Fly v. Screeton

Battle, J. The circuit court erred in refusing and granting requests for instructions to the jury. The insolvency of debtors does not deprive them of the right or power of making Iona fide sales of their property. They may do so for the purpose of paying their debts. Any creditor may purchase at such sale at a fair price, and out of the purchase money reserve a sufficiency to pay his own debt, and pay the remainder to the debtor. A sale of property by an insolvent debtor to a creditor at a fair price, for the purpose of paying a debt, is not rendered invalid by the purchaser’s knowledge of the vendor’s intention to defraud other creditors, if the purchaser does not participate in the fraudulent design. A creditor has “the right to insist upon and take a preference for his own debt,” and purchase of his debtor property for that purpose, without subjecting himself to the imputation of fraud. If it be necessary to effect this object, he may purchase property of greater value than the amount of his debt, at a fair price, and reserve out of the purchase money sufficient to satisfy his debt, and pay the residue to the debtor, although he may know at the time that the object of the debtor is to deprive other creditors of the means of collecting their debts. This may occur when the debtor cannot sell enough property to satisfy the debt without materially injuring the sale or value of other property, as in the case of a' stock of goods where the sale of a considerable part would materially injure the sale of the remainder. The fact that the price paid an insolvent debtor by a creditor for property only amounts to fifty cents on the dollar of its invoiced price is not conclusive evidence of fraud. The value of property is not determined by its invoice price, but by its condition at the time of the sale—by the market price thereof when sold. Reversed and remanded for a new trial. Absent, Bunn, C. J.