Stix v. Chaytor

• Decision Date: 14 November 1891
• Citation: 17 S.W. 707,55 Ark. 116
• Parties: STIX v. CHAYTOR
• Court: Arkansas Supreme Court

17 S.W. 707

55 Ark. 116

STIX v. CHAYTOR

Supreme Court of Arkansas

November 14, 1891

APPEAL from Little River Circuit Court in chancery, RUFUS D. HEARN Judge.

In 1888, Stix, Krause & Co. brought suit against Chaytor & Dunn formerly partners, and certain others, to set aside conveyances alleged to be fraudulent. The complaint alleged that in 1886 plaintiffs recovered judgment against Chaytor & Dunn, upon which execution was issued in 1888 and returned no property found; that defendant Chaytor, or Chaytor & Dunn while insolvent, had made three several conveyances without consideration and with intent to defraud.

It was charged that Chaytor, with assets of the firm, purchased a lot in the town of Richmond and fraudulently took deed to his wife. The evidence showed that in 1881 he purchased the lot with his own funds, and took deed to his wife; but it was not shown that either Chaytor or Dunn, individually or jointly owed any debts in that year, or that there was any fraudulent design on Chaytor's part. In the same year Chaytor and wife mortgaged the lot to secure a valid debt of Chaytor & Dunn. The debt and mortgage by assignment became the property of William Snodgrass, one of the defendants, who filed a cross-bill asking a foreclosure of his mortgage.

It was alleged that a sale by Chaytor of a stock of merchandise was fraudulent. The facts appear to be as follows: In 1882 Chaytor purchased the interest of his partner Dunn in a stock of goods owned by them. Shortly afterwards he sold the stock to William Snodgrass, an uncle, who at the time of the sale and since has resided in Texas. The complaint alleged that the sale was made to Snodgrass with design to defraud the firm's creditors; that it was made without consideration and at a time when Chaytor & Dunn were largely indebted. The answer denied the fraudulent purpose, but did not deny that Chaytor & Dunn were insolvent. The evidence does not disclose what consideration was paid for the goods by Snodgrass. After the sale the goods were left in the possession of Chaytor, who continued the business. A. O. Lewis testified: "I am a clerk for William Snodgrass. I have been clerking for him for about four years. I made my contract with Mr. Chaytor. Mr. Snodgrass comes here two or three times a year. When he comes he goes to see Mr. Chaytor and talks to him of the business. I do not know whether he examines the books or not, but he looks around at the stock. I mean that he goes over the house and examines the goods. Mr. Snodgrass has never had me take an inventory, but Mr. Chaytor had me take an inventory of the stock once a year. * * * When anything is taken out of the store it is charged to Mrs. Chaytor--such as family supplies and most of the dry goods are charged to Mrs. Chaytor. There are some things charged to Mr. Chaytor on the day books. * * * It is my understanding that the business belongs to Snodgrass; and whenever they get in a tight, they go to Mr. Snodgrass. The goods are always shipped in Snodgrass' name."

It was charged that the title to certain lands purchased by Chaytor from Feazel in 1885 was fraudulently taken to Chaytor's wife. In 1887, Chaytor sold the land to defendants, Mims & Moores. Notes were taken payable to Chaytor's wife and deed executed to the vendees, reserving a vendor's lien upon its face. The vendees purchased with notice of all the facts. A few days afterwards the notes were transferred to Wolf & Brother as collateral security for a valid debt due by Chaytor. Wolf & Brother are not parties to this suit.

The court upon the hearing dismissed the complaint, and decreed that the mortgage of Snodgrass be foreclosed. Plaintiffs have appealed.

Decree reversed and cause remanded.

F. W. & W. A. Compton for appellants.

1. The testimony shows fraud clearly. Chaytor was insolvent, and his gift to his wife and the pretended sale to his uncle were void. Bump on Fraud. Con. (2d ed.), pp. 276, 277.

2. So, the purchase by Chaytor from Feazel, after the judgment in favor of appellants, and after the execution had been returned nulla bona, paying for it with his own means and causing the deed to be made to his wife, leaving in him no property to satisfy said judgment, was a fraud and void. 31 Ark. 546.

3. The retention of possession of the goods by Chaytor after the pretended sale is evidence of a secret trust and a fraud on creditors. 50 Ark. 289.

4. Plaintiff's judgment was a lien on the lands, not being his homestead. 33 Ark. 762. Mims & Moores had notice of the judgment.

5. The finding of the chancellor is against the preponderance of the evidence and should be reversed. 41 Ark. 292; 34 id., 212.

Scott & Jones for appellees.

1. So far as the house and lot is concerned, there is not proof to sustain the charge, and the burden was on appellants. 42 Ark. 173; 196 U.S. 264; 59 Mo. 158. There is no proof that Chaytor or Chaytor & Dunn were insolvent, or that they owed anyone, at the time the house and lot were bought.

3. The judgment was not a lien on the Feazel lands. The conveyance from Feazel to Mrs. Chaytor was prior to the date of appellant's judgment, and she conveyed to Mims & Moores before this suit was brought. It is true the land might have been subjected to their debt by proper proceedings. 43 Vt. 48. The mere notice to Mims & Moores that they intended to bring suit amounted to nothing. 2 Wall. 237; 12 Cent. L. J., 135; Freeman on Judg. (3d ed.), 350. Citing the following to show that a judgment lien does not attach to premises transferred to defraud creditors: 6 Paige, Ch., 465; 3 Watts, 231; 67 Pa. 435; 35 N. J. Law, 133.

3. This case differs from the ordinary case of one who voluntarily conveys his property to hinder creditors in this, that here the title never vested in Chaytor. He purchased from Feazel and caused him to execute the deed to his (Chaytor's) wife. See 15 N.Y. 475; 9 Mich. 368; 53 Me. 45; 99 Mass. 478; 3 Metc., 28; 58 Me. 230; 5 Ala. 710; 7 Yerg., 155; 25 Vt. 564; 9 Mich. 484; Freeman on Executions, 136.

4. The sale of the lands to Mims & Moores and the transfer of the notes was simply a preference to Wolf & Brother, which he had a right to make. A fraudulent intent must be proven. 34 N.W. 366; 10 S.W. 458; 4 id., 253; 8 id., 564; 14 Mo. 416; 73 Mo. 74; 8 Am. Rep., 522.

5. The sale to Snodgrass was in good faith for a valuable consideration, and the testimony fails to show any fraud. Chaytor was simply put in charge as manager. 50 Ark. 280; Pom. Eq. Jur., vol. 3, sec. 1415.

OPINION

MANSFIELD, J.

1. There is no error in the decree appealed from, so far as it relates to the town lot. The evidence fails to show that the defendant R. S. Chaytor or the firm of Chaytor & Dunn were indebted to any one at the time that property was conveyed to Mrs. Chaytor. And the mortgage upon it was executed several years prior to the date of the plaintiffs' judgment, and was given to secure the payment of an undisputed and subsisting debt. The right of Snodgrass to a foreclosure was therefore clear.

2. But on the facts appearing in the record the plaintiffs were not without a claim to relief as to the other property mentioned in the complaint. The answers of Chaytor and Snodgrass deny that any fraudulent purpose was entertained in the sale to the latter of the stock of merchandise. But there is no denial of the allegation made in the complaint that Chaytor was then largely indebted to the plaintiffs and to other persons. And the proof shows that he remained in the actual possession of the goods and continued his personal management and supervision of the business. A presumption of fraud was thus raised which it devolved upon Snodgrass to overcome by proving that he paid a valuable consideration for the transfer of the goods. Driggs Bank v. Norwood, 50 Ark. 42, 6 S.W. 323; Valley Distilling Co. v. Atkins, 50 Ark. 289; Norton v. McNutt, ante, p. 59.

He offered no testimony whatever conducing to show such payment. He did not testify in the cause himself, and Chaytor, whose deposition was taken, made no statement from which an inference can be drawn that the sale rested upon any valuable consideration. Both of them aver in their pleadings that "a valuable and adequate consideration" existed. But they are silent as to what it consisted of. And the prima facie case made by the plaintiffs against the good faith of the transaction is opposed by nothing, except the fact that the business was conducted in the name of Snodgrass, and the statement of an employee of Chaytor's in its management that it was his understanding that the merchandise belonged to Snodgrass; that "all the family supplies and most of the dry goods taken from the store were charged to Mrs. Chaytor; and that when the business was embarrassed, Snodgrass was always appealed to for assistance. Little weight is to be given to these facts in view of the relationship existing between the parties and the other circumstances of the case.

We think the charge of fraud in the sale to Snodgrass is ...