Wallace v. Bernheim

Riddick, J., (after stating the facts.) The questions in this case arise upon a petition of intervention filed in an attachment suit. The interveners, Bernheim Brothers, contend that the attachment suit brought by Wallace against Aitken was the result of a secret and fraudulent agreement between Wallace and Aitken for the purpose of defrauding interveners and other creditors of said Aitken. Admissibility of account books in evidence. Admissibility of evidence of fraudulent design. In order to prove the allegations of their petition, interveners introduced evidence to show certain transactions between Aitken and Wallace, and the circumstances surrounding the same. Many objections were made, and many exceptions saved, to the introduction of this evidence, but none of these exceptions can be sustained. It was certainly not erroneous for inter-veners to read in evidence the account against Aitken, kept by Wallace upon his book of accounts, and showing the different transactions between himself and Aitken. That some of the items of this account were entered upon the books prior to the conspiracy alleged to have been entered into between Wallace and Aitken is of no consequence, for these entries are not the acts or declarations of another conspirator, but of Wallace himself. It was important to show the state of the account between Wallace and Aitken, and it was proper, as against Wallace, to show this by his own books; the rule being that the declarations of a party to the record, whether oral or written, are, as against such party, admissible in evidence. 1 Greenleaf, Bv. (Redfield’s Bd.), sec.-17. It was proper to admit evidence to show that Aitken had formed the design to cheat his creditors, and that he was, at the time Wallace sold the last bill of goods to him, making active preparations to carry such design into effect. But, in order to affect Wallace, it was necessary to go further, and show that he entered into this scheme with Aitken, and undertook to carry it out by the means alleged in the petition of interveners. There was uo case to submit to the jury until some evidence was introduced tending to show such connection of Wallace with the fraud of Aitken. If Aitken formed the design of cheating his creditors, and Wallace'after-wards became a party to this design, and undertook to aid him to carry it into effect, then the acts and declarations of Aitken done in pursuance of this purpose are competent evidence against Wallace, even though they were prior to the entry of Wallace into the conspiracy. “Every one,” says Mr. Greenleaf, “who does enter into a common purpose or design is generally deemed, in law, a party to every act which had before been done by the others, and a party to every act which may after-wards be done by any of the others in furtherance of such common design.” 1 Greenleaf, Ev. sec. 111. If this were not so, it would, in many cases, be impossible to show the full scope of the conspiracy. Cox v. Vise, 50 Ark. 287. The evidence tending to show that Wallace entered into a conspiracy with Aitken to defraud his creditors may not be very satisfactory, but it was sufficient, we think, to submit to the jury. When letters admissible. The court, over the objections of appellant, permitted the interveners to read in evidence letters written'by them to a bank in Fort Smith-demanding payment of a check drawn by Aitken upon the bank in favor of interveners; also letters written by the bank in reply, refusing to pay such checks. It is contended that it 'was error to admit such letters. As the bank was not a party to the action, it would not, as a rule, be competent to prove facts against Wallace by the declarations of the bank officials, whether contained in letters or not. Nor could such facts be established by the letters of interveners. But the only object in introducing these letters was to show that the check of Aitken was not paid. It was proper to show this, and, as the presentment of the check for payment and the refusal' of the bank were each made by letter, it was competent to introduce these letters to show such facts. The letter of the interveners was in itself a demand for payment, and the letter of the bank was a refusal to pay, and they were the direct evidence of such facts. 1 Greenleaf, E)v. sec. 101. Examination of witnesses. whether in-lent to attach fraudulent, It is further said that interveners were allowed to pU£ leading- questions to their own witnesses. While the general rule is that a party should not be allowed to put questions to his own witness that suggest the answer desired, still there are exceptions to this rule, and the- question of when a party should be allowed such a privilege rests largely in the discretion of the presiding judge. Some latitude in this direction may have been permitted in this case, but nothing to justify a reversal on that ground. • Without discussing further the points raised on the ° admission of evidence, we will say that no material error was committed in that regard, but we are of opinion that the presiding judge erred in his charge to the jury. It will be seen, by reference to instructions three and seven set out in the statement of facts, that the learned judge instructed the jury that if Wallace, at the time he sold any portion of the goods charged in the account on which he brought suit, intended to attach for such debt, then his debt was fraudulent, and. the finding should be in favor of interveners. We have been cited to no case that .supports this doctrine, and it does not seem to be supported by sound reason. A creditor has the right to sue upon his debt if not paid when it falls due. If, at the time the debt is contracted, he intends to bring suit so soon as it falls due, this intention cannot make his debt fraudulent, for he intends no more than the law permits him to do; in other words,. he intends only that which is lawful. If he forms the intention at the' time the debt is contracted not only to sue, but to attach the property of his debtor, this intention cannot be said, as a matter of law, to be fraudulent, for the law permits the creditor to attach under certain circumstances, and his intention to attach may be perfectly lawful. Take this case as an illustration. If Wallace, at the time he sold the last item of goods to Aitken, had learned that Aitken was about to transfer his property, with the intention of defrauding his creditors, and, therefore, at that time formed the intention of attaching unless his debt was paid upon demand, would this be anything more than the law allowed him to do, and can it be fraudulent to resolve to do that which is lawful? We do not think so. On the contrary, we hold that an intention to attach for the collection of a bona fide debt cannot, as a matter of law, be said to be fraudulent, although such intention be formed at the time the debt was contracted. But, under the instructions above mentioned, however honest the motive of Wallace may have been in forming the intention to attach, yet if such intention was formed at the time the debt, or any part thereof, was contracted, the jury was compelled to find for interveners. It may be conceded that very few merchants would sell on time to one whom they knew was disposing of his property to defraud his creditors, and when they knew it would be necessary to attach. A sale under such circumstances, and with the intention on the part of the seller to attach, might, if unexplained, tend to show fraud, but that is a question of fact, which must be left to the jury, or, at least, decided by the weight of evidence, and not as a matter of law. We are also of opinion that instruction No. 2, given on motion of interveners, was subject to objection. The fraud alleged against Wallace was the result of collusion between himself and Aitken; but this instruction leaves out the question of collusion between Wallace and Aitken; leaves out the question as to whether Wallace intentionally brought suit for more than was due him, with the view of aiding Aitken, and makes the case turn on the question whether the debt sued upon was contracted by Wallace with the view of suing out an attachment for the purpose of destroying the business of Aitken, and thereby securing some benefit to himself. It is not claimed by interveners that there was any malice on the part of Wallace against Aitken, or that he desired or intended to destroy the business of Aitken. On the contrary, the contention of interveners is that the intention of Wallace was to assist Aitken at the expense of his other creditors. Nor these reasons, this instruction was calculated to confuse and mislead the jury, and should not have been given. Nor is it clear that such instruction, if abstractly considered, could be held correct. We have already stated our reasons for holding that fraud cannot be predicated, as a matter of law, upon the sole fact that a party sells goods with the intention to attach for the price. Neither can it be said, in law, to be fraudulent for a creditor to intend some benefit to himself by his attachment, for it is the rare exception that an attachment is procured by one who expects no benefit therefrom. This reference to the destruction of the debtor’s business had a tendency to mislead the jury. Persons who are perfectly solvent are rarely attached. It is against those who are tottering on the brink of insolvency that this process' is usually directed. Hence the destruction of a debtor’s' business, or at least the cessation thereof, is a frequent result of attachment suits begun in the utmost good faith. It is therefore no evidence of fraud on the part of a creditor that the misfortune to the debtor is caused by the attachment. But we may go further, and say that if a creditor, having a bona fide debt, brings an attachment suit, actually intending, by that means, to destroy the business of the debtor, and to make a benefit thereby, yet it is doubtful if such intention, although indefensible as a matter of morals, can be said, in the absence of collusion, to be fraudulent as a matter of law; for if there be no grounds for the attachment, the debtor can resist and defeat the attempt to destroy his business. If' there be just grounds for the attachment, it can only result in the public sale of the goods attached; Other creditors and the public generally have the right to bid at such sale, and may compel the purchasers to pay a fair price for the same. So long as there is is no collusion on the part of the debtor, other creditors have no right to complain that a creditor, who attaches for an honest debt, intends, npt only to collect his debt, but to injure his debtor. Against such an intention the debtor and his other creditors can protect themselves, but the case is different when the debtor colludes with the attaching creditor for the injury of his other creditors. Nor these reasons, it is doubtful if this instruction is correct, abstractly considered; but, as there is no contention that Wallace desired to injure Aitken or break up his business, such an instruction, even if correct, was in this case unnecessary and misleading. The contention of interveners is set out in the allegation that the suit and attachment commenced by Wallace was, by collusion, purposely brought for a larger sum than was due, with the intent to aid Aitken to hinder and delay interveners and other creditors of Aitken in the collection of their debts. To support this allegation, the interveners undertake to show that a check for $300.00, drawn by Aitken in favor of Wallace, was given in part payment of the debt of Aitken to Wallace, and also that the sale of five barrels of whiskey made to Aitken by Wallace was only a sham sale to increase apparently the debt from Aitken to Wallace, so that the attachment might absorb the whole property of Aitken. Wallace testified that this check was not given to him as a payment upon his account, but that, the bank upon which the check was drawn having closed for, the day, he had, in .order to accommodate Aitken, exchanged cash for the check. He also testified that the sale of the five barrels of whiskey was in every respect bona fide. If the check for $300.00 was given to Wallace upon his account, and not in exchange for cash, then he should have given credit for it. If he purposely withheld credit for the same, and intentionally brought suit, attached, and took judgment for $300.00 more than was due him, he was guilty of a fraud which would justify a finding in favor of interveners. If the transfer of the five barrels of whiskey was only a pretended sale, made by collusion, for the purpose of apparently increasing the debt due Wallace, that the attachment might absorb the whole assets of Aitken, then the attachment for the price of this pretended sale was fraudulent, and justified a judgment giving precedence to the attachment lien of interveners. But the instructions do not confine the jury to the issues presented by the pleadings. When instruction misleading-. The question presented by the pleadings was whether Wallace, by collusion with Aitken, brought suit and attached for more than was due him, with the intent to aid Aitken in putting his property beyond the reach of his creditors, and this is the question that should have been presented to the jury. But the instructions complained of left out the question presented by the pleadings, and permitted the jury to decide the case on other issues. These instructions, we think, were erroneous and prejudicial. The judgment is therefore reversed, and the case remanded for a new trial.