Nelson & Co. v. Good

• Decision Date: 23 November 1883
• Citation: 20 S.C. 223
• Court: South Carolina Supreme Court
• Parties: NELSON & CO. v. GOOD.

20 S.C. 223

NELSON & CO.

v.GOOD.

Supreme Court of South Carolina.

Nov. 23d, 1883.

1. Insolvency of the vendor of personal property, pendency of suits against him, the sale of all his property, and retention of possession of the goods sold, to all appearances as owner, constitute such strong evidence of fraud that they will be regarded as conclusive unless explained by the most satisfactory testimony, but are not presumptions of fraud irrebuttable by any evidence. Cases reviewed.

2. This court concurred with the Circuit judge in holding these badges of fraud to have been satisfactorily explained in this case.

3. A debtor may legally sell his property to one of his creditors, pending suit by others, and may retain possession as bailee for hire or as agent of the vendee.

4. Excessive compensation allowed by the vendee to such vendor, as his agent after the sale, is a circumstance to be weighed in determining the bona fides of the transaction, but is not conclusive of fraud in the sale.

Before COTHRAN, J., Greenville, November, 1882.

This was an action by Samuel A. Nelson & Co. and William Bryce & Co., judgment creditors of Warren S. Good, against said Good and Williams Cox, to set aside a sale of a stock of goods by Good to Cox.

The master's report was as follows:

The master to whom it was referred to take the testimony in the above-entitled cause, and to report the same together with his conclusions of fact, begs leave to report that he has held references, and from the evidence adduced and herewith filed he respectfully submits the following as his conclusions of fact, to wit:

1st. That the defendant W. S. Good was engaged in the mercantile business and purchased goods of the plaintiffs, for which he gave the notes on which judgments were obtained against him, as set forth in the complaint herein.

2d. That on December 18th, 1879, the defendant Williams Cox became surety for defendant Good on two notes, payable to the order of Butler, Clapp & Co., one of which was for $322.16 and the other for $324.14. The first became due on November 1st, 1880, and the latter on December 1st, 1880.

3d. That on February 28th, 1880, defendant Good, who knew he was insolvent, disposed of his entire stock of goods (amounting in value, at actual cost, to $531.40,) to defendant Cox to secure him against loss on account of his suretyship on said notes to Butler, Clapp & Co., and on the same day executed and delivered to defendant Cox a bill of sale to said stock of goods with an inventory of the same attached, which bill of sale and inventory were duly recorded on said date in the office of the register of mesne conveyance for the county aforesaid. That defendant Cox did not know that defendant Good was insolvent when he bought said stock of goods, and he would not have bought them had he not been surety on said notes. 4th. That defendant Cox never took possession of said stock of goods, but employed defendant Good, who is his son-in-law, as his agent to carry on and manage the business, and authorized him to sell said stock of goods and to buy other goods in order that he might close up the business without sacrificing the original stock, and agreed to pay defendant Good for his services a salary of $400 a year out of the proceeds of the sales of said stock of goods. That, in pursuance thereof, defendant Good remained in charge of said stock of goods, bought other goods on time as agent, sold and disposed of the same, and about the middle of April, 1881, closed out the business. That defendant Good, as agent as aforesaid, had sole charge of the business and never made any statements of the same to defendant Cox, nor did defendant Cox ever ask for or require of him a statement, and it does not appear that he took any interest in the same and knew nothing of the management thereof, nor of the profits or losses, nor of the debts incurred on account of the same, but left the whole matter to defendant Good, he, the said Cox, being a farmer, with very little business capacity and experience.

5th. That no notice was given by advertisement, or otherwise, of the change of the business, when defendant Good became the agent of defendant Cox. There was no sign then nor before over the store-house, and externally there was nothing to show that any change had been made. That on the ledger kept by defendant Good from 1876 to the time he closed out the business, as agent, as aforesaid, there is an account kept of goods purchased by defendant Cox, and various amounts of cash and cotton are placed to his credit, and there is no change in the mode of keeping said account after the stock of goods were sold to defendant Cox, from that prior to the same, nor are there any changes made in the mode of keeping said books as to the general business done before or after that time.

6th. That while defendant Good was acting as agent for defendant Cox, his clerk, Norman Good, signed two receipts dated September 7th, 1880, in the name of W. S. Good, for goods purchased on account.

7th. That on June 23d, 1880, defendant Good made his return under oath to the county auditor, in which he included among other items of personal property, by and with an understanding with defendant Cox, goods, merchandise, &c., to the value of $400, and on the same day, and at the same time, defendant Cox made his return to said auditor, and did not include any goods, merchandise, &c. That on June 21st, 1881, defendant Cox made another return under oath to said auditor, in which he did not include any goods, merchandise, &c.

8th. That on December 1st, 1880, the sheriff levied on said stock of goods, and about three or four weeks prior to that date, defendant Good said that said stock of goods were worth not less than $1,500, and spoke of them as his goods.

9th. That on December 12th, 1879, defendant Good purchased from his wife the house and lot in which they lived, and paid her $500 in cash for it, which he mortgaged to Ferguson & Miller, merchants in this place, (on the same day that he executed and delivered the said bill of sale of said stock of goods to defendant Cox,) for $475, to secure to them a debt of $326, and they were to pay him the difference in money, which they have not done.

10th. That on page 481, in the day book kept by defendant Good, while in business for himself, and as agent for defendant Cox, there is an entry made of “W. S. Good, Agt., commenced business at Marietta, S. C., February 28th, 1880,” which has the appearance of having been originally 1881 and having been changed to 1880, and the same entry is made on the back of said book, the date and month of which appear to have been altered, and also another entry of “W. S. Good commenced business at Marietta, S. C., April 8th, 1876,” which appears to have been originally 1879. The same entries are made in the back of said ledger, and they have not been changed.

11th. That on September 5th, 1879, defendant Good made and delivered to Johnston, Crews & Co. his two promissory notes, one for $283.88 and the other for $88.57; the first became due on November 15th, 1879, and the latter on January 15th, 1880, and on November 14th, 1879, he gave the said Johnston, Crews & Co. another promissory note for $211.22, payable sixty days after date. That no part of said notes were paid with the exception of $40, and suit was commenced on same on March 8th, 1880, and judgment was obtained thereon by default against defendant Good on April 27th, 1880, for $556.63.

12th. That on September 17th, 1878, defendant Good made and delivered to William C. Browning & Co. his promissory note for $165.93, payable four months after date, on which he made sundry payments, but, failing to pay the whole amount due thereon, suit was commenced against him on February 21st, 1880, and judgment was obtained by default on March 15th, 1880, for $39.98.

13th. That defendant Cox has paid the said notes, for which he became surety, to the said Butler, Clapp & Co., out of the proceeds of sales from said stock of goods, with the exception of $110 paid out of his own money, and he also gave two notes to said Butler, Clapp & Co. on February 3d, 1881, for $250 each for goods bought of them by defendant Good, as his agent, which he has paid, and he has never received anything on account thereof from the sale of said stock of goods or from defendant Good except his account for goods gotten by himself, amounting to $193.86, and therefore he lost $416.14 by being involved in said business.

14th. That defendant Cox is a man of unquestionable character and integrity, and did not intend to perpetrate any fraud upon the plaintiffs.

All of which is respectfully submitted November 15th, 1882.

S. J. DOUTHIT, Master.

The Circuit decree was as follows:

This is a joint action by the plaintiffs above named, against the defendants, to set aside as fraudulent the sale of a stock of goods, by the first-named defendant to the latter, and to subject the same, or the value thereof, to the payment of certain executions of the plaintiffs heretofore obtained in this court against the defendant Good. The matter was referred to the master to take testimony and report his conclusions of fact to this court. Pursuant to said order the master has taken the testimony and made his report, to which exceptions have been filed on behalf of the plaintiffs and defendants. In the view which I have taken of the case, it will not be necessary to deal with these exceptions seriatim.

The pivotal point of the whole case is the alleged fraudulent sale of the stock of goods by Good to Cox on February 28th, 1880. It appears from the evidence taken that Good was a merchant at that time, and previously doing business at Marietta; that Cox, his father-in-law, a farmer, without knowledge of mercantile affairs, lived in the neighborhood; that Butler, Broome & Clapp, merchants in the city of New York, were creditors of the said Good, and sent one of their traveling agents to look...