The State ex rel. Friedman v. Purcell

• Decision Date: 26 November 1895
• Parties: The State ex rel. Friedman et al., Appellants, v. Purcell et al
• Court: Missouri Supreme Court

33 S.W. 13

131 Mo. 312

The State ex rel. Friedman et al., Appellants, v. Purcell et al

Supreme Court of Missouri, First Division

November 26, 1895

Appeal from Jasper Circuit Court. -- Hon. W. M. Robinson, Judge.

Affirmed.

C. H Montgomery and J. D. Snoddy for appellants.

(1) At the time of the levy of the writ of attachment, the property in controversy was in the exclusive possession of plaintiffs. This being the case, such seizure was prima facie wrongful and no presumptions obtained in favor of the officer that he did his duty in making the levy. State ex rel. v Hope, 88 Mo. 430; State to use v. Fitzpatrick, 64 Mo. 185. (2) The court erred in refusing instruction number 3, asked by, and on behalf of, appellants. It has always been the law in this state that a failing debtor could dispose of his property for an adequate consideration, to get money to pay his debts. In fact this is the general law. Bump on Fraud. Conv. [2 Ed.], ch. 8, pp. 203, 204, 194; Dougherty v. Cooper, 77 Mo. 531; Murray v. Cason, 15 Mo. 379; State to use v. Laurie, 1 Mo.App. 371. A creditor may even buy more property than to pay his own debt when it is understood that the purchase money is to be applied to payment of other debts. Co. v. Rubelman, 15 Mo.App. 280. (3) The court erred in refusing to give declaration of law number 1, asked by, and on behalf of, appellants. A purchaser is not required to investigate the financial standing of the seller. State ex rel. v. Merritt, 70 Mo. 284; Van Raalte v. Harrington, 101 Mo. 608. (4) The court erred in admitting evidence of the inventory made by the sheriff, of the goods in controversy, against the objection and exception of appellants, and in basing special finding number 11 upon such illegal evidence, and in finding from such illegal evidence that the consideration of the sale was inadequate. The plaintiff was not a party to the attachment suit, and, hence, the appraisement was not competent for the purpose of affecting his rights. Lesser v. Boekhoff, 33 Mo.App. 233. (5) The court erred in finding, as a matter of law, that the consideration paid by appellants for the Schwartz stock of goods was inadequate. If no contracts were valid, except such as appeared to be of equal value to each party, very few contracts would be made, and such as were made would be quite likely to be invalid for inequality. 1 Wait's Actions and Defenses, p. 93, sec. 4. The courts will not weigh the value of the goods sold, and the price secured, in very nice scales, but all circumstances considered, there should be a reasonable and fair proportion between them. Kuykendall v. McDonald, 15 Mo. 416. Mere inadequacy of consideration, unless extremely gross, does not per se prove fraud. The disparity as to consideration must be so glaring as to satisfy the court that the conveyance was not made in good faith. Wait on Fraud. Conv. and Creditors' Bills [2 Ed.], ch. 1, sec. 6, p. 8. (6) Fraud is never presumed, but must be proved. It may be inferred from facts and circumstances, the burden resting upon the party asserting it to make it manifest. Hardwicke v. Hamilton, 121 Mo. 465. Fraud can not be inferred from the transfer of property merely because the maker of the deed was in debt. Buckner v. Stine, 48 Mo. 407. The proof must be clear and satisfactory. Bump on Fraud. Conv. [2 Ed.] pp. 585, 586. (7) A creditor, by reason of his absolute dominion over his property, may prefer any debt he sees fit. He may prefer his wife, his attorney, whether the debt be due or not. A corporation may prefer a director, no matter what the motive may be. Bump on Fraud. Conv. [2 Ed.], ch. 7, pp. 182-188.

J. D. Perkins and Thomas & Hackney for respondents.

(1) The trial court committed no error in refusing the declarations of law requested by relators on the trial. Bailey v. Wilson, 29 Mo. 21; Suddarth v. Robertson, 118 Mo. 293; Nichols v. Carter, 49 Mo.App. 401; Griffith v. Construction Co., 46 Mo.App. 539. (2) The court committed no error in its declarations of law numbered 1, 2, and 3, designated in the printed record, on page 86, as defendants' declarations of law. The principles therein declared have become elementary, and have uniformly received the sanction of this court. Frederick v. Allgaier, 88 Mo. 598; State v. Merritt, 70 Mo. 275; Sexton v. Anderson, 95 Mo. 373; Shelly v. Boothe, 73 Mo. 74; Dougherty v. Cooper, 77 Mo. 528; Garesche v. MacDonald, 103 Mo. 1. (3) The court did not, as claimed by counsel for appellants in instruction number 3, announce the law to be that if the transaction was in fact fraudulent on the part of Simon Schwartz, and that sufficient knowledge was obtained by Friedman (one of the relators) to put him upon inquiry, the transaction would be fraudulent, but simply declared that if the transfer was made by Schwartz for the purpose of defrauding his creditors, and that Friedman had sufficient knowledge of such intent to put him on inquiry, then the court might infer that Friedman had knowledge of the transaction. And in this the trial court is fully sustained by the authorities. Rupe v. Alkire, 77 Mo. 642; Van Raalte v. Harrington, 101 Mo. 608. (4) In a case where both the law and the facts are intrusted to the court, the finding of the facts by the trial court will not be reviewed if there is evidence to support it. If from the facts found a judgment necessarily followed as rendered, it is not important to inquire whether any particular instructions ought or ought not to have been given. Suddarth v. Robertson, 118 Mo. 293; Cook v. Farrah, 105 Mo. 508.

Macfarlane J. Robinson, J., not sitting.

OPINION

Macfarlane, J.

This suit is upon the official bond of defendant Purcell, as sheriff, to recover damages for the alleged wrongful seizure and sale of a stock of dry goods claimed by relators, and taken from their possession in Joplin, Missouri.

Defendant by answer justified the seizure on the ground that the goods were levied upon by Purcell as sheriff by virtue of two writs of attachment issued against one Simon Swartz; and that the said Swartz had previously, with intent to hinder, delay, and defraud his creditors, sold and transferred them to relators who at the time had notice of such intent.

The case was tried without a jury. At request of relators the court stated in writing its conclusions of fact. These conclusions are stated at length and in detail. For a sufficient understanding of the case the facts will be briefly stated.

On the fourteenth of December, 1892, Simon Swartz was, and for some years had been, a merchant in Joplin and had on hand a stock of dry goods. He was at the time largely indebted and some of his mercantile creditors were then pressing him for payment. He owed T. W. Cunningham, a banker at Joplin, about $ 2,400, which was secured by mortgage on real estate of his wife valued at $ 9,000. He also owed him about $ 500 which was unsecured. Relators lived in LaCygne, Kansas.

On said day said Swartz sold his stock of goods to relators for $ 3,000, which was paid by draft, of which $ 2,900 was paid to Cunningham on his claims, and $ 100 was paid to his attorney. The goods were at once delivered to relators. The entire transaction was concluded that morning before breakfast.

In about two hours after the transfer two of Swartz's mercantile creditors commenced suits by attachment against him, writs were issued and the goods were levied upon by defendant Purcell, who was then sheriff. Afterward, under an order of court, the goods were sold by the sheriff at auction and brought $ 3,600.

The court found "that said sale on the part of Swartz was made to defeat and defraud a part of his creditors, and that said Friedman knew the purpose of said sale when he made the draft on the National Bank of Kansas City and delivered it to Swartz. The eighth finding was as follows:

"The court finds from all the facts and circumstances that relators had actual notice before the purchase of said stock of a fraudulent intent on the part of Simon Swartz in disposing of the same."

The court also found the value of the goods at the time of the transfer to be $ 3,600, and that the price paid for them by relators was inadequate. The general finding was for defendant and from a judgment thereon plaintiffs appealed.

I. The court found from the evidence that the sale of the goods was made by Swartz with the fraudulent intent of hindering and delaying his creditors and that appellants knew of such intent when they purchased them.

Relators asked the court to declare, as a legal conclusion, that they were not "chargeable with notice of any fraudulent purpose on the part of Swartz, merely because A. Friedman failed to avail himself of an opportunity of making investigations, which, if made, would have revealed some fraudulent purpose if any such purpose existed." This declaration of law the court refused.

While it may not be required of a purchaser of goods, in the usual course of business, to inquire into the motives of the seller, yet he can not be allowed to shut his eyes to facts and circumstances which indicate a fraudulent motive. He is bound to draw correct inferences from facts and circumstances of which he has knowledge, and which are consistent only with a fraudulent intent. The evidence in ...