Reynolds v. Johnson

• Decision Date: 25 April 1891
• Citation: 16 S.W. 124
• Parties: REYNOLDS <I>et al.</I> v. JOHNSON.
• Court: Arkansas Supreme Court

16 S.W. 124

REYNOLDS et al. v. JOHNSON.

Supreme Court of Arkansas.

April 25, 1891.

Appeal from circuit court, Washington county; O. W. WATKINS, Special Judge.

Winchester & Bryant, for appellants. T. M. Gunter, for appellee.

HUGHES, C. J.

This is an appeal from a judgment in favor of appellee in a suit upon a bond of indemnity, executed by appellants to a constable, who, at the instance of appellants, levied an execution upon a stock of goods as the property of the firm of Johnson Bros., which was composed of T. B. and J. F. Johnson. The goods were at the time of the levy in the possession of the appellee, and were claimed and held by him under a mortgage executed by said firm to him. They were sold to satisfy the execution in favor of appellants, and the appellee recovered a judgment for $200 damages. The mortgage was for two hundred, while the real amount of appellee's demand was only one hundred and eighty, dollars. It is contended that this was evidence of fraud. Unexplained, it would be; but it was shown that the real amount of the indebtedness of Johnson Bros. to appellee was not known at the time, and that the amount was fixed in the mortgage at $200 to cover what was due. If the amount was overstated by mistake, this was not evidence of fraud. Jones, Chat. Mortg. 339; Kalk v. Fielding, 7 N. W. Rep. 300 The mortgage provided that: "Now, the said party of the second part [appellee] is to take possession and control of said goods, and convert the same into cash, either at wholesale or retail, as soon as possible, consistent with the most profitable disposition that can be, under the circumstances, made in the premises." It is contended that the effect of this clause was to put the property out of the reach of creditors for an indefinite time, and that, as against them, it was fraudulent. Such a provision is not fraudulent per se, but only evidence of fraud to be left to a jury. Marks v. Hill, 15 Grat. 400; Williams v. Lord, 75 Va. 390; Cunningham v. Freeborn, 11 Wend. 241: Woodward v. Marshall, 22 Pick. 468; 2 Bigelow, Frauds, p. 299, note 4, and cases. The evidence tended to show that the debts which the mortgage was made to secure were in part debts of the firm of Johnson Bros., and in part the individual debts of members of the firm. It is contended that the firm could not appropriate the partnership property to the payment of the individual debts of members of the firm in preference to partnership debts. Bump on Fraudulent Conveyances (page 389) does, indeed, lay down the rule broadly, that "an appropriation of firm property to pay the individual debts of one of the partners is, in effect, a gift from the firm to the partner; and the attempt to assign partnership property to pay the private debts of one of the partners, before the firm debts are paid, when the firm is...