Lightman Bros. & Goldstein v. Epstein

• Decision Date: 16 December 1909
• Citation: 51 So. 164,164 Ala. 660
• Parties: LIGHTMAN BROS. & GOLDSTEIN v. EPSTEIN.
• Court: Alabama Supreme Court

51 So. 164

164 Ala. 660

LIGHTMAN BROS. & GOLDSTEIN v. EPSTEIN.

Supreme Court of Alabama

December 16, 1909

Appeal from City Court of Bessemer; William Jackson, Judge.

Trial of the right of property levied upon under execution, between Jacob Epstein and Lightman Bros. & Goldstein, claimants. From a judgment adverse to claimants, they appeal. Reversed and remanded.

The following charges were refused to the claimants: (4) "If you believe from the evidence that the claimants paid a price for the goods not grossly inadequate to their value, and that such price was paid to the creditors of Kartus Dry Goods Company, then your verdict must be in favor of the plaintiff." (5) "If you find from the evidence that in good faith claimants paid a price for the goods not greatly inadequate to their value, and paid the entire consideration to the creditors of the Kartus Dry Goods Company, then your verdict must be for the plaintiff." (7) "I charge you that an insolvent debtor can make a valid sale of his property, if the price received is fair and reasonable, and the entire consideration is paid to his creditors existing at the time of the sale." (8) "If you find from the evidence that a fair and reasonable price was paid for the property, and all the consideration was paid to the existing creditors of Kartus Dry Goods Company, except a certain part which was set aside for plaintiff, and a good check therefor sent to him, which plaintiff did not receive or object to because it was in the form of a check and not cashed, and that such part of such consideration still remains in the purchaser's hands subject to plaintiff's orders, then your verdict must be in favor of the claimants." (9) "If an insolvent debtor makes a sale of his property for a fair and reasonable price, and the entire consideration is held subject to his creditors' claims, and none of it is secreted, carried away, or applied to any other purpose than the payment of his valid debts, then the sale is a valid transfer."

The judgment is as follows, omitting the formal part: " 'We, the jury, find the issue in favor of the plaintiff and assess the value of the goods levied on at $500.' It is therefore considered and adjudged by the court that the plaintiff have and recover of the claimant the said sum of $500, the value of the goods levied on, so assessed as aforesaid, together with all the costs in its behalf expended, for the recovery of which let execution issue."

George Huddleston, for appellants.

Trotter & Odell, for appellee.

SAYRE J.

Trial of the right of property, in which the appellants intervened as claimants. Plaintiff offered evidence to prove his claim against the defendant, the Kartus Dry Goods Company; the writ of execution, with the sheriff's return thereon; the levy of the execution on the property in controversy; and that the goods, when levied on, were in the storehouse where the defendant had carried on business until about six months prior to the levy, and in charge of Sam Kartus, who had been an employé of the defendant corporation. Here the plaintiff rested. Thereupon the claimants showed that the Kartus Dry Goods Company was a corporation, with R. A. Porter, W. L Wilson, and N. V. Millsap as shareholders, owning the entire stock, and that the corporation had no corporate seal. Then the claimants offered in evidence a paper writing which seems to have been intended to evidence a sale of all the property of the Kartus Dry Goods Company to Lightman Bros. & Co., and J. Goldstein & Co., on consideration that the said vendees should pay to each creditor of the vendor 33 1/3 per centum of their debts. This writing was objected to by the plaintiff, and that objection was sustained by the court.

Appellants in their brief state that it was objected to on the ground that it was not under seal and that it did not appear to have been authorized by the corporation. It may be conceded that the objection here stated was untenable. Jordan v Collins, 107 Ala. 572, 18 So. 137. But doubtless, if the appellee had filed a brief, he would suggest that the record does not show what ground of objection was urged or sustained, and, whether so or not, if there was any ground upon which the deed of assignment was properly excluded, the trial court will not be put in error. The claimant must recover on his own title. He cannot set up an outstanding title with which he does not connect himself. Seisel v Folmar, 103 Ala. 491, 15 So. 850. It may be further conceded that the evidence introduced at a later stage of the trial afforded ground for the inference that Lightman Bros. & Goldstein, the claimant firm, purchased the goods in dispute from Lightman Bros. & Co. and J. Goldstein & Co., or in some other legitimate way succeeded to their rights; but at the time the deed of assignment was offered in evidence nothing of this had appeared, nor was the trial court informed, so far as the record shows, that it would be made to appear. The case thus presented to the trial court was a case in which the claimant firm offered to prove a conveyance to two other and different firms, without connecting itself with the title so passed. On this showing, it cannot be said that there was error in the ruling under consideration. If this paper had been offered at a later stage of the trial, and after some evidence had been offered to show that claimants claimed under Lightman Bros. & Co. and J. Goldstein & Co., doubtless the court would have allowed it in evidence.

There was evidence on behalf of the claimants which went to show that they had purchased defendant's stock of goods in consideration of the absolute payment of defendant's indebtedness to claimants and the agreement by claimants to pay all other creditors of the defendant 33 1/3 per centum of their claims, claimants accepting the same per centum in payment of their debt--substantially the agreement shown by so much of the rejected writing as we have mentioned above; that all creditors had accepted payment, except the plaintiff. It was admitted that on the day after the sale claimants had mailed to plaintiff a check for 33 1/3 of his debt against the defendant, which check was good and would have been paid on presentation, the same being mailed with an explanation that it was a part of the proceeds of the assignment to claimants, and that plaintiff retained the check during 30 days, approximately, when he returned it to claimants. Defendant was insolvent. It has been repeatedly decided by this court that an insolvent debtor may select and pay which of his creditors he will, and thus disable himself to pay the others anything; and it makes no difference if the preferred creditors know that the effect of the transaction will be to deprive the debtor of all means with which to pay his other debts. This is said without any reference to the effect of section 4295 of the Code of 1907, which is to be administered in a court of equity. We speak merely of the effect of such transactions in a court of law. Nor is the motive or intention of the debtor a material inquiry, if the requisite conditions exist. Those conditions in a case like this are: First, the debt must be bona fide and enforceable, not simulated; second, the payment must be absolute, and, if made in property, must not be materially in excess of the debt; third, no pecuniary benefit or consideration of value, other than the liquidation of the debt, must inure or be secured to the debtor. As said by Stone, C.J., in First National Bank v. Smith, 93 Ala. 97, 9 So. 548: "The true inquiry at last is, did the creditor bargain for and receive overpayment, or payment in excess of his just demand." Pollock v. Meyer, 96 Ala. 172, 11 So. 385; Knowles v. Street, 87 Ala. 360, 6 So. 273; Carter v. Coleman, 84 Ala. 268, 4 So. 151; Meyer v. Sulzbacher, 76 Ala. 128; Hodges v. Coleman, 76 Ala. 103.

As we gather from the record, the main contention between the parties concerned the adequacy or inadequacy of the consideration paid by the claimants for the goods. The trial court appears to have proceeded upon the idea that no issue but that of the adequacy of the price paid was involved. If the price paid was adequate, the bona fides of the debts and their payment...