Smith v. Collins & Griffith

94 Ala. 394
CourtSupreme Court of Alabama
DecidedNovember 15, 1891
StatusPublished
Cited by27 cases

This text of 94 Ala. 394 (Smith v. Collins & Griffith) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smith v. Collins & Griffith, 94 Ala. 394 (Ala. 1891).

Opinion

COLEMAN, J.

— Creditors of J. D. Collins & Go. sued out certain attachments against the firm, which were levied by the sheriff upon a stock of goods as the property of the defendants in attacmnent. The plaintiffs in this suit, Collins & Griffith, brought the present action against the sheriff and his sureties, in trespass, claiming the goods -as their property under a purchase from J. D. Collins & Co., made prior to the suing out of the attachments.' The bona fieles and validity of the sale to the plaintiffs by J. D. Collins & Co. was the issue in the trial court. Robert A. Collins, of the firm of Collins & Griffith, is a brother of J. D. Collins, and son of J. A. Collins, composing the firm of J. -.D. Collins & Co.

There seems to be no contest as to the validity of the debts of the plaintiffs in attachment, and of their existence at the time and prior to the sale of the goods. The evidence tends to show that the> consideration paid by plaintiffs principally consisted in cash and a debt due Robert A. Collins from J. D. Collins and J. A. Collins, jointly but not as partners. There was one item of four hogs, valued' at sixty dollars in the inventory. These hogs were' returned to the-vendors, and the agreed price for the whole purchase was credited with the amount of the sixty dollars. There are some general principles of law applying in such cases, which have been repeatedly declared by this court, but, as they seem not to be fully apprehended, we venture to repeat some of them again.

When a creditor, attacks a sale of property made by his debtor as fraudulent, and proves the existence of his debt prior to the sale, the burden devolves upon the purchaser to show that he paid a fair and adequate consideration. After the purchaser makes this proof, then the burden shifts back [403]*403upon the creditor to show that tile sale was made with a fraudulent intent, and that the purchaser knew of and participated in this intent. The law declares that an insolvent vendor, or one in embarrassed circumstances financially, who disposes of his property which is liable for his debts, and places it beyond the reach of legal process, and withholds the purchase-money from his creditor, is guilty of fraud; anda purchaser for a cash or present consideration of substantially all his property, who knows that his vendor is insolvent, or financially embarrassed, or who has knowledge of such tacts as would put a reasonable man upon inquiry, and which, if followed up, would lead to a discovery of his insolvency or embarrassment, is a guilty participator in the fraud, and acquires nothing by his purchase, available against the creditors of his vendor.

The general charge of the court is not consistent with itself, and not in accord with these principles in several particulars. We specify only one. The court, after correctly instructing the jury as to the effect a knowledge of the insolvency of the vendor on the part of the vendee would have upon the purchase, in another part of the charge instructed the jury that, after plaintiffs showed a prima facie title to the property, “it devolves upon the defendants to show that plaintiffs’ vendors were in failing circumstances or insolvent, and to show notice of that fact to the plaintiffs when they became the purchasers; when they have done that, it devolves upon the plaintiffs to show that they bought those goods for a valuable consideration — to show to the reasonable satisfaction of the jury what they have paid for them.” This is error in two respects. First, in requiring the defendants to show that plaintiffs had knowledge of the insolvency of their vendors, before the plaintiffs were required to prove the payment of a valid consideration. The rule is, that when the proof shows that the attaching creditor’s debts existed prior to the sale, the burden of proving the payment of the consideration devolves upon the purchaser, and after this' proof is made, then the burden is shifted back upon the attaching creditors to prove that the purchaser had knowledge of the fraudulent intent, or insolvency of the vendor, or of his failing condition. The charge is also wrong in principle, in this, that impliedly it asserts that the purchase would be valid, if an adequate consideration was paid, although the purchasers had notice of the insolvent condition or fraudulent intent of their vendors.

The court holds that there is no reversible. error in the charge to the jury in reference to the fact of relationship of the parties, and in giving charge No. 1 at the, request óf [404]*404plaintiffs, in which it was declared that the jury are sole judges of the weight to be given to the fact of relationship. The .charge asserts no incorrect proposition of law, and if deemed misleading, as falling short of the entire rule, the court holds that it was the duty of the complaining party to have asked for an explanatory charge. In the case of Reeves v. Skipper, at present term, this question was considered at length, and the rule which governs in such cases settled.

That J. D. Collins & Co. were largely indebted at the time of the sale to plaintiffs, and that the sale tended to hinder and delay their creditors in the collection of their debts, is not seriously controverted. A debtor possessed of ample means to satisfy all demands against him, as well as an insolvent debtor, may be guilty of a fraudulent intent in the sale of his property. He may convert his property into money for the express purpose of putting it beyond the reach of his creditors, and a vendee who purchases with a knowledge or such fraudulent purpose, for a cash consideration, in law is a participator in the fraud. Charge 2 given for plaintiffs ignores this contention, and is further objectionable, in that it does not hypothesize a want of knowledge or notice of facts, if such were proven on the trial to the satisfaction of the jury, calculated to put a reasonable man on inquiry, and which, if followed up, would have led to a discovery of either a fraudulent intent or the insolvency or failing condition of their vendors. Charge No. 7 is subject to the first objection pointed out to charge No. 2. Furthermore, it fixes the burden of proving knowledge or notice of insolvency upon defendants absolutely, without reference to the fact that the jury must be satisfied that plaintiffs paid a fair and adequate consideration, before this burden is shifted on defendants. We find no error in charges 3, 4, 5, and 6. Charge 6 is substantially the same as that approved in Kellar v. Taylor, 90 Ala. 290. Charge 4 may have called for an explanatory charge, but there is no error in the proposition asserted.

Charge No. 1 requested by defendants went too far, and was also argumentative, and was properly refused. Charge No. 2 was argumentative, and there is no reversible error in its refusal. If the jury believed the facts predicated in this charge, they were suggestive of fraud, and should have led to inquiry on the part of the purchasers; and if the charge had stopped here, it ought to have been given. Near the conclusion of the charge it becomes argumentative. Charges Nos. 3 and 7 were properly refused. A debtor who has a sufficiency of property amenable to legal, process to satisfy all legal demands, can not be said to be insolvent, although he [405]*405may not have money-in-hand to meet his liabilities as they fall due in the course of trade.

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Bluebook (online)
94 Ala. 394, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-collins-griffith-ala-1891.