Florence Sewing Machine Co. v. Zeigler

STONE, J. In Crawford v. Kirksey, 55 Ala. 282, we said, to avoid a sale made upon adequate new consideration— that is, not in payment of a debt — -on tbe alleged ground that it was made with intent to delay, binder, and defraud creditors — tbe creditor attacking tbe sale must show two things : first, that tbe vendor made tbe sale with sucb intent; and, second, that tbe purchaser participated in sucb intent, or knew of its existence, or bad knowledge of some fact calculated to put him on inquiry, and which, if followed up, would have led to tbe discovery that tbe vendor’s intent was fraudulent. We cited authorities in support of this proposition. We have considered tbe pleadings and evidence in this cause with great care, and are not convinced that tbe Chancellor erred in refusing to set aside, as fraudulent, tbe sale of Zeigler to Cherry. Sworn answers were required from-them, and each of them denies, very fully, that Cherry was informed that Zeigler was indebted to the sewing machine company. One fact, apparent in tbe record, is strongly corroborative of this. Cherry was entering on a business which, to be successful, would require a continued supply of merchandise from the complainant. Succeeding to tbe business of Zeigler, be could not have expected to keep up trade with tbe sewing machine company, if be bad known or suspected Zeigler was largely indebted, and in default to them. Tbe testimony of Cherry very fully sustains these denials in tbe answers, and explains why be wished to enter on a business, which would permit him to remain more at home. Dr. Caines justifies him in this. We find nothing in bis testimony, which, per se, causes us to distrust it. The testimony of Anderson is not enough to overcome it. Admissions and conversations are easily misconstrued; and tbe remark proved by him, if made by Cherry, is scarcely potent and decisive enough to fix tbe charge of fraudulent participation on Cherry. Hence, we find no error in the ruling of the chancellor on the main question in the cause. . There is a rule as to real estate, that to constitute a good defense of bona fide purchase without notice, the purchaser must have paid in full before notice of the fraud of the vendor. And if, after purchase, and before making full payment, the purchaser receives such notice, any payment afterwards made by him will be in his own wrong. But he does not thereby forfeit the money he has paid. The effect is, to render him liable to account to the creditor, attacking the conveyance, for any unpaid balance of the purchase-money; and, in some cases perhaps, to compel a surrender of the property, upon being indemnified for prior payments and im [225] provements. — 2Sto. Eq. Ju. §§1502 to 1505, and notes. We do not sanction tbe extreme doctrine that a purchaser, no matter how innocent he may be, acquires no rights against a latent equity until he pays in full and receives a conveyance. We hold that he acquires an equity pro tanto to the extent he pays before notice. — See Sto. Eq. Ju. § 15036, note 2; Yourt v. Martin, 3 Serg. & R. 423; Lewis v. Bradford, 10 Watts, 67; Bellas v. McCarthy, Ib. 13; Juvenal v. Jackson, 2 Harris, 519; Ulrich v. Beck, 1 Harris, 639; Beck v. Ulrich, 4 Harris, 499; Paul v. Fulton, 25 Mo. 156; Boggs v. Varner, 6 W. & S. 469; Farmers’ Loan Co. v. Maltby, 8 Paige. 361; Frost v. Beekman, 1 Johns. Ch. 288; Everts v. Agnes, 4 Wis. 343. We need not inquire whether the same rule applies to the personalty, for under the averments and special prayer in this case, we consider such inquiry unnecessary. The original bill charges that the sale from Zeigler to Cherry was made with intent to delay, hinder, and defraud complainant, and it prayed and obtained the appointment of a receiver, who took charge of the effects. This necessarily broke up and destroyed the adventure in the hands of Cherry. To hold him accountable for the unpaid purchase-money to the creditors of Zeigler, on account of the alleged fraud of the latter, would be to compel him to pay for that which the wrongful act of complainant has prevented him from enjoying. This relief would be incompatible with that specially prayed, and partially obtained; and, on this account, it would be oppressive and unjust to grant such relief under the general prayer. — Reese v. Kirk, 29 Ala. 406; 1 Brick. Dig. 704, §938. Having ascertained that the complainant is not entitled to relief, and that the chancellor rightly ruled against him, we need not and will not inquire into the ruling as to rents. In that question the appellant has no interest. Decree of the chancery court affirmed. In the affirmance of this decree, we do not intend to preclude the chancellor from proceeding to settle the accounts of the receiver appointed in this cause, nor from disposing of the fund thus brought into the custody of that court. MANNING, J., not sitting, having been of counsel.