Thornton v. Cook

McCLELLAN, J. — It appears that at the time of the sale by Pickett to Thornton, the former owed debts amounting to $1,200 and the only property he then owned was the stock of goods worth from $350 to $400 which he sold to Thornton; but it does not appear that Pickett owed any debts, except that due to Thornton, when he executed the mortgage to the latter four months previous to said sale on what property he then had further than that he then owned a stock of goods worth, less than $1,000. Eor aught that appears, in other words, it may be that when Thornton’s mortgage was executed, Pickett owed no other debt than that secured thereby, and that, whether otherwise- indebted or not, he was not then insolvent or in failing circumstances, but had abundant means to meet all his liabilities. On this state of the evidence, it can not be said that the mortgage to Thornton was fraudulent and void even though a benefit was thereunder reserved to the mortgagor. — Hayes v. Wescott, 91 Ala. 143, 149 et seq. ■ Moreover, if it be conceded that this mortgage was -executed under such circumstances with reference to Pickett’s pecuniary condition that the reservation of a benefit-to him 'renders it-fraudulent and void, it does not follow, as matter of law, that the subsequent sale of the stock of goods covered by it in absolute payment of the debt it was intended to secure is also void. The fraudulent character- of the mortgage, so long as the bona fides of the debt is not impeached, would be, at most, a circumstance to which the jury might look in determining whether the subsequent sale was fraudulent; but if Pickett justly owed Thornton a debt equal to the value of the stock of goods, and sold the goods to him in absolute payment thereof, reserving no benefit to himself in the transaction, the sale must stand regardless of any covinous intent that may have tainted’ the mortgage he had previously given to secure the debt. An attempt by fraudulent devices to secure the payment of an honest debt does not, we think, destroy the justness of the debt itself or deprive the creditor of any right he would otherwise have had to realize on his claim, but only invalidates whatever is done to that end of a fraudulent chafacter. So - that the fact, if indeed it be conceded to be a fact, that the mortgage from [633] Pickett to Thornton was void by reason of its reservation of a benefit to the former, or for any other reason not affecting the fair character of‘the debt intended to be secured thereby, may be left out of view in passing upon the correctness of the trial court’s action in giving the affirmative charge for the defendants, since it could have been no more than a badge of fraud, a circumstance of suspicion to be submitted to the jury. — Owens v. Hobbie & Teague, 82 Ala. 466, 468. With respect to the sale itself there is such Conflict- in the evidence or such conflicting inferences deducible from the evidence on the inquiry of fraud vel non as that the whole question should have been submitted to the jury. If the testimony of Thornton and Pickett be true, that is if the jury should find that there was an absolute sale of the goods at- a fair valuation in payment of an honest debt, that the satisfaction of this debt was the sole consideration for the sale, that whatever arrangement was made between the parties as to Pickett’s possession and sale of the goods was subsequent to the full completion of the sale and passing of title into Thornton, that the sale was in no degree induced by or made in anticipation of this subsequent arrangement béing entered into, and that Thornton after the sale was- perfected was by reason thereof under no moral or legal obligation to make the arrangement which was made, 'but that, in short; the agreement as to Pickett’s after relations to the property was wholly apart from and disconnected ' with the sale, the fact of such relations would not • at all impugn the sale or invalidate it as a fraud on the creditors of the seller. — Buford, McLester & Co. v. Shannon, 95 Ala. 205; Ullman v. Myrick & Bowman, 93 Ala. 532. On the other hand the circumstances surrounding the transaction were such as that the jury might have inferred, it was open to them so to do, that all that occurred between Thornton and- Pickett with reference to the stock of goods, its sale in satisfaction of' the debt and the arrangement for Pickett’s continued possession, &c., &c., constituted parts of one transaction, which, so considered, confessedly involved such reservation of benefit to Pickett as avoided the sale for fraud. We have so-far left out of view the character -of Pickett’s possession of the property levied on considered without reference to its connection with the sale of the stock by him to Thornton in the first instance since whatever be the nature of the contract by which Pickett’s possession was continued, whether he held for himself or' as the agent of Thornton with right of sale and compensation for his services, the original goods and others supplied by Thornton and mixed [634] with them were subject to attachment by Pickett’s creditors, if the sale to Thornton and the agreement for Pickett’s after possession were parts of one transaction. But in the event the jury should find that these matters were entirely separate and distinct from each other, it would then become an important inquiry whether Pickett was invested with title to the property, or held it as Thornton’s agent, or as upon a conditional sale, the title remaining in Thornton. If the former, the levy was rightful and defendants were entitled to the affirmative charge on this part of the case alone. If either of the latter, the levy was wrongful unless the arrangement was a part of the original sale to Thornton by Pickett, and this being a question for the jury, as we have seen, the affirmative charge should not have been given. The inquiry would then turn upon the construction to be given the written agreement entered into between the parties by the terms of which Thornton was to furnish Pickett with goods to be sold by the latter as the former’s agent, at a reasonable wholesale market value and for which Pickett was to account to him as his agent at said wholesale market value, in whatever amount, he, Pickett, received. It is most clear to us that this was a sale to Pickett; he was not to account to Thornton for the proceeds of the goods so furnished, but only to pay him for them at a price to be ascertained by reference to a certain standard, and which doubtless was ascertained and fixed on delivery, and such payments were to be made as the funds therefor were realized out of the sales by Pickett. Yet the stipulation is that the goods are to be sold, and the price due Thornton accounted for by Pickett as Thornton’s agent; and it is our duty to accord some meaning and force to this stipulation if possible. We think a field for its operation may be found for it by construing the contract to be a conditional sale to Pickett, with a reservation of title by Thornton until a sale by Pickett, and thereupon the latter as the former’s agent with respect to the title was empowered to vest the title in purchasers from him. So long as the goods (were not sold by Pickett his relation to them was that of vendee upon condition, the condition being the payment of the price. The title was held by Thornton to secure the performance of this condition, and that it might be performed, the sale of the property by Pickett was contemplated, and he was Thornton’s agent for the purpose of passing Thornton’s title to his own vendee. Creditors of Pickett had no right to subject the property to the satisfaction of their demands, and their attachments to that end were wrongful even though they were without [635] notice of the conditional character of the sale to Pickett. The case therefore turned upon the inquiry of fraud in the sale by Pickett to Thornton, as above explained. This inquiry was one of fact which should have been submitted to the jury, and upon which it was open to them to reach either of the two possible conclusions. For the error committed by the court in giving the affirmative charge for the defendants, the judgment must be reversed and the cause remanded. Beversed and remanded.