Harris v. Lombard

Cooper, J., delivered the opinion of the court. There is nothing in the evidence in this case, proving, or tending to prove, that Mrs. Lombard, the claimant, was a purchaser of the property attached. Her right, if any she has, is that of a pledgee holding the property as security for a pre-existing debt, with authority to sell it in the usual course of trade, and to apply the proceeds to the satisfaction of her debt against Boyd. In the court below, the case was tried as if the same rules of law were applicable whether she occupied the attitude of purchaser or pledgee, and the instructions, both for the plaintiff and claimant, propounded the law applicable to a purchaser for value. If Mrs. Lombard had purchased the goods in good faith from Boi^d, relinquishing in whole or in pai't her debt against him as the consideration of the purchase, her title would have been valid, regardless of the fraudulent intent of her vendor (if any such existed), of which she had no notice. The relinquishment of her debt would have constituted her a purchaser for value. Hinds v. Pugh, 48 Miss. 268 ; Soule et al. v. Shotwell et al., 52 Miss. 236; Love v. Taylor, 26 Miss. [33] 567 ; Perkins v. Swank, 43 Miss. 349. On the other hand, one who accepts a mere security for a pre-existing debt is not a purchaser for value, and the validity of the transaction, as against the creditors of the' debtor, is determined, not alone by her good faith, but by the lawful or unlawful intent of the debtor in making the security. Surget v. Boyd, 57 Miss. 485 ; Craft v. Bloom, 59 Miss. 69 ; Montgomery v. McGuire, 59 Miss. 193. If an assignment of the property levied on was before that time made by Boyd to Mrs. Lombard with the bona fide purpose of securing the payment of the debt due to her, and with no intent oil his part thereby to defraud his creditors, or unlawfully to hinder or delay them, the assignment is valid, although the result may be that other creditors are thereby hindered and delayed in the collection of their debts; but if the intent of Boyd in making the assignment was thereby to defraud, or unlawfully to hinder or delay his creditors, or the plaintiffs only, it is void as to such creditors. Every assignment of property by a debtor, necessarily withdraws for a time the property assigned from subjection to his debts by legal process. But the law which permits the assignment, necessarily tolerates its consequences. The necessary consequences of a legal act cannot be illegal; so, too, the exei’cise of the right to prefer one creditor withdraws from other creditors the property appropriated to the payment or security of the preferred claim ; but as it is lawful to do this, other creditors cannot claim that its effect is to prevent them from realizing their debts from the property assigned. The exercise of a legal right is not a fraud. On the other baud, a debtor assigning property as security to one of several creditors, must do nothing inconsistent with the rights of such other creditors. He cannot use a valid debt as a cover for covinous concealment of his property, he cannot provide for any benefit to himself, he can only make a real transfer really to pay or secure a real debt. The court erred in instructing the jury that Mrs. Lombard’s [34] rights were to be, or might be, tested as if she was a purchaser for value, because there was no evidence from which the fact of such purchase might be inferred, and also in instructing the jury that the declarations and acts of Boyd could not affect her rights unless she had notice thereof before she acquired the goods. Whatever he did or said tending to prove the intent with which he made the transfer was competent evidence, and ought to have been left to the jury without regard to Mrs. Lombard’s knowledge or want of knowledge thereof. We will not be understood as expressing any opinion on the facts of this case further than to say that they ought to have been submitted to the jury with proper instructions as to the law applicable to them. The judgment is reversed.