Gollober v. Martin

The opinion of the court was delivered by JOHNSTON, J.:

This was an action of replevin, brought by Nathan Gollober in the district court of Clay county, to recover a stock of goods of which he claimed ownership and right of possession through a transfer from the firm of Jack-man & Robinson. The partnership of Jackman & Robinson was engaged in the grocery business in Clay Center, and becoming financially embarassed and being pressed by creditors, sold their entire stock of goods and unsettled accounts to the plaintiff, on the 9th of January, 1883. The defendant Martin, who was the sheriff of Clay county, took and was holding possession of these goods under an execution issued upon a judgment rendered against Jackman & Robinson in favor of one of their creditors. The defendant levied the execution upon the goods as the property of Jackman & Robinson, and contended that the sale to plaintiff was fraudulent and void as against the creditors of the vendors.

The principal question in the case was as to the validity of this sale. A trial was had before the court with a jury, and a verdict in favor of the defendant was returned. The court refused to set aside the verdict and grant a new trial, and the plaintiff, excepting, brings the case here for review. He makes complaint of some portions of the charge of the court., and also contends that the verdict of the jury is unsupported by the evidence. Among the instructions given was the following:

“A sale made out of the usual course of business is evidence of fraud. Whatever is notice enough to excite the attention and put a party on his guard and call for inquiry upon the part of a prudent man, is notice of everything to which inquiry would lead.”

A departure from the usual course of business in the transfer of property has uniformly been held to be a suspicious circumstance, a badge of fraud, to be considered in determin *254 ing the bona Jides of the transaction. (Bump on Fraudulent Conveyances, 51, and eases cited.) This rule is apparently not disputed by counsel for plaintiff, but they insist that the instruction was not pertinent, or warranted by the evidence introduced before the jury.

It appears from the testimony given in the case, that before the transfer was made, the plaintiff was apprised of the fact that Jackman & Robinson were in failing circumstances, and were being sorely pressed by their creditors; that within a few hours after being so informed, he purchased the stock of goods and a lot of unsettled accounts, without any inventory or ap-praisement thereof, making only a superficial inspection as he passed through the store-room and cellar where the goods were kept. He was not engaged in merchandising, and could have had but an imperfect notion of the value of the goods and accounts. This conduct was certainly a departure from the natural and usual course. Men do not usually buy a stock of merchandise made up as this one was, of a great number and variety of articles, without taking a detailed account and inventory of the same; and we have no hesitation in saying that the testimony in the case fully justified the court in the instruction given. The court did not assume or intimate, as counsel seem to infer, that the sale was made in an unusual manner, nor that the transaction between the plaintiff and Jackman & Robinson constituted a fraud upon the creditors of the latter. These questions were left to the jury, and while their attention was called to the rule that certain circumstances have a tendency to show fraud, the instruction will not bear the interpretation that such evidence or badge of fraud was conclusive, or could not be overthrown by explanatory proof.

The plaintiff testified that the transaction was evidenced by a bill of sale which was in testimony before the jury. The court, referring to this bill of sale, instructed the jury that “the mere production of a bill of sale which would be sufficient as against the seller, is not sufficient as against the creditor, and he must supplement that bill of sale with proof of *255 good faith and payment of consideration.” Under the circumstances, there was no error in giving the instruction, nor do we think there was any just cause of complaint in instructing the jury that “the law presumes that every man intends the necessary consequences of his acts, and if the act necessarily delays, hinders or defrauds his creditors, then the law presumes that it was done with fraudulent intent.” One of the principal questions in the case was the intent of the debtors in making the sale charged to be fraudulent. The motives of parties in such cases are not of easy proof, and must generally be shown by their acts and declarations. Fraud is not easily detected, and in cases of this kind the law permits a resort to presumptive evidence, and imputes a fraudulent intent to a debtor where his conduct inevitably leads to a fraud upon his creditors. "Where his action necessarily results in defrauding his creditors, he must be presumed to have foreseen and intended such result. Notwithstanding this instruction, the questions of the debtor’s intent, and whether the sale was fraudulent, were still open for the determination of the jury, and the presumption referred to might have been rebutted by other circumstances and explanatory proof. In other portions of its charge the court told the jury “that fraud is never presumed, but must be proven; that it was the duty of the jury to take into consideration every circumstance, transaction and fact surrounding the sale.” With respect to the good faith of the plaintiff, the jury was in substance told that the fraudulent intent of the vendors was not alone sufficient to avoid the sale. Actual knowledge by a vendee of the fraudulent intent of the vendor is not essential to render the sale void. If the facts brought to his attention are such as to awaken suspicion, and lead a man of ordinary prudence to make inquiry, he is chargeable with notice of the fraudulent intent, and with participation in the fraud. (Phillips v. Reitz, 16 Kas. 396 ; Kurtz v. Miller, 26 id. 314; McDonald v. Gaunt, 30 id. 693.)

It is finally urged that the verdict is contrary to the evidence. Under the facts and circumstances surrounding the sale as disclosed by the record, and applying the rule govern *256 ing this court iu interfering with the verdict of a jury where it has been approved by the trial court, we do not feel warranted in disturbing this verdict. There are signs of fraud connected with the sale, and considei’able testimony which tends to cast a suspicion upon the bonajides of the transaction. It appears, as has been stated, that the plaintiff was told by Jack-man on the day of the sale that his firm was in embarrassed circumstances, and for that reason were seeking to dispose of their goods. The sale was made in considerable haste, within a few hours after receiving this information, and upon a mere superficial examination of a large stock of goods and open accounts, worth several thousand dollars. The plaintiff was not a merchant, and had no training that would enable him to estimate its value; no inventory was taken, nor were there any persons skilled in the business called on to inspect the stock and accounts as to what they were worth, nor were there any other means employed by which a reasonably correct judgment could be formed of the value of the goods, which were subsequently sold for $1,872.72, nor of the unsettled accounts which amounted to between $1,700 and $1,800.' The consideration alleged to have been paid was $2,210, which was paid in the form of a check upon a bank with which the plaintiff was connected. Nine hundred and eighty dollars of this amount was paid by Jackman to his wife for money which he claimed to have borrowed from her, and $380 thereof was paid by the other member of the firm to his sister to discharge an individual debt which he claimed to owe her. These payments were made at the time of the sale and with the knowledge of plaintiff. Then again, Jackman & Robinson, together with their clerk, remained in the store after the alleged sale, and continued to sell goods and collect the outstanding accounts as formerly. The plaintiff visited the store only occasionally, and never sold any of the goods nor collected any of the accounts.

These circumstancs, together with others that need not be mentioned, tend strongly to impeach the;sale. Some explanation of these circumstances was made, or attempted to be made, *257 by the plaintiff, but the jury found against him, and against the validity of the sale. The trial judge has ratified the finding, and, under the rule heretofore referred to, we must sustain the verdict.

The judgment of the district court will be affirmed.

All the Justices concurring.