Scheitlin v. Stone

I see nothing in the transaction in this case, upon the contract as made between the parties, which will warrant us in setting aside the sale.

The purchasers deny all knowledge of a fraudulent intent; they show that the sale, as made, was the best mode of getting the highest price for the property sold, and that the notes, when sold, were paid to the creditors, and have all been paid by the makers. I know of no principle of law that prevents a party who is involved in debt from selling his property, nor from making such sale on credit, nor from taking the notes received for his goods and paying his creditors with them. If a creditor chooses to receive a note in payment of his claim, he is not hindered or delayed in its collection. His debt is paid as soon as he receives the note in payment. Hor can I see any wrong in selling on credit, if thereby the debtor is able to pay two debts, when, by sale for cash, he would only be able to pay one creditor.

The justice who tried the case found that the sale was made in good faith and for a good consideration, and was not made to hinder creditors or defraud them. Under such findings it was impossible to hold the sale void. Until the courts go so far as to hold that all sales made by a debtor in failing circumstances are void, I can see no reason for so holding in this case ; and when such a rule is adopted, it will render it necessary for every purchaser of goods, before he makes a purchase., to institute an inquiry into the solvency of the vendor. If a man who purchases without notice, for a good consideration and without any intent to hinder or defraud creditors, can not he protected by the law, there will be no safety in commercial transactions. The statements in the answer of the firm who sold the goods are not evidence against the purchasers in whose favor the judge found on the trial, even if they admitted a fraudulent intent on their part. The purchasers had no such intent, and knew nothing df any fraudulent transaction.

As to the findings of fact by the judge, I think they were *638warranted by the evidence, and I concur with- him in the conclusions to which he arrived.

I think the judgment should be affirmed.

Clerke, J. concurred.

(dissenting.) It is impossible to sustain the transaction, even on the answers.

The statute declares void every conveyance, &c. “made with the intent to hinder, delay or defraud creditors,” &c. The necessary effect or result of the transaction, as avowed in the answers, was to hinder and delay creditors. The parties must be presumed to have intended the necessary effect or result of the transaction. Even the favored creditors, to whom the notes were turned out, were obliged to take the notes and wait until they matured, or get nothing. Take the statement of the transaction in the answer of the defendants composing the firm, and it can not be supported without evading the statute. They say that the sale was made to prevent the property from being sacrificed, and that the confidential creditors should get the avails ; but, as I have said, even the confidential creditors could not get the avails until the notes matured, and the necessary effect was to hinder and delay even them. It is quite immaterial how good or pure in a moral aspect the motives of the defendants may have been.

The giving of the notes did not make E. F. Stone & Hall purchasers for value. When this action was commenced, by their own answer they were not purchasers for value, except to the extent that they may have actually paid their notes.

Without examining the evidence on the question of fraud in fact, or other questions in the case, I think, then, that the judgment should be reversed, and a new trial ordered, with costs to abide the event.

Judgment affirmed.

Ingraham, Clerke and Sutherland, Justices.]