Knower v. Cadden Clothing Co.

• Decision Date: 08 May 1889
• Citation: 57 Conn. 202,17 A. 580
• Court: Connecticut Supreme Court
• Parties: KNOWER et al. v. CADDEN CLOTHING CO.

17 A. 580

57 Conn. 202

KNOWER et al.

v. CADDEN CLOTHING CO.

Supreme Court of Errors of Connecticut.

May 8, 1889.

Appeal from superior court, Hartford County.

G. G. Sill and A. F. Eggleston, for appellant. C. E. Perkins, for appellees.

PARDEE, J. It was the claim of the plaintiffs that Leopold Levy was their debtor, and that with the intent to defraud his creditors he transferred a portion of his personal property to the defendant, the Camden Clothing Company, a corporation, through the agency of P. J. Rosenberg, its president, which received and retained possession of the property having either actual knowledge, or reasonable means of knowledge, that the transfer by Levy was with such fraudulent intent. The defendant claimed that Rosenburg, as an individual, was a creditor of Levy; that the property was delivered by Levy to Rosenberg in payment; and that the latter, as an individual, sold it to the defendant. The court instructed the jury that, to violate the defendant's title to the goods on the ground of fraud, it should appear that it was not a bona fide purchaser of them, and did not receive them in good faith, and that it either had a part in, or knowledge of, the fraud of Levy, or Rosenberg, or Furstenberg, if they, or either of them, were guilty of any in the transaction, or that it was aware of such suspicious circumstances with respect to the goods sold as would reasonably put it on inquiry, and lead it to suspect that there was something fraudulent and wrong in connection with the transfer of them. "Fraud is a poisonous element in any transaction, and, if proved, destroys any sale of property or other contract contaminated with it. If Levy, being the owner of the goods, or any one else by his direction or for him, with intent to defraud his creditors, sent the goods to the defendant, who, having knowledge, or reasonable means of knowledge, of the purpose to defraud, received them, the transfer was fraudulent, and no title passed to the defendant. The goods would still be Levy's, and liable to be taken for his debts." Also that the acts and declarations of an officer of a corporation must, to bind the corporation, be done and made while actually engaged in the performance of his official duty; but the knowledge of the directors and other managing officers of a corporation is generally the knowledge of the corporation when it relates to its interest and business, and the acts and declarations of Dublin and others, if mere employees, and not agents of Levy, are not binding on the defendant, unless known to the defendant at the time, or afterwards adopted by it, or by Rosenberg, or Camden, or both, while acting in the performance of their duties as agents or managing officers of the defendant. The plaintiffs had a verdict. The defendant appealed, for the following reasons: (1) that the court erred in refusing to charge the jury as requested by the defendant upon each of its six requests. (2) That the court erred in charging the jury in relation to the question of fraud, and especially in charging that knowledge of any fraud of Rosenberg or Further would vitiate a sale to the defendant, and that knowledge of any suspicious circumstances with respect to the goods winch would reasonably put the defendant on inquiry and lead it to suspect that there was something fraudulent and wrong in connection with the transfer of item, would have the same effect. (3) Also in charging that if the defendant with knowledge, or reasonable means of knowledge, of the purpose to defraud, received them, no title passed to the defendant. (4) In relation to the adoption of Rosenburg's acts by the directors, the court should have charged that any assent or adoption by the directors, to be binding upon the defend ant, must be made with full knowledge to all the material facts in the case. (5) The court erred in instructing the jury that it Camden or Rosenberg had knowledge of circumstances which would reasonably lead them to believe or fairly suspect fraud in the" transfer their verdict should be for the plaintiffs. (6) The whole charge of the judge on the question of fraud was erroneous, besides the particulars above specified. (7) The judge also erred in admitting the evidence of Cassidy, Levy, and Goldsmith, as set out in the finding, as there is nothing in the plaintiffs' evidence as set out in the finding to authorize the admission of the same. (8) The court erred in admitting the evidence of Isaac M. Levy relating to orders from Dublin to pack and send goods to Goldsmith & Co.; also in admitting evidence of the acts and declarations of Dublin, showing that he was keeping away from New York; also in admitting the evidence of Herman Goldsmith as to the goods sent him; also the evidence of A. W. Cassidy, in relation to what he discovered in New York; all as set out in the finding.

In Utley v. Smith, 24 Conn. 290, the claim being that certain conveyances of real estate were fraudulent and void under the statute, as having been made in view of insolvency, the court held that, in order to make them so, the grantor must not only in fact be in failing circumstances, but must make the deed with a view to insolvency, and with intent to prefer one creditor over another, saying that the true rule is that the quo animo is the important and decisive characteristic. In Sisson v. Roth, 30 Conn. 15, it was determined that, although a conveyance was made with an intent to defraud creditors, yet if the grantee did not participate in the fraud, the conveyance is good. In Bank v. Brewster, Id. 559, the marginal note is as follows: "The court below found that a certain mortgage was not given with a view to insolvency, if the evidence was to be weighed by the ordinary rules of evidence, without giving to any of it an additional legal or constructive effect; but that, if the parties to the mortgage were to be held chargeable with the knowledge of facts of which they had such notice as would lead a prudent man, in a matter which concerned his pecuniary interest, to make inquiry, and were to be presumed to have intended the probable consequences of giving such mortgage, in view of the facts which might have been ascertained by such inquiry, then the mortgage was found to have been given in view of insolvency." It was held "that the latter rule could not bad apply and that the mortgage was to be regarded as not given in view of insolvency." The court said: "Facts which by inquiry ha might have ascertained, if in truth he did not know them or believe in their existence, could have had no influence upon his purposes or his actions. And notice enough of his actual condition to put him upon inquiry, if that inquiry had not been made, could have had no influence upon hair actions. Legal fictions and equitable presumptions have no effect upon the actual conduct of men. An omission to inquire may be evidence of negligence, but negligence is not fraud, either in law or fact, and neither proves nor indicates a positive intention to commit a fraud, whatever penal consequences the law-giver in his wisdom may attach to such negligence." In Blood good v. Beecher, 35 Conn. 469, the court, speaking of a similar question, and approving of the foregoing case, adds that the quo animo must be proved as a fact and cannot be inferred or presumed to exist by inference of law contrary to the fact. In Hawes v. Mooney, 39 Conn. 37, a conveyance was declared void because of actual fraud participated in by the grantee. In Bassett v. McKenna, 52 Conn. 437, the court held a conveyance of land void because the grantee knowingly assisted in placing it beyond the reach of attachment. In Lackey v. Roberts, 25 Conn. 486, the plaintiff...