McNeil & Higgins Co. v. Plows & Co.

Mr. Presiding Justice Windes delivered the opinion of the court. The only question presented is whether there was sufficient evidence of actual fraud to have required the submission of the case to the jury. In order to sustain an attachment under our statute there must be shown actual fraud, or fraud in fact, as distinguished from constructive fraud. Weare v. Druley, 156 Ill. 25, and cases cited. But such actual fraud may be proven by facts and circumstances from which the inference of fraud would be natural and probable, and would be presumed. The mind should be convinced from the proof that the fraud charged had been perpetrated, although there might remain some doubt. Schumacher v. Bell, 164 Ill. 181-3, and cases cited. In Sternbach v. Leopold, 50 Ill. App. 476-94, in which there was a question as to whether fraud in fact was shown, this court, while it held that the evidence in the record was insufficient to show fraud in fact, quoted with approval from the Supreme Court of Indiana in Hutchinson v. First Nat. Bank, 30 N. E. Rep. 952, citing many cases, viz.: “We are satisfied that an agreement for the withholding of a mortgage from the record is not of itself sufficient to justify a court in holding, as a matter of law, such mortgage fraudulent and void as to creditors, either existing or subsequent, but that it is a badge of fraud, to be considered with all the other facts and circumstances surrounding the transaction, in determining whether or not there was in fact a fraudulent intent.” The case was affirmed by the Supreme Court (Haas v. Sternbach, 156 Ill. 44-55), in which it is said : “While the unsworn answer of Henry Leopold sets up conversations between himself and Charles Sternbach relative to’ keeping-the mortgage off record and concealing it from others, which, if true; would establish a wicked conspiracy to defraud creditors by giving a false credit to himself and his firm, his own testimony does not support these allegations.” From an examination of the ábstract and of the answer referred to in that case in this court, we find statements which make the case in point of fact quite similar to the case at bar, and we regard the language of the Supreme Court, when considered with reference to the statements of the answer, as deciding that where a party takes a mortgage and keeps it off record in order to support the credit of the maker, upon the condition or agreement that the maker shall keep him informed of his affairs, so that if any trouble is likely to arise with the maker’s creditors the grantee can place his mortgage upon record, such a transaction is a fraud in fact. See also Weber v. Mick, 131 Ill. 520-6. In Wait on Fraudulent Conveyances, Sec. 234, the author says that an agreement that “ the transaction is to be kept secret until the debtor has an opportunity of escaping beyond the reach of process used by bis other creditors, or by which the deed is not to be offered for record until the other creditors threaten suit, will render it fraudulent. Secrecy in such cases is a part of the consideration; the transaction is contaminated by it, and ought not to be regarded as bona fide." The statement of the author is supported in principle by the following cases, viz.: Farguson v. Johnston, 36 Fed. Rep. 134; Blennerhassett v. Sherman, 105 U. S. 100-117; Seals v. Robinson, 75 Ala. 363-72; Stockgrowers Bank v. Newton (Colo.), 22 Pac. Rep. 444. In the Newton case, supra, the court holds that where the conveyance is withheld from the record, “ so that it may not affect the financial standing of the grantor, the evidence of fraudulent intent becomes express.” So, in the case at bar, the evidence being that there was an agreement between Richter and appellee that the bill of sale was to be kept secret, and that in case other creditors should push their claims and that the party holding it in escrow should be notified of any danger in that regard he should turn it over to Richter and he should take" possession under it, also that there Was an agreement between appellee and Bartlett’s agent that if appellee’s creditors attempted to push their claims he should be notified immediately so that the Bartlett mortgage might be placed on record, and that the mortgage was given only upon that express understanding between the parties, and also that during all this time appellee was insolvent, we are of opinion these facts and circumstances tended to show actual fraud, and the question as to whether this evidence did or did not show fraud in fact should have been submitted to the jury. The judgment on the attachment is therefore reversed and the cause remanded.