Starr v. Stevenson

• Decision Date: 08 October 1894
• Parties: STARR ET AL. v. STEVENSON ET AL. RUSH ET AL. v. STEVENSON ET AL.
• Court: Iowa Supreme Court

91 Iowa 684

60 N.W. 217

STARR ET AL.

v.STEVENSON ET AL.

RUSH ET AL.

v.STEVENSON ET AL.

Supreme Court of Iowa.

Oct. 8, 1894.

Appeal from district court, Dallas county; A. W. Wilkinson, Judge.

Separate actions by appellees, Starr Bros. and Rush & Sprague, to recover a quantity of flour which they had sold to one L. G. Hetsel, and by him sold to one George Leonard, and by Leonard sold to appellants. They alleged that no title to the flour passed to Hetsel, for the reason that his pretended purchase was in fraud of the right of appellees; that at the time of the purchase he was insolvent, which he well knew, and that he did not intend to pay for the goods, but, on the contrary, intended to cheat and defraud appellees out of their property, and place it beyond their reach; that appellants had knowledge of these facts, and of the fraudulent designs of Hetsel, and assisted and participated in the scheme; and that they paid no consideration for the flour. Appellants' answer was practically a general denial of each and every allegation in the petition, and they further alleged that they purchased the flour from one George Leonard prior to the commencement of this suit. The actions were consolidated, and tried to a jury. There was a verdict and judgment for plaintiffs, and defendants appeal. Reversed.Cardell & Nichols, for appellants.

Shortly & Harpel, for appellees.

DEEMER, J.

For some time prior to the 24th day of August, 1892, one L. G. Hetsel was engaged in the grocery business in the city of Omaha, Neb. In the early part of that year he ordered of Starr Bros., who were engaged in the milling business at Brock, Neb., through a member of the firm, 1,000 sacks of flour, 400 of which were to be shipped immediately, and if these gave satisfaction the remainder were to follow in two weeks. The 400 sacks were sent to Hetsel on August 5th. Instead of taking possession of this shipment at Omaha, for which trade he had purchased the flour, he, on the 10th day of August, reconsigned the same to one George Leonard, at Perry, Iowa. Rush & Sprague were, during the year 1892, also engaged in the milling business, at Leavenworth, Kan., and about the 1st of August they shipped to Hetsel, at Omaha, Neb., upon his order, 600 sacks of flour. This flour was also reconsigned by Hetsel on August 10, 1892, to George Leonard at Perry, Iowa, and Leonard afterwards made sale of the flour to the defendants and appellants, who also reside at Perry, in this state. At and about the time of the sale of the flour, Hetsel was indebted in the sum of about $16,000, and on the 23d day of August, 1892, he failed, and conveyed his grocery stock to one P. C. Rude. Rude, on the 24th day of August, gave a bill of sale thereof to Frank J. Hetsel, a brother of L. G. On the 13th day of August, 1892, George Leonard sold the flour which had been reconsigned to him to the defendants Stevenson & Leonard, the consideration for which, it is claimed, was the sum of $50 cash and two notes for $1,500. These notes have not been paid. Leonard, of the firm of Stevenson & Leonard, was a nephew of George Leonard, to whom the flour was consigned by L. G. Hetsel. George Leonard is a farmer living 12 miles south of Perry, and knew nothing of the shipment of the flour to him by Hetsel until he was notified of it by letter from Hetsel on the 11th day of August. He immediately went to Omaha, where Hetsel was residing, and there it was arranged that he should take the flour in payment and satisfaction of a note of $1,500 which Hetsel had made him, for borrowed money, in March, 1892. Leonard took the flour pursuant to this arrangement, and transferred it to Stevenson & Leonard, as before stated. In order to show the financial ability of Rude, the purchaser of the Omaha store, plaintiffs offered in evidence the assessment roll of the town of Perry for the year 1892. To this defendants objected, as irrelevant and immaterial. There does not appear to have been any ruling on this objection, and, if the book was admitted, over the objection, there was no exception preserved. The assessor who made the book was a witness, and he testified that Rude had but little property in the years 1889 and 1891. This testimony was objected to, but the court admitted it over the objection. The ruling was correct. It is claimed that the transfer of the property by Hetsel to Leonard before it was unloaded from the cars in Omaha was made with intent to defraud. Where such intent is in question, it is competent to show similar fraudulent acts committed at or about the same time upon others. Castle v. Ballard, 23 How. 172;Baldwin v. Short (N. Y.) 26 N. E. 928;Allison v. Matthieu, 3 Johns. 234. The testimony admitted by the court had a tendency to establish that other goods purchased by Hetsel were fraudulently disposed of to Rude.

2. Witness Starr was permitted to testify to his belief as to the purposes for which Hetsel had purchased the flour. This was after he had stated that Hetsel represented to him, when he purchased the goods, that he wanted to retail them from his store in Omaha. Objection was taken to this testimony, and the objection was properly overruled. There are other rulings on the admission and rejection of testimony complained of, which we have examined, and we have to say that we think they were right. None of them are of enough importance to be set out in this opinion, and we will not further refer to them.

3. The court instructed the jury, in the eleventh paragraph of the charge, as follows, to wit: “If you find from the evidence that L. G. Hetsel, at the time he ordered the car load of flour from Starr Bros., or at the time the same arrived in Omaha and was reconsigned for shipment to Perry, Iowa, did not intend to pay for said flour, but intended to defraud the said Starr Bros. out of the price thereof, then the title to said property did not pass to said L. G. Hetsel, and the purchase would be fraudulent as between said L. G. Hetsel and the said Starr Bros.; and said Starr Bros. would be entitled to recover the said property in this action, unless you find that either Geo. Leonard or Stevenson & Leonard are innocent purchasers for value, as in these instructions defined.” The twelfth instruction announces a similar rule as to the purchase from Rush & Sprague. We do not think this instruction can be sustained. It is the preconceived design of the buyer, formed at or before the purchase, not to pay for the thing bought, that constitutes the fraudulent concealment which renders the sale voidable, and not an intent formed after the purchase. 2 Pom. Eq. § 906. If the purchaser forms the intent not to pay for the goods after he has received them and the title has passed, it is a mere intended breach of contract, and not such a fraud as to authorize a rescission of the sale. But if he, at the time of making the contract, intends never to pay for the goods, the whole transaction is fictitious. There is no meeting of the minds, no contract. The buyer obtains possession of the goods under the false pretense of a purchase, with intent not to pay for them. On the other hand, an intent formed after the delivery of the goods, and after the title has passed, not to pay for them, is not a misrepresentation, but a mere intention unaccompanied by any act. Fraud never consists in intention, unless it be accompanied by some act. This intent never to pay for the goods has sometimes been treated as a fraudulent representation, and sometimes as a fraudulent concealment, but in either event it must precede the sale. Burrill v. Stevens, 73...