Reed v. Pelletier

• Decision Date: 31 March 1859
• Citation: 28 Mo. 173
• Parties: REED et al., Defendants in Error, v. PELLETIER et al., Plaintiffs in Error.
• Court: Missouri Supreme Court

28 Mo. 173

REED et al., Defendants in Error,

v.PELLETIER et al., Plaintiffs in Error.

Supreme Court of Missouri.

March Term, 1859.

1. A. conveyed a stock of goods in trust to secure certain notes in favor of B. In the deed it was stipulated that the property conveyed should remain in the possession of A. until the maturity of the notes secured, when, if they were not paid, the trustee might take possession and sell. A. remained in possession and continued to sell in the usual course of business. C., a creditor of A., sued out an attachment against A. on the ground that he had fraudulently conveyed and assigned his property so as to hinder and delay his creditors. Held, that the declarations of B., (he not being a party to the suit and being a competent witness for either party and not shown to have conspired with A.,) made in the absence of A., to the effect that A. had the right to sell the goods embraced in the deed of trust in the ordinary course of business, were inadmissible in evidence.

2. The constructive fraud against creditors, which exists where it is understood between the grantor in a deed of trust conveying a stock of goods and the cestui que trust that the former is to remain in possession and continue to sell in the ordinary course of business, is sufficient to support an attachment under the seventh clause of the first section of the attachment act.

Error to St. Louis Circuit Court.

This was a suit by attachment against Thomas A. Pelletier and John D. Pelletier. The affidavit charged that the defendants “had fraudulently conveyed and assigned their property and effects so as to hinder and delay their creditors. There was a plea in abatement denying the truth of the affidavit. Upon the trial of the issue raised by this plea, the following facts, among others, appeared: Defendants, being indebted to the firm of Hugh Boyle & Co. in the sum of $1,737, executed a deed of trust conveying their stock in trade to a trustee to secure said indebtedness evidenced by notes therein described. This deed contained the following stipulation: “It being understood that the property may remain in the possession of the said parties of the first part until default of payment as aforesaid,” &c. The deed was duly acknowledged and recorded. The notes were not paid and the trustee took possession and advertised the property for sale. Before a sale the levy of the present attachment was made. Evidence was introduced by plaintiffs to show that at the time of the execution of the deed of trust the defendants were embarrassed pecuniarily, and that the stock of goods was worth more than the debt secured by the deed of trust amounted to. A witness called by plaintiffs was permitted to state, against the objections of the defendants, that Boyle had said to him in conversation that he had given the defendants permission to hold possession of the goods and settle with their creditors, and that they had from him a right or permission to continue selling the goods in the store in the usual course of business; and that he (Boyle) supposed the defendants had stock on hand worth some six or seven thousand dollars. Boyle, called as a witness for defendants, denied having made these statements.

The court, at the instance of the plaintiffs, gave the following instructions: “1. If the jury believe from the evidence that the deed of trust of defendants to Boyle & Co. was made with intent on the part of the defendants to hinder or delay the other creditors in the collection of their debts, then they will find for the plaintiffs. 2. If the jury believe from the evidence that there was an agreement between defendants and Boyle & Co., at the time of executing the deed of trust and afterwards, that defendants should continue in the possession of the goods and property therein conveyed, with the privilege to sell and dispose of the same in the usual course of business or trade for their own account and benefit, and that said defendants did remain in possession of the same from the date of the deed until after attachments were levied upon them, and continued from time to time to sell and dispose of portions of such property for their own use, then the jury will find the issues for the plaintiffs. 3. If the jury believe from the evidence that the deed of trust of defendants to Boyle & Co. was made for the purpose of covering up their property therein named and to enable them to obtain settlements from their other creditors on terms of discount from the sums really due, then they will find for plaintiffs.”

The following instructions asked by defendants were refused: “1. The defendants had a lawful right to make the deed of trust given in evidence to secure the debt named therein to Boyle & Co.; and if the jury find from the evidence that said deed was made to secure a bona fide debt due to Boyle & Co. by defendants, then the said deed is not any evidence of fraud on the part of the defendants as against their creditors. 2. The possession of the store and goods of defendants had and held by them after the execution of said deed of trust, and the sale of articles of goods from time to time by the defendants in the ordinary course of business, is no evidence of fraud in the conveyance or assignment of these goods as charged in the affidavit of the plaintiffs, if the jury find from the evidence that said deed was made fairly to secure...