Fargason & Co. v. Hall

HAEALSON, J. There is no dispute between the parties as to the legal principles by which this case is to be decided. They have been so repeatedly declared by this court, as to require but little repetition of them here. There are three inquiries, and only three, to which consideration need be devoted, in a case of this kind, viz., the bonafides of the considertion paid, its sufficiency, and whether or not there was a reservation of benefits to the debtor.—Pollock v. Meyer, 96 Ala. 172; 11 So. Rep. 385; Dawson v. Flash, 97 Ala. 539; 12 So. Rep. 69. There is no controversy as to the bonafid&s of the debts which respondents held against said Hall. It is clearly shown, and is not denied, that he owed the defendants, Throne, Eranklin, Nance & Adams, the sum of $1,304, and to defendants J. S. Eeeves & Co. $1,521.39; aggregating $2,825.39. Nor is it denied, for it is fully established by the proof, that the defendants together paid' to Hall, as a part of the consideration of the trade, the sum of about $853 in cash — an amount of money which Hall .was owing to other creditors for sums borrowed of them, which he felt special concern to • pay. The proof tends to show, and is satisfactory to that end, that the representatives of the defendants — Nance and Neely — who conducted the negotiation, did not desire to purchase the notes and accounts, but simply the stock of goods, but that Hall would not make the sale, unless these were included; and yielding to his terms, they furnished him the amount of money he required to pay this indebtedness for borrowed money, the larger part of which was owing to his father and brother. Hall, who was examined by the complainants, swears to this fact, and also, that he paid every cent of the amount thus paid to him to these creditors; 'and he produced on the-trial [213] their receipts to corroborate this statement. He says the complainants made no demand of him to pay these debts, but that he did require from them the money for the purpose; but Nance and Neely both swear he gave them the names of these creditors, and they paid the sum required with the understanding that it should be paid over to them, which Hall informed them afterwards he had done, and produced the receipts to show. Their version of the transaction is to be credited as the correct one, since it is natural, and what we might expect of them under the circumstances, having been advised by their counsel how to act. Hall had the right to pay these creditors, in preference to others, out of the proceeds of the sale of his property; and the purchasers will not be held to a fraudulent intent, in having paid to him this sum of money, as a part of the purchase price of the goods, if they paid it, and had a reasonable expectation, at the time, that it would be used for the purposes specified, and it was in fact so used.—Chipman & Co. v. Stern, 89 Ala. 207; Levy v. Williams, 79 Ala. 179; Rankin v. Vandiver, 78 Ala. 562; Hodges v. Coleman, 76 Ala. 103. It thus appears that the debts of the respondents, which were satisfied in the sale of the goods, notes and accounts, were bona fide, and that the money paid as the balance of the consideration for the purchase was honestly and fairly paid. As to the value of the goods sold, and the notes and accounts transferred, there is conflict in the evidence. It would extend this opinion at 4too great length, and would be unnecessary, to review in detail the evidence of the witnesses as to these values. Beferring first to the goods: the complainants, to prove their value, examined four witnesses, including the defendant, A. M. Hall, neither of whom, except Hall, showed a knowledge of the stock from an examination of it, or had experience which would entitle them to be considerd as very competent to speak in reference to such matters. But, with such experience and knowledge as they had, they gave it as their opinion that the goods were worth 75 cents on the dollar of their original cost. Hall says they were worth that price. On the cross-examination, he admitted that he had sold the stock for $3,000; that the transaction was fair and honest; that the times were hard, people poor, and money very scarce; that he was about a week negotiating the trade with defendant’s representatives; that he had been in business since 1881, and the stock in store was composed, partly, of accumulations of goods since that time, but there were not a great many old goods; that he [214] had on hand five or six hundred dollars worth of new goods, and had many that had been carried from the winter before, and most of the summer goods had been brought over from the past summer; that there was a difference between him and the representatives of the defendants as to the value of the goods, notes and accounts; that they did not propose to pay exceeding $500 over and above the amount he owed them, but he demanded $800; that finally the sale was consumated, and the goods were valued in the transaction at $3,000, and the notes and accounts at $679. On the other side, Nance and Neely, who made the negotiation with Hall, both depose that they paid more for the goods than they believed they were worth; that they had been selling to him for the past eight or nine years, and had sold him the greater part of the goods he had bought; that they had seen his stock several times a year, and had kept up with it; that the stock was old for the greater part, and was not worth exceeding $2,600, but that they offered him the amount of their debts — $2,825—and $500 for the goods, notes and accounts, but he declined the offer, and required $300 more; and trade was finally concluded, valuing the stock at $3,000, and the notes and accounts at $679. Defendants examined seven other witnesses as to values, three of whom testified to many years experience in mercantile business, and to having examined this stock of goods; two of them giving it as their opinion, that it was not worth more than 50, and one that it was worth 60 per cent, on the cost price. The other four, who had had some experience with second-hand stocks of goóds, testified that 50 per cent, on the cost price was a fair valuation of them. The stock, as inventoried by the receiver, at net cost, amounted to $4,276. If valued at 75 cents on the dollar, as estimated by complainants’ witnesses, it was worth $3,200 ; and if at 50 cents,.as estimated by other witnesses, then $ü,100, making a difference in their estimates of $1,100. In proving the consideration of sale of this character, the law allows room for the ordinary difference of opinion, and will not weigh the estimates of values in too exacting a balance.—Mobile Savings Bank v. McDonnell, 89 Ala. 447. But we haye other evidence to aid us in the approximate value of the goods. The court appointed Amos L. Moody, the register in chancery, as the receiver in this suit, who took possession of the property transferred, and proceeded to sell the goods and collect the claims. The receiver's sales amounted to $3,617.75. He was about ten months in closing out the stock, a part of it at private sale, and some [215] at auction. His expenses, which he swears were curtailed to what was absolutely necessary, -amounted to $908.85, leaving as a balance, on that account, .$2,708.90. But, before the receiver took charge, the defendants had sold $625.70 worth of goods, at a cost of $115.08, and had added $55.00 worth of new goods, which the receiver got, together amounting to $170.08, to be deducted from the gross sales; leaving a balance of $455.62, to be added to the $2,708.90, making $3,164.52, as the approximate value of the goods at the time they were sold to the defendants, being $164.52 more than defendants paid for them. Under the circumstances, we can not regard $3,000 paid for $3,164.52 worth of goods, as so materially less than their value as to make the sale fraudulent, especially when it is remembered, that for the ten months between the sale by the defendants and the closing out of the receivership, the interest on the amount the defendant paid for the goods exceeded this difference of $164.52, and that the interest is still running against them, and none in their favor, on the sum remaining in the hands of the register. But, in addition to this, it is clearly shown that Hall transferred every thing he owned, without the reservation of any exemptions; and if the amount paid in cash was less than the exemptions to which he was entitled, the other creditors can not complain of the transaction, since they are not injured by it.—Brinson v. Edwards, 94 Ala. 448. For convenience, we consider the transaction of the notes and accounts separate from the sale of goods, although they were one and the same. These were estimated, and included, at $679. After an effort, extending over nearly two years, the receiver collected on these claims $519.75, and James Nance collected, before the receiver was- appointed, $284.62; making total collections, $804.37. Deducting 15 per cent., the reasonable expense, as shown, of collecting, and we have remaining $4.72 more than was paid for them. Green Turner, who was employed by the receiver to collect these, claims, or to aid in so doing, who was acquainted with the financial standing of the parties, gives his opinion that the batch was not worth over $650 when sold; and Amos L. Moody, who was also well acquainted with the parties owing the notes and accounts, agrees with said Turner, that not more than $40 or $50 more can be collected; that the parties are poor, and, for the most part, nothing can be made out of them. The evidence is satisfying, without reviewing it, that the defendants paid fair value for these claims. [216] It is not insisted that there was any reservation of benefit to Hall in making the sale. Hall himself swears: “In this transaction, I did not receive any personal benefit, other than the payment of my indebtedness. I did not retain a nickel. .... I honestly owed the amounts I paid. . . These payments were made according to my design at the time I made the demand for the $800.” Speaking of the entire transaction, he says : “The sale of the goods, notes and accounts, was not made to hinder, delay or defraud any of my creditors, neither was it made to hinder, delay or defraud J. T. Eargason & Co. I honestly owed the parties the amounts I have stated; $1,521.39 to J. S. Reeves & Co., and $1,304 to Throne, Eranklin, Nance & Adams.” We find no error in the record, and the decree of the chancellor is affirmed. •