Repauno Chemical Co. v. Victor Hardware Co.

CALDWELL, Circuit Judge, after stating the case as above, delivered the opinion of the court. There are a number of errors assigned, hut in the brief of the learned counsel for the plaintiff in error, who did not try the case below, only two of the assignments of error are set out and relied upon. In City of Lincoln v. Sun Vapor Street-Light Co., 19 U. S. App. 431, 8 C. C. A. 253, 59 Fed. 756, we .announced our purpose to. require a com [950] pliance with rule 24 of this court, and it has been applied in numerous cases since. Haldane v. U. S., 32 U. S. App. 607, 16 C. C. A. 447, 69 Fed. 819; National Bank of Commerce of Kansas City v. First Nat. Bank, 27 U. S. App. 88, 10 C. C. A. 87, 61 Fed. 809; Hoge v. Magnes, 56 U. S. App. 500, 29 C. C. A. 564, 85 Fed. 355. We proceed to the consideration of the errors assigned and discussed in the brief of counsel for the plaintiff in error. The first assignment of error is as .follows: “That the court erred in refusing to admit in evidence the letter of the intervener sent to R. G. Dun & Co., as follows, to wit: “ ‘Victor, Colo., Sept. 24, 1898. “ ‘To Whom It may Concern: This is to certify that I am not, neither do I intend to push Greve and Quereau for the amount of their indebtedness to me, as they have ampie time, and are meeting their notes as they become due, notwithstanding all reports to the contrary. “ ‘[Signed] Henrietta Quereau.’ ” But the record fails to show that there was an exception saved to the ruling of the court when it was finally offered in evidence and excluded by the court. It is true that when the letter was first offered in evidence and excluded an exception was saved, but that was a mere tentative ruling. As shown by the record, the court, in sustaining the objection, stated:' “The objection to this paper is sustained until you make further proof. You may offer it later on possibly.” Later on, when the witness Allen was introduced on behalf of the plaintiff in error, the letter was again offered in evidence, when the objection to its introduction as evidence was sustained by the court. To this ruling of the court no exception was then saved, and for this reason the matter is not properly before us for consideration. Paxson v. Brown, 27 U. S. App. 49, 10 C. C. A. 135, 61 Fed. 874. But,, in view of the fact that the reports of the commercial agency of Dun & Co. stated the contents of the letter, and these reports were admitted in evidence, and considered by the jury, its rejection was not prejudicial. Besides, when the letter was first offered in evidence, and when the exception was- saved, there was no evidence before the jury that the letter had ever been communicated to the creditors, and for this reason the trial judge properly held that it was at that time inadmissible. The second assignment of error relates to the charge of the court. The charge is lengthy, covering nearly five pages of the printed record, and the only exception taken was to the entire charge; the language of the exception being as follows: “To the giving of which instructions the plaintiff, by its counsel, then and there excepted.” The ruléis well settled that an exception to a charge of the court in gross, which contains several distinct propositions of law, is not available if any part of the charge is good.; Iron Co. v. Blake, 144 U. S. 476, 12 Sup. Ct. 731, 36 L. Ed. 510; Thiede v. Utah, 159 U. S. 510, 16 Sup. Ct. 62, 40 L. Ed. 237; Price v. Pankhurst, 10 U. S. App. 497, 3 C. C. A. 551, 53 Fed. 312; Schneider Brewing Co. v. American Ice-Mach. Co., 40 U. S. App. 382, 23 C. C. A. 89, 77 Fed. 138; McClellan v. Pyeatt, 4 U. S. App. 319,1 C. C. A. 613, 50 Fed. 686; New England Furniture & Carpet Co. v. Catholicon Co., 49 U. S. App. 78, 24 C. C. A. 595, 79 [951] Fed. 294. But, aside from this fact, a careful examination of the entire charge of the court fails to show any error prejudicial to the plaintiff. The evidence tends to show that the hardware company was insolvent, and indebted to numerous persons, among them the plaintiff in error, and also defendant in error. The jury found the indebtedness due to Mrs. Koby (formerly Mrs. Quereau) was a valid indebtedness, and that the value of the property received by her in payment thereof was not in excess of the amount due to her, and that the sale was absolute, and made in good faith to pay an honest debt. These facts having been established by the verdict of the jury, the only question is, did the hardware company have the right to prefer one creditor to the exclusion of all others? On this point the court instructed (he jury as follows: * “The evidence in the case shows a race of diligence between creditors, who, I think, it may be fairly said knew the failing condition of their common debtor, and knew that the latter liad the right to make a preference among them, and, as indicated at the outset, the intervener had a right to secure the payment of her claim if the transaction, so far as she was concerned, was honest, and entirely free from fraud, or the knowledge by her of fraud,’on the part of her debtor, the Victor Hardware Company. In other words, a mere intent on the part of the debtor, the Victor Hardware Company, in this case, to hinder and delay its creditors, or any one of them, will not of itself render a transfer made in payment of an existing indebtedness void as against the creditor. In order that the intent of the debtor to hinder and delay his creditors by such transfer shall render void a conveyance made in payment of a prior debt, such intent must be participated in by the creditor to whom the conveyance is made. Parties to a business transaction are not presumed to deal with each other in bad faith; but, on the contrary, are presumed to deal honestly and in good faith until the opposite is shown by evidence upon the trial, and any one who alleges such acts are done in bad faith, or for a dishonest and fraudulent purpose, takes upon himself the burden of showing that such is the case. In other words, fraud is never presumed, and it devolves upon him who alleges fraud to show the same by satisfactory proof; that is to say, proof which Is satisfactory to the jury.” This question was before this court in Rice v. Commission Co., 36 U. S. App. 266, 18 C. C. A. 15, 71 Fed. 151, and we there said: “Fraud and collusion cannot be predicated upon the fact that a debtor consented to a judgment for a debt which he honestly owed. Nor is it a fraud for a debtor to consent to a judgment in favor of one of his creditors, and deny that favor to all others. In the absence of a bankrupt or insolvent law, a debtor may lawfully pay or secure one creditor to the exclusion of all others. The preference may be given in many ways, but most commonly it is accomplished by paying the debt in money, or by the debtor’s selling or mortgaging his property to his creditor, or by confessing a judgment in favor of liis creditor, followed by execution and a levy upon the debtor’s property. The validity of tlie preference is not affected by the fact that it was accomplished quickly, or secretly, in order to prevent the interference of other creditors.” A debtor who has many creditors may pay one of them in property in full, though it takes all his property, and leaves nothing for his other creditors. The debtor has an undoubted right to make the preference, and the creditor has an undoubted right to take his debtor’s property in payment of his debt. While the questions in cases like this are very plain, they are sometimes obscured, and the minds of the jury confused, by telling them that any action of the preferred creditor and debtor which had the effect to hinder, delay, or defraud the debt952 or’s other creditors is fraudulent .and void. They should be told, in this connection, that, although the acquisition by one creditor of all the debtor’s property in satisfaction of his debt to that creditor has the effect to place that property beyond the reach of other creditors, and leave the debtor nothing with which to pay his other debts, yet this is not hindering or delaying his other creditors in a legal sense; that is, it is not fraudulent as to them, and they cannot complain of it, because the debtor in paying and the creditor in receiving the property did nothing which the law did not authorize them to do, and which every other creditor would have quickly done if he had had the good fortune to be in likq favor with the debtor. Other creditors may reproach the debtor for his partiality, but they cannot recover the property from the preferred creditor. The questions in-such cases are: Did the debtor owe the debt? Did the creditor accept the property in absolute payment of his debt, with no reservation or secret trust for the benefit of the debtor? Was there such a change of the possession as the property fairly admitted of? When these questiqns can be answered in the affirmative, the transaction is impervious to attack from any quarter. These are the facts essential to- constitute a valid sale of property in payment of a debt, and when they are established it is wholly immaterial whether the transaction was consummated in haste, and secretly, or openly and leisurely, or in daylight or in the nighttime. Lawful contracts, made in good faith, for a lawful purpose, may be made at any hour of the day or night, and publicly or secretly, and leisurely or hastily, as it best suits the convenience or interests of the párties to them. When a creditor is seeking payment from an insolvent debtor, it is commonly to his interest to act with celerity and secretly. If he made open proclamation of his purpose, it would probably result in some other creditor obtaining the preference. A creditor whose debt is payable in money has a legal-right to insist that the cash value of the property received in payment shall equal the amount of his debt. And, as the actual cash value of most property is largely a matter of opinion, the discrepancy between that value and the amount of the debt must be clearly shown to be very considerable before the transaction can be challenged on the ground that there was a fraudulent overpayment. That charge is frequently made, but rarely sustained. It was not sustained in this case. The judgment of the circuit court is affirmed.