Hiller v. Ellis

• Decision Date: 18 February 1895
• Citation: 18 So. 95,72 Miss. 701
• Court: Mississippi Supreme Court
• Parties: HAYMAN HILLER ET AL. v. I. N. ELLIS, ASSIGNEE, ET AL

18 So. 95

72 Miss. 701

HAYMAN HILLER ET AL. v. I. N. ELLIS, ASSIGNEE, ET AL

Supreme Court of Mississippi

February 18, 1895

FROM the chancery court of Copiah county, HON. H. C. CONN Chancellor.

The material facts, as found by the court from the record, are stated in the opinion. To this it may be added that the assignment construed in this case contains, among other things, the following provision: "To facilitate the execution of this trust, the said party of the first part (the assignor) has prepared a schedule, which is herewith filed, marked schedule B, and made part of this deed, showing all the liabilities of the said party of the first part, as required by § 124, code of Mississippi of 1892, which said schedule is intended to show the liabilities of the party of the first part, and the exact amount of them, and all of them; but, if by reason of inadvertence there be any mistake in omitting any of the liabilities of the said party of the first part from said schedule B, or errors in amounts thereof, then the said party of the first part hereby fully authorizes and empowers the said party of the second part (the assignee) to correct the same, and to that end, and to further facilitate the execution of this trust, does hereby constitute and appoint the said party of the second part his attorney in fact irrevocable, with full power and authority to do, transact and perform all acts, deeds, matters and things which may be necessary in the premises, as fully and completely as the said party of the first part might or could do if these presents had not been executed, hereby ratifying and confirming whatever the said attorney shall lawfully do or cause to be done in the premises."

Decree reversed.

J. S Sexton and R. P. Willing, Jr., for appellants.

1. The assignment was fraudulent in fact. Such a transaction cannot be allowed to stand while the decision of this court in Selleck v. Pollock, 69 Miss. 870, remains the law fixing the standard of integrity required in general assignments.

2. The assignment should be set aside in toto, because the debt preferred to the Merchants & Planters' Bank is usurious. Wetter v. Dinkins, 70 Miss. 835. That this debt is usurious, is manifest from a consideration of the facts.

3. The assignment cannot be upheld as to the bank and Mrs. Klotz on the ground that these parties released the assignor from personal liability. This was a mere attempt to circumvent the law and get the benefit of the principle announced in Anderson v. Lachs, 59 Miss. 111. The parties knew that Hiller was insolvent, and gave the release merely to make a consideration, and to protect themselves against his fraud.

R. P Willing, Jr., for appellants Marshall Field & Co., and J Kyle & Co.

1. The goods sold by these appellants were obtained through Hiller's fraud, and they had the right to rescind the sales. Klein v. Rector, 57 Miss. 538.

2. The assignee is not a purchaser for value, and the goods may be recovered from him. Frank v. Robinson, 65 Miss. 162.

3. The false representations need not be made directly to the seller. It is sufficient if they are made to a mercantile agency through which they are communicated. 15 Am. & Eng. Enc. L., pp. 297, 298, and authorities cited; Eaton v. Avery, 83 N.Y. 31.

When asked by Marshall Field & Co. to make a statement of his financial condition, Hiller referred them to Dun's agency, Saying he had previously made it a statement which could be relied on. The goods were sold on the faith of this statement, which was false.

In the purchase from Kyle & Co., nothing passed between them and Hiller in regard to his statements to the commercial agencies, but the goods were sold to him upon the faith of such statements, and the fraud was in the representation made by Hiller to the agencies for the purpose of getting a rating. The legal aspect of both cases is the same. In both, the goods were obtained through fraud.

R. N. Miller and George S. Dodds, for appellees.

1. With the witnesses before him, the chancellor found that the goods sought to be retaken had not been fraudulently purchased, and we rely upon this finding. The evidence fails to show that the statements relied upon were given by Hiller to the commercial agency. The information upon which the rating was made was obtained, in large part, from other persons and Hiller was not responsible for the same. As to this matter, also, the proof was conflicting, and the decree will not be disturbed.

2. The creditors seeking rescission cannot prevail, (1) because there was no fraud in the purchase of the goods; (2) because, admitting the fraud, the assignee is a bona fide purchaser. If Hiller's fraud were fully admitted, it could in no manner affect the rights of the assignee, because, at the time of the execution of the assignment, the bank and Mrs. Klotz each released Hiller from personal liability in consideration of being preferred. This makes them bona fide purchasers. Craft v. Bloom, 59 Miss. 69; Anderson v. Lachs, Ib., 111; Soule v. Shotwell, 52 Ib., 236.

3. As to the claim that the debt to the bank was in part usurious, the facts are, that the ten per cent. interest which was stipulated for in the note was taken out in advance; but this is explained by showing that Hiller previously went to the bank, and arranged to get the money, when the cashier informed him that he could have it, with the understanding that interest should be charged from that date. Hiller agreed to that, and left the money with the bank until he made the note. Counting the interest on the money during this time at six per cent. more than compensates for the slight excess that resulted from reserving the interest when the notes were executed.

4. If it be conceded that we are mistaken in assuming that; there was no usury in the debt to the bank, still the assignment will be upheld, because the record contains no intimation that Mrs. Klotz, when she released Hiller in consideration of the preference, had any notice of this usury.

Argued orally by R. N. Miller, for appellees.

OPINION

COOPER, J.

On the tenth day of October, 1893, Charles Hiller, an insolvent merchant, made a general assignment of his property to the appellee, Ellis, for the benefit of his creditors. Preferences were given to Messrs. Miller and Dodds, the attorneys by whom the instrument was prepared, for their fees, and, also, in the order named, to F. Dillard, for the sum of $ 250 and interest; to the Merchants & Planters' Bank of Hazelhurst, for the sum of five thousand dollars, and interest; to Mrs. Hannah Klotz, for the sum of five thousand five hundred dollars; to Hyman, Hiller & Co., for the sum of nine thousand one hundred dollars, and, after the payment of said sums, the assignee was directed to distribute any remaining funds to all other creditors pro rata. The assignee filed his petition in the chancery court of Copiah county, as required by law, and gave bond as receiver. Many creditors of Hiller, soon after the execution of the assignment, exhibited cross petitions against the assignee seeking to vacate the assignment as fraudulent and void, on the grounds that it was made for the purpose and with the intent of defrauding creditors; that some of the preferred debts were simulated; that the debt to the Merchants & Planters' Bank was composed in part of usury, and upon other grounds not necessary to be stated. The firm of Marshall Field & Co., of Chicago, exhibited their cross petition, charging that among the assigned property was a lot of goods bought from them by the assignor, and for which the purchase price had not been paid; that Hiller procured the sale of said goods to be made to him on credit by falsely and fraudulently representing himself to be solvent and the owner of a large amount of property, and by falsely and fraudulently understating and concealing the amount of his liabilities; that the assigned goods were in the hands of the assignee, and capable of identification. They prayed that the purchase of said goods by Hiller be declared fraudulent, and the goods returned to them. A like cross petition was exhibited by the firm of Kyle & Co. to recover certain goods they had sold to Hiller. It was admitted by the assignee that the goods mentioned in the cross petitions of Marshall Field & Co. and Kyle & Co., came to his hands, and were identified by the claimants, but the fraudulent purchases by Hiller were denied. Under agreement, they were sold, and the proceeds yet remain in the hands of the assignee, subject to the order of the court. On final hearing, the court found all the issues joined on the several cross petitions in favor of the assignee, and dismissed the petitions, and from the decree, the cross petitioners appeal.

In considering the questions presented for decision, it is only necessary to state such facts as are relevant to the points on which the cause turns. The record is voluminous, and contains much evidence not necessary to be stated in the view we take of the cause. One of the preferred debts, that due to the Merchants & Planters' Bank, is evidenced by five promissory notes, each for one thousand dollars, dated at different times, and which, when executed, the bank discounted at the rate of 10 per cent. per annum--i. e., retained the interest as prepayment thereof at the full legal rate. Mr. Ellis, the cashier of the bank, and who is the assignee in the assignment, gives this explanation of the circumstances of the negotiation of the loan by Hiller and the execution and discount of the notes. Some time in January or February Hiller applied to the bank "and stated that he wanted to borrow four or five thousand dollars, and wanted to know when he could get it, and what security would be needed. I told him that he could get it. ...