Martin v. Rexroad

JOHNSON, Judge, delivered the opinion of the Court: The demurrer to the supplemental bill was properly overruled. The charges of fraud, collusion and confederacy against the defendants, Harris, Rexroad and Mus-grave, were distinctly made therein. An award of arbi-Syllabus 1. trators may be relied upon as a bar to a suit, but before the defendant can rely upon such a defense, it must be properly pleaded. The defense of the award of arbitrators, attempted to be pleaded in the answer of Rexroad, — 519 — could not avail him as a defense, because too imperfectly pleaded, if it in tact existed. Among its other defects are the following: That it does not distinctly appear what the submission was, and that it does not appear that the attachment had in fact been abandoned. The main question in. this cause is one arising upon the facts. If the sale was made by Harris to Rexroad for the purpose of hindering, delaying or defrauding the creditors of Harris, and Rexroad participated in the fraud, then the sale did not pass the goods to Rexroad, and the stock of goods or their proceeds are liable to the debts of Harris ; but on the other hand if the sale was made for a valuable consideration and in good faith, the goods are the property of Rexroad and not liable to the debts of Harris. It is not pretended that the plaintiffs had any lien upon the goods at the time of the alleged sale to Rexroad, neither is it claimed that the said goods are liable to the debts of Harris, unless the said sale was fraudulent. It is claimed by counsel of appellees that the clear preponderance of the evidence shows that the said sale was fraudulent. One circumstance relied upon is that the contract made and signed by the parties on the 11th day of June, 1875, and witnessed by L. D. Starkey, binds Rexroad to pay to Harris $1,250.00 for said goods, part of it in three months and the residue in six and twelve months, for which Rexroad executed his notes to Harris ; while the claim of defendants is that Rexroad paid the consideration by paying the amount thereof to the creditors of Harris. If there was no evidence that the creditors of Harris were paid by Rexroad, with the consent of Harris, this would be a very strong circumstance to show fraud; but if it does satisfactorily appear that the creditors of Harris were paid this amount, then the strength of this circumstance is taken away. We here affirm the principles settled by this Court in the cases of Lockhard & Ireland v. Beckley et al., 10 W. Va. 87, and Hunter’s ex’r v. Hunter et al., Id. 321, that fraud may be legally inferred Syllabus 2. — 520 — from the facts and circumstances of the case, when those facts and circuinstances are of such a. character as to lead a reasonable man to the conclusion that the sale was made with the intent to hinder, delay or defraud existing or future creditors; and where the facts and circum-Syllabus 3. stances in any case are such as to make aprima jaoiecase of fraudulent intent, they are to be taken as conclusive evidence of such intent, unless rebutted by other facts and circumstances in the case. It is true the evidence shows, that at the time the sale was made the defendant, Harris, was largely indebted, perhaps to the degree of insolvency; and if the proof further showed that no consideration was paid for the goods, the sale as to such debts would be absolutely void; and such facts proved would also make it fraudulent in fact, and it would be void as to future creditors. The plaintiff, Foster, swears that when he went to pur-. chase the goods, he found Harris in the store, and hearing that Rexroad had a claim on the store went to him ; and Rexroad told him “that whatever arrangements he made with Harris would be all right with him.” Foster further sai d_ that A. J. Hickman came to the store and wanted goods on a debt Harris owed him, that witness would not let him have them unless Harris would consent to account for the price to him on the purchase money, to which Harris assented and he let him have the goods. Troy said he had heard Harris say to Rexroad “what shall we do about it, Foster said he hada little money and more coming to him,” and that was on the day they took the inventory of the goods, also that in the summer after the sale to Foster, Harris asked witness for money he owed him, and said he. expected to get $500.00 or $600.00 from the store “but you know how it is.” L. D. Starkey, who was a witness to the contract, said that a short time before the sale to Rexroad, Harris bad “tried to make a sham sale to himand the offer was refused. He further says that at the time the agreement of sale was made between Harris and Rexroad, he understood it was a “sham sale.” — 521 — A. C. Ash says, he received goods out of the store on Harris’s indebtedness to him. John W. Gatrell says, that after the goods were attached Hexroad said “he was afraid Harris had gone back on him.” If it had been a “sham sale,” it would not have hurt him much, if he had. Wilson says, after the sale Harris told him that “if he had good luck he would have as good a stock of goods in a year as when he was locked up.” Charles A. Walker says, he heard Rexroad say on the day of the sale, “that Harris had put the goods in his hands, and he would do the best he could with them for Harris.” This witness says he was present when the sale was concluded; which sale he says was made in the morning. This same witness also says, he had'seen Harris’s wife come into the store after the alleged sale, take down a bolt of alpacca, take it into her room and cut off two dress patterns therefrom. The foregoing is the strongest testimony produced by the plaintiffs; and if this were all the evidence in the case, under the rule laid down in Hunter’s ex’r v. Hunter et al., I should be constrained to hold that it would be conclusive evidence of the fraud charged in the bill. Is this evidence rebutted by other facts and circumstances in the case? The witness Foster is successfully impeached ; and his testimony may be regarded as out of the case. The impeaching witnesses against Starkey crippled him very much, although a number of his neighbors and acquaintances testified that his reputation for truth was good, and they would believe him on oath. He is also shown to have made a statement, not on oath, that the sale was a bona fide one, and he would be compelled to so testify; but it seems he afterwards changed his mind. According to his deposition he is placed in a very unenviable position; that of a subscribing witness to a fraudulent contract; which according to his own testimony he understood to be so, when he subscribed his name thereto as a witness. Walker is expressly contradicted as to a material matter, — 522 — he says he was present when the sale was concluded; yet Kuykendall met him on the morning of the sale, after it was made, and asked him : “If we had not a new merchant in our end ofthe town ” ? and he replied: “He did not know, he had not been there this morning.” But the strongest rebutting testimony, in the case is the fact, sworn to by the defendant, Rexroad, that he paid, and secured to be paid, to the creditors of Harris $1,290.22, which was $40.22 in excess of what he was to pay for the goods, and names the creditors whom he had thus paid and secured to be paid. It must be presumed that these were the creditors of Harris, as no attempt is made by the plaintiffs to contradict this evidence by one of the creditors thus named. Rexroad thus put it into the power of the plaintiffs to bring conclusive evidence of his fraud, if it existed ; and as they made no attempt to thus contradict him, I must conclude his statement is true. He gave the plaintiffs notice of this defense by naming all these creditors in his answer, and yet they do not call a single one of them to show the statement untrue in a single particular. Besides he is corroborated in this statement by his father, Addison Rexroad, who says, he knows his son paid the money, and to enable him to comply with the contract “reached pretty deep into his pocket.” He is also corroborated in this statement by the defendant Harris. It is nowhere intimated in the record, that $1,250.00 was not a fair price for the goods. This was paid, or secured to be paid by Rexroad, as I think the evidence clearly shows. • The preponderance of the testimony, to my mind, is clearly in favor of the good faith of the sale; and the court therefore did right in setting aside the issue, as it was no proper case for an issue. But the court erred in setting aside the sale, for the reasons aforesaid, the sale being a bona fide one; and it follows, that said Rexroad was entitled to sell the said goods to Foster, and is entitled to all the benefits of the deeds of trust executed for his benefit, and to all the proceeds of' the sale of the — 523 — goods, or any part thereof, after he had purchased the same as aforesaid. Nor the foregoing reasons, the decree of the circuit court of Ritchie county, rendered in this cause on the 25th day of April, 1878, is reversed, with costs to appellant ; and this Court proceeding to render such decree as the circuit court should have rendered, the injunctions granted on the original and supplemental bills are respectively wholly dissolved; and this cause is remanded to the circuit court of Ritchie county, with instructions to enter such orders as may be proper with respect to the fund, which may'be now, or has been, before it in this cause, and proceed according to the principles of this opinion, and in accordance with the rules governing courts of equity, and then ultimately to dismiss both the original and supplemental bills at the costs of the plaintiffs. The Other Judges Concurred. Decree Reversed. Cause Rehanded.