Selz v. Hocknell

• Decision Date: 08 January 1902
• Citation: 63 Neb. 503,88 N.W. 767
• Parties: SELZ ET AL. v. HOCKNELL ET AL.
• Court: Nebraska Supreme Court

63 Neb. 503

88 N.W. 767

SELZ ET AL.

v.HOCKNELL ET AL.

Supreme Court of Nebraska.

Jan. 8, 1902.

Syllabus by the Court.

1. Where circumstances show clearly that, notwithstanding defendant's assertions of good faith, he was at least guilty of culpable negligence, and was so placing his property as to hinder and delay the collection of his debts, under circumstances showing that by the exercise of any ordinary care he must have known this would be the result, the transaction will not be upheld when the other party participates in the fraud.

2. Evidence examined, and held to show at least enough facts within defendant's knowledge so that good faith towards his creditors demanded that he make so much investigation as would have shown the worthlessness of the consideration he was receiving for his property.

3. Where it appears clearly from the record that defendant is insolvent, and that executions have been returned against him unsatisfied, the fact that no execution has been issued on a judgment will not prevent an intervener from recovering upon it when conveyance is set aside in principal action.

4. Fraudulent grantees, who have disposed of the property conveyed to them, are chargeable as trustees on behalf of the grantor's creditors.

On rehearing. Reversed.

For former opinion, see 86 N. W. 905.S. L. Geisthardt and Mockett & Polk, for appellants.

Ricketts & Wilson and Wilson & Brown, for appellees.

HASTINGS, C.

An opinion on this case was rendered at a former hearing, and appears at page 905, 86 N. W. At that hearing there was no oral argument. There seems to have been a misunderstanding of appellants' position, owing to a remark of appellants' counsel in his brief that he does not ask that any pure finding of fact by the lower court be overturned. The result was that the case seems to have been considered as turning upon a mere application of law. Counsel seems to indicate in his brief that he is not disputing the good faith in point of fact of Parker, the seller of the goods in question, but argues that his action tended to hinder and delay his creditors, and was therefore constructively fraudulent, and that the action of the defendants Simpson and Hocknell was with full knowledge that such would be the effect of their proceeding, and with intention of getting the advantage of it. At the former hearing this was taken as admitting the truth of Parker's declaration that from an examination of the lands offered for his stock he concluded that they were worth from $7 to $10 an acre. Now, however, counsel for appellants in his brief on rehearing has gone too far the other way, and denounces the conduct of defendant Parker in such vigorous terms as would seem scarcely compatible with due respect for the trial court or for this one. It was conceded at the former hearing that the lands were of no value whatever above the incumbrance of $8,500, which it was agreed should be placed upon them. But it was thought that, if Parker acted honestly under the supposition that they were valuable, his creditors could not complain; that the defendants Simpson and Hocknell knew that Parker was indebted and in failing circumstances, knew that these goods were worth at least $14,000 to $16,500 in cash, and would invoice at cost prices $22,000, and traded for them lands which they knew to be entirely valueless beyond the amount of the agreed incumbrance is admitted. The question remains simply as to whether Parker, in making this trade, was acting in such good faith with his creditors that they are bound to accept the result. It appears, in the first place, that Mr. Parker had been having difficulty in meeting his bills, and had been asking extensions for a year or more. For about a year and a half he had been negotiating with Simpson in reference to trading his stock for land. It appears that he had made one previous trip to western Kansas to examine lands, and within two weeks before making this trade had visited Benkelman, in Dundy county, and had examined as many pieces of land in that immediate vicinity as he could do in one half day, and had returned to Benkelman for dinner. It seems that Simpson made no claim to having personal knowledge of the quality of these lands. While at Benkelman, in Parker's presence, Simpson made “a partial arrangement with a native” to examine the 52 quarter sections of land involved, and rate them as good, bad, and indifferent. This “native” was a liveryman as to whose disinterestedness and other qualifications as a land appraiser Parker seems not to have inquired. It is clear now, and by the slightest effort on his part would have been then, that it was not worth his while to ask. It did not matter to either buyer or seller in the least how the 15 quarters which Parker was to get were selected. Parker then went back to Lincoln, and almost immediately made the transfer of his stock. The first proposition had been to deed him clear land on which he should make mortgages to the extent of $8,500, and then use the equities to settle with his creditors. This proposition Parker refused to accept, because he would not render himself liable for deficiency judgments on the mortgages, claiming also that his wife would not sign them. This was after his examination of the land, as to which he does not say that he thought it was worth $7 to $10, but as to which he says “he had reason to think” it was worth that. What that reason was he does not say. He could hardly have believed that the lands farther from Benkelman, and outside of the valley, were more valuable than those near by. By his own testimony all the lands examined were deserted. What single fact he learned that would indicate to him there was any such value in this land he does not state, except that he saw crops out there that looked perhaps better than those around Lincoln. How...