Vickers v. Company

• Decision Date: 10 June 1899
• Docket Number: 11197
• Parties: C. C. VICKERS et al. v. BUCK STOVE AND RANGE COMPANY et al
• Court: Kansas Supreme Court

57 P. 517

60 Kan. 598

C. C. VICKERS et al. v. BUCK STOVE AND RANGE COMPANY et al

No. 11197

Supreme Court of Kansas

June 10, 1899

Decided January, 1899.

Error from Morris district court; O. L. MOORE, judge.

Judgment reversed and cause remanded for new trial.

Allen & Allen, and Charles B. Graves, for plaintiffs in error.

M. B Nicholson, and E. S. Bertram, for defendants in error.

OPINION

JOHNSTON, J.:

The creditors of W. L. Vickers & Co. brought this action to set aside a conveyance of lands made by C. C. Vickers and wife to P. B. Maxson, upon the alleged ground that the conveyance was made to defraud the creditors of W. L. Vickers & Co. This firm was engaged in the hardware and implement business at Wichita Falls, Tex., and was composed of C. C Vickers and his nephew W. L. Vickers. C. C. Vickers resided in Kansas, where he owned a large farm, and also an interest in a bank at Dunlap, of which he was president. He furnished the greater part, if not all, the capital that was invested at Wichita Falls, while W. L. Vickers was the active manager of the business, and contributed but little except experience toward the capital of the firm. The business was started in 1891, and many sales were made upon credit, so that when C C. Vickers went to Wichita Falls in 1894 the assets of the firm consisted of a stock of merchandise worth about $ 7000, and notes, mortgages and accounts amounting to $ 17,700. C. C. Vickers determined to close out the business, and a sale of the goods on hand was made to two of the creditors for $ 7000. There remained debts of the firm to the amount of $ 11,000, and to secure this indebtedness the notes, mortgages and accounts due the firm, amounting to $ 17,700, were assigned and transferred to a trustee for the creditors, who was charged with the duty of collecting the same and applying the proceeds to the payment of such indebtedness. Only a small part of the notes and accounts had been collected by the trustee when the testimony in the case was taken, and hence the creditors are seeking satisfaction from the property of C. C. Vickers.

About the time that C. C. Vickers closed out his business in Texas, a sale of the land in controversy was made to P. B. Maxson, his father-in-law. The price of the land was fixed at $ 8500. It was subject to a mortgage for $ 3000, and Maxson agreed to assume the payment of the mortgage and to pay $ 5500 more. One thousand dollars was to be payable in ten days, and he executed two notes for $ 2250 each, due in six and twelve months. The bargain was made by Mrs. Vickers, and it was subject to the ratification of her husband, who was then in Texas. He ratified the sale and joined in the execution of the conveyance.

The creditors contend that the transfer was not an honest one, but was made to defeat and defraud them; that while the amount of the notes and accounts of the firm exceeded its indebtedness, it was well known that a part of them was not good and that they were not worth to exceed fifty per cent. of their face value; that C. C. Vickers was in Texas about three months, and must have known the financial responsibility of the men who owed the firm. And it is also claimed that Maxson knew, or should have known, of Vickers's circumstances and fraudulent purpose; and, further, that while the negotiations were pending for the sale of the land he went to Texas, where Vickers then was, and had an opportunity to learn that Vickers was insolvent and that the sale was fraudulent.

On the other side, it is contended that Vickers thought his Texas assets were sufficient to pay the Texas liabilities, and that quite a sum would remain; that the sale was only made to meet an obligation to the Dunlap bank, which was pressing, because it was an overdraft on a bank of which he was president; that the violation of law was liable to be exposed by a bank-examiner, and lest financial disgrace should result he decided to sell his land; that Maxson knew of this stress, and agreed to buy the land to relieve it and the anxiety of Mrs. Vickers, his daughter, because of it; that he had no knowledge of any fraudulent purpose of Vickers, nor of any facts that would upon diligent inquiry have disclosed it; that the information he gained in Texas was that the Texas assets were more than sufficient to pay the liabilities of the firm; that Vickers so represented, and that he in good faith believed him. There was some testimony tending to sustain the various contentions of the parties, and the principal questions raised in this review arise upon the instructions given to a jury which was impaneled to try the facts.

Complaint is made of the seventh and eighth instructions, to the effect that actual knowledge by the vendee of the fraudulent intent of the vendor need not be shown in order to avoid the sale but that a knowledge of facts sufficient to excite the suspicions of a prudent man and put him upon inquiry will be sufficient. The principle embodied in these instructions is fairly within the authorities, and has passed beyond the stage of controversy into settled judgment. (Phillips v. Reitz, 16 Kan. 396; Kurtz v. Miller, 26 id. 314; McDonald v. Gaunt, 30 id. 696, 2 P. 871; Gollober v. Martin, Sheriff, 33 id. 252, 6 P. 267; Morse v. Ryland, 58 id. 250, 48 P. 957.) The instruction might have been elaborated as to constructive knowledge of fraud by requiring a knowledge of facts sufficient to excite the suspicions of an ordinarily prudent man. Maxson was only bound to act as a man of ordinary prudence would, and could not be required to act up to the standard of a person who was particularly suspicious and cautious by nature. The word "ordinarily " was not used, but we think the jury would infer from the language used by the...