Richards v. A. Vaccaro & Co.

• Decision Date: 28 April 1890
• Citation: 7 So. 506,67 Miss. 516
• Parties: J. B. RICHARDS v. A. VACCARO & CO
• Court: Mississippi Supreme Court

7 So. 506

67 Miss. 516

J. B. RICHARDS v. A. VACCARO & CO

Supreme Court of Mississippi

April 28, 1890

FROM the circuit court of Madison county, HON. J. B. CHRISMAN Judge.

The opinion states the case.

Judgment affirmed.

Smith &amp Powell, for appellant.

It was a part of plaintiff's duty to show that the goods were subject to the attachment, and, to do this, he must show that Ward sold in fraud of his creditors, and that Richards bought with a knowledge of such fraud.

The first instruction told the jury that Richards was presumed to have purchased from Ward with a knowledge of his fraud. This is contrary to all law, and the presumption is that Richards bought in good faith.

Plaintiff should be required to show the liability of the property to attachment. To do this it is necessary to show that the sale was fraudulent and void, and that Richards participated in this fraud.

Having failed to show that Richards participated in the fraud plaintiff must fall. Butler v. Lee, 54 Miss. 477; Dickman et al. v. Williams, 50 Ib. 500; 3 S. & M. 42; 1 Ib. 372; 7 How. 42. See also Hirsh v. Richardson, 65 Miss. 228; Tuteur v. Chase, 66 Ib. 476; Bigelow on Frauds, 123.

Downs & Ward, on the same side.

Section 1774, code 1880, fastens the burden of proof on the plaintiff. This means that plaintiff must show the transaction fraudulent as to the purchaser. The party on whom the burden of proof rests must make out such a case as would entitle him to a verdict if the defendant offered no evidence at all. Richards was not called on to offer any evidence until the plaintiff had in some way fixed the fraud on him or a knowledge of it, or that he was in possession of such facts as would have led to knowledge.

F. B. Pratt and Calhoon & Green, for appellees.

Sales of personalty are caveat emptor, and a purchase for value and without notice is a defense which may relieve from the vendor's fraud. Thompson v. Furr, 57 Miss. 484; Fulton v. Woodman, 54 Ib. 172; Portwood v. Lee, 41 Ib. 109. The burden is on plaintiff at the commencement, but he has met that burden when he shows the sale fraudulent on the part of the vendor. Then, if the claimant is protected by equities from the effect of such fraud, this is an affirmative defense, and he must show it. Carter v. Allen, 21 Gratt. 241; Carr v. Callahan, 3 Litt. 365; Hair.v. Little, 28 Ala. 236; Bailey, Onus Probandi, 303; Williams v. Hill, 19 How. [U.S.] 246; Hoskins v. Warren, 112 Mass. 527.

Argued orally by R. C. Smith, for appellant, and M. Green, for appellees.

OPINION

COOPER, J.

Vaccaro & Co. sued out an attachment against one Ward, which was levied on certain goods which the plaintiffs claimed had been sold by Ward to Richards for the purpose of defrauding his creditors. Plaintiffs sustained their suit against Ward, and the present controversy is between them and Richards, who interposed a claim to the property seized. On the trial of the claimant's issue, Ward's fraudulent purpose in making the sale was abundantly shown. The claimant contended that it devolved on the plaintiffs to establish not only the fraud of Ward, but that he [the claimant] was not a bona fide purchaser for value, but participated in, or had knowledge of, Ward's fraudulent design. The court rejected this view, and instructed the jury that, "if it believed from the evidence that the sale by Ward was fraudulent on his part, then the burden of proof is on Richards to show to your satisfaction that he purchased the goods for value, and without knowledge of Ward's design." The giving of this instruction is the principal error assigned.

There is conflict in the decisions, and much confusion among the text-writers, on the question involved. The effect of the statute against fraudulent conveyances, as held by one line of decisions, is about this: Conveyances made by a grantor in fraud of his creditors are valid, unless it be shown that the purchaser is not a purchaser for value, and in good faith. Another line of authorities states the effect of the statute to be that conveyances fraudulent on the part of the grantor are invalid at the suit of his creditors, unless it be shown that the purchaser is a purchaser for value, and in good faith. The authorities are uniform in declaring that one who attacks a conveyance as fraudulently made must establish the fraud. The burden of proof is upon him, and he is opposed by the presumption of good faith and legality that attaches in favor of the ordinary transactions of business. The conflict of decisions arises a step beyond, when the inquiry is whether the plaintiff, by proof of the fraud of the grantor, has made a prima facie case against the grantee, entitling him to recover, in the absence of any evidence by his adversary. In Massachusetts, New Jersey, Iowa, Wisconsion, Connecticut and Maryland it is held that the plaintiff must not only show fraud on the part of the seller, but participation in or notice of it by the buyer. Bridge v. Eggleston, 14 Mass. 245; Foster v. Hall, 29 Pick. 89; Insurance Co. v. Tooker, 35 N.J.Eq. 408; Tantum v. Green, 21 N.J.Eq. 364; Bank v. Northrup, 22 N.J.Eq. 58; Adams v. Foley, 4 Iowa 44; Fifield v. Gaston, 12 Iowa 218c; Mehlhop v. Pettibone, 54 Wis. 652; 11 N.W. 553; Partelo v. Harris, 26 Conn. 480; Cooke v. Cooke, 43 Md. 522. On the other hand, the courts of Pennsylvania, New York, Alabama, Texas, Arkansas and North Carolina hold that, where the fraud of the grantor is established, a prima facie case is made by the plaintiff, which must be met by the purchaser by evidence that he is a purchaser in good faith, for value. Rogers v. Hall, 4 Watts 359; Clark v. Depew, 25 Pa. 509; Lloyd v. Lynch, 28 Pa. 419; Starin v. Kelly, 88 N.Y. 418; Hamilton v. Blackwell, 60 Ala. 545; Gordon v. Tweedy, 71 Ala. 202; Brown v. Hedge Co., 64 Tex. 396; Miller v. Fraley, 21 Ark. 22; Fullenwider v. Roberts, 4 Dev. & Bat. Law 278; Worthy v. Caddell, 76 N.C. 82.

We concur in the views announced by those courts which hold that proof of fraud on the part of the grantor is sufficient to entitle his creditors to subject the property fraudulently assigned, in the absence of evidence showing the claimant to be a purchaser for value and in good faith. We fail to perceive why, in cases of this character, the party assailing the conveyance shall be required to assume the burden of showing participation in the fraud by the purchaser, and the non-payment of value for the property fraudulently conveyed.

The decisions holding it to be the duty of the creditor to establish not only the fraud of the seller, but that of the purchaser, seem to rest upon an undue extension of the rule that fraud is never to be presumed but must always be proved by the party alleging it to exist. This rule is so well established as to have become one of the maxims of the law but it is not true that, where a transaction has been shown to be fraudulent on the part of one of the actors, it is incumbent upon a party claiming or defending against it to show the fraud of the other actor claiming under it. Good faith and legality are presumed to exist in reference to the ordinary business transactions of life, and the burden is upon him who asserts the contrary; but it is otherwise when the transaction is itself unfair, or is prima facie shown to be illegal. Whart. Ev., §§ 366, 1248; Bigelow, Frauds, 130, 132. Mr. Bigelow, while denying that the defense of purchase for value is new matter in avoidance, concedes that the plaintiff proving the fraud of the seller makes a prima facie case. He says: "A scrutiny, however, of the situation, in such a case, will show that the defense of purchase for value is not new matter in...