Leinkauff v. Frenkle & Co.

STONE, C. J. The sale of S. A. Myer & Co. to Frenkle was certainly gotten up and consummated in very great haste, and without those preliminary formalities which usually attend so grave transactions. To purchase, at a large gross sum, a stock of merchandise, entire, then being sold at retail, and with it all the unpaid dues, including notes and accounts, of the amount or availability of which the purchaser could have no personal knowledge; and this in a few brief hours, and solely on the representation of the seller as to quantity and value, certainly betrays a blind confidence, or recklessness, rarely met with in commercial circles. Add to this the pretended ignorance of Frenkle, the purchaser, that Myer, the seller, was insolvent, or in failing circumstances. Yiewed in the most charitable light, there are many suspicious circumstances attending this transaction. — Delaware v. Ensign, 21 Barb. 85; Griswold v. Skeleton, 4 Comst. 580. Still, although Myer & Co. may have been insolvent, and that fact fully known to Frenkle, if [140] the latter was a bona fide creditor of the former, the law authorized him to use extraordinary haste in collecting his demand, even to the extent of purchasing everything Myer owned; thus leaving nothing for the other creditors.- The limitations on this right are, that in purchasing as a means of collecting his own demand, he shall pay a reasonable, fair price for the goods or property received in payment, and that he shall, by the contract, secure to the vendor no benefit, which the law would not secure to him in the absence of the contract. Re must not go beyond the permissible purpose of securing his own demand.— Crawford v. Kirksey, 55 Ala. 282; Lehman, Durr & Co. v. Kelly, 68 Ala. 192; Lipscomb v. McClelland, 72 Ala. 151; Meyer v. Bromberg, 74 Ala. 524; Hodges v. Coleman, 76 Ala. 103; Levy v. Williams, 79 Ala. 171. The so-called firm of S. A. Myer & Co. consisted alone of Mrs. S. A. Myer. Tiie testimony of Freukle (and it is not contradicted) shows that Mrs. Myer — S. A. Myer & Co. — was ipdebted to him, Freukle, balance of account, in the sum of fifty-seven hundred dollars. The merchandise and bills receivable were estimated and purchased by Frenlde at the sum of six thousand two hundred dollars. Of this sum five thousand and two hundred dollars were credited on the indebtedness to Freukle. The remaining sum — nine hundred or one thousand dollars — was paid by Frenlde to Myer, either in cash, or in notes afterwards paid. The bill of sale shows the sale of merchandise and bills receivable was one entire and single transaction, for a gross sum. There is nothing in the pleadings or testimony which shows, or tends to show, that Myer, or Mrs. Myer, had any right or claim to any part .of the property sold, which exempted it from liability for their debts. The facts and circumstances in evidence force us to the conclusion that Freukle, when he made the purchase, knew S. A. Myer & Co. were unable to meet tlieir liabilities, and, in'fact, were insolvent. Now, if Myer, when the trade was being negotiated, demanded the payment of nine hundred or one thousand dollars as a condition of making the sale, this was an additional notice to Frenlde, which should have put him to careful inquiry. And if this money payment was not required byMyer as a condition of the sale, why did Frenlde pay him so much money, and leave a balance of over live hundred dollars of his own claim unsatisfied? Re went beyond the permissible purpose of securing payment of his own demand, and enabled Myer to defraud his other creditors. The case falls within the principle settled in Levy v. Williams, supra. The decree of the chancellor is reversed, and a decree here rendered, granting to complainants relief, [141] It is therefore ordered and decreed that the bill of sale and conveyance made by Solomon Myer and Sarah A. Myer to Lonis Frenkle & Co. — bearing date January 10th, 1881, — Exhibit A. to the bill, — be set aside as fraudulent, and held for nought. And a reference to the register is ordered, requiring him to state an account, showing the several amounts due the several complainants, with interest to the coming in of the report. Also, the value of the merchandise and bills receivable, transferred by Solomon and Sarah A. Myer to Lonis Frenkle & Co., with like interest. In taking the account, he will consult the admissions in the pleadings, the testimony on file, and any other legal testimony that may be offered. Ho will report his findings to the Chancery Court. All other questions are reserved for the chancellor’s ruling. Be versed and remanded. STONE, C. J. — It is urged before us, as a ground for rehearing, that Mrs. S. A. Myer was the sole member of S. A. Myer & Co.; that she has been all the while a married woman, and, being such, she was incapable of making a binding contract for tlie payment of money. — Dreyfus v. Wolffe, 65 Ala. 496; Cook v. Meyer, 73 Ala. 580. From this premise, it is contended, that the complainants in this suit, showing themselves to be creditors of S. A. Myer & Co., can only claim to be creditors of Mrs. Myer, and she not being bound by any promise she may make, complainants have failed to show themselves creditors by any lawful demand which can give them a standing in court. ' The bill is filed against S. A. Myer & Co., composed of Solomon Myer and Sarah A. Myer, his wife. It proceeds against them as partners, and seeks to condemn only the merchandise and effects, which had been of the firm effects of S. A. Myer & Co., and which it avers had been fraudulently disposed of.' Sworn answers to the bill were waived, and the answers were put in without oath. The answers deny that Solomon Myer was a member of the firm, and set up that S. A. Myer, the wife, was trading alone, employing the name S. A. Myer & Co. The bill of sale, or conveyance, by which the merchandise and effects were conveyed to Louis Frenkle, is made an exhibit to the bill, and is a part of the record. That conveyance is in the following language : “ This agreement of purchase and sale, made this 10th day of January, 1881, by .and between Sarah A. Myer and Solomon Myer, of the firm of [142] Sarah A. Myer <& Co. of the county of Tuscaloosa in said State, and Louis Frenkle, composing [the firm] of Louis Frenkle & Co. of the city of Mobile, witnesseth,” c%c. This is tbe only evidence found in the record bearing on the question of the constituent membership of the mercantile house of S. A. Myer & Co. Neither Solomon Myer nor S. A. Myer was examined as a witness in this cause. This evidence, unrebutted and unexplained, is sufficient prima facie proof that Solomon Myer, and S. A. Myer, his wife, were partners, doing business in the name of S. A. Myer & Co. ' In a proceeding against a firm or partnership, to subject partnership effects to the payment of a partnership liability, it is no defense that one of the partners was a married woman at the time the liability was incurred. The firm, and the firm effects are liable, notwithstanding some of the partners were not sui juris.— Yarbrough v. Bush, 69 Ala. 170. The application for a rehearing must be overruled, and the decree heretofore rendered adhered to. Footnotes [1] [Note ry Reporter. — In response to an application íov a re-hearing, filed by counsel for appellee, the following opinion was delivered:]