Sly v. Bell

• Decision Date: 10 July 1906
• Citation: 108 N.W. 227,131 Iowa 184
• Parties: E. R. SLY, Appellant, v. HENRY BELL
• Court: Iowa Supreme Court

108 N.W. 227

131 Iowa 184

E. R. SLY, Appellant, v. HENRY BELL

Supreme Court of Iowa, Des Moines

July 10, 1906

Appeal from Crawford District Court.--HON. Z. A. CHURCH, Judge.

ACTION in replevin, verdict and judgment for the defendant. The plaintiff appeals.

Affirmed.

Shaw Sims & Kuehnle, for appellant.

F. C Gilcrest, for appellee.

OPINION

LADD J.

The defendant, as sheriff of Crawford county, levied an execution May 23, 1903, on eight head of cattle, a wagon, and two sets of harness, as the property of M. F. Sly, who, with Ella H. Sly, his wife, had confessed judgment in favor of W. and J. G. Hinn for $ 2,376 March 13th previous. The property was sold and proceeds applied on the judgment. Before doing so, however, defendant exacted an indemnifying bond, thereby waiving notice of plaintiff's claim of ownership by virtue of a bill of sale, covering this and other property, executed by M. F. Sly to his brother, the plaintiff, February 25, 1903, and in this action the latter prayed judgment for the value of the property taken and sold. The defense interposed was that the purpose of the bill of sale was to hinder, delay, or defraud the creditors of the judgment debtor. The evidence showed that one-half of the indebtedness fell due March 1, 1903, but that prior thereto, and on February 21st, M. F. Sly and his wife conveyed the farm on which they resided to plaintiff, and four days later M. F. Sly alone executed to him a bill of sale covering all his personal property except household furniture; that the agreed consideration for the land was an assumption of a mortgage thereon of $ 3,600 and the application of $ 1,200 on a note executed by M. F. Sly to plaintiff for $ 960 dated March 27, 1885, payable in one year, and that for the personal property was $ 1,000, of which $ 275 was paid in cash and the remainder applied in a satisfaction of the note.

Appellant complains of several instructions, but, in view of our conclusion that the evidence of fraud was conclusive, these need not be considered. The judgment defendant candidly admitted that his purpose in executing the bill of sale was to hinder and delay, if not to defeat, the collection of the indebtedness owing W. and J. G. Hinn. This was made known to the plaintiff, and he fully understood the object sought to be attained. If, notwithstanding this, he had taken the property at a fair price in satisfaction of his claim against his brother without paying in cash more than was reasonably necessary to effect the collection of the indebtedness owing him, and therein had acted in good faith, the transaction must have been upheld. Thompson v. Zuckmayer (Iowa) (not officially reported) 94 N.W. 477; Stroff v. Swafford Bros., 81 Iowa 695; Rosenheim v. Flanders, 114 Iowa 291, 86 N.W. 293.

But while a vigilant creditor may procure payment of his claim against a failing or insolvent debtor by a purchase of his property, he must not go beyond the permissible purpose of securing his own demand. The whole purpose of the creditor must be the payment of the debt. He will not be allowed to go beyond this and confer a benefit on the debtor. This is the boundary of the reward and protection the law gives to the vigilant creditor. In effecting this purpose he must not unnecessarily hinder or delay other creditors, or impair their rights, by placing it in the power of the debtor to screen a part of the proceeds; the creditor having knowledge thereof or of facts sufficient to create reasonable belief that such is his intention. When, therefore, a creditor purchases property from his debtor, a part of the consideration being the payment of an antecedent debt and a part money paid, the rules applicable are the same as to purchasers on a new consideration; the payment of a just debt being a circumstance to be considered as bearing on the bona fides of the transaction. If, however, the payment of money in part has been reasonably necessary in order to effect the collection of the debt, this will not invalidate the transaction. The rule is thus stated in Bump on Fraudulent Conveyances 194: "Although the purchase exceeds the amount of the indebtedness, still, if the excess is reasonably necessary for attaining the lawful purpose of satisfying the actual debt, the purchase to the whole extent may be attributed to the same motive of self-interest, and therefore the mere fact of the excess does not invalidate the transaction, unless there are other circumstances tending to show a fraudulent intent on the part of the purchaser." This necessity is not created by the unyielding demand of the debtor for cash, but must arise from the nature, condition, or situation of the property. Thus, in Levy &...