Swofford Bros. Dry Goods Co. v. Smith-McCord Dry Goods Co.

37 S.W. 103, 1 Indian Terr. 314, 1896 Indian Terr. LEXIS 43

• Court: Court Of Appeals Of Indian Territory
• Decided: September 19, 1896
• Status: Published

Opinion

Lewis, J.

(after stating the facts.) 1. It ih urged by appellants (interpleaders below) that the verdict for the appellees is not supported by proof of the issuance and levy of the writ of attachment, such papers not having been offered in evidence. It may be doubted if this objection, if the record sustained it, could inure to the interpleaders’ benefit in this action. They prosecute their claim under section 390, Mansf. Dig. Ark., which enacts: “When a.sheriff shall levy a writ of attachment upon property claimed by a person not a party to the suit, such person may make oath to the property, and the same shall be delivered to him upon his giving bond in favor of the plaintiff [omitting further provisions. ”] Under this statute, the interplea (which is in other jurisdictions known as “intervention”) presupposes the existence and levy of a writ of attachment upon the property claimed. These must be, as they have been held, jurisdictional facts, essential to exist, before the third party can intervene in the suit of others. Insurance Co. vs Teague, 78 Ala. 147. If the record fails to disclose these facts, then it fails to show the facts by virtue of which alone the inter-pleader can lawfully be treated as a party to this action. It seems reasonable to require of him to show the facts whose existence are necessary to bring into life his right of inter-pleading. At least, if the court takes notice of its own process to the extent of letting the interpleader into the action without other proof, it should not, as soon as he is in, cease to know the facts by which he is before it, and give him judgment because of the defect of proof of the facts which alone warrant his presence. Section 356, Mansf. Dig. Ark., gives the right to a third person — First, to contest the validity of the attachment; or, second, to set up claim or lien to the property seized. Section 390 also gives the latter right, but provides a different procedure. In this case the inter-pleader does not deny the validity of the attachment, but asserts lien upon the property seized. When the interplea is a denial of the attachment, and plaintiff’s right to hold the property because of some vice or defect in the attachment proceedings, the burden is upon the attachment plaintiff to show the levy of a valid process and prima facie ownership in the attachment defendant before it is necessary for the claimant to introduce any evidence. But where the inter-pleader does not assail the regularity or validity of the attachment proceedings, but denies ownership or right in the attachment defendant, and asserts it in himself, the burden is on him as to all facts essential to his causé of action or his right of proceeding in the particular case. 1 Shinn, Attach. § 437. The cases cited, imposing the burden of proof upon the plaintiff where ownership of the attached property was asserted by a third party, were decided under special statutes so enacting. Jackson vs Bain, 74 Ala. 329; Code Ala. 1876, 5 3343; Mandel vs McClure, 14 Smedes & M. 11; Hutch. Code Miss. pp, 820, 903; Sayles, Civ. St. Tex, arts. 4838, 4839.

p-Sírf?11 oi Question in-vo1ved.

Apart from these considerations, the objection cannot be sustained. The interplea states: "That the property levied on by the marshal in this case is the property of the interpleaders, and they were entitled at the time of the levy of the attachment in this cause to the possession thereof." Appellees deny such ownership. It was, by stipulation agreed that the property in controversy is the same property conveyed by the mortgage introduced by interpleaders, and the same property levied on under the writ of attachment of the Smith-McCord Dry Goods Company against S. M. Perry. The interpleaders gave bond; issue was joined; evidence in.-troduced; instructions requested,-which indicate that the case was tried below solely upon the theory that only the question of the interpleaders' interest in the property was involved. We think, under the circumstances, the parties should be held to their trial court theory. Elliott, App. Proc. §~ 489 etseq.

2. Appellants went to trial without objection before the disposition of the issue between the plaintiffs and defendants as to the rightfulness of the attachment. With this issue interpleaders had nothing to do, and it is not perceived why they should be compelled to await its determination. It is so held in the parent state from which the Arkansas Code is taken. Taylor vs Taylor, 8 Bush (Ky.) 118. See, also, 1 Shinn, Attachm. § 431. In any event, appellants did not object at the trial to proceeding before its disposal, and it is too late to do so now.

3. The jury rendered the following verdict: “We, the jury, impanelled and sworn to try the issues herein, find the issues in favor of the plaintiff. Geo. M. Martin, Foreman. ’ ’ After the jury had been discharged by the court, the court amended this verdict by adding after the word “plaintiff” the words “and against the interpleaders.” The issues the jury were sworn to try, and the only issues actually tried and submitted to them, were issues between the plaintiffs and the interpleaders. We think the original verdict suf-' ficient to manifest the intent of the jury, and therefore to support the judgment. We think, further, that, when the intent was manifest, the court was authorized to modify or enlarge the verdict wherein he regarded it as informal. 2 Thomp. Trials, §§ 2642-2644; Woodruff vs Webb, 82 Ark. 612; Mansf. Dig. Ark. § 5083.

Verdict. Intent.

4. The court charged: “(5) If you should find in this case that the defendants, at the time they executed the mortgage herein, intended to cheat or hinder or delay creditors and executed the mortgage for that purpose, that alone would not justify you in finding against the interpleaders; but it would be your duty to find in favor of the interplead-ers unless you should find that they took said mortgage with the view and aim to aid and forward the said design of cheating or hindering or delaying creditors. (6) If you should find that the makers of said mortgage, at the time of making the same, made. it for the purpose of cheating 'or hindering or delaying creditors, and as to either of the interpleaders it should not be proven to your satisfaction by. a preponderance of the evidence that such interpleader participated in the fraudulent design, and took the mortgage with the view and aim to aid and forward such design, it would be. your duty to return a verdict for sucb interpleader. (7) An insolvent debtor has a right to prefer one creditor to another, and he may do so by a mortgage; and other creditors, if the transaction be assailed as fraudulent, must establish fraud of the mortgagor in making and taking the mortgage; and this fraud must be against creditors, and must be in making and taking the mortgage complained of; and proof of other fraudulent acts, either of the mortgagor or mortg gee, not connected with the transaction, would not be sufficient to overturn the mortgage. Fraud is never presumed, but must be proved by a preponderance of the evidence, the presumption being one of good faith in the first instance, and the burden being upon him who asserts a want of good faith; and if you believe from the evidence in this case that either the mortgagor or the mortgagees, in making and taking the mortgage in this case, acted in good faith, it would be your duty to find for the mortgagees. If you find from the evidence that the instrument relied on as a basis of title by the interpleaders was executed, not alone to secure an indebtedness of the mortgagor, but to protect the property of the mortgagor, and to hinder and delay their creditors, and this was known at the time by the mortgagees, said instrument would be fraudulent and void as to creditors, provided you also find that said instrument was a fraudulent contrivance for that purpose, and that the mortgagees participated in the fraud.” Appellants object to the last paragraph. Taking it in connection with the preceding sections, we think the charge states the law as favorably as apjiellants can ask, and perhaps more favorably than they were entitled to. Shelley vs Boothe, 73 Mo. 74; Bank vs Ridenour (Kan. Sup.) 27 Pac. 150; Straight vs Roberts (Ind. Sup.) 26 N. E. 78; Howell vs Bowman (Ala.) 10 South. 641; Haas vs Kraus, 86 Tex. 687, 27 S. W. 256; David vs Birchard, 53 Wis. 492, 10 N. W. 557; Smith vs Schwed, 9 Fed. 485; Wood vs Keith, 60 Ark. 425, 30 S. W. 756; Jones, Chat. Mortg. § 334. We would probably not have reached the same conclusion on this issue as found by the jury, but we think the facts required its submission to their determination, and áre sufficient to support their verdict.

instruction,

.5. The thirteenth paragraph of the court’s charge was as follows: “The instrument relied on as a basis of title by the interpleaders is on its face a mortgage, and purports to convey all of defendant’s choses in action, no .matter where situated, used by defendants in connection with their business. Now, if you find from the evidence that it was the understanding of all parties that the words ‘choses in action’ were intended to embrace the notes and accounts of the mortgagors, and that the mortgagors, or either of them, were to remain in possession of any of such property, and use and dispose of it as their own, and that they did so use and dispose of any of such property, said instrument would be void as to attaching creditors, and you should find for plaintiffs, notwithstanding the terms of the instrument in reference to the mortgagees’ custody and control of'Said property.” The fourteenth paragraph of the court’s charge was requested by the interpleaders, and given by the court, with modifications as indicated by italics: “You are also instructed that if you find from the evidence that said mortgage covered the notes and accounts of the mortgagors, and the said notes and accounts were in the possession of defendants, that then, under the conditions of said mortgage, defendants were the agents of said mortgagees, and that that fact of itself was no fraud upon the creditors, unless you find that the mortgage was wrongfully given by defendants, and that such notes and accounts were conveyed to and accepted by the interpleaders with the fraudulent intent to- hinder and delay the creditors of the defendants, and not for the purpose of securing the indebtedness due to them.” Objection is urged to the giving of the first, and to the modification of the second, of these paragraphs. The court admitted evidence that the parties did not. know that the mortgage conveyed the notes and accounts, and that, consequently, no fraudulent intent should be imputed to them on that account. It is held by some authorities that the parties to a written . instrument are conclusively held to intend what is expressed upon its face, and, if its terms are fraudulent, it cannot be supported by proof that they were inserted through inadvertence or mistake. This is the rule in this jurisdiction. Appolos vs Brady, 1 C. C. A. 299, 49 Fed. 401; Bump. Fraud. Conv. §§ 81, 338. It is also held by all the authorities that proof is admissible to show that the parties intended that acts should be done under the instrument, inconsistent with the provisions of the deed. This is the very essence of the fraud. The charge of the court was as favorable to the appellants as the facts warranted. Gauss Sons vs Doyle, 46 Ark. 127. It is true that, if the mortgagors were in possession of the notes and accounts as agents of appellants, their misappropriation would not, without more, avoid the mortgage. But the court did not so declare. To have this effect, the court told the jury that it must have been understood between the parties that they were to use and dispose of the property as their own. The fourteenth paragraph, as modified by the court, was more favorable to appellants than the charge requested by them. They should not, therefore, be heard to complain of it.

instruction, instruction, written instrument, I; tent, Instructions considered as an entirety.

6. The badge of fraud referred to by the court in the fifteenth paragraph of the charge was applicable to facts established against the mortgagors. When taken in connection with the paragraphs of the court’s charge heretofore set out, and particularly in connection with the fifth paragraph, it is impossible to believe that the jury could have understood this instruction as applying to the interpleaders. The charge must be considered as an entirety, and it must be assumed that the jury so construed it.

7. Proof was admitted, over objection of appellants, of a sale made by the firm of S. M. Perry on December 26th, to W. C. Brock, of the goods and merchandise of the first-named firm. In the details of this sale, there were circumstances sufficient to justify the inference of a fraudulent intent on the part of S. M. Perry in making such sale. A few days after this transaction, it was rescinded at the instance of the agents of the appellants, and the mortgage upon which they rely in this action was executed in their favor. It is urged that evidence of the first conveyance and the circumstances attending it was not admissible against appellants. Evidence of other fraudulent transfers or acts at or about the time of the transfer in controversy is admissible upon the question of the grantor’s intent in the execution of the conveyance attacked. Bump, Fraud. Conv. pp. 582, 583. Such evidence, though admissible, is ineffectual against- the grantee, unless it is further shown that he had knowledge of and participated in the fraudulent intent established against the grantor. Upon this point, as we have seen, the jury were sufficiently advised.

other iraudu-Evidence, objection to evidence. Record. Written instrument. Evidence of intent.

8. Error is assigned to the action of the court in admitting testimony of J. H. Langley, one of the parties to the mortgage set up by appellants, the effect of which testimony, it is claimed, was the disparagement of the mortgagees’ title by the mortgagors, by declarations subsequent to the execution of the instrument. It is enough to say of this objection that the record does not show that it was presented to tne trial court, and it cannot be raised for the first time here. Railway Co. vs Heck, 102 U. S. 120; Hanna vs Maas. 122 U. S. 24, 7 Sup. Ct. 1055; Newport News Co. vs Pace, 158 U. S. 36, 15 Sup. Ct. 743; Cogswell vs McKeogh, 46 Ark, 524; Railway Co. vs Brown, 49 Ark, 253, 4 S. W. 781; Elliott, App. Proc. §§ 293, 294.

Appellants sought to show by the mortgagors that it was not intended that the choses in action mentioned in the instrument should be included therein. The court did not err in excluding such testimony. Appolos vs Brady, 1 C. C. A. 299, 49 Fed. 401.

Finding no reversible error in the record, the judgment is affirmed.

Springer, C. J., concurs.