Kahn v. Peter

McCLELLAN, J. That the complainant, Bernard Kahn, who now attacks for fraud a bill of sale executed by George F. to Charles Werborn, on October 26, 1886, was fully advised of that transaction immediately after it transpired is not denied. That a part of the consideration for the sale was the assumption by Charles Werborn of an indebtedness of $1,000 from George Werborn to the complainant, that Kahn immediately came to the knowledge ok this fact, looked to Charles for payment, and soon thereafter received payment in full of his debt against George from Charles Werborn, is admitted.. Whether the complainant knew of this sale beforehand and consented to and advised it, .there is conflict in the evidence. Mr. Bromberg, who was the attorney of George Werborn in and about the sale, and drew up the, bill of sale, swears that Kahn was consulted with reference- to .it;- and that he consented to it and advised that it be made. Kahn swears that he knew nothing about it until it had been fully consummated. It can [529] not be said, we think, that these witnesses are equally interested. Kahn has a direct pecuniary interest of several thousand dollars in having the sale declared fraudulent. Bromberg has no pecuniary interest at all, so far as the record discloses, m sustaining the transaction. On the score of having been the attorney who advised and conducted the sale, he is naturally interested in sustaining it against impeachment for fraud; but it would seem that this interest would not be subserved by his evidence on this point, which does not tend to prove the bona fides of the sale, but only to estop Kahn to question the validity of the transaction. But apart from this consideration, there are others which constrain us to belief of the testimony of Bromberg. The purpose of this sale was to get the property of George Werborn out of the reach of a judgment, which he knew would soon .be rendered against one Proskauer, as principal, and Kahn and Werborn, as sureties in a guardianship bond, and to devote it to the alleged personal liabilities of said Werborn. It clearly appears that Kahn at that time had no property which could be reached by execution. He had nothing to fear from the anticipated judgment except through its operation upon Werborn’s property to the exclusion of the claims of Werborn’s individual creditors, of whom he was one. His whole interest at that time was in line with Werborn’s purpose and. effort to save his property from subjection to the guardianship judgment, and to devote it to the payment of his individual debts. It is shown that both he and Werborn were alive as to the impending judgment, and that he went to Huntsville, where the settlement of the guardianship was pending, along with his and Werborn’s attorney, to look after the matter, and that while they were in Huntsville, the attorney telegraphed Werborn such information in respect of the proceedings in the probate court of Madison county in the guardianship of Proskauer as caused the latter to file the bill of sale, which had been drawn before they went to Huntsville, for record in the probate office of Mobile county. On this state of case, nothing is more reasonable and probable than that Kahnshould have been consulted with reference to the sale by George-to Charles Werborn, or than that he should have advised that course since thereby his interests would be subserved, when, if the sale was not made, he would [530] lose the $1,000 which Werborn owed him. And these considerations, are, in our opinion, sufficient to turn the scales in favor of the evidence of Bromberg, and to impart probability to his statement that Kahn knew of, consented to and advised the sale beforehand, as against the naked denials of Kahn himself. And we accordingly so find, and concur with the chancellor m holding that Kahn not only accepted benefits under the bill of sale— took under its provisions — but also advised and participated in it execution. After having thus advised the sale by George to Charles Werborn, apart of the consideration and one of 'the purposes of which was the payment by Charles of $1,000 to him, and after having thus accepted the benefit secured to him in that sale and received payment of $1,000 under it and as provided in the bill of sale, Bernard Kahn seeks by the present bill to have that sale, in so far as it was of benefit to Charles Werborn, the purchaser, declared fraudulent and void as against certain money demands upon George Werborn existing at the time of the sale, and to which he, the complainant, has since then succeeded by subrogation. We have no hesitancy in agreeing with the chancellor that he is estopped todo this. The sale was made to Charles Werborn in consideration, in part, of an alleged indebtedness of the seller to him and, in other part, in considerasion of his assuming and paying sundry debts of the seller to third persons, including this one of $1,000 to the complainant. As to his own claim he paid the consideration by a cancellation of the alleged indebtedness of George to him, and the other part of the consideration he discharged soon after the sale by payment of each of the seller’s debts which he assumed, and among others that of complainant, amounting in the aggregate to twelve or thirteen thousand dollars. The complainant presents himself here in the attitude of affirming the validity of the sale and receiving that part of its consideration which was stipulated to be paid to him and denying the right of-other creditors of George Werborn to receive that part of the consideration which was stipulated to be paid to them, and without which, it is to be presumed, the sale would not have been made, and the entire estate of George Werborn would have been consumed in the satisfaction of the Proskauer judgment; and the anomaly of [531] Ms attitude is accentuated by tbe fact that he advised the sale upon these very considerations which he is now attacldng as simulated and fraudulent. It is familiar law that one cannot claim both under and against a conveyance. He has an election in ordinary cases either to ratify or disaffirm a transaction of this sort; he can either claim under or against, but he cannot do both. And having adopted one course, he cannot afterwards pursue the other. And it is wholly immaterial, of course, what may be the infirmities of the transaction abstractly considered : if he elects to take under it he thereby cuts himself off from attacking it. It is good as to him though it maybe bad as to everybody else. In this case the complainant did not even have an election to claim under or against the sale. Having advised the sale, he was committed to it and estopped to question its validity before the occasion upon which he would otherwise have had an election arose. He could at no time after the sale was made and he cannot now — more certainly for having taken under it — deny its entire validity. — Rabitte & Gaudin v. Orr Brothers, 83 Ala. 185; Williams, Deacon & Co. v. Jones, 77 Ala. 294; Espy v. Comer, 80 Ala. 333; Hatchett v. Blanton, 72 Ala. 423; Leinkauff & Strauss v. Forcheimer & Co., 87 Ala. 258. But it is said, this doctrine should not be applied to the complainant because, when he advised the sale to Charles Werborn and when he accepted payment of his claim from Charles Werborn according to the terms of the sale, he did not know, what he now asserts, that Charles Werborn’s debt, upon consideration of which in part the sale was made, was simulated. There is nothing in this contention. In the first place, the sale was made upon his consent and advice as an interested party, and this advice and consent, which the evidence shows contributed materially to the consummation of the sale, should not have been given ignorantly. So that, whether cognizant or not of the now alleged fictitious character of Charles Werborn’s claim against George, he was at fault in advising and thus bringing about the sale, and he can not now be permitted to undo what he then accomplished. His position and rights in this connection are not unlike those of the seller himself. And further, leaving the fact of his having advised the sale out of view, whether the sale as to Charles was fraudulent or not, [532] and whetherj it being conceded to be fraudulent, he had knowledge of the fraud when he claimed and received benefits under it or not, he can not, while retaining those benefits — while holding on to the money which he received from Charles in consideration of the sale — have the transaction avoided. This would be the taking and holding under and claiming against the conveyance which all authorities denounce. And there is no pretense that he has surrendered or is willing to surrender what he received. He is even now, with full knowledge of the alleged fraud, claiming both under and against the bill of sale. It is further insisted that the complainant should not be held to an estoppel in respect of that part of his demand which results from his compromise and settlement of the guardianship judgment several years after the sale, because, it is said, Lucy, the guardian, unquestionably was under no estoppel to attack the sale for fraud, and the complainant, by paying off the claim of Lucy, succeeded to the latter’s footing in the premises, as against George Werborn, to the extent of said Werborn’s contribhtive share of the sum paid by the complainant. A denial of this position may be safely rested upon the consideration that the sale was made upon complainant’s consent and advice, for the express purpose of defeating this very claim of the guardian by whomsoever held or asserted ; and it can not be tolerated that the complainant shall now be let in to thwart the sole purpose and object of the sale which was largely induced by him to the end he now seeks to subvert. The decree of the chancery court must be affirmed.