Ball-Warren Commission Co. v. Wills

Wood, J., (after stating the facts). The natural and, to us, irresistible conclusion to be drawn from the facts, as found by the court, is that the deed of assignment was but a part of a scheme to defraud creditors, and that it was well calculated to subserve that purpose. We do not think the deed itself in this case can properly be divorced from the fraudulent acts which immediately precede and follow its signing and acknowledgement. The deed is but an emanation of that same fraudulent intention and disposition which gave rise to the frauds found by the court. We need not expect to find fraud advertised in the face of a deed of assignment that has been made to defraud creditors, for that would defeat the very purpose of its making, which is, by a fair and honest outward show, to hide the rottenness within, to allay the suspicion of creditors, and thus to forestall inquiry into, and the uprooting of, fraudulent practices. Probst v. Welden, 46 Ark. 405, 411. Hence it'is that the deed itself must always be passed upon in the light of its environments. Concomitant and prior and subsequent acts of fraud, when so closely connected as to contaminate the deed, should be given their legitimate force. Martin v. Ogden, 41 Ark. 192. Although the court finds that it was the intention of the assignor, when he acknowledged and left the deed with the notary public, that same should convey title in presentí to the assignee, there was in fact no delivery of the deed to the assignee until same passed into his hands at 7 or 8o’clock p. m. of the.day the deed was executed. After the deed was acknowledged (4 o’clock p. m.) and left with the notary for delivery, the agent of the assignor instructed the notary to hold same to give him an opportunity to examine the schedule made part of the deed to see if the same were correct. It thus appears that the assignor reserved and had control over the deed until it was in fact delivered into the hands of the assignee. At -the time the deed was acknowledged the assignor represented to the assignee, in the face of it, that it conveyed title to all the stock of goods in the store he was then occupying, and two or three hours later, when the deed_was delivered, the store contained some two wagón loads less of goods than it did when the deed had been signed and acknowledged, the said goods having in the meantime been abstracted by the assignor without the consent or knowledge of the assignee. This conduct of the assignor was certainly a withholding of assets for his own benefit, which he pretended to be conveying for the benefit of creditors. He pretended that he was conveying to the assignee all the stock that was then in the storehouse, when, in truth and in fact, he was not conveying them all, but withholding a valuable part. And the circumstances lead to no other reasonable inference than that he knew, at the time he signed the deed representing that it conveyed all of a certain stock of goods, that said deed would not in fact convey all of said goods, because he, the assignor, intended that, before the deed should be delivered, a considerable and valuable portion of the goods should be taken away for the assignor’s own benefit. This was a gross and palpable fraud, which was contemplated in the making of the assignment, entered into it, and vitiated the whole transaction. The fraud of the assignor avoids the assignment, and although there are deserving creditors who must suffer by reason of the setting aside of the assignment, there are also deserving creditors who will suffer if it is not declared void. So they must all be left where the law places them after the fraudulent assignment is wiped out. Reversed and remanded, with directions to enter judgment for appellant upon the finding of facts.