State To Use of Salomon v. Mason
| Citation | 20 S.W. 629,112 Mo. 374 |
| Parties | The State to use of Salomon, Appellant, v. Mason et al |
| Decision Date | 29 November 1892 |
| Court | United States State Supreme Court of Missouri |
Appeal from St. Louis City Circuit Court. -- Hon. D. D. Fisher Judge.
Reversed and remanded.
D. P Dyer and David Goldsmith for appellant.
(1) The court erred in refusing to instruct the jury that, if they believe that the alleged payment of $ 3,500 was not made by Trepp, they were bound to find that Trepp was indebted upon his three notes read in evidence, and to the full amount thereof. Bump on Fraudulent Conveyances [3 Ed.] pp. 574, 594; Gates v. Labeaume, 19 Mo. 26; McConnell v Bank, 27 N.E. 617. (2) There was no evidence that the value of the property in controversy exceeded Trepp's indebtedness on said three notes, if said alleged payment was not in reality made by him, and the court, therefore, erred in refusing to instruct the jury to that effect. Hill v. Corcoran, 15 Col. 270. (3) The court erred in giving the instruction number 12. This is true: First. Because fraud in a sale can never be established by proof that the purchaser had reason to know or believe that the seller intended to defraud his creditors. Van Raalte v. Harrington, 101 Mo. 602; Carroll v. Hayward, 124 Mass. 120. Second. Because, in the case of a preference, actual knowledge by the preferred creditor of a fraudulent intent on the part of the debtor will not invalidate the preference. Holmes v. Braidwood, 82 Mo. 610; Albert v. Besel, 88 Mo. 150. Third. Because gross inadequacy in price is merely a badge of fraud; at the utmost, it only warrants an inference of fraud as a matter of fact, and does not as a matter of law establish fraud. Schatz v. Kirker, 17 Week. Notes of Cases (Pa.) 43; Motley v. Sawyer, 38 Me. 68; Craver v. Miller, 65 Pa. St. 456; McFadden v. Mitchell, 54 Cal. 628; Bickler v. Kendall, 66 Iowa 703; Kempner v. Churchill, 8 Wall. 362, 369; Ames v. Gilmore, 59 Mo. 537; Bump on Fraudulent Conveyances [3 Ed.] pp. 44, 45. Fourth. Because, even when such inadequacy is sufficient to warrant an inference of fraud as a matter of fact, it is a comment upon the evidence, and erroneous for the court to instruct the jury that they may infer it, and, therefore, it is all the more erroneous to require them to find fraud. Bump on Fraudulent Conveyances [3 Ed.] p. 34; Herkelrath v. Stookey, 63 Ill. 486; Leasure v. Colburn, 57 Ind. 374; Kane v. Drake, 27 Ind. 29. Fifth. And, finally, because there was no evidence of such an inadequacy as would warrant an inference of fraud, or constitute a badge of fraud. Fuller v. Brewster, 53 Md. 361; Bump on Fraudulent Conveyance, 45; Prosser v. Henderson, 11 Ala. 484; Hunt v. Hoover, 34 Iowa 81; Day v. Cole, 44 Iowa 452. (4) The trial court erred in excluding the parts of Mr. McIntyre's deposition which it ruled out. Bank v. Kennedy, 17 Wall. (84 U.S.) 25; Greenleaf on Evidence [14 Ed.] secs. 100, 101; Best's Principles of Evidence [Chambers Am. Ed.] p. 466, note; State v. Gabriel, 88 Mo. 631; State v. Walker, 78 Mo. 387; Wharton on Evidence [3 Ed.] secs. 1102, 262; Phillips on Evidence, pp. 169, 170. (5) When the debt preferred is bona fide, and the property transferred in payment is not excessive, there is no room to impute fraud in fact in a preference, unless a secret use in favor of the debtor is established by the evidence. Knowles v. Street, 87 Ala. 360; Richardson v. Lewis, 14 S.W. 1076; Covanhovan v. Hart, 21 Pa. St. 501; Keiler v. Tutt, 31 Mo. 307; Bank v. Filch, 48 Barb. 354; Bump on Fraudulent Conveyances [3 Ed.] 189; State to use v. Mason, 24 Mo.App. 326; Nichols v. Bancroft, 41 N.W. 891; Carter v. Coleman, 84 Ala. 258; Edwards v. Dickson, 2 S.W. 719. And there is no evidence in this case of any such secret use. State to use v. Glaser, 24 Mo.App. 324.
C. H. Krum, John C. Orrick and Frank, Dawson & Garvin for respondent.
(1) The court did not err in refusing to instruct that, if the jury believed that the alleged payment of $ 3,500 was not made by Trepp, they were bound to find that Trepp was indebted on his three notes read in evidence, and to the full amount thereof. The vice of the instruction is that it directs the jury to find as a conclusive presumption what the law declares to be only a disputable presumption. (2) The court did not err in instructing the jury that, if appellant "knew or had reason to know" of the fraud of the vendor, the sale was fraudulent as to the other creditors of the vendor. This is not in conflict with the rule laid down in Van Raalte v. Harrington, 101 Mo. 602. (3) The McIntyre deposition was properly excluded. (4) The case was properly submitted to the jury on the question of fraud; the evidence supports the verdict, and the latter should not be disturbed.
This is an action upon the bond of defendant Mason as sheriff of the city of St. Louis, to recover damages for taking, under writs of attachment issued in April, 1888, against one Isaac Trepp, and selling certain goods claimed by plaintiff.
The answer admits the seizure and conversion of the goods, but charges that they were in fact the property of the debtor, Isaac Trepp, and were transferred to plaintiff fraudulently, and with intent to hinder, delay and defraud his creditors.
Isaac Trepp, a merchant doing business in Centralia, Illinois, being in failing circumstances, on the eighteenth day of April, 1883, sold plaintiff and others his entire stock of goods, which were at once moved to St. Louis, where those received by plaintiff were attached by the creditors of Trepp.
The evidence shows that plaintiff Salomon and Trepp were brothers-in-law, having married sisters, who were the, daughters of one Martin Frank, of New York; that plaintiff was the executor of said Frank, and as such, at the date of the sale of the goods, held three notes against Trepp for $ 3,500, $ 3,000 and $ 2,000 respectively. Plaintiff claims that the goods in controversy were bought and paid for in settlement of these notes. The good faith of this sale constitutes the matter of controversy in this suit.
I. The court was asked by plaintiff to instruct the jury, as a matter of law, that Trepp was indebted to plaintiff, at the date of the sale and transfer of the goods, in the full amount of the said three notes, unless the $ 3,500 note had been paid, and that the burden of proving payment was on defendant.
There was no direct evidence tending to impeach the validity of the three notes; but the evidence did tend to prove payment of the one for $ 3,500. The instruction was asked on the theory that the notes were prima facie valid, and proof of their invalidity should be made by defendant.
The issue in the case was whether the sale was fraudulent, and not whether the notes were valid. The question of the validity of the notes, therefore, was only incidentally involved in the issue. They only represented the consideration for the transfer of the goods, and, as between the maker and the payee, were prima facie valid.
The consideration of the sale was one of the necessary elements of its validity. The only consideration shown or claimed by the parties to the transaction was the surrender and cancellation of these notes. If the notes evidenced valid subsisting debts, then they constituted a sufficient consideration, as between the parties, for the sale of the goods; but when the validity of the sale is challenged by third parties, on the ground of fraud, every part of the transaction, including the validity of the consideration, is subject to investigation. We do not think that notes or other evidences of indebtedness between the parties to alleged fraudulent transactions are, as a matter of law, to be declared valid. Such evidence is too easily manufactured to be allowed conclusively to uphold a transaction, the good faith of which is questioned. In determining such question the jury should be allowed to judge of the whole transaction from all the facts and circumstances in evidence. There was no error in refusing the instruction.
II. At the trial, for the purpose of proving that the $ 3,500 note had been paid prior to the sale, the defendant introduced in evidence the settlement of plaintiff as executor of Frank, one item thereof with which he had charged himself being "cash from Isaac Trepp, $ 3,500." Defendant also read a deposition of plaintiff taken in another suit involving the validity of the same sale. In this deposition the plaintiff was given an opportunity to explain the charge of $ 3,500 contained in the settlement.
In rebuttal plaintiff offered to read a deposition of one McIntyre, the lawyer who prepared the settlement for him. By this witness plaintiff offered to prove that, when the settlement was made, he had told witness that $ 3,000 of the $ 3,500 charge in the settlement was the $ 3,000 note which the wife of plaintiff, as heir of Martin Frank, deceased received as a distributive share in the estate, and $ 500 he himself had paid to the estate on the note. This...
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