Penzel Grocer Co. v. Williams

• Decision Date: 22 March 1890
• Citation: 13 S.W. 736,53 Ark. 81
• Parties: PENZEL GROCER CO. v. WILLIAMS
• Court: Arkansas Supreme Court

13 S.W. 736

53 Ark. 81

PENZEL GROCER CO. v. WILLIAMS

Supreme Court of Arkansas

March 22, 1890

APPEAL from Pulaski Chancery Court, D. W. CARROLL, Chancellor.

Decree reversed and cause remanded.

Sanders & Watkins and Cohn & Cohn for appellants.

1. Brodie is shown to have been interested as a partner, and the preference to him was a fraud upon creditors. Moreover Brodie's assets were not turned over to the assignee. 46 Ark. 405.

2. The assignors withheld firm assets. 46 Ark. 405; Acts of 1887, p 194.

3. The assignment was executed for the purpose of evading the assignment laws of the State. Before it was fully consummated and before the assignee took control, it was converted into a receivership, upon a bill that has not a single ground of equitable jurisdiction stated in it, for the purpose of evading the assignment laws. The appointment of a receiver ought not to change the rights of attaching creditors. 60 Md 477; 49 Ark. 117.

This receivership operated as a measure to defeat the assignment law, and for this reason avoids the assignment. 7 Wend. 239; 9 F. 483; 49 Ark. 117, 121.

4. Williams willfully withheld property from the assignment this was an actual fraud, the effect of which was to avoid the deed in toto. 47 Ark. 301, 311; 47 Ark. 367; 37 Ark. 151; Wait, Fraud. Convey., sec. 194.

The like intent affected the assignment in the preference of Brodie. 2 Sandf. Law, 594; 1 Tenn. Chy., 388; Meigs (Tenn.), 328. The contrary can only be true when the intent of the assignor is not the controlling element, as before the act of 1887. 18 Ark. 137; 18 Ark. 172. See Acts 1887, p. 194; 51 Ark. 56.

The statements of Williams were admissible. 3 Wharton (Pa.), 347, 354, 355. In any event to show the fraud of Williams. 46 Ark. 127.

Ratcliffe & Fletcher for appellees.

1. Appellants showed no right to intervene. They failed to comply with sec. 323, Mansf. Dig. The mere suing out writs of attachment gave them no standing. The case in 49 Ark. 117, was where an execution had issued on judgment and no such action as that in sec. 323 is required.

2. The evidence relied on to establish a partnership on the part of Brodie is not sufficient. It is not shown that any of the intervening creditors gave credit to Williams & Co. on the faith of any act of Brodie. Even if Brodie had stated he was a partner, this is overcome by proof that he was not. 50 Wis. 491.

3. There was no fraud on the part of B. R. Williams in withholding assets. The land and note were his individual property. The fraud must have been in the assignment itself, and not in some act occurring before or after the assignment. 88 Pa. St., 167; Burrill on Assignments, sec. 351 et seq.; 68 Wis. 442. Both the note and land did not exceed his exemptions, and there was no fraud in withholding them if Williams so intended at the time of the assignment. He had no other individual property. 31 Ark. 554; 52 Ark. 493; 70 Wis. 276. See Burrill on Assignments, sec. 353 et seq.; 2 Bates on Part., 1117; 53 Ark. 1.

4. The fact that a complaint was filed in the chancery court and receiver appointed on the same day the assignment was made, is no proof of fraud. The relief asked was proper, and no other court could grant it. The practice is commendable, especially in view of the speedy, inexpensive and satisfactory manner the property was administered. Trusts arising under general assignments are the objects of equity jurisdiction. 2 Story, Eq. Jur., sec. 1037. The effect of the assignment was to place the property under the jurisdiction of the chancery court. 1 A. & E. Enc., Law, p. 872; Mansf. Dig., chap. 8.

The evidence of Penzel that Williams told him Brodie was a partner, in Brodie's absence, is clearly inadmissible. 29 Ark. 512.

OPINION

SANDELS, J.

On July 1, 1887, Williams & Martin began a general grocery business at Little Rock, and continued together until about December 20, 1887, when Martin, who had put no money in the firm, withdrew. After that the firm was B. R. Williams & Co. J. R. Williams became a member about March 1, 1888.

On April 19, 1888, B. R. Williams & Co. made a general assignment of all partnership and individual property (except that exempt from levy and sale under execution) to J. K. Brodie, preferring, among others, Parker & Worthen for $ 1,000.00 and J. K. Brodie for $ 3,440.00.

On the same day Parker & Worthen filed a bill in the Pulaski chancery court alleging the execution of said deed; that the property assigned had been "turned over" to the assignee; that plaintiffs were creditors; that there was a large quantity of perishable assets in the stock assigned; that said assignee in administering the trust "would be trammeled by the statute:" and prayed that a receiver be appointed to administer the trust under orders of court. The assignors and assignee also personally appeared, waived issuance of process and consented that the receiver be appointed. Accordingly, Brodie was appointed receiver and gave bond in the sum of twelve thousand dollars. Four days later the receiver filed his inventory of the estate, and the court ordered him to receive bids for five days for the sale of the stock and fixtures. On April 28, 1888, the court accepted the bid of L. W. Mason, it being $ 4,383.63. On May 5th, the receiver filed his settlement with the court. On May 7th, various creditors of B. R. Williams & Co. filed petitions in the chancery court, alleging that they had brought suits at law and caused attachments to be issued, which could not be levied because of the appointment of a receiver; that said assignment was executed with the fraudulent intent to cheat, hinder and delay the creditors: they asked to levy their attachments and have their claims paid out of the fund in court. Intervenors afterwards filed an amendment, stating the grounds of the charge of fraud: 1st, that Brodie was a partner of B. R. Williams & Co., and that the preferred debt to him was his capital in the business; 2d, that assignors willfully withheld assets; 3d, that the purpose of said assignment was to secure control of their business to Brodie for the interest of assignors and for the purpose of cheating, hindering and delaying creditors.

Upon the trial evidence was introduced to show the partnership of Brodie and the withholding of property, viz: a note of Martin for $ 174.95 and an equitable interest in some lands paid for by check of the firm shortly before the assignment. The chancery court, on June 9, 1888, decreed that Brodie was not a partner; that the intervenors be dismissed; and that the parties preferred in the assignment have distribution of the fund in court.

In the argument here appellants take broader ground than in the court below. It is insisted that the allegations of the bill filed by Parker & Worthen, showing the goods "turned over" to the assignee, the circumstances indicating that the assignee never took an inventory or gave bond to justify such possession, together with the simultaneous execution of the deed, filing of the bill, appearance of all the parties, consent to the appointment of a receiver, show that it was the purpose of assignors to thwart the law relating to assignments and to conserve their own interests.

Neither the allegations of the petitions nor proof of matters prior to, or contemporaneous...