Humphries v. Freeman

• Decision Date: 01 January 1858
• Citation: 22 Tex. 45
• Parties: P. W. HUMPHRIES AND ANOTHER v. THOMAS FREEMAN AND ANOTHER.
• Court: Texas Supreme Court

22 Tex. 45

P. W. HUMPHRIES AND ANOTHER

v.THOMAS FREEMAN AND ANOTHER.

Supreme Court of Texas.

1858.

In order to enable creditors to set aside an assignment made by a debtor, as fraudulent, it is not necessary that the assignee should have been influenced by a fraudulent intent, or that he should have intended to assist the debtor to defraud his creditors, provided he had notice of the intended fraud of the debtor. 15 Tex. 188;24 Tex. 518;28 Tex. 759.

It is constructive notice, if the assignee be in possession of such facts as would reasonably satisfy an individual of the fraudulent intent of the debtor, or put him upon inquiry in relation thereto.

A secret trust for the benefit of the assignor, accompanying an assignment by an insolvent debtor, held to be a sign, if not decisive evidence, of fraud; especially when the debtor transfers all his property subject to execution.

It is of no avail that an assignee, after suit brought, offer to deliver the property to other creditors, on being paid the amount of his claim against the assignor.

A purchaser of property, to protect himself, must not only pay value, but must not know, or have good reason to believe, that by his purchase, he is enabling his vendor to make a disposition of his property, for his own benefit, which of right belongs to his creditors.

It is the duty of the court, in cases of fraudulent conveyances, to charge the jury that a knowledge in the vendee, of the fraudulent intent of the vendor, makes the purchase void; and that actual knowledge need not be proved, if the purchaser had the means of knowing by the use of ordinary diligence.

APPEAL from Travis. Tried below before the Hon. A. W. Terrell. This action was brought in the court below, by appellants, creditors of Case, against appellees, to annul and render void, on the ground of fraud, a sale and transfer made by Case to Freeman, of certain articles, to wit: one Coleman's patent mill and two copper stills and fixtures. Judgment by default was taken against Case, for want of an answer.

The defendant, Freeman, answered by general denial, and specially by setting forth the transaction, admitting that he had purchased from Case, a Coleman patent mill, two copper stills and fixtures, which cost Case, in New Orleans, $454; that he took an assignment of them, by transfer of the bills of purchase, while the articles were in transitu; that he took them in payment of a debt of $234.70, with interest for about nine months, also paying transportation and charges amounting to $40.10; and that he purchased the property with an agreement to reconvey to Case, on being repaid these several sums within a reasonable time: but in answer to interrogatories attached to the petition, he denied knowing of the insolvency of Case, or any motive in himself, except securing the payment of a just debt due him; or any motive in Case to defraud, hinder or delay creditors. He also denied knowing that plaintiffs were creditors, or that there were judgments against him, but admitted that he was aware that Case was embarrassed in his circumstances, and that he had been informed that executions had been issued against him; and again repeated, what he had before averred in his answer, a willingness to surrender up the property to Case, or any of his creditors, on being paid the amount which the property cost him.

The statement of facts showed that it was proven on the trial, that Case was indebted to Freeman in the sum of $234.70, besides interest from May, A. D. 1856; that in December, A. D. 1856, Case purchased and paid for, in New Orleans, certain property to wit, one Coleman's patent mill, at the price of $179, and two copper stills, worms, etc., at the price of $275; that the latter were purchased in the name of C. H. P., of Austin, to whom the whole were consigned; that before the property reached Austin, to wit, in February, 1857, Case sold the property to Freeman, at the nominal price of their cost in New Orleans, and receipted to Freeman for the same in full; Freeman taking them in full payment for his debt, subject to cost and charges of transportation, with an agreement, not apparent upon the face of the transaction, that Freeman should reconvey the property to Case on being repaid the amount Freeman had paid for them, within a reasonable time. It appeared that Freeman was a merchant in Austin, and that Case resided in the country, some five or six miles distant, and transacted most of his business in Austin. It appeared that the claims of appellants had been, for a considerable time previous to the purchase of the property by Case in New Orleans, reduced to judgments, and several executions upon them had been issued, and returned by the sheriff, no property found; and that Case was, and had been for some years, notoriously insolvent. It was also proven by said C. H. P. in whose name the stills were purchased, and to whom said property was consigned, that he had no knowledge or connection in the purchase of, or paying for, any of the property, or its consignment to him, until after the consignment was made. And it was also proven, that Case had erected suitable buildings within a short distance of his residence, in which to receive and put in operation the mill and distillery.

On the conclusion of the evidence, the court charged the jury:

1st. Fraud is never presumed, but must, when relied upon, be proved. It is seldom capable of direct proof, on account of its secret character. It may be established by circumstances; that the jury were authorized to consider all the circumstances in evidence, to determine whether or not fraud really existed in the transfer of the property in controversy; and if fraud did exist, to find for the plaintiff, otherwise for the defendant.

2d. Should the jury find from the circumstances and the facts in evidence, that Freeman received the property in controversy under what purported to be an absolute transfer and sale, yet had a private agreement or contract that Freeman should reconvey to Case, on his paying him at some future time, a pre-existing debt due Freeman; that Case was notoriously insolvent, at the time of said sale or transfer; and if they further found the value of the property transferred was greatly more than the debt due Freeman; then the transaction would be a fraud in law, as to the creditors of Case; and if plaintiffs were creditors of Case, the jury would find for them.

3d. If the jury found, that a fraud in law had been committed in the transfer of the property from Case to Freeman, then the answer of the defendant disclaiming a fraudulent intent, could not relieve him from the legal consequences of his acts, and the jury would find for the plaintiffs. 4th. That if the jury believed that Freeman, in the contract with Case, was not only attempting to secure his debt, but made use of his demand to shield the property of Case against his creditors, by holding the property subject to a secret trust for the benefit of Case, they would find for the plaintiffs.

5th. If the jury believed from the...