Bowden v. Spellman

Wood, J. This was an action for damages growing out of an alleged illegal seizure of personal property which appellant claimed belonged to him, and was unlawfully levied upon and taken out of his possession by appellee, under writs of attachment from the United States court, commanding appellee, as United States marshal, to attach and safely keep the property of Martin Bros. Appellee admitted the levy upon part of the property described in appellant’s complaint, but denied that it was the property of appellant, or in his possession when levied upon; says that he was not a party to. nor bound by the attachment proceedings; that the writs were in due form; and that the property levied upon belonged to Martin Bros. He denies the loss and damage. Martin Bros., insolvent merchants at Reyno, Ark., on the 29th day of December, 1891, sold their stock of goods and certain other articles of personal property to one B. F. Bowden, the appellant. The consideration for the purchase was $4500, evidenced by various promissory notes. H. T. Simon-Gregory & Co. and Shafer, Schwartz & Co. were creditors of Martin Bros, for large sums, which had accrued before the sale from Martin Bros, to Bowden. Martin Bros, assigned two of the Bowden notes—one for $325 to H. T. Simon-Gregory & Co., and another for $2,75 to Shafer, Schwartz & Co.—as collateral security. These firms did not know, at the time the notes were received by them, that said notes were given as a part of the price of the property sold by Martin Bros, to Bowden. Their collecting agent, however, received information as to the sale, and all the circumstances connected therewith, on the 7th day of January, 1891. On the 12th day of January, 1891, this agent, at the instance of Simon-Gregory & Co. and Shafer, Schwartz & Co., brought suits in the United States court for the eastern district of Arkansas, H. T. Simon-Gregory & Co. and Shafer, Schwartz &■ Co. being the plaintiffs, and Martin Bros, the defendants. Writs of attachment were issued on same day suits were brought, based on the sale of Martin Bros, to Bowden, which the plaintiffs in attachment claimed was fraudulent as to creditors. These were the writs under which appellee seized the property for which damage is sought in this action. The attachments were dissolved on the 6th day of March, 1891. The notes of Bowden, which had been transferred by Martin Bros, to H. T. Simon-Gregory & Co. and Shafer, Schwartz & Co., had never been returned, but were in possession of Muse, their collecting agent, and were referred to and exhibited on the trial of the issue on the attachments. 1. The court over the objection of appellant gave the following instruction : “(7) If the jury believe from the evidence that Martin Bros, delivered two of the notes executed by Bowden, as consideration for the sale of the property to Simon-Gregory & Co., and Shafer, Schwartz & Co., without notifying them that they were the proceeds of a sale of the property to Bowden, and that Simon-Gregory & Co. and Shafer, Schwartz & Co. did not, at the time of receiving and accepting said notes, have information or knowledge that the said notes were the proceeds of a sale to Bowden of the property after-wards attached, then they were not estopped from causing the attachment to issue.” And refused to give the following, asked by appellant, to which ruling he also objected : “ (3) If the jury find that said sale was fraudulent in law because of its tendency to cheat, hinder or delay the creditors of Martin Bros., still the sale would be good as between the parties to that sale, and could only be set aside on the intervention of creditors, and such creditors might waive their right to attack said sale ; and if the jury further find that, after making said sale, Martin Bros, sent the attaching creditors notes that were given by Bowden for a part of the price of the property thus bought by him, and that they, or their agent acting for them in that behalf, knowing' that said notes were given for a part of said price, have retained said notes until the present time, then they were estopped from maintaining' their said attachments, and they must be considered as having ratified said sale; and, as between them and said Martin Bros, and said Bowden, the property thus sold was the property of the said Bowden, and was not the property of Martin Bros., and was therefore not subject to attachment in favor of said attaching creditors ; and if the jury find that said attachments in favor of H. T. Simon-Gregory & Co. and Shafer, Schwartz & Co. were levied on said property for the debt of Martin Bros, under these circumstances, then said levy was illegal, and-they will find for the plaintiff in this suit.” 1. A.s to setting1 out evidence in bill of exceptions. It is insisted that the court was correct, for two reasons: (1) Because of a failure to set out all of the testimony, and (2) Because of inherent defects in the instruction refused. The bill of exceptions begins thus: ‘‘Be it remembered that, on the trial of this cause, evidence was introduced tending to show the following state of facts.” Rule 13 of this court relieves of the burden and expense of setting out. the testimony in extenso. That is no longer required in civil cases or misdemeanors. But, to ke'ep this court from indulging the presumption that all facts necessary to establish the correctness of the rulings of the lower court were proved that could have been proved, the bill of exceptions must show affirmatively that it contains a statement of all the facts required to explain the rulings of the trial court upon the issues involved. This is essential now ; just as it was formerly necessary, where the evidence was fully set out, to say : “This was all the testimony in the case.” The statement “that evidence was introduced tending to show the following state of facts ” would by no means be conclusive that there were not other facts shown on the trial which, if brought before us, would sustain the ruling's and judgment of the lower court. It must not be left for us to say by implication that there were no other facts shown. We should decline, therefore, to reverse for the refusal to give the third instruction, even if it was correct; for we are unable to say from the record that there was not testimony produced at the trial which rendered the giving of the instruction either unnecessary or improper. Por instance, if the plaintiffs offered to return or surrender the notes before bringing the attachment suits, or at the trial, and Martin Bros, refused to accept same, the above prayer would have no place in the case. Upon the hypothesis that the bill of exceptions contained a statement of all the facts necessary to explain the ruling of the court in refusing it, was the prayer correct ? % As to rescission of a fraudulent sale. In the case of Millington v. Hill, 47 Ark. 309, it is held that “a conveyance to defraud creditors is good as between the parties and their privies, although it may be avoided by the creditors of the fraudulent grantor. If the creditors condone the fraud, the grantee’s title is good against all comers, and when any creditor, with knowledge of the wrong that has been done him, makes his election to take from the grantee the purchase price of the land, his conduct is, in effect, an affirmance of the sale, and a waiver of the right to complain of the fraud.” The principle here announced is elementary, and is as applicable to this case as to the one in which it was announced, although the facts are different. If the attaching creditors, with knowledge of the fraudulent sale, elected to take the notes given for the purchase price of the goods bought, their conduct would be, in effect, an affirmance of the sale, a condonation of the fraud. Thompson v. Peek, 115 Ind. 512. It is urged, however, that, instead of an election to take the hotes, the attaching creditors, by issuing their attachments, were proceeding in the most vigorous and emphatic way to disaffirm the fraudulent sale, and to announce their intention of taking nothing under it. But, in the absence of a return of or offer to return the notes, or a showing that such was impracticable or impossible, how are we to know that it was not their double purpose to hold on to the fruits of the fraud with one hand, while attempting to uproot the tree that bore it with the other? Sumner v. Parker, 36 N. H. 449. Our own court has long ago announced the rule that a party defrauded must, “within a reasonable time after the fraud is discovered, elect to rescind, if such be his purpose. And he can only rescind by returning, or offering to return, whatever he may have received, under the contract, of value to either party.” Desha v. Robinson, 17 Ark. 240; Seaborn v. Sutherland, id. 603; Bellows v. Cheek, 20 id. 438; Hynson v. Dunn, 5 id. 395; Davis v. Tarwater, 15 Ark. 286; Johnson v. Walker, 25 id. 204; Benjamin v. Hobbs, 31 id. 151; Merritt v. Robinson, 35 id. 483; Hanger v. Evans, 38 id. 334; Berman v. Woods, 38 id. 351. To the same effect, see Farwell v. Hanchett, 9 N. E. Rep. 58, S. C. 120 Ill. 573; Bowen v. Schuler, 41 Ill. 192; 8 A. & E. Enc. p. 850, and other cases there cited; Johnson v. McLane, 43 Am. Dec. 102. And the general rule is that such return, or offer to return, must be before the bringing of suit. There are, however, some well settled exceptions, even as firmly established as the rule itself. One is where the vendor who seeks to rescind for fraud has received nothing but the notes of the vendee in payment. In such a case, if the vendor can and does produce them at the trial for return to the vendee, or for cancellation, it is held sufficient. Wood v. Garland; 58 N. H. 154. If the notes are non-negotiable, a return, or offer to return, at the trial is all that is necessary ; or where the notes are negotiable, and still in the possession of the vendor, if offered or tendered back at the trial, it is sufficient to enable the vendor to maintain his suit. If the notes are negotiable, and not surrendered at the trial, the presumption would be they had been negotiated, and no action to rescind could be maintained. Thurston v. Blanchard, 22 Pick. 18; Emerson v. McNamara, 41 Me. 565; Bassett v. Brown, 105 Mass. 551; Thayer v. Turner, 8 Met. 552; Bartlett v. Drake, 100 Mass. 176. See, also, Dayton v. Monroe, 47 Mich. 193; 21 A. & E. Enc. Law, p. 87, and authorities cited in addition to those supra. The case at bar comes within the spirit, if not the letter, of the above exception. Under our statute (Mansfield’s Dig. sec. 473), promissory notes are assignable; but the record shows that the attaching creditors, to whom the notes had been assigned as collateral security, still had them in their possession at the trial of the attachment issue:. They were exhibited there, and referred to; and had these notes been tendered and surrendered to the defendants there, they would have been placed in statu quo as to the notes, and the attachments, in that event, should not have been dissolved for failure to return or offer to return them before suit. It follows, from what we have said, that instruction numbered three needed this qualification after the words ‘ ‘ they were estopped from maintaining their said attachments,” to-wit, “unless they had offered to return the notes before bringing suit, or at the trial, and said offer had been rejected.” This modification would have made the instruction complete. * It was not error, therefore, to refuse it, for such proof is presumed, in the absence of a showing to the contrary. The seventh is erroneous. Knowledge of the fraudulent transaction was necessary on the part of the attaching creditors before they could be held to have ratified the same by receiving or accepting the notes, and failing to return or to offer to return them. But such knowledge, in order to estop them, did not have to be coeval with the receiving and accepting the notes, as seems to be the view presented by the instruction. It will be observed, from what has already been said, that it was the duty of the attaching creditors, if they designed to rescind the alleged fraudulent sale, to proceed to do so by offering to return or returning the notes received by them as the result of such sale, within a reasonable time after discovering the alleged fraud, whether such knowledge came to them at the time of receiving the notes or not. And a failure to do so before issuing the attachments, under the general rule, would estop them from maintaining said attachments. The attaching creditors in this particular case, however, coming within the purview of the exception to the rule, could have maintained their attachments, although they failed to tender back the notes before issuing the attachments, provided they did so, or offered to do so at the trial. The testimony, so far as this record discloses, reveals an imperfect effort on the part of the attaching creditors to repudiaté the sale. Had there been a return of, or offer to return, the notes before bringing suit, or at the trial, their disaffirmance would have been complete. The presumption is this was done, and hence there is no prejudicial error in the giving of the seventh prayer of appellee. McKinney v. Demby, 44 Ark. 74; Railroad Co. v. Amos, 54 Ark. 159. 3. As to using writing to refresh memory. 2. On the trial of this cause, witness Bowden referred to a memorandum purporting to contain a list of the property bought from Martin Bros. When asked by defendant’s counsel who made out the memorandum, he replied, one of the firm of Martin Bros., but that he was satisfied from his own knowledge that it was correct. The court refused, over appellant’s objection, to allow the witness to refer to said memorandum to refresh his memory. This was error. The witness, being satisfied-from his own knowledge of the correctness of the memorandum, and proposing to use it only for the purpose of refreshing his memory, speaking as to the facts from his own recollection of them, could use the memorandum to refresh his memory. The writing does not have to be an original writing, or made by the witness, when it is proposed to use it only for the purpose of refreshing the memory of the witness. 1 Greenleaf, Ev. sec. 436. Appellant could not have been prejudiced by this ruling, however, since his complaint purported to set forth all the articles bought by him of Martin Bros, which had been lost or damaged, and his answer admitted that part of this property was levied upon, and the bill of exceptions says “that the proof tended to'show that the property levied upon was damaged.” Yet the verdict of the jury was against appellant for every thing, showing that their verdict must have been upon the theory that appellant was not the owner of the property, or that the sale was fraudulent. 4. When declarations of vendor admissible against vendee. 3. The second assignment of error—that the court allowed “witness Muse to state conversations had between him and Joe N. Martin with regard to the value of the goods and other properties sold after the date of the sale made from Martin Bros, to Bowden and the reasons for making said sale”—is not well taken. The contention in the lower court seems to have been that, if the sale from Martin Bros, to Bowden was fraudulent as to creditors, appellee was not liable. The proof was principally directed to the issue of the rightful or wrongful suing out of the attachments under which the levy was made. To avoid the sale for fraud, it was necessary to show that Martin Bros, sold with the fraudulent intent to cheat, hinder, etc., that being the ground alleged. What one of the parties to the fraudulent transfer said about his connection with it, made either before or after the sale, would certainly be admissible if it tended to throw any light upon the character of the transaction. Dyer v. Taylor, 50 Ark. 318; Gauss v. Doyle, 46 Ark. 127. Finding no prejudicial error, the judgment of the Pulaski circuit court is affirmed.