Woolridge v. Thiele

• Decision Date: 24 October 1891
• Parties: WOOLRIDGE v. THIELE
• Court: Arkansas Supreme Court

17 S.W. 340

55 Ark. 45

WOOLRIDGE v. THIELE

Supreme Court of Arkansas

October 24, 1891

APPEAL from Clay Circuit Court, Eastern district, J. E. RIDDICK Judge.

Judgment reversed and cause remanded.

L. L Mack for appellant.

I. Appellant is an innocent purchaser for value without notice of any fraud on the part of his vendor. 17 Am. Rep., 208-210; 1 Jones on Mortg., secs. 458-9, 710; 2 L. C. in Eq., Wh. & Tud., p. 85-6; 63 Ala. 450; ib., 336; ib., 561; 63 Ind. 576; 54 Ia. 14; 55 Miss. 348; 1 Perry, Trusts, sec. 239; 12 Barb 605; 42 Ga. 250; A. and E. Enc. Law, vol. 2, p. 444; 49 Ark. 207; Will. Eq., p. 257; 18 P. 926.

2. While it may be that an antecedent debt, standing alone, is not a sufficient consideration, it will be sufficient if there is any other consideration besides, as where notes are given up or additional property given in exchange. Am. and E. Enc. Law, vol. 8, p. 843; 18 P. 658.

3. Knowledge of the mere insolvency of a purchaser is not alone ground to prevent a sub-purchaser from being a bona fide purchaser. 4 So. 658; see 18 P. 926.

Marshall & Coffman for appellee.

1. The definition of a bona fide purchaser is found in 1 Perry on Trusts, 239, and was adopted in 49 Ark. 214. See also Willard's Eq., 257. It seems to be conceded by counsel that the satisfaction of an antecent debt alone, without surrendering any security, is not a valuable consideration (the dictum in 27 Ark. 560 notwithstanding), and such is the weight of authority. 18 P. 926; 36 N.Y. 129.

2. Does the payment of a part in cash, in addition to the extinguishment of the debt, change the rule? Appellants certainly would not be protected except to the amount of the new consideration. 36 Ia. 348; 3 S. & R. (Pa.), 423; 44 Ark. 53-4; 29 Barb. (N. Y.), 507-8; 37 Barb., 458.

4. Appellant had at least constructive notice. 14 Ark. 69.

OPINION

HUGHES, J.

Appellee sued appellant in replevin for a carload of stoves, sold by him to one E. B. Outlaw, then a merchant at Rector, Arkansas, who it was claimed procured the sale of said stoves by fraudulent representations as to his solvency, and with the intent not to pay for the same. Appellant claimed to hold said stoves as agent of George Taylor Commission Company and Adler-Goldman Commission Company, who it was said bought the same, together with other goods worth in all $ 4900, from said Outlaw, without notice of any fraud, in settlement of his debt to them, aggregating $ 4100, the excess of $ 800 being paid by them in cash.

The court gave the following instruction to the jury, to-wit: "Even if it be shown that Outlaw procured the stoves through fraud, if he has sold them to an innocent purchaser, plaintiff cannot recover. But if the parties who now hold the stoves took them with other goods amounting to about the value of forty-nine hundred dollars, in satisfaction of past-due debts from Outlaw to them, and only paid the excess of goods over the debts, amounting to about eight hundred dollars, in money, this alone would not be sufficient to constitute them innocent purchasers, if the other goods received by them were more than sufficient to cover all the money expended by them, and there be nothing going to show that said parties are not in as good a position now as they were before the trade with Outlaw." The appellant excepted, moved for a new trial, which was denied, to which he excepted and appealed.

We think the proof in the case supports the theory that the sale of the stoves by appellee to E. B. Outlaw was induced by the fraudulent representations of the latter, and that Outlaw sold the stoves with his entire stock of goods to the George Taylor Commission Company and the Adler-Goldman Commission Company, for whom the appellant held them at the time of the institution of this suit as their agent; that the consideration for the sale by Outlaw was the satisfaction, at the time of the sale, of a previous indebtedness of his to the purchasers--for whom the appellant held the goods as agent--of $ 4100, and $ 800 additional paid by them for Outlaw to a bank at Cairo, Ill. There is no proof that, at the time of this purchase and payment of the consideration, the purchasers had notice of the fraud of Outlaw in inducing the sale to him by the appellee.

Were the purchasers bona fide purchasers, within the rule in equity, and entitled to have their purchase protected against the equity of the appellee, the original vendor. "A bona fide purchaser has been decided to be one who at the time of his purchase advances a new consideration, surrenders some security, or does some other act which leaves him in a worse position if his purchase should be set aside, and purchases in the honest belief that his vendor had a right to sell, without notice, actual or constructive, of any adverse rights, claims, interests, or equities of others in and to the property sold." Fargason v. Edrington, 49 Ark. 207, 214, 4 S.W. 763; 1 Perry on Trusts, sec. 239.

It has been decided in this State that, upon a sale and delivery of goods induced by fraud, the title to the goods passes to the fraudulent vendee, subject of course to the right of the vendor to rescind and retake the goods from the fraudulent vendee or any purchaser from him with notice of his fraud. This seems to be according to the weight of authority in other States. Hamilton v. Ford, 46 Ark. 245; Henderson v. Gibbs, 39 Kan. 679, 18 P. 926; Paddon v. Taylor, 44 N.Y. 371; Kingsbury v. Smith, 13 N.H. 109; Robinson v. Fairbanks, 81 Ala. 132, 1 So. 552.

There is a decided conflict in the decisions of the...