Truitt v. Caldwell

• Decision Date: 01 January 1859
• Citation: 3 Minn. 257
• Parties: TRUITT BROS. & CO. vs. JAMES Y. CALDWELL.
• Court: Minnesota Supreme Court

3 Minn. 257

(3 Minn. R. p. 364.)

TRUITT BROS. & CO.vs.

JAMES Y. CALDWELL.

Supreme Court of Minnesota.

Error to district court, Ramsey County.

Points and authorities for plaintiff in error: —

1. The plaintiffs are entitled to judgment upon the whole record before the court, for the following reasons, to-wit: First, because the facts, and all the facts, stated in the reply being admitted, and it being stated therein that the transaction mentioned in the answer was made in good faith, and without fraud, the defendants cannot rely upon any fraud in fact, but on the contrary, have admitted that there was none. Second, it is also admitted by the demurrer that the sale of the goods from Markley to the plaintiffs was for an ample consideration actually paid; that the property was immediately delivered to the plaintiffs, and to their actual possession; and that the transaction was in perfect good faith between the parties. Third, a debtor may convey his property, or any part thereof, to any one of his creditors, for the purpose of paying and satisfying an actually existing debt or demand, and this even when the debt is in some measure contingent. Stevens v. Bell, 6 Mass. 338; Wilkes v. Ferris, 5 Johns. 335; Cowles v. Ricketts, 1 Iowa, 582; Leitch v. Hollister, 4 N. Y. 211; Ins. Co. v. Chandler, 16 Mass. 274; Hubbard v. Taylor, 5 Mich. 155; Burrell on Assignments, 102.

2. The fact that provision was made in the instrument executed by the plaintiffs to Markley, that if, on the happening of a certain contingency, more money should be realized from the property conveyed than was sufficient to discharge the debt of the plaintiffs, the excess should be paid to the grantor or his order, does not make the transaction fraudulent as to creditors, but, on the contrary, is just such a disposition as the law would have made of the excess if said instrument had not been executed, and is no evidence of fraud whatever. See the cases cited before; Leitch v. Hollister, 4 N. Y. 211; Wilkes v. Ferris, 5 Johns. 335.

3. The principles of law applicable to general assignments for the benefit of creditors do not apply to this case, for the reason that general assignments are voluntary, and without consideration, and for certain purposes designated in the trust deed of assignment; while the sale under consideration is direct, and for a valuable, full, and adequate consideration. See cases before cited; Cowles v. Ricketts, 1 Iowa, 582.

4. The sale from Markley to the plaintiffs, and the whole transaction, is good and valid in law as to all persons, unless it be averred and proved that the conveyance was made for the main purpose of a secret trust, and with a fraudulent intent to hinder, delay, and defraud, creditors, which fraudulent intent must be brought home to the assignee, and is a question of fact for the jury. Harrison v. Trustees, 12 Mass, 456; Stevens v. Hinckley, 43 Maine, 440; Stewart v. English, 6 Ind. 176; Felton v. White, 4 Jones (N. C.) 301; Rev. Stat. 269, ch. 64, § 4; United States v. Hooe, 3 Cranch, 73.

5. But the instrument executed by the plaintiffs to Markley shows clearly on the face of it, that instead of being made to defraud, it was made to protect the creditors of Markley; and fraud should not and cannot be presumed from the provisions of an instrument which admits of a contrary construction. Bank v. Talcott, 22 Barb. 550; Stewart v. English, 6 Ind. 176.

6. A court cannot infer that a conveyance, transfer, or assignment, of property was made for the benefit of the grantor, where it is admitted that a valuable consideration was paid for the same by the grantee. The question in such a case becomes one of intent, and this is made a question for the jury by statute. Rev. Stat. 269, ch. 64, § 4 (N. S. 459); 6 Hill, 433; 1 Hill, 436, 473; and authorities above cited.

Points and authorities for defendant in error: — 1. The bill of sale and the trust deed must be considered together in determining the character and effect of the agreement and transaction between the parties. 7 Pick. 71; Burrill on Assignments, 89.

2. It was not a conditional sale, nor a pledge, nor mortgage, for there is no condition or right of defeasance, and the plaintiffs have an immediate and absolute right of sale and disposition of the property, and besides, the relation of debtor and creditor between the parties seems to have been extinguished. It does not differ in principle or legal effect from an ordinary assignment for the benefit of creditors.

3. It is, in fact, the creation of a trust in direct terms.

4. If the parties go beyond what is necessary to pay or secure the debt, or create the trust, and enter into stipulations for the benefit and protection of the debtor or assignor, the court will look narrowly into such stipulations, and if their legal effect is necessarily to hinder, delay, or defraud, creditors, the law presumes the parties to have so intended, and such presumption cannot be rebutted by evidence of an actual mental different intention, but the whole conveyance is at once pronounced void as against creditors.

5. By this deed of trust it appears that Markley did not divest himself of all interest in the proceeds of the property; the plaintiffs were to account to him for all moneys realized, and after realizing a certain amount, hold the balance, or overplus, subject to the order of Markley, the legal effect of which is necessarily to hinder, delay, and defraud, creditors. Grover v. Wakeman, 11 Wend. 203; 4 Paige, 41; Boardman v. Halliday, 10 Paige, 223; Hart v. McFarland, 13 Penn. St. 182; Goodrich v. Downs, 6 Hill, 438; Doremus v. Lewis, 8 Barb. 124; Barney v. Griffin, 2 Comst. 365; 7 Paige, 58; 17 Vt. 390; 13 Penn. St. 306.

6. The conveyance is void as to creditors, because the deed of trust not only authorizes, but directs, plaintiffs "to dispose of the property in the ordinary course of business," that is, by retail and upon credit.

Sanborn, French & Lund, for plaintiffs in error.

Smith & Gilman, for defendants in error.

ATWATER, J.

This was an action brought in the district court of Ramsey County, by the plaintiffs in error, to recover the value of certain personal property alleged to have been wrongfully and unlawfully taken by the defendants. The answer alleges, that in April, 1859, William P. Wilstack & Co. recovered a judgment against one Isaac Markley, surviving partner of Simon Kern, late partners as Markley & Kern, for the sum of $2,596.06, upon which execution was duly issued; that the defendant Caldwell was sheriff of said Ramsey County, and Brackett (one of the defendants) was deputy sheriff; that by virtue of the said execution, the said property had been taken by the defendants as the property of the said Markley, and which was the same taking alleged in the complaint. The answer further alleged, that on the 28th day of March, 1859, the said Isaac Markley, as surviving partner as aforesaid, and in his individual capacity, was the owner and in possession of a large stock of goods, wares, and merchandise (including the property described in the complaint), amounting to the sum of $14,500; that the said Markley, being indebted to the plaintiffs and to many others, and being insolvent and unable to pay his creditors in full, did, on the said 28th day of March, 1859, execute an instrument in writing, whereby he sold, assigned, and transferred, unto the plaintiffs, all of said goods, wares, and merchandise, &c., and which embraced all the property of the said Markley, held or owned by him, either as surviving partner or individually, not by law exempt from execution (except certain real estate of small value conveyed by deed or mortgage by the said Markley at the same time to other parties), and which included the property taken by the defendants. The bill of sale is set forth in the answer, and is an absolute sale and transfer of the property therein described, for the expressed consideration of $13,000. The instrument was acknowledged and filed in the register's office, March 28, 1859. The answer further alleges that at the same time, and as a part of the same transaction and agreement, the plaintiffs executed and delivered to the said Markley a written agreement, of which the following is a copy, to-wit: "Know all men by these presents, that whereas we, Charles B. Truitt, Robert W. D. Truitt, Samuel L. Creutzborg, and John F. Bennet, partners as Truitt Brothers & Co., of Philadelphia, State of Pennsylvania, parties of the first part, have, on this 28th day of March, A. D. 1859, purchased of Isaac Markley, party of the second part, all the stock of merchandise, notes, bills, and book accounts, belonging to him either individually or as surviving partner of the late firm of Markley & Kern, for the agreed sum and price of twelve thousand seven hundred and seventy-nine dollars and ninety-eight cents, which the parties of the first part have receipted and paid to him; and whereas, there is included in said sale and transfer of said property, some eight or ten thousand dollars of notes and book accounts, which, at the present time, both parties to this agreement and to said sale consider as nearly valueless, and the said sale or transfer being made on that basis, but which, if times should improve, may be of considerable value. Now, therefore, in consideration of the premises, and to the end that no advantage may be realized or taken of said Isaac Markley, or of his creditors, we, the parties of the first part, do promise and agree, that if, after disposing of all the goods and merchandise transferred to us in the ordinary course of business, as shall seem to us best, and collecting all that we are able to collect from the notes and accounts transferred to us, it shall be found that we, the parties of the first part, have realized over and above all expenses, time, services, and the said amount of $12,779.98, and the interest thereon, any sum or amount whatever, that the same overplus shall be...