Smith v. Jones

• Decision Date: 28 November 1896
• Citation: 37 S.W. 1052,63 Ark. 232
• Parties: SMITH v. JONES
• Court: Arkansas Supreme Court

37 S.W. 1052

63 Ark. 232

SMITH v. JONES

Supreme Court of Arkansas

November 28, 1896

Appeal from Craighead Circuit Court, Jonesboro District JAMES E RIDDICK, Judge.

STATEMENT BY THE COURT

This case was affirmed orally some time ago, the affirmance was set aside, and it now comes before us again on a motion for rehearing.

Jones & McPherson Bros. was a firm composed of H. V. Jones, who resided in St. Louis, Mo., and kept the firm's office there, and J. J. McPherson and W. G. McPherson, who manage the firm's business at Gates, Tennessee, and in and near Earle in Cross county, Arkansas, and were brothers. The co-partnership was engaged in the saw mill business, mainly in Arkansas, so far as the record shows. There was another firm, styled McPherson Bros., composed of J. J. McPherson and R. T. McPherson, and doing a milling business at Gates Tennessee, and had their office there in the same room as did Jones & McPherson Brothers. All the McPhersons named in the record were brothers, and J. J. McPherson was brother-in-law to T. F. Lee, hereinafter referred to.

On the 28th of June, 1893, Smith, Graham & Jones, a firm of merchants at Wynne, Ark., brought suit in attachment against Jones and McPherson Bros., and on 8th of July, 1893, attached their saw-mill, about 200,000 feet of sawed lumber, and all the saw-logs about the mill in Cross county, the grounds of attachment being "that the defendants, Jones & McPherson Bros., are about to remove a material part of their property out of the state, with the effect of hindering and delaying their (defendants') creditors in the collection of their debts."

On the 11th of July, 1893, the Cross County Bank also brought its suit in attachment against defendants, and attached, on the 16th of August, 1893, the said mill, sixty-five stacks and parts of stacks of poplar lumber, and 218 poplar logs; and the grounds of attachment were "that said defendants have sold, conveyed, or otherwise disposed of their property or suffered or permitted it to be sold, with the fraudulent intent to cheat, hinder and defraud their creditors, or to hinder or delay them in the collection of their debts" "that said defendants are not residents of the state of Arkansas."

No defense was made by any of the defendants, nor was there a countervailing affidavit in either of the suits.

The saw-logs were partly sawed into lumber after the levy of the attachment by order of the court, and all the lumber was sold by order of the court in vacation.

On the first day of November, 1893, Lee & Co., by T. F. Lee, one of that firm, filed their interplea for the property attached (which was substantially the same in both suits and in the interplea), claiming to be the owner thereof by purchase of the same from the defendants. It is in testimony that J. J McPherson, one of the defendants, and acting for them, sold the mill to T. F. Lee on the 27th of February, 1893, for $ 1,300, and on the 21st of June, 1893, 150,000 feet of the lumber to T. F. Lee and 100,000 feet, which was all on the yard, to R. T. McPherson, and the logs, also, to them, and they two, on that day, formed a partnership to continue the milling and lumber business at the same place. These sales and this organization of partnership were effected at Gates in the State of Tennessee, when all the parties to the cause were there. The consideration paid for the mill and lumber was the satisfaction of pre-existing debts owing to Lee and R. T. McPherson by Jones & McPherson Bros. It is in testimony that Lee, at the time of his purchase of the mill, wrote from Tennessee to the foreman in charge of the mill near Earle, in Cross county, Arkansas, to the effect that he had an interest in the mill, and requested him to keep the exact number of days that the mill was run from that time on for him. This message seems to have been based upon what appears in evidence to the effect that the defendants were to retain the mill a time after the sale for the purpose of sawing up all the lofts they had cut, and they were to pay rent at the rate of four dollars each day the mill was actually operated, and to make repairs to the amount of twenty-five dollars. It appears in evidence, also, that R. T. McPherson went from Gates to Earle to look after and take possession of the mill and lumber early in July, 1893, and was advised by J. J. McPherson, whom he found at Wynne, Arkansas, to go and mark the lumber, which he did on the 5th of July, 1893, in the name of "Lee & Company" the name of the new-formed firm. It also appears that all of the McPhersons had always resided at Gates, Tennessee.

Affirmed.

J. C. Hawthorne and N.W. Norton for appellants.

No sale is complete while the vendors retain an interest in the property. There must be delivery, constructive or actual. 54 Ark. 308; 47 id. 210; 31 id. 136. A retention of possession is prima facie evidence of fraud, and the proof does not overcome the presumption. 50 Ark. 289. A non-resident firm's property in this state, especially when insolvent, should be held to pay creditors of this state. 36 Cent. Law Journal, 312; 128 Ill. 222; 108 id. 385; 29 N.E. 209; 35 Ill.App. 155; Story, Conf. Laws (5 Ed.), sec. 388; ib. sec. 414.

E. F. Brown and N. F. Lamb for appellees.

Actual delivery is not necessary in any case as against creditors, not even of articles present at the time and place of sale. 7 Ark. 269; 18 id. 123; 31 id. 131; 35 id. 304; 44 id. 301; 50 id. 289; 54 id. 308; 5 Caldwell (Tenn.), 476. See also 44 Mo. 238; 54 Pa. 514.

OPINION

BUNN, C. J., (after stating the facts.)

This cause was considered by this court, and the judgment was affirmed orally. The affirmance was subsequently set aside for the purpose of considering a motion for a new hearing, the term being about to expire. The motion for rehearing assigns two grounds upon which the affirmance aforesaid should be set aside and the judgment reversed. The first is because the transaction involving the sale from Jones & McPherson Bros., the defendants herein, to T. F. Lee and R. T. McPherson, the interpleaders, was in fact fraudulent as to the plaintiffs, Smith, Graham & Jones, and the other creditors of the defendants. The second proposition is that there is in fact no evidence of the completion of the sale, and especially because there was no delivery in law.

First then, as to the fraudulent character of the sale. There is evidence to the effect that the defendants were honestly owing Lee and R. T. McPherson debts equal to, and even in excess of, the prices they respectively paid for the portion of property they purchased of defendants; and the price paid in each instance seems to have been reasonable, and the consideration seems to have been by agreement paid by these debts. These things being true, unless there is some other circumstance going to show fraud (and there does not appear to be such), we are not at liberty to set aside the finding and judgment of the lower court, as to the bona fides of the sale.

It must be kept in mind that plaintiffs cannot be held as innocent purchasers for value and without notice.

A question, however, that affects or may affect the character of the sale arises upon the facts stated in connection with the sale of the mill in February, 1893, to Lee. In that connection it is contended by appellants that, in making that particular sale, defendants in fact reserved to themselves some interest in the mill property. If that be true, the sale was fraudulent as to creditors, as contended. Interveners Lee and R. T. McPherson (the app...