Adam Roth Grocery Co. v. Lewis

69 Mo. App. 463, 1897 Mo. App. LEXIS 80

• Court: Missouri Court of Appeals
• Decided: February 23, 1897
• Status: Published

Opinion

Biggs, J.

The plaintiff sued the defendant by attachment before a justice of the peace, and the constable levied upon a portion of a stock of goods as the property of Lewis. Ashton claimed to be the owner of the property attached and he filed an interplea under the statute denying that Lewis had any interest therein. On the trial of the interplea before the justice the finding and judgment were,, for Ashton, and the plaintiff took an appeal to the Louisiana court of common pleas. On the trial in the latter court the interpleader introduced evidence which tended to prove that the goods in question were a portion of a stock of groceries which formerly belonged to Lewis; that on the evening of the thirtieth of January, 1896, the interpleader purchased the entire stock from. Lewis, upon the terms stated in bill of sale of that date; that the invoice of the. goods was taken on the thirty-first and possession given on the evening of that day, and that on the evening of the next day, to wit, February 1, the constable made the levy. The interpleader read in evidence the bill of sale referred to, which is as follows:

“For and in consideration of the premises hereinafter stated, I, A. C. Lewis, of the city of Louisiana, Mo., have this, the thirtieth day of January, 1896, bargained, sold and transferred to George Ashton, of St. Louis, Mo., my entire stock of groceries, goods, wares and merchandise, together with all fixtures and appliances therewith connected now in my storeroom, No. 413 Georgia street, between 4th and 5th streets in said city of Louisiana, also one team (two horses and wagon) used for delivery team. The said George Ashton on his part agrees and hereby promises to pay said Lewis seventy-five (75) per cent of the invoice market price of said' goods, wares, merchandise and fixtures, less such deduction, to be mutually agreed upon between Lewis and Ashton, as may be made upon damaged or unmarketable goods or upon goods. in excess of quantity usually proportionate to similar stock of goods. For said stock of goods, wares, merchandise and fixtures and team, the said Ashton to pay to said Lewis on the valuation thereof, to be determined as above, five hundred (500) dollars cash and assume all the indebtedness of said Lewis to, Bauer Grocery Co., of St. Louis, Mo., and the balance to. be paid in monthly installments of two hundred (200) dollars per month, for which said Ashton is to execute his negotiable promissory notes for each of said monthly installments, to bear six per cent interest per annum. Said Lewis is to pay all taxes due and legally assessed against said property.

“All coupon books issued in the name of A. C. Lewis and taken up by said Ashton shall be accepted by said Lewis as a payment on the indebtedness of Ashton to Lewis at their face value less 2 1-2 per cent. Said Lewis also hereby leases to said Ashton for the term of one year with the privilege of three (3) years, the aforesaid storeroom, No. 413 Georgia street, at the rate-and rental of thirty (30) dollars per month, to be paid monthly.

“Witness our signatures this 30th day of January, 1896.

“A. C. Lewis.

“Geo. Ashton.”

The evidence for the interpleader was also to the effect that on the thirty-first of January he made the cash payment mentioned in the bill of sale. The interpleader offered proof to the effect that the price at which the goods were purchased, was fair and reasonable; that he made the purchase in good faith and without any knowledge of the insolvency of Lewis, or that he was indebted, except as stated in the bill of sale, and that he had declined to execute his notes to Lewis for the balance of the purchase money by reason of the attachments of plaintiff and other creditors of Lewis. He also offered to prove that at the time the attachment writ was served he was garnished under it and that in answer to the garnishment, which was filed on the thirteenth day of February, 1896, he admitted that he was indebted to Lewis on account of the purchase of the goods, in the sum of $2,400, payable in monthly installments of $200 each, and that the first installment would become due on the twenty-ninth of February, 1896. He also offered to prove by Lewis that he made the sale with no intention of defrauding or delaying his creditors, but for the purpose of paying all of his debts. The court excluded all of this evidence. It was admitted by counsel for interpleader that at the time of the sale Lewis was insolvent. Thereupon the court of its own motion instructed the jury to find the issues on the interplea for the plaintiff, which was done and judgment entered accordingly. The inter-pleader has appealed and complains of the action of the court in rejecting the evidence offered by him and also of the instruction.

Bill of sale by insolvent debtor: competency of testimony of to prove intention of sale. It may be remarked here that the offer of proof made by the interpleader was after he had closed his evidence and after the court had intimated that a peremptory instruction to find the issues for the plaintiff would be given. In order to strengthen his case he offered the rejected proof, the court having reopened the case for the purpose of allowing the offer to be made. The bill of sale is regular on its face and its execution is not disputed, and the other evidence introduced by the interpleader clearly tended to prove that at the time the attachment writ was issued and served, the inter-pleader held the actual possession of the goods. This made a prima fade case for him and cast the burden on the plaintiff to show that the sale was fraudulent (Albert v. Besel, 88 Mo. 150), unless the terms of the sale rendered the transaction fraudulent at law as against the creditors of Lewis. This latter view must have been entertained by the trial court, and if it is the correct view, then it was immaterial whether the parties acted in good faith or not. If incorrect, then the evidence should have been admitted, although the interpleader at that stage of the proceeding assumed an unnecessary burden.

Right of insolvent debtor to sell property to pay creditors. To vindicate the instruction in this case we must hold that under no circumstances can an insolvent debtor make a valid sale of his property on time. This is not the law in this state, as has been repeatedly decided. In the case of Dougherty v. Cooper, 77 Mo. 528, it was decided that “an embarrassed debtor may make sale of his property which he deems advantageous to enable him to raise the necessary means of paying off his creditors and to prevent its sacrifice at forced sale under execution, and for this purpose the law recognizes his right to sell for cash or on lime. * * * The fact that the sale may or does have the effect to hinder or delay the creditors is not sufficient to avoid it.” In the very recent case of State ex rel. v. Purcell, 33 S. W. Rep. 13, the supreme court reaffirms the doctrine of the Dougherty case. Judge Macfaelane, who wrote the opinion, says: “There is no doubt that a debtor in failing circumstances has the right to dispose of his property in order to obtain money for the purpose of paying his debts. This is so, though the sale may in fact hinder and delay his creditors. But this right has coupled with it the condition that the sale is made with an honest purpose.” In the subsequent case of Baker v. Harvey, 34 S. W. Rep. 853, the language of the opinion in the Dougherty case is quoted and unqualifiedly approved. Doubtless the trial judge found something in the case of Seger v. Thomas, 107 Mo. 635, which in his opinion justified the instruction which he gave, for the decision in that case is the only one in this state which even seemingly tends to support it. In that case it was admitted that at the time of the sale of the goods (which comprised all of the defendants’ property) the defendants were insolvent and their creditors were pressing for the payment of their claims. It was also admitted that the interpleader .(who was the purchaser) knew of the financial condition of his vendors. It was claimed that the defendants owed the interpleader $2,680. The price of the goods was $4,500. The goods were paid for by the cancellation of the alleged debt and the execution of a note by the inter-pleader for $1,820, which was made payable to the defendants or their order one year after the date of sale. On this state of facts it was held that the necessary effect of the sale was to hinder and delay other creditors of the defendants, and that the parties must be held to have intended that the transaction should have that effect. The considerations which induced the court to so hold, were that the defendants were insolvent and known to be insolvent by the interpleader at the time the sale was made, and that all of the property owned by defendants was conveyed. In the case at bar there is no evidence that Ashton knew that Lewis was insolvent or that he was indebted except as stated in the bill of sale. This distinguishing feature seems to have been treated as of paramount consideration in the Seger case, and it must be so construed.by us, for otherwise the ruling would be contrary to the doctrine of the Dougherty case, which, as we have shown, has been reaffirmed in two subsequent cases, and must now be regarded as the settled law of this state. Hence we are justified in declining to apply the doctrine of the Seger case to the present case.

Bill of sale attachment: evidence. It is suggested by counsel that the bill of sale is not evidence of a complete bargain, in that the goods had to be invoiced and the price of damaged goods had to be subsequently ascertained, and that for these reasons the attempted sale was void as to the respondent. This argument goes for nothing, for the reason that the evidence for the plaintiff tended to prove that the invoice had been taken (except as to a small lot of tinware), the price to be paid for damaged goods had been agreed on, and possession of the entire stock given to Ashton' before the writ of attachment issued.

Part payment of purchase money. It is also suggested by counsel for respondent that as Ashton had paid only a portion of the purchase money for the goods, he could only be protected fro tanto. This principle could only be invoked in case it was determined that Lewis made sale with a fraudulent intent, and that Ashton was not aware of his intention or purpose. Whether this equitable principle can be applied and successfully worked out in a statutory proceeding of interpleader, we need not decide. The record before us does not present such a case. A discussion of the question will be found in the opinion in the Dougherty case.

Attachment of goods in hands of inter pleader: summoning of interpleader as debtor of defendant. Counsel for appellant insist that the plaintiff by attaching the goods in the hands of Ashton and at the same time summoning him as the debtor of Lewis, adopted inconsistent remedies. We can not agree to this. The plaintiff may have had good reason to believe that Ashton was indebted to Lewis on other accounts than the purchase of the goods. There is nothing in the testimony to the contrary.

Our opinion is that the trial court committed error in giving the instruction complained .of, and for this reason its judgment must be reversed and the cause remanded.

All the judges concur; Judge Bond in the result.