Adler-Goldman Commission Co. v. Hathcock

Hemingway, J. The appellant argues that the court erred in giving two instructions asked on behalf of the appellee ; but there was no exception to the giving of them, nor was it made a ground of the motion for a new trial. We cannot therefore review the court’s action in this regard. Whether the evidence sustains the verdict is the controlling question in the case. That Pearson was insolvent, and, being pressed by his creditors, sold the stock of goods in bulk for 50 per cent, of its invoice price, collected two-thirds of the agreed price and withheld it from his creditors, are facts not controverted. Hathcock believed that Pearson owed mercantile debts and that he was embarrassed as other small merchants, and knew that he owned but little property and that the price to be paid was inadequate. The sale was first spoken of on Saturday afternoon and concluded that.night before an inventory of the articles sold could be taken; Pearson demanded (without assigning a reason) and Hathcock paid (without asking one) $500 in cash that night; the balance, which was expected to be about $250, was to be paid, when the inventory should be completed, to a creditor of Pearson. These admitted facts and circumstances are viewed in law as badges of fraud; that is, as calculated to throw suspicion on the sale and call for an explanation (Wait’s Fraud. Conv., chap. 16); and when they appear without explanation, the inference of fraud becomes conclusive. Bump, Fraud Conv., P- 33' As such is the effect of such circumstances unexplained, they must be considered as sufficient in law to awaken suspicions as to the fraudulent intent of the seller, and to put the purchaser who knows of them upon inquiry, and, although no inquiry be made, to charge a knowledge of what might have been ascertained. Although Hathcock was affected by such notice, he made no inquiry, and now says only that he did not in fact know of his seller’s fraudulent purpose. But this cannot avail him. He saw what the law esteems evidences of fraud, and should have investigated them ; he could not close his eyes to them and rely upon his ignorance of what they indicated and he might have learned. His purchase aided the fraudulent design of his vendor; and as the character of the design was clearly suggested by the facts and circumstances known to him, he is judged in law to be a party to it. So he could take nothing by the purchase as against Pearson’s creditors; and since the facts that put him upon inquiry are undisputed and there is no claim that he made any inquiry, the verdict should have been set aside as not sustained by the evidence. Birdsall v. Russell, 29 N. Y., 249; Tantum v. Green, 6 C. E. Green, 364; Dyer v. Taylor, 50 Ark., 320; Singer v. Jacobs, 11 Fed. Rep., 559; Christian v. Greenwood, 23 Ark., 265-6; Gollober v. Martin, 33 Kas., 252; Cottle v. Cleaves, 70 Me., 256; Bartles v. Gibson, 17 Fed. Rep., 293 ; Carter v. Coleman, 84 Ala., 256. For the error indicated the judgment is reversed, and the cause remanded.