Allen v. Massey

1 F. Cas. 504, 2 Abb. 60

• Court: U.S. Circuit Court for the District of Missouri
• Decided: April 15, 1870
• Status: Published

Opinion

DILLON, Circuit Judge,

delivered the opinion of the court. — I. Neither in his petition nor in argument does the assignee base his right to the relief demanded upon the ground that the bankrupt did not in fact owe Mrs. Massey the debt which the bill of sale was made to pay or secure, nor upon the ground that the sale was fraudulent, because made to hinder and delay the creditors of Downing, the vendor. The assignee places his case solely upon the statute of the state of Missouri relating to fraudulent conveyances, the tenth section of which is in these words: “Every sale made by a vendor of goods and chattels in his possession or under his control, unless the same be accompanied by delivery in a reasonable time (regard being had to the situation of the property), and be followed by an actual and continued change of possession of the things sold, shall be held to be fraudulent and void, as against the creditors of the vendor, or subsequent purchasers in good faith.” .St. Mo. 1865, p. 440, c. 107.

The sale by the bankrupt to Mrs. Massey is within the statute. It was an absolute sale of goods in the possession of the vendor. There was no delivery of the property, or, if any, but a momentary one, and it was not followed by any actual or continued change of possession. This being so, the statute enacts that the sale “shall be held to be fraudulent and void as against the creditors of the vendor, or subsequent purchasers in good faith.” With the policy of a statute which, irrespective of the fact of fraud or the intention of the parties to defraud, inexorably denounces as fraudulent per se all sales not accompanied by the required delivery and by actual and continued change of possession, the courts have nothing to do, and it does not become them to question the legislative wisdom.

[NOTE. On appeal to the supreme court the above decree of the circuit court was aflSrmed. Mr. Justice Field, in delivering the opinion of the court, said: “The sale of Downing to Mrs. Massey was, within the terms of the statute, fraudulent and void as against his creditors. It was not accompanied by any delivery of the property, and was not followed by any change of possession. * * * There was no outward sign manifested, nor indicia exhibited, nor notice given, which could apprise the community of any change of ownership. * * * The as-signee of Downing’s estate was authorized by the express terms of the fourteenth section of the bankrupt act (14 Stat. 439) to pursue the property thus attempted to be transferred, and, as auxiliary to its recovery, to ask that the sale, of the bankrupt be annulled.” Allen v. Massey, 17 Wall. (84 U. S.) 351.]

The purpose of the statute is to prevent the vendor from acquiring a false and delusive credit, and to prevent purchasers from being ensnared by means of secret sales. Hence, the provision that the sale shall, a3 required, be accompanied with delivery, and this by an actual and continued change of possession. The purpose of the enactment being to protect the public from deception, the. indicia of a change of owners should be such as to accomplish this end. The new owner should fly his own, and not his vendor’s flag. This is the construction which the statute has received from the supreme court of the state. In Claflin v. Rosenberg, 42 Mo. 439, speaking of this statute, Wagner, J., remarks that “the vendee must take actual possession, and the possession must be open, notorious, and unequivocal, such as to apprise the community, or those who are accustomed to deal with the party, that the goods have changed hands. . . . This necessarily excludes the idea of a joint or concurrent possession.” On a critical examination of the case just cited, it will be seen that the exact point of the decision is that the possession of the vendee- must, as against the vendor, be actual and exclusive. This is the. leading case upon the statute in question, and it has been subsequently reaffirmed and followed. Claflin v. Rosenburg, 43 Mo. 593; State v. King, 44 Mo. 238; Lesem v. Herriford, Id. 323. See Twyne’s Case, and American Notes, 1 Smith, Lead. Cas. 33.

We deem it prudent to observe that in the case at bar, it is not necessary to go so far as to say that in no case can a sale be upheld where the vendor is in possession concurrently with, or rather subordínate to, the vendee or his agent. This may depend upon the existence of circumstances of a nature fairly to put the public upon notice. In this case there was no actual delivery, no continued change of possession, no circumstances of any kind, whereby either creditors or purchasers could know that any change of owners had taken place.

n. The defendants make a point that the situation of the parties to the sale and property was such that no delivery and change of possession other than such as were made was practicable, and hence more ought not to be required. The statute refers to “the situation of the property,” not of the parties; but, -without emphasizing this suggestion, it seems to us that the statute has reference to property so situated as not to be at the time capable of immediate actual delivery and change of possession, such as growing crops, bulky articles, &c., and not to cases where the property is present and capable of being delivered to the vendee and retained in his possession and controL-Since, in a case like the present, this court, will follow- the construction given to the local statute by the highest court of the state, it is not deemed to be necessary to follow the appellant’s counsel into an examination of the decisions under the statute of Elizabeth or the statutes of other states.

HI. The defendants also contend that even if such be the construction of the statute, the assignee has no right to impeach the sale and have the property delivered to him. This view cannot be maintained. If Downing had not gone into bankruptcy, any creditor of his could have subjected the property to the payment of his debt. In this respect the assignee represents the creditors. In consequence of Downing being adjudicated a bankrupt, his creditors are precluded from proceeding against him, and hence the assignee has the right given to him in terms by the bankrupt act, to proceed in the way which the present plaintiff is pursuing. Carr v. Hilton, [Case No. 2,436;] Hill. Bankr. 134, § 43, and cases cited; Bankrupt Act 1867, §§ 14, 35. The result is that the order of the district court must be affirmed.

KREKEL, District Judge, concurred.