Singer v. Goldenburg

Opinion by Hall, J. I. The interpleader complains of the action of the trial court in permitting plaintiff to show by the sheriff, Wilson, that the interpleader bought a part of Golden-burg’s household goods, which were sold at public auction. — 561 — While it is difficult for us to see what bearing the testimony had upon the issue in this case, we cannot perceive how the admission of the evidence could in any way have injured the interpleader. II. The interpleader complains of the action of the trial court in permitting plaintiff, to introduce in evidence statements made by Goldenburg to Allen and others, touching Ms responsibility while purchasing the goods in suit, and in permitting plaintiff to introduce in evidence the depositions of certain named witnesses, and in refusing to give instruction No. 1, asked by the inter-pleader, and in giving instruction No. 12 of the court’s own motion. One position of the interpleader as to the statements made by Goldenburg, not in the presence of the inter-pleader, is, that those statements might have a tendency to show that Goldenburg intended to cheat and defraud those from whom he purchased the goods in August, but that they could have no tendency to show a fraudulent intent on the part of Goldenburg in making the sale to Franke in November. We think that any evidence tending to show that Goldenburg purchased certain goods in August, with the intent then formed in his mind to cheat and defraud those from whom he so purchased them, naturally and necessarily has a tendency, in connection with proof that he had not paid for the goods, to show that Goldenburg’s intent in making the sale of the same goods in November was to carry out and complete the fraudulent intent and design formed when the purchase of the goods was made in August, and that such evidence was admissible in this case. Another position taken by the interpleader as to those statements made by Golden-burg is, that, as to the controversy between plaintiff and the interpleader, the defendant Goldenburg is a stranger, and that, on general principles, those statements cannot be evidence for or against either party to this controversy. Although Goldenburg is not a party to this controversy, the intent with which he sold the goods to — 562 — Franke is a part of the issue in this controversy and any competent evidence, bearing upon and explaining that intent, was admissible in this controversy for the purpose of showing what was that intent. — Bump, on Fraudulent Conveyances (3rd ed.) p. 582. As just said above, this evidence does tend to show what that intent of Goldenburg was, and it was therefore admissible. We think that instruction No. 12, given by the court of its own motion with sufficient clearness, informed the jury for what purposes they should, and for what purposes they should not consider those statements of Goldenburg. That instruction stated to the jury that those statements were evidence only for the purpose of showing Goldenburg’s intent in making the sale of the goods to Franke. That this is the meaning of the 1st clause of that instruction is clear and certain, but in the 2nd clause the court directs as follows, “and the jury will not consider the same against Frarilce, unless they believe, etc.” And on account of this 2nd clause the interpleader makes his chief objection against this instruction, contending that it must mean, either, that the jury should consider those statements of Goldenburg in connection with all the other evidence in the case, in determining the intent of Goldenburg in making the sale to Franke and the knowledge of Franlce of that intent at the time of the sale; or that the jury should determine from the other evidence alone, excluding those statements, Golden-burg’s intent and Franke’s knowledge of it, and that if they found Goldenburg’s intent fraudulent, and that Franke knew it at the time of the sale, then they might consider the statements against Franke; in which latter case the statements as evidence would be useless, the jury having already decided the case before having the right to consider them. But the instruction as a whole is not open to the objection made upon the 2nd clause of it. The language of the 2nd clause is peculiar in directing that “the jury will not consider the same as against Franke unless they believe,” etc. — 563 — But this peculiarity is wholly on account of an equal peculiarity of the language of the 1st clause of the instruction, which declares that “the statements of Goldenburg,” etc., “are evidence against him alone to? the purpose of showing his intent,” etc., “in making the sale to Franke.” Goldenburg not being a party to the controversy, there was no evidence against him ; it was all against Franke. But the unmistakable meaning of this instruction, somewhat unfortunately worded, taken as a whole, is, that the jury should consider those statements of Goldenburg only and solely for the purpose of finding with what intent Goldenburg made the sale to Franke. For this purpose we think that the statements were competent evidence. We think that the instruction was proper. We also hold that instruction No. 1 asked by the interpleader was properly refused by the court, because it withdrew those statements from the jury’s consideration. ■ As to the depositions, on account of whose introduction In evidence the interpleader objects, it is true that they May not throw much light upon the issue in this case ; still they do throw some light upon it. They tend to show a state of facts and circumstances, from which, had it existed, the jury might have reasonably inferred that in August and September, 1881, Goldenburg purchased the goods in suit with the intent to cheat and defraud those from whom he so purchased them, and the depositions, in that way, in connection with the other evidence in the case and the proof that Goldenburg never paid for any of the goods, tend to show that, in making the sale to Franke, he intended to carry out that original design. For these reasons the depositions, in our opinion, are competent evidence. To illustrate, take the deposition of Henry Solomon as an example of the depositions. In that deposition Solomon states that Goldenburg first did business with Ms house in March, 1880; that Goldenburg bought a few goods in March, 1880, in amount from $40 to $400; that from March, 1880, until September, 1881, Goldenburg’s — 564 — business with his house in all, did not amount to much, and that Goldenburg paid for the goods purchased by him almost at maturity, except in one instance in which ■the bill was a little past due.; that in Sept.,1881, Golden-burg went to Chicago and paid his house the balance of the account due it, about $200, and then bought, or rather ordered of it, a bill of goods amounting to $2,400 ; that this bill of goods was larger than any bill ever before purchased by Goldenburg, and that witness’s house, for that reason, called upon Goldenburg for a statement of his financial condition, which he flatly refused to make ; that under the circumstances witness’s house refused to ship the goods. Now this evidence is not the strongest evidence of any fact at issue in this case, still we think the evidence competent. The evidence in this case tends to show that in August and September, Goldenburg bought of various parties many thousands- of dollars worth of goods, for none of which he paid, and in which goods were included most of the goods attached; the goods attached having been sold to Franke by Golden-burg in November, 1881. Evidence tending to show that Goldenburg, in August and September, attempted also to purchase other goods, in addition to those actually purchased by him, in quantities much larger than ever before purchased by him, and all on time, and that he did so in such a manner and under such circumstances, as to cause those from whom he endeavoured to so purchase to refuse to sell to him, is competent. That evidence throws light upon the character of the intent had by Goldenburg at the time of making the purchases in August and September, which intent was material and proper for the jury’s consideration in determining the character of the intent had by Golden-burg in selling to Franke the goods,, thus purchased and still unpaid for, in November. III. The interpleader also complains of the action of the trial court in refusing to give instructions numbered 2, 3 and 10, asked by him ; and in giving said instruction numbered 10 as modified by the court.. — 565 — The interpleader testified that he bought the stock of goods for the dollars and cents he thought there were in the wade; that Gfoldenburg told him that he did not owe anybody but Nusbaum; and that he did not know how much Gfoldenburg owed Nusbaum. And the plaintiff contends that the court, if for no other reason, properly refused those instructions because they are based upon a theory of the case contradicted by the interpleader’s own testimony. But the interpleader had prima facie title to the goods by reason of actual possession of them at the time of their seizure under the writ of attachment-The burden of proof was on the plaintiff to show that the interpleader’s prima facie title was wrongful and fraudulent, and the interpleader was entitled to have all theories of the case supported by the evidence in the case, although contradicted by his own testimony, submitted to the jury. The jury might not have believed his testimony, and still if properly instructed might have found no fraud in his prima facie title, notwithstanding they might have found the existence of certain facts denied by him. Thus, although Franke, the inter-pleader, in effect denied any knowledge of Goldenburg’s intent, in making the sale to him, to prefer Nusbaum by paying Nusbaum’s debt with the proceeds of the sale, and also any purpose on his, Franke’s, part, in making the purchase, to enable Gfoldenburg to so prefer Nusbaum, still there was other evidence from which the jury might have reasonably inferred such an intent on the part of Gfoldenburg and such a purpose on the part of Franke ; and Franke had a right to an instruction by the court, telling the jury that neither such an intent nor such a purpose was fraudulent, if such be the law. It is settled law that the insolvency of a debtor does not deprive the debtor of the right to dispose of his property. He can still dispose of his property in any way he may think proper, provided he does so “for an honest purpose and not to withdraw it from process for his just debts.” — Dougherty v. Cooper, 77 Mo. 581. And “the power of a debtor to sell implies the corresponding right — 566 — of another to purchase. Mere insolvency alone does not vitiate any transfer.” In addition to the indebtedness there must “be an intent on the part of the debtor to-delay, hinder, or defraud his creditors.” — Bump on Fraudulent Conveyances (3rd ed.) p. 195. It is equally well settled that a debtor has the right to prefer a particular creditor over his other creditors, even if by so doing he should hinder and delay his other creditors. — Shelley v. Boothe, 73 Mo. 77. And “it is no-objection to an assignment made to pay a bona fide debt that the intent of the parties was to postpone or hinder other creditors.” — Lane v. Ewing, 31 Mo. 75. “ So long as the property of a debtor remains in his hands unshackled by liens and incumbrances, his power over it is absolute, and he can, in the absence of any statute!, dispose of it by the way of satisfaction to his creditors as well as by sale. A debtor therefore has discretion within the limits of fraud.” — Bump on Fraudulent Conveyances, p. 180. .An insolvent debtor may sell his property, then, if he do not so with the intent to hinder, delay, or defraud his creditors ; another may buy the property; and an insolvent debtor can prefer one creditor over his other creditors. It necessarily follows that an insolvent debtor can sell all or any part of his property for the purpose of applying the proceeds of the sale to the payment of the honest debts of any particular creditor; that such a purpose is an honest purpose; and that another with knowledge of such purpose on the debtor’s part may legally purchase the latter’s property. In Avery v. Estes (18 Kas. 507), the following instruction was approved: “If the jury believe from the evidence that Harris sold the property in question in good faith to pay any particular creditor of his, to the exclusion of others, without any intention to defraud, but simply to prefer one creditor to another, although the plaintiff may have had full knowledge of such intent on the part of Harris, it would not vitiate the purchase of Estes by plaintiff.” In Bedill v. Chase (34 N. Y. 387-388), the court says: — 567 — “ He was also right in declining to charge that,if the sale was made by Bedill & Co., in contemplation of insolvency, for the purpose of enabling them to prefer a portion of their creditors, and this was known to the plaintiffs, the transaction was in effect a general assignment by reason of the credit given to purchasers. There was no evidence to authorize the assumption that the plaintiffs had any knowledge of the purpose imputed to the vendors. Such a purpose if it existed was not unlawful. The debtor is not permitted to hinder, delay, or defraud his creditors, but he is at liberty to pay them in such order as he prefers where there is no claim of priority.” In Ruhl v. Phillips et al. (48 N. Y. 31), it is said : “ This object, although known to Phillips at the time of his purchase, did not render it fraudulent as against the plaintiff or any of his creditors who were not to be so preferred. A debtor, notwithstanding his insolvency, is allowed to make such preference if bona fide, and a sale for that purpose is not invalid.” In Gregor et al. v. Harrington et al. (33 Vt. 245), the court said : “The doctrine has ever been recognized in this state that a debtor may pay or secure one creditor to the exclusion of another. * * * In this case, if the principal debtor had transferred the property itself to the same persons to whom he transferred the notes he took for it and for the same purpose, no person would claim that he had not a perfect legal right to do so; or if he had sold the property and taken the money for it and had applied the money in the same manner, it would not have been fraudulent. The purpose was not to keep his property away from his creditors, but to pay to his creditors, he exercising his legal right to prefer such as he chose. Fraud does not consist in transferring property with the view to prefer one creditor to another, but in transferring property with the intent .to prefer one’s self to all his creditors.” Whether or not an intent is fraudulent is a question of law, and “it is the province of the court to instruct the — 568 — jury as to what intent is in the law fraudulent.” — Bump on Fraudulent Conveyances, p. 26. Hence we think that the circuit court erred in refusing to give instructions 2 and 3 asked by the interpleader. We do not think that instruction No. 10, as asked by the interpleader or as given by the court, was a substitute for those instructions 2 and 3. Had the latter instructions been given it would have been unnecessary to have given No. 10. For this error the judgment of the circuit court will be reversed and the cause remanded. IV. The interpleader contends that the motion in arrest of judgment, made by him, should have been sustained, for the reason that the answer of plaintiff to the interplea .fails to allege that the debt sued for in the attachment suit was existing at the time of the alleged fraudulent sale by Goldenburg to Franke. The petition in the attachment suit alleges that the debt of $1,200 sued for is due for goods furnished by plaintiff to Goldenburg in Aug., 1881. The answer to the interplea avers that the amount of $1,200 due plaintiff is for the purchase price of the goods and merchandise attached and levied upon by the sheriff in this cause. The answer further states that while Goldenburg was so indebted to the plaintiff, etc., for the goods and merchandise levied upon and seized in this cause, etc., the said fraudulent sale was made. We think that the answer clearly states and shows that the debt due plaintiff, therein alleged, was existing at the time of the alleged fraudulent sale, and that the motion in arrest was properly overruled. The judgment of the circuit court for the reason given above, is reversed and the cause remanded-; All concur.