Waggoner v. Cooley

Scates, O. J. With, an exception excluding by statute, a defendant in execution from, testifying on the trial of the right of property levied on, by the general principles of law, the admissions of a person in possession claiming property, are admissible in evidence against his own title, and we are not able to discover any ground of objection upon which Benton’s statements on this point should have been excluded, as the whole tenor of the evidence tended to show that defendants deduced title fthrough him. Jackson ex dem. Titus et al. v. Myers, 11 Wend. R. 533; Crary v. Sprague et al., 12 Wend. R. 41. The acts and declarations of Gilbert, his agency for defendants being proved, were admissible at least to show notice of the alleged fraudulent sale, under which defendants were alleged to claim. The first, second, sixth, eighth and ninth instructions given for defendants here, are erroneous; and the first, second and third instructions asked by plaintiff here, were improperly refused. The error seems to have arisen out of a mistaken view of the rights and powers of a fraudulent vendee. The sale may be and is good as between vendor and vendee, but void as between each of them and creditors. As to them, it is still the property of vendor, and so creditors may attach or levy upon it. This is the general rule, and under it the law will recognize, favor and secure the vigilant, as in cases of insolvency* where diligence may give priority by suit. But the case is not placed upon these familiar principles. We, on the contrary, understand the instructions, as assuming the ground, that although the sale is void for the purpose of transferring the title to the vendee, it is nevertheless a valid appointment of an agent with power to sell to and prefer the creditors of the vendqr. No authority to sustain this position has been shown. The power of a failing, or insolvent debtor, to prefer and secure a creditor, has not been transferred to, or sanctioned in a fraudulent vendee, by any principle or decision known to us, when drawn in question or litigated between the creditors themselves. The case of Thomas v. Goodwin, trustee, 12 Mass. R. 140, referred to for this position, does not sustain it. The proceeding was a trustee process against the fraudulent vendee, with a view to charge him with the value of the property. To discharge himself from liability, he proved that he had paid, on the orders of the debtor, the full value over to creditors. An executor of his own wrong may discharge himself from further liability by payment of intestate’s debts in good faith, nor is it apparent why a fraudulent vendee may not discharge himself from further liability, after having paid away the proceeds or value of property, when the proceeding seeks to charge him with the value again. But when the proceeding is against the property itself, or the proceeds in the hands of the fraudulent vendee, I consider the aspect of the question as wholly changed. He has no right to dictate who shall, and who shall not be paid, or preferred. His position and possession of the property is one of self protection merely, and not one of agency or preference. It may be here, that Benton has, by a delivery of the property over to a creditor of Stevenson, discharged himself from any further liability for it, or its value, and yet the receiver of it from him, and under his contracts and sales, has acquired no title to it, or preference over Stevenson’s other creditors. Had defendants [bought the property of Stevenson, they then might have raised the question of title by purchase and preference-. Burnell et al. v. Robertson, 5 Gil. R. 282 is no authority for defendants, for there both salés were made by competent authority, the one by the owner, without delivery, the other by levy of attachment on the property, which created a valid lien, overreaching the former sale without delivery. Had the defendants proceeded with their attachments, they had a Hen, and may have perfected title by sale, and it may be a preference to the full value of the goods attached. But when they abandon that diligence, and consent to take title by purchase of the fraudulent vendee, with a full knowledge of his fraudulent title ; the fact that they are creditors of the fraudulent vendor cannot purge and purify the transaction of its fraudulent character towards other creditors, and make that valid which was before void. They waive their vantage ground, and take what title their vendor may have, as against other creditors, equally with themselves entitled to assail the transaction for fraud. See Jennings v. Gage et al., 13 Ill. R. 610; Saltus v. Everett, 20 Wend. R. 275; Swett et al. v. Brown, trustee, 5 Pick. R. 178; Caldwell v. Williams et al., 1 Carter R. 405; 2 Kent Com. 324. Had the fraud been perpetrated upon the vendor, a bona fide purchaser or bailee, who receives the goods on a preexisting debt, may hold them against the defrauded vendor, as is held in Root v. French, 13 Wend. R. 570, and ante, 11 Wend. R. 533; Powell et al. v. Jeffries et al., 4 Scam. R. 387. Every advantage that a suitor may obtain by his diligence^ is sustainable, even to the levy of an attachment between the execution and filing a deed for record. Cushing v. Hurd, Jr., 4 Pick. R. 253. But a creditor has no right to take the goods without suit. Osborne v. Moss, 7 John. R. 164. Nor is his title improved by a purchase from one who had no right to sell, for the fact of his being a creditor will not confer the right or power. And however free his own purchase may be from fraud, he must answer for the fraud which taints and avoids his vendor’s purchase, when that fraud is known to him, although he was no party to that fraud. The instructions given and those refused seemed to proceed upon the ground that the fraudulent vendee had power to sell to a creditor of the vendor, and that he would acquire a valid title against the claims of other creditors, notwithstanding the first sale was void as to them all, for fraud, and that fraud known to the second purchaser. The principle is unsustained by authority and we are not able to give it our sanction. Judgment reversed and cause remanded for a new trial. Judgment reversed.