Bunn, Raiguel & Co. v. Ahl

The opinion of the court was delivered by Lowrib, J. We are of opinion that none of these assignments of error are well founded, except one. Our time would not be well employed for the justification or exposition of any valuable principle, if spent in enlarging upon any of them except the last one. It has caused us some embarrassment, and we may explain the views that we take of it. In answer to points specially put by the plaintiffs’ counsel, the court had instructed the jury that if the contested judgment was knowingly given for more than was due in order to be used as a means of compelling other creditors to compound their claims; and if it was thus given and was used for such purpose; in either case it is void as against creditors. Then comes the eighth point, which we must regard as negatived by the court. It needs some analysis in order to ascertain whether or not it was entitled to an affirmative answer. “ If the jury believe, from the evidence, that Daniel Ahl, Sr., advanced funds to D. Ahl, Jr., & Brother to enable them to commence and prosecute the business of dry goods merchants, and authorized them to assure their creditors that the money so ad [390] vanced should be at the risk of their business, without preference to him at any time as a creditor.” Here we may stop to remark that a mere authority to make representations to creditors, not carried out by representations actually made, is in no sense a fraud upon them. As no actual representations were made or proved, or offered to be, in this point, this part of it is of no value in the question to be decided. That the money was advanced in order to enable D. Ahl & Brother to commence business, is also unimportant. The only matter of importance remaining in this part of the point is the fact of the debt, and retaining this we read on, thus — If the jury believe that D. Ahl, Sr., advanced the money, “ and afterwards procured the said firm to confess a judgment therefor — the judgment here in issue — for the purpose of being used in order to compel a compromise by said firm with its creditors,” then the said judgment is void as against creditors. Let it be noticed that this point does not assert that the judgment was so used. The short way of stating the principle therefore is, that a judgment confessed for an amount honestly due, is voidable by the defendants’ creditors, if it was given and received for the purpose of forcing the creditors into a compromise of their claims, even though it was never used for that purpose. Such then is the proposition that was negatived by the court: was there error in this ? The jury have found that it was not given and received for more than was due, to be used for such a purpose; would it change the case, relative to creditors, if they had found that this judgment, though honest in amount, was intended, but not used, for such a purpose ? Perhaps it was an oversight that they were not, in this point, asked to find that it was so used. Dishonest as such an intention would be, we cannot call it fraudulent; for fraud does not consist in mere intention, but in intention acted out. Fraud consists of conduct that operates prejudicially on the rights of others and is so intended. We have fully expressed our views on this subject in the case of Smith v. Smith, Murphy & Co., 21 State Rep. 370, and we need not repeat them. The judgment of Daniel Ahl, Sr., is found to have been honest in amount; and yet it may have been given and received for a fraudulent purpose. If it was, we have something beyond a mere fraudulent intention, for something is done in pursuance of the intention — the giving and receiving of the judgment. Then the judgment is an act tainted with a fraudulent intent, and the law cannot allow it to be used so as to affect any rights that are in a position to question it. It is not enough to say that the judgment is not used for the fraudulent purpose for which it was given, but for the honest purpose of collecting a debt justly due. There is no valid repentance [391] without entire restitution, when this is possible; and a judgment obtained in order to defraud creditors cannot be purified by merely abandoning the fraudulent purpose and using it for an honest one. All the benefits of the fraudulent arrangement must be foregone. A judgment obtained to defraud creditors must not be used even to obtain an unforbidden preference over them. The thing is voidable by them in whatever way it may be used to their prejudice, because it was made to defraud them. The fraudulent debtor cannot object to it, but they can. Whenever it comes in conflict with their rights, they may charge upon it its illegitimate origin: and we cannot get clear of this by the proof of its honest use; for we cannot say that it would have been given at all, had it not been for its fraudulent purpose. It seems to us that the eighth point of the plaintiff was erroneously answered. Judgment reversed and a new trial awarded.