Singer v. Jacobs

• Decision Date: 01 April 1882
• Parties: SINGER, BAER & CO. and others v. JACOBS and others.
• Court: U.S. District Court — Eastern District of Arkansas

11 F. 559

SINGER, BAER & CO. and others v. JACOBS and others.

United States Circuit Court, E.D. Arkansas.

April, 1882

The plaintiffs sued out an attachment against Jacobs, which was levied on a general stock of merchandise found in the possession of Thompson, who filed his interplea claiming to be the owner of the same. The following are the leading facts disclosed by the evidence:

On the first of August, 1880, the defendant Jacobs purchased at St Louis, largely on credit, a fresh stock of general merchandise, with which he embarked in business as a retail merchant at Hope, in this state. The total amount of the stock when first purchased is not disclosed by the evidence but it does appear that after selling from it in the ordinary course of business until the eighteenth of October, a period of two and a half months, there remained stock to the value of $5,766, invoiced at cash price. This stock, on the eighteenth of October, Jacobs sold to Thompson, a merchant doing business in the same town, for cash, at the rate of 50 cents on the dollar of the cost price. The sale was consummated and the invoice of the goods taken after night and with closed doors. One or more agents of Jacobs' creditors were in the town at the time, pressing him for payment of overdue bills which he had promised to pay that night or the next morning. While the agents of the creditors were resting on this promise, in the expectation of receiving payment the next morning, Jacobs and Thompson, with their clerks, five in number, were engaged in invoicing the goods under lock and key, at a late hour of the night. Before the work of invoicing began, Thompson says: 'I remarked I wanted no foolishness, and wanted to make a payment, and I paid Jacobs right then $1,000 cash, and paid the balance in cash the next day. ' The creditors' agents finding the store closed the next morning, called to see Jacobs at his residence when he feigned sickness, and assigned that as a reason why his store was not open.

The original invoices of the goods to Jacobs, which disclosed the terms upon which they were purchased, lay on the counter the night the goods were invoiced to Thompson, and reference was made to some of them by his clerks to ascertain the cost of the goods. Jacobs' general reputation for honesty and fair dealing was bad, and Thompson, who had known him many years, admits he knew him 'to be tardy in paying debts, and tricky with his customers.'

Previous to purchasing the stock of goods Jacobs had property worth $2,000 or $3,000, which he sold, but he had no other property or means which he could have used in the purchase of the goods, and Thompson knew this. Before Thompson concluded the purchase he employed an auctioneer to sell the goods at auction. Jacobs never paid his creditors any part of the money he received from Thompson, and has not paid any of his debts then existing, which amounted to $2,500 and more.

Thompson testifies that Jacobs told him he was selling because he was indicted for an assault with intent to murder, and wanted money to fee counsel to defend him, and that he found he knew nothing about the dry goods business and wanted to get out of it. The indictment referred to by Jacobs was found a year before he purchased the goods, and this fact was known to Thompson, and he was not tried on it until some months after the sale. He testifies further that before making the purchase he saw his attorney and asked him if he would get into trouble in making the purchase, and was told he would not. And Dr. Baylies, another merchant in the same town, says: 'Thompson told me he had an opportunity of buying the Jacobs stock so that he could make some money on it, and asked me the question whether I thought there would be any impropriety in it, and I told him I thought not. ' He says he 'asked Jacobs if he was involved with his creditors in any way,' and that 'he answered there was no claims against the goods;' that he was 'led to believe and did believe Jacobs had paid for the goods;' and in conclusion he says, 'I don't remember that Jacobs said he was or was not embarrassed. He assured me the goods were not encumbered. ' He did not ask to see Jacobs' books or his invoices, and did not look at the latter, though they lay on the counter before him, and made no inquiry of any one other than has been stated.

U. M. & G. B. Rose, Compton & Battle, and Cohen & Cohen, for plaintiffs.

W. G. Whipple and C. E. Mitchell, for interpleader.

CALDWELL D. J.

It is not contested that on the part of the defendant Jacobs the sale of the goods was a premeditated and scandalous fraud upon his creditors. The general rules of law applicable to the controversy between the interpleader and the creditors of Jacobs are well settled. To avoid the sale it is not required that the purchaser should have had actual knowledge of the fraudulent purpose of the vendor. It is sufficient if he had...