Lane v. Norton

• Decision Date: 28 February 1879
• Citation: 63 Ga. 12
• Court: Georgia Supreme Court
• Parties: Early & Lane et al. v. Oliver & Norton et al.

63 Ga. 12

Early & Lane et al. v. Oliver & Norton et al.

Supreme Court of the State of Georgia

February Term, 1879.

Early & Lane and others filed a creditors\' bill against Oliver & Norton and Douglass, making, in brief, the following case:

On October 25, 1877, there was in existence in the city of Macon a firm doing business under the name of Oliver, & Douglass & Co. Owing to a general belief in the solvency of Douglass, this partnership had fair credit, and stood well with the business community. On the day and year aforesaid this firm was dissolved by the withdrawal of Douglass, but the same business was continued by the other partners under the name of Oliver & Norton. Complainants having sold to the former firm, continued to supply their successors with such goods as they required in the general hardware business, which they conducted.

During the year 1877 and especially in the months of September, October *and December, they sold to them goods amounting to nearly $12,000.00 a large portion of which still constitute a part of their stock. When the commercial paper given for such goods matured, said Oliver & Norton declined to pay the same, informed complainants that they had sold their entire stock to Douglass, that they had nothing and could pay nothing. Astonished at this proceeding, complainants sought for an explanation, but Oliver & Norton simply referred them to their counsel, and the latter declined to give them any information. They then went to the records of Bibb county and there found a mortgage covering said stock of goods, dated November 20, 1878, recorded the 18th day of the following month, purporting to be to secure the said Douglass in the payment of two notes, each for $8,135.72, one due at thirty and the other at sixty days from date. On the day of its record said O. & N. made a bill of sale of said stock to said Douglass in full satisfaction of the mortgage. This mortgage and bill of sale complainants insist are void for the following reasons:

1. At the date of the bill of sale there was nothing due on the mortgage.

2. On November 20, 1878, said stock of goods was only worth $15,000.00. The mortgage could not cover a larger amount than was present at the time of its execution. When the bill of sale was made, goods to the amount of $20,000.00, or other large sum, had been added by the fraudulent purchases of O. & N., to swell said stock for the benefit of Douglass, of all of which he was fully cognizant, participating in the fraud.

3. The indebtedness to Douglass, if any existed, was subsisting before the fraudulent purchases aforesaid. Douglass had an intimate knowledge of the business of the firm—was the brother-in-law of Norton, and participated in the fraud perpetrated, attempting to collect the amount of his pretended indebtedness out of the goods of complainants, under the forms of law. O. & N. never intended to pay for said goods when they pur-chased; they then had in view *the fraud which they are now attempting to execute, and Douglass procured the mortgage and bill of sale for the purpose of appropriating the property of complainants to his own use.

Most of complainants do business at a considerable distance from the city of Macon, and in selling goods to the above named firm, were necessarily compelled to rely upon the integrity of the members thereof. To inform themselves of their financial standing they called upon O. & N. for statements of the condition of their business from time to time, and their replies showed such business to be thoroughly solvent. (The statements are set out in the bill and are utterly inconsistent with the facts subsequently developed.) If they were indebted to Douglass in the large sum now claimed when those replies were made, the statements then forwarded were thoroughly false and fraudulent. If they were not indebted to Douglass, then he is endeavoring by a thin and patent fraud to take the property of complainants for his own benefit, or for the benefit of O. & N., or of both jointly.

Complainants, before selling to O. & N., applied to Douglass for information as to their financial standing, and he sedulously sought to produce the impression that the firm was solvent and worthy of credit. (The bill then specifies an instance.)

For each of complainants to take out legal process, whether by attachment for the purchase money, or attachment against O. & N. as fraudulent debtors, would lead to a great number of separate suits. To bring simply common law actions would be useless, as O. & N. have no property subject to the payment of their debts, save said stock of goods. Therefore the equitable powers of the court are indispensable.

They therefore pray that defendants be enjoined from further interfering with said goods, that the bill of sale to Douglass beset aside as fraudulent and void, and that a receiver be ap-pointed to take charge of said stock and to *sell the same as directed by the chancellor. Discovery was waived.

By an amendment, complainants presented the following facts:

By reason of the misrepresentations, fraud, etc., charged in the bill, the title to the said goods did not pass to O. & N., but remained in complainants.

Complainants charge, as an additional badge of fraud, that since said pretended sale, Douglass, by his agents, has been offering said stock for sale at prices below the market value.

They further charge that Douglass is of doubtful solvency, if not actually insolvent. Besides a tax upon a stock of merchandise in Savannah, he pays tax upon only $8,000.00 of real estate, upon which there is a mortgage to a Loan Association to secure an advance of $5,000.00. There are three other mortgages upon such realty in favor of his son, amounts now unknown. From information derived from one of the defendants, unless Douglass succeeds in paying the debt of O. & N. to him with complainants' goods, his financial condition will be exceedingly precarious and his insolvency inevitable. He returns merchandise for taxation in Savannah only $5,000.00, and furniture $300.00. In Bibb county he only returns $14,000.00 in real estate, upon which there is a mortgage made August 11, 1877, to secure a note due twelve months after date, for $5,600.00, with ten per cent. interest. He would be wholly unable to pay complainants' debts should it be so decreed. They pray that the sales by them to O. & N. be rescinded, and the goods so bought turned over to the receiver.

The answers of the defendants denied every material allegation in the bill. Douglass alleged that at the time of the sale to him of the stock of goods, O. & N. were bona fide indebted to him in the sum of $18,200.00, which was more than the value of the property conveyed to him in satisfaction thereof. He asserted that they had the right to prefer him; he denied that he had ever made any representations *to any of complainants as to the solvency of O. & N., and gave his version of the conversation had with the agent of one of the complainants referred to in the bill.

In an affidavit subsequently made, he stated that he was worth in real estate located in Savannah and Macon, $28,000.00; in stock of goods and other personalty located in Savannah, $10,000.00, and that he did not owe exceeding $5,000.00. He therefore insisted that he was solvent, and amply able to respond to any decree that might be rendered against him.

Numerous affidavits pro and con were introduced, some in reference to the value of stock at the time of the mortgage, at the time of the sale, etc., in reference to mutilation of books by defendants, a mysterious entry on the account of Douglass with O. & N. to his credit, as follows: "Services to October 27, $10,427.25, " whilst complainants claimed he had never rendered any such services. Other testimony consisting of accounts, letters, statements, etc., were introduced, all of which is deemed immaterial here.

Two affidavits were offered by complainants in which the affiants testified purely upon the information of others. These the chancellor regarded as hearsay and refused to consider.

The application for injunction was heard at Macon, in the county before Judge Lawson, of the Ocmulgee circuit Judge Simmons, of the Macon circuit, being providentially absent from the state.

When the evidence closed, it was then a few minutes past nine o'clock p. m., on Saturday evening, and complainants suggested to the chancellor that it would be better to adjourn until Monday, but on his expressing a desire to finish so as to return to Eatonton on the seven o'clock train in the morning, they proposed to divide the time equally with the defendants until midnight, asin their view it would be illegal to go on beyond that hour. Defendants\' counsel *stated that he would consume more than one hour and a half in his argument. Counsel for complainants had occupied forty minutes of the time when counsel for defendants began his argument. When he had proceeded for one hour and a half, his attention was called to the agreement, and the chancellor requested to enforce the same. To this the counsel objected, and the chancellor ruled that he had no authority to limit the argument. Counsel for defendants continued until twelve minutes of the hour of twelve, thus leaving to complainants for a concluding argument only about twelve minutes. After the argument, the chancellor carried the papers to Eatonton, in the county of Putnam, and at the latter place passed an order refusing the injunction and the appointment of a receiver. He directed that this order be entered on the minutes of Bibb superior court. To this order complainants excepted, and assign error as follows:

1. That the chancellor erred in refusing to consider the affidavits...