Pierce v. O'brien

• Court: Supreme Judicial Court of Massachusetts
• Writing for the Court: LATHROP, J.
• Citation: Pierce v. O'brien, 189 Mass. 58, 75 N.E. 61 (Mass. 1905)
• Decision Date: 08 September 1905
• Parties: PIERCE v. O'BRIEN.

189 Mass. 58

75 N.E. 61

PIERCE v. O'BRIEN.

Supreme Judicial Court of Massachusetts, Suffolk.

September 8, 1905

COUNSEL

Chas. W. Bartlett, Elbridge R. Anderson, and Arthur T. Smith, for plaintiff.

Elder & Whitman, F. L. Hungerford, and H. Ware Barnum, for defendant.

OPINION

LATHROP, J.

This is an action of tort against the former sheriff of Suffolk county for a conversion of the goods of the plaintiff by reason of an attachment by one of the defendant's deputies of a stock of office furniture on October 18, 1893 on a writ in favor of the Corbin Cabinet Lock Company, a Connecticut corporation, against the Indianapolis Cabinet Company. The defendant died during the action, and the action was defended by the executrix of his will. The case was sent to an auditor, who found for the plaintiff. It was afterwards tried by a justice of the superior court with a jury, and a verdict was returned for the plaintiff; and the case is before us on the defendant's exceptions to the refusal of the judge to give 34 requests for rulings, and to the instructions given, so far as they were in conflict with the requests. Many of the requests were not insisted upon at the argument, and we treat them as waived. Other requests were given in substance though not in form. We proceed to consider the case so far as argued.

The facts in the case may be briefly outlined as follows: The Indianapolis Cabinet Company was a corporation doing business at Indianapolis, Ind., in the manufacture and sale of office and other furniture. Its capital stock was $150,000. It had six branches or subcompanies in different parts of the country. One of these companies, called the Indiana Cabinet Company, was situated in Boston. It was a corporation with a capital stock of $10,000, of which $75 had been paid in. All its stockholders and officers were either officers or employés of the Indianapolis Cabinet Company. It seems to have been treated at the trial as merely a branch of the Indianapolis Cabinet Company, and we shall so consider it.

The principal issue in the case was whether a sale of the stock of goods in the Boston store by the Indianapolis Cabinet Company to the plaintiff on August 1, 1893, was fraudulent and void as to the creditors of the sellers, the Corbin Cabinet Lock Company being one of such creditors.

The first request which was refused was that upon all the evidence the plaintiff was not entitled to recover. There was much evidence in the case to show that the sale was fraudulent and void; and that it was made to hinder, delay and defraud the creditors of the seller; and that the plaintiff participated in the scheme of fraud. But there was also evidence that the plaintiff was innocent of the fraud. The question was for the jury, and the plaintiff had put in the auditor's report, which was prima facie evidence in his favor.

The defendant's counsel, without referring to specific requests for instructions, contends in his brief as follows: 'The defendant in several requests for rulings maintained that in this case the plaintiff could not recover if he knew, or as a reasonable man ought to have known, that the Indianapolis Cabinet Company intended to defraud its creditors.' The judge ruled that actual knowledge by the plaintiff must be shown. The defendant then goes on to admit that there are Massachusetts cases in which it is said that, where an owner transfers property with the intention of defrauding his creditors, the grantee nevertheless is protected if he gave a valuable consideration therefor, and did not actually know or participate in the fraud. The requests must be overruled. Whatever may be the rule in other states, it is well settled in this commonwealth that there is a distinction between belief and reasonable cause to believe, and knowledge and reasonable cause to have such knowledge. To hold a purchaser liable for the fraud of the seller it must be shown that at the time of the purchase he had knowledge of the fraud, if he was a purchaser for a valuable consideration. Kittredge v. Sumner, 11 Pick. 50; Foster v. Hall, 12 Pick. 89, 22 Am. Dec. 400; Marden v. Babcock, 2 Metc. 99; Johnson v. Johnson, 3 Metc. 63; Green v. Tanner, 8 Metc. 411, 419; Banfield v. Whipple, 14 Allen, 13; Snow v. Paine, 114 Mass. 520; Carroll v. Hayward, 124 Mass. 120; Bristol Savings Bank v. Keavy, 128 Mass. 298; Morse v. Aldrich, 130 Mass. 578; Mansfield v. Dyer, 131 Mass. 200; Hill v. Ahern, 135 Mass. 158; Carr v. Briggs, 156 Mass. 78, 30 N.E. 470.

Next it is contended that there was no valuable consideration paid by the plaintiff. It appears from the auditor's report that the plaintiff signed and gave 34 promissory notes, which aggregated the value of the goods. He also undertook the payment of $3,370.15 of accounts due by the grantors, under the bill of sale, and...