Christian v. Greenwood

Mr. Justice Fairchild delivered the opinion of the Court. . On the 4th of February, 1856, Christian purchased of Cecilias J. Hundley, two negroes — Ned and Fanny. Át the time of the purchase, the negroes were not in Ashley county, the place of Hundley’s residence, but were in Louisiana, where they and the other negroes of Hundley had been taken to avoid their sub jection to the payment of the debts of Handley to the appellees, Greenwood & Co. Immediately upon the purchase, the ‘negroes were brought back to Ashley county, Ned went into the possession of Christian, Fanny returned to the employment and house of Hundley, but under’ hire from Christian, and they thus remained, till in September, 1856, they were levied upon as Hundley’s property, in pursuance of directions from the appellees, to satisfy executions which they had sued out against him on judgments obtained in the Circuit Court of Ashley county. To prevent the sale of the negroes under these executions, Christian filed his bill against the appellees, alleging that the negroes were his, and not subject to be applied to the payment of Hundley’s debts; he having bought' them when there was no lien upon them, in perfect good faith, and upon the payment of a fair and full consideration. A.n injunction, according to the pr'ayer of the bill was granted. The answers of the appellees tender an issue as to the ownership of the negroes; the appellees maintaining them to be subject to the satisfaction of their executions against Hundley, as their alleged purchase by Christian was a feigned' transaction, made to assist Hundley-to defraud the appellees out of the demands represented by the executions. There are other allegations in the pleadings: in the bill, to show the propriety of the application for an injunction; and in the answers denying this upon the want of jurisdiction of chancery, and alleging facts tending to make good the main defence of fraudulent dealing between Christian and Hundley; but we shall notice only .the principal point in the case, because the consideration of that is conclusive of the whole case; and because it is well settled that, if the bill be true, it presents a proper case for the relief for which it asks. Sanders vs. Sanders, 20 Ark., 612, 614. Hpon the final hearing of the case, the Circuit Court of Ashley county, sitting in chancery, dismissed the bill, and Christian appealed. The sale of the negroes to Christian was fraudulent on the part of Hundley, and was made by him to defraud the appellees, and out of these very debts that are mentioned in the pleadings. But Christian cannot be affected by Hundley’s fraud, unless he participated in it by assisting Hundley to put his property out of the reach of the appellees, and appropriating it to himself with a knowledge of Hundley’s fraudulent design, and with intent to further the accomplishment of such design. Dardenne vs. Hardwick, 4 Eng. 486; Splawn vs. Martin, 17 Ark. 152; Hempstead vs. Johnson, 18 Ark., 141; Ewing vs. Bunkle, 20 Ill., 463. The argument that Christian had the same right as the appellees to secure his own debt against Hundley, is good if applicable. If Hundley was owing Christian, he might secure the debt by a voluntary sale from Hundley of his property, as well as the appellees could procure the payment of their demands by the compulsory sale of Hundley’s property under execution. And this would be so, though Christian knew that Hundley’s object in making the sale was to deprive the appellees of the means of making their debts. On the part of Hundley, the effect of such sale to Christian would be but preferring one creditor to others which the law tolerates, and on' the part of Christian, it would only be endeavoring to do by contract what the appellees were doing by law, each trying to secure his own interest. Pearson vs. Rockhill, 4 B. M. 299. In such a case, Christian’s conduct would not be held fraudulent, as the law would presume that he acted not to defraud other creditors of Hundley, but to secure himself. Seigler vs. The Knox Co. Bank, 8 Ohio State Rep., 516; Ford vs. Williams, 3 B. M., 557. A creditor, buying the property of an insolvent debtor to secure his own demand, has the same equity that other creditors have ; each has an equitable interest in the debtor’s property; and the legal title, conjoined to an equity, will overcome a mere equitable interest. Seymore vs. Wilson, 5 Smith, 421, 418. Although the law will not restrict a creditor from buying enough property, from a failing or fraudulent debtor, to pay the whole debt, or from buying all the debtor’s property, and applying it to the extinguishment of the debt, as far as it will go, the buyer must allow a fair price for the property, and must not buy more than is necessary for his own protection. Ford vs. Williams, 3 B. M. 557. We do not intimate that the value of the property bought must be less, or must be no more, than the debt to which it is applied, but it would be a suspicous fact that the purchase should include parcels of property, one piece ‘of which would pay the debt; and the cause for suspicion would be increased, if the overplus should be paid in money, or with a consideration that would be invisible to other creditors. In a case where the price of the property bought was nine hundred dollars, and the debt on which it was bought was six hundred and sixty dollars, the court of appeals of Kentucky upheld the sale, notwithstanding the excess of two hundred and forty dollars was paid in money, and was not shown to have been paid on debts of the insolvent seller of the property, because the property, being that of a female slave and two infant children, was not such as the law or good conscience required to be separated, and because a fair price was given for the whole of the negroes. Young vs. Stallings, 5 B. M. 307. And so in this case, if Christian had shown himself a creditor of Hundley for the amount that he paid on Ned and Fanny, in claims upon Hundley, that .amount being four hundred’ and nineteen dollars, according to the testimony of Barnes, or five or six hundred dollars as to be gathered from Hundley’s own deposition, we should not be disinclined to grant the desired relief to Christian, if his purchase had extended only to one of the negroes, or if it had extended to both, and there were good reasons for them not to be sold separately, and his conduct had been in other respects that which was only attributable to a creditor, successful in the race of diligence against the appellees. But Christian does not occupy the advantageous position of a creditor of Hundley upon which to rest his purchase of Hundley’s negroes. Barnes and Hundley are the only persons who testify about the payment for Ned and Fanny; and Hundley who may be supposed not to be under any bias against Christian, says that Christian paid him in cash, nine hundred or a thousand dollars, and in an account against him, in one against his mother, and in one or two against his brother. That is no proof at all that Hundley was indebted to Christian in any specific amount; and Christian must take the place of a stranger •who purchases property from a fraudulent seller, and that is one that is far different from being a creditor, endeavoring out of the wreck of an insolvent debtor’s property to find something to save his own debt. Still, if Christian bought the negroes of Hundley, there being no lien upon them in favor of the appellees, and paid the value of them without notice of Hundley’s fraud, his equity as a purchaser, is at least equal to the equity of the appellees to have their debts paid out of Hundley’s property, and the legal title derived from the purchase will prevail. His position as a purchaser is different and less favorable than that of a purchasing creditor, for as a purchaser he will be held to be a participator in Hundley’s fraud, if he have notice of it, and still deal with him, and thereby afford him the means to make his fraudulent efforts against his creditors successful. Seymore vs. Wilson, 5 Smith, 420. And this is the case, notwithstanding he may have paid a full price for the property. 2 Kent (8th Ed.) 674; Beals vs. Guernsey, 8 John. 452. These two authorities refer to property bought in fraud of a judgment, but the reference being to personal property, which a judgment does not bind, the authorities are not inapplicable to this case. The appellees are judgment creditors, are shown tobe so by the hill which alleges the extent of the executions upon Christian’s negroes and though they were not so when Christian bought the negroes, it was from the fraud of Hundley that they were not at that time, and of this fraud, executed with relation to these debts of the appellees, Christian was informed in October, 1855, by the agent of the appellees. To have the benefit of the perpetuation of his injunction Christian should have shown a clear title to the negroes, that is, one unaffected by any taint of fraud. This he has not done. He knew that Hundley had run off these and four other negroes, all he owned, to Louisiana; he had been told by the agent of the appellees that Hundley acknowledged that he had run them off to avoid the debts that he prays not to be extended over the negroes Ned and Fanny. Knowing of these debts, and not knowing of any others that Hundley owed, as it may be presumed he did not know of debts that Hundley could not recapitulate, he did not see that the money he paid to Hundley or that any part of the twenty-five or twenty-six hundred dollars, which Hundley got for the other negroes, was applied or intended to be applied by Hundley to their satisfaction; he bought the negroes out of the usual course of business, by buying them when they had been run out of the state, and while they were absent; he paid mostly in cash lor them, which could hot but aid Hundley in his design to defraud the appellees. s In view of these facts, though we are not called upon to say that Christian was an active participator in Hundley’s fraud against the appellees, we are sure that he has not presented such a case as entitles him to the protection of a court of equity. He is brought within the cases that hold that a grantee that has knowledge of the fraud of a grantor must be held responsible for it to the extent of his dealing with him, and that indulge the presumption of a fraudulent intent on his part, as well as against the grantor. Ford vs. Williams, 3 B. M. 558; Pastilo vs. PEcvr, ris, 26 Conn. 482. The Circuit Court sitting in chancery, properly dismissed the bill of Christian, but that dismissal and the affirmance here are not intended to affect Christian’s legal right, only to declare that a court of equity will not interpose in his behalf against the appellees.