Morse v. Ryland

Allen, J. Though the findings of the jury are challenged as unsupported by the testimony, it is unnecessary to consider any other assignments of error than those i*elating to instructions given and refused. There were many circumstances given in evidence, tending to sustain the defendant’s claim that the sale of the stock of hardware by W. K. Ryland to M. L.' Ryland was fraudulent. It therefore became the duty of the court to instruct the jury with reference to the facts disclosed by the testimony on the part of the defendant. Special instructions were submitted by counsel for both parties. The court appears to have selected from those submitted on both sides such as were deemed correct statements of the law, and to have made up from them the charge given to the jury. It contains twenty-seven paragraphs, covering thirteen pages of the record. The first paragraph contains a fair statement of the issue. The second is to the effect that the plaintiff must show, by a preponderance of the evidence, that there was a bona fide indebtedness from W. K. Ryland to M. L. Ryland for the amount claimed, and that the purchase was absolute, and without any intent on the part of the plaintiff to assist in defrauding the creditors of W. K. Ryland. The third instruction is as follows : “You are instructed that it is lawful for a debtor to prefer a particular creditor ; that, for the purpose of paying such creditor, the debtor may turn over all his property at a fair valuation, and this is not a fraud on other creditors, although the known effect of it [257] may be to hinder and delay other creditors in the collection of their just debts.” ■ In the following instructions, from the fourth to the nineteenth inclusive, the propositions contained in the second and third are repeated many times, with the further propositions, in the sixth, eleventh and nineteenth, that the sale should be made for a fair value. In these instructions are included, in various forms, the propositions : That a sale of more property than was necessary to satisfy the debt would not vitiate the transaction if the excess was reasonably necessary for the purpose of satisfying the actual debt; that the agreement to pay the debt of Tom Hill would not invalidate the plaintiff’s purchase; that the law favors the vigilant creditor; that M. L. Ryland had a right to procure a payment of his debt .to the exclusion of other creditors ; that he might take more goods than was actually necessary to pay the debt, if he honestly believed he was taking no more than a sufficient amount; that he had a right to proceed hurriedly and secretly; that no amount of bad faith on the part of W. K. Ryland toward his other creditors would invalidate the plaintiff’s title, if he himself acted in good faith and bought the goods for a fair value ; that in order to find that W. K. Ryland acted fraudulently in disposing of his property, the jury must believe that he intended to retain some interest in the property sold, .or to obtain some pecuniary advantage by reason of the sale; that W. K. Ryland had a right to apply his property to the payment of debts as he chose, and to give preferences among his creditors ; that, if transferred for the sole purpose of paying his debts, Aultman, Miller & Co. had no right to attach the stock; that the transfer of his own homestead to his wife was not a fraud, and could not be taken into consideration in the case for [258] any purpose ; that fraud is never to be presumed; that all men are presumed to act fairly and honestly; that while fraud vitiates everything into which it enters, the burden of proving it is upon him who asserts it; and that the fact that some of W. K. Ryland’s creditors were left wholly unpaid, and without provision for any payment to them, did not render the transaction fraudulent. Instructions asked by the defendant, and given by the court, included the propositions : That the jury, in determining the question of fraud, might take into consideration, not only the facts and circumstances connected with the disposition of the property on the first and third days of July, but other facts and circumstances affecting the control of the property before, at and after said time, all statements made by M. L. Ryland concerning the same, and the relationship of the plaintiff and W. K. Ry-land ; and that where a creditor purchases property of his debtor, knowing that he is attempting to dispose of it to defraud his creditors, and pays for the same with a debt due him, he must act in the utmost good faith, and pay adequate prices for the property purchased. SrasmisfeiStag, The charge as a whole impresses us as unfair and misleading. It singles out'each particular badge of fraud, and states that it is insufficient to vitiate the transaction provided certain other things stated be shown. While most of the propositions are true as abstract statements of the law, in the form they were presented to the jury they were calculated to convey the impression that neither one of the many indicia of fraud was, in fact, of any force in the defendant’s attack on the transfer of the goods from W. K. Ryland to his brother. There was much needless and misleading repetition calculated to prejudice the j ury. But, without singling [259] out any particular instruction given as sufficient of itself to warrant a reversal of the judgment, there was clearly error in the refusal of the court to give the third and tenth instructions asked by the defendant. Nothing of similar import was given. . fraud may Re circumstantial. It is rare indeed that fraud can be proved by the direct and posi: tive testimony of reliable witnesses. It is an almost invariable rule that it can only be deduced from a consideration of many facts and circumstances; from the conduct, statements, dealings, and surroundings of the parties, from their relationship to each other, and from .the many little doings of the parties which indicate their secret motives, which as a rule are studiously concealed from those it is intended to wrong. The third instruction asked by the defendant is a fair statement of the law on this proposition, and the substance of it should have been given. Neither positive knowledge nor direct notice, on the part of M. L. Ryland, of the fraudulent purpose of W. K. Ryland, was necessary to avoid the transaction, if other facts sufficient for that purpose were established. 3. Purchaser knowledge^ It was only necessaiT that the defendant should prove knowledge of such facts as would be sufncient to awaken the suspicion of an ordinarily prudent man, and lead him to inquire into the purposes of his debtor. Such proof would be-sufficient to charge the plaintiff with knowledge of all such facts as a diligent inquiry would have developed. It is said that the error in refusing this instruction is. immaterial because the jury found, in answer to the first special question submitted, that W. K. Ryland was. free from all fraudulent purposes. That they would SO' find, the court did not know, and had no right to anticipate, at the time the instructions were given. It cannot be assumed that, under correct instructions, [260] the jury would have found as they did; for there is an abundance of evidence in the record tending to show fraud, not only on the part of W. K. Hyland but of the plaintiff as well. As in most cases, this evidence consists mainly of circumstances, which, taken singly, although indicative of fraud, are not necessarily inconsistent with an honest purpose. The jury should have been called upon to consider carefully all these circumstances, and say whether, when all taken together, they proved fraud on the part of W. K. Byland, and either knowledge, or facts putting him on inquiry, on the part of M. L. Byland. For the errors mentioned, the judgment must be reversed and the cause remanded for a new trial.