White v. Beall & Fletcher Grocery Company

• Decision Date: 07 May 1898
• Citation: 45 S.W. 1060,65 Ark. 278
• Parties: WHITE v. BEALL & FLETCHER GROCERY COMPANY
• Court: Arkansas Supreme Court

45 S.W. 1060

65 Ark. 278

WHITE v. BEALL & FLETCHER GROCERY COMPANY

Supreme Court of Arkansas

May 7, 1898

Appeal from Conway Circuit Court, JEREMIAH G. WALLACE, Judge.

Judgment reversed and cause remanded for new trial.

Carroll Armstrong, J. M. Moore and W. B. Smith, for appellants.

Plaintiff knew or had the means of knowledge of the facts that authorized a rescission of the contract of sale, at the time sought to affirm it. Hence it is bound by its election, and cannot disaffirm the sale and maintain replevin. 155 U.S. 38; 111 Mass. 272; 31 Mich. 312; 2 Smith, Lead. Cas. 1372, and notes; 5 Met. 49; 125 Ind. 381; 149 Mass. 141; 113 N.Y. 450; 45 Ark. 141; 52 Ark. 467; 31 Mich. 311; 115 N.Y. 387; 23 Wis 500. Fraud in a particular transaction under investigation cannot be proven by evidence of other acts of fraud. The rule is the same as that which applies to the proof of negligence for which see: 58 Ark. 454; 39 Ark. 278; 54 Ark. 621.

Ratcliffe & Fletcher, for appellee.

The affidavit for attachment does not point to any knowledge, by appellee, of the fraudulent character of the contract of purchase. 104 N.Y. 106. Election, to be binding, must be made with full knowledge of material facts. 13 Cal. 133-142; 50 Cal. 332; 22 O. St. 398; Kerr, Fr. & Mist. 452; Bish. Cont 680; Bigelow, Fraud, 434-438; 37 N.E. 760; 27 A. 619; 33 Hun, 169; 22 O. St. 388; 3 Pick. 495; 45 Ark. 141; Big. Fraud, 30 et seq., 2 Story, Eq. Jur. § 1097; 2 Gr. Ch. 509; 22 S.W. 813, 817; 28 S.W. 870, 873; 5 Met. 51; 2 Story, Eq. Jur. § 1098; 7 Enc. Pr. & Prac. 366; 50 Ark. 322; 53 Mich. 444; 51 Conn. 455; 42 Ga. 521; 30 Ia. 465; 31 Kan. 248; Kerr, Fr. & Mist. 453. Facts specifically found by a court, sitting as a jury, and not excepted to, are conclusive. 25 Ark. 562; 33 Ark. 97; 34 Ark. 524. Appellee is not estopped to set up the fraud to avoid the sale, as against attaching creditors. 47 Ark. 247. Estoppels are not favored 15 Ark. 319; 4 Mass. 181; 1 Greenl. Ev. 22. The evidence complained of all tended to show fraud in the purchase of the goods, and was properly admitted. 109 Mass. 457; 18 N.Y. 589; 58 Vt. 315; 49 Vt. 355; 1 Greenl. Ev. § 53; 59 Vt. 247; 23 How. (U. S.) 172; 24 Vt. 525; 9 Gray, 97; 7 Wall. 132; 54 Ark. 554; 64 Ark. 12.

OPINION

BATTLE, J.

On the 31st of October, 1894, Overstreet & Son purchased from Beal & Fletcher Grocer Company goods and merchandise, on credit, at the aggregate sum and price of $ 420.17, which, added to the sum they were already owing to the Grocer Company, made their indebtedness to it amount to about $ 1,000. On the 6th of November, in the same year, they failed in business. On the 8th of the latter month the Grocer Company sued Overstreet & Son for the amount of their indebtedness, including the $ 420.17, and caused an order of attachment to be issued against them, upon the ground that they had sold, conveyed and otherwise disposed of their property, and suffered and permitted it to be sold, with the fraudulent intent to cheat, hinder and delay their creditors, and were about to sell and convey their property with such intent. Afterwards, about three or four days, the Grocer Company brought an action against B. G. White, sheriff, to recover the possession of the goods and merchandise sold on the 31st of October, 1894, they having been seized by the sheriff under orders of attachment sued out by creditors of Overstreet & Son, and being then held by him by virtue of such seizure.

Did Overstreet & Son fraudulently create the debt contracted by the purchase of the goods on the 31st of October, 1894, and, if so, did Beal & Fletcher Grocer Company elect to enforce the collection of the debt by process of law, with a knowledge of the facts necessary to know in order to enable it to make an intelligent choice of remedies, or did it so elect after such knowledge could have been acquired by it by the exercise of reasonable diligence after it was put upon inquiry or notice as to such facts? These were the issues tried in this action.

The evidence adduced at the trial tended to prove the following facts: Overstreet & Son were merchants, and did a mercantile business at Plummerville, in this state, for many years. During this time they contracted many debts, amounting to a considerable sum. They became insolvent, their liabilities largely exceeding their assets. While in this condition, on the 3d of August, 1894, they represented to the manager of Bradstreet's Mercantile agency, at Little Rock, Arkansas, that their assets amounted to $ 46,000, and their liabilities to $ 12,500; and on the 4th of October, 1894, represented to R. G. Dun Mercantile Agency, at Little Rock, that their assets amounted to $ 37,100, and their liabilities to $ 6,600. These reports were evidently made for the purpose of obtaining credit from the merchants patronizing the agencies. Beal & Fletcher Grocer Company were subscribers of the R. G. Dunn Mercantile Agency. When it sold goods to Overstreet & Son on the 31st of October, 1894, it regarded them as solvent. It based this opinion upon the report to the R. G. Dun Mercantile Agency and the information received from its agents. At the time they purchased the goods, on the 31st of October, Overstreet and Son represented to the traveling salesman of the Grocer Company that they were in "good shape, and thought the worst time of the business had blown over, and everything was all right," and thereby induced the salesman to believe they were solvent and to sell them the goods. On the 6th of November following, they sold what was represented to be their entire stock of goods to one of their creditors, to pay their indebtedness to him. A part of their goods, including a portion of those purchased from the Grocer Company on the 31st of October, was found, by the sheriff, concealed in the house of a colored man, about a mile from Plummerville, and was seized under the order of attachment sued out by their creditors.

The order of attachment sued out by the Grocer Company on the 8th of November was based on the affidavit of J. T. Beal, its president, in which he swore that Overstreet & Son had sold and conveyed and otherwise disposed of their property, and suffered and permitted it to be sold with the fraudulent intent to cheat, hinder and delay their creditors, and were about to sell, convey, and dispose of their property with such intent. He (Beal) testified in the trial of this action that he knew as much, at the time he made this affidavit, about the disposition of property by Overstreet & Son, with the intent to cheat their creditors, as he did afterwards, except he had not discovered what disposition had been made of the goods his company sold on the 31st of October; that, after making the affidavit, he saw goods on a wagon, and recognized them as the goods sold by his company, and learned that they had been concealed; and that thereupon he went to Little Rock, in order to employ an attorney, and sent Mr. Cryer to identify the goods. Cryer testified that he identified the goods in controversy as a part of those sold on the 31st of October, "about two days after the failure."

The plaintiff in this action, the Grocery Company, was allowed to, and did, introduce evidence, over the objection of the defendant, the book containing the assessment of personal property, in order to show the assessments of Overstreet & Son, and of each of them, and proved that other parties had sold them goods about the time they failed, and afterwards replevied the same.

The court, sitting as a jury in the trial, found that Overstreet & Son purchased the goods in controversy from plaintiff, with the fraudulent intent not to pay for the same; that plaintiff, at the time it brought the attachment suit against "Overstreet & Son, had no knowledge that said Overstreet & Son had purchased said goods with the fraudulent intent not to pay for the same; and that said plaintiff is not estopped by said attachment suit from reclaiming the goods in controversy," and rendered judgment accordingly. The defendant filed a motion for a new trial, which was overruled, and he appealed.

Among the grounds set up in the motion for a new trial, the defendant alleged that the finding of facts by the court was not sustained by any evidence. Beal, the president of the Grocer Company, testified that he knew all the facts as to the fraudulent disposition of property by Overstreet & Son at the time attachment proceedings were instituted by his company that he afterwards knew, except that he had not ascertained where the goods it had sold then were. No other evidence was adduced to show that the debt contracted by the purchase of the goods on the 31st of October was fraudulently created, except that which showed a fraudulent sale of property by Overstreet & Son, and was necessary to sustain the attachment of the Grocer Company, and this was known to Beal at the time he made the affidavit upon which the attachment was based. That being true, the finding of the court that the Grocer Company, at the time it sued out the order of attachment, had no knowledge that Overstreet & Son purchased the goods in controversy with the fraudulent intent not to pay for them is unsupported by evidence;; and the findings of facts by the court are not sufficient to sustain the judgment.

If with a knowledge of all the facts necessary to enable it to elect intelligently between the remedy allowed to enforce the payment of the debt contracted by the purchase of the goods on the 31st of October, 1894, and that provided for the recovery of the goods, appellee instituted the action to collect the debt, it thereby ratified the sale, and could not thereafter institute and maintain an action to recover the goods. Before it could, however act judiciously or intelligently in the selection...