Avery v. Johann

Dixon, C. J. There can be no question as to the defendant Peter Johann's knowledge, at the time of sale, of his father’s intention to hinder and defeat the payment and collection of the debt due the plaintiff. This knowledge he not only admitted, as a witness called by the plaintiff at the trial, but it was otherwise positively proved. He was present at the conversation between his father and the plaintiff’s attorney a few days before the sale, and heard his father declare his purpose not to pay the mortgage debt, and to prevent the collection of the money. It is not improbable that he knew — indeed it seems almost certain from the facts and circumstances of the case that he must have known — that such was his father’s intention, before the conversation took place. But whether he knew it before or not, he must have learned it then, which was but a very short time before the sale to himself and his brother John W. Johann. That sale was of all his father’s property, both real and personal," valued at $12,000 and upwards, as he and his brother testify. Nothing was left upon which a levy could be made, or payment of the debt enforced by proceedings against the father alone, especially after he absented himself in Germany, as it seems he very soon did. By such sale, supposing its validity could be sustained, the father succeeded in placing himself in the very position he desired so as to defeat the collection of the debt, and to consummate and give effect to his [250] previously declared and known purpose and intent to defraud the plaintiff; and the only question would seem to be, whether the sale can be upheld, and thus the fraudulent intent and purpose consummated, on the ground that the father informed the sons at the time of the sale that one of his objects in making it was to obtain funds with which to pay the debt. Did such declaration at the time of sale, and which turns out to have been false, purge the transaction of fraud, and transform the sons into innocent purchasers ? We are of opinion that it did not, and that the least a purchaser under such circumstances could do, would be to see to it and know that the purchase money was applied in payment of the debt, or otherwise he must stand chargeable as a purchaser in bad faith, or with a knowledge of the debtor’s fraudulent intent. This is no hardship upon the purchaser who knows the debtor’s circumstances and his previously declared fraudulent purpose, and has good reason to suspect that such purpose may still exist at the time of sale. It is a rule which promotes fair dealing and honesty, and discourages fraudulent schemes and devices to enable debtors to shift and smuggle away their property beyond the reach of creditors. As to the defendant John W.’s knowledge of and complicity in the fraudulent purpose of his father, the evidence is scarcely less satisfactory than as to Peter's. He well knew the existence of the debt, and his. 'father’s neglect and refusal to pay it, and the other facts as to him are as stated in the tenth finding of the circuit judge. He testifies that before the papers were executed, and before any considerable portion of the consideration money was paid, he consulted an attorney as to whether the agreement or purchase would stand in the law as against the debts of his father. He also testifies that he knew of but one debt —the debt in controversy. The question has been very pertinently and justly asked, why this inquiry [251] should have been made, if he believed at the time that his father honestly and truly intended to pay the debt out of the proceeds of the sale, as he affects now to testify. He had written a letter but ten days before, in the name of his father, to the plaintiff’s attorney, to ascertain what settlement could be made of the debt, and was undoubtedly familiar with his father’s views and intentions with reference to it. At all events, the inquiry made of the attorney, which he himself acknowledges, clearly shows that he had his doubts and suspicions, which were evidently not without good reason; and this alone was sufficient to deprive him of the character of an innocent or bona fide purchaser without notice. In the case cited and relied upon by his own counsel, Atwood v. Impson, 20 New Jersey Eq. R. (5 C. E. Green), 150, the rule applicable here is thus correctly stated: “A sale, in making which the object of the debtor is to hinder, delay, or in any way put off his creditors, is void if made to one having knowledge of such intent; and this knowledge need not be actual positive information or notice, but will be inferred from the knowledge by the purchaser, of facts and circumstances sufficient to raise such suspicions as should put him on inquiry.” There cannot be much doubt, we think, that the defendant John W. had knowledge of such facts and circumstances as raised a suspicion in his mind, and did and ought to have put him upon inquiry, so that he purchased and paid at his peril, provided the debt due the plaintiff was not paid by his father, as he says his father at the time proposed to do. These observations, we believe, dispose of the entire merits of the controversy involved on this appeal; and as we see no errors or defects which should prevent a judgment on the merits, the judgment of the circuit court must be affirmed. By the Court. — Judgment affirmed