Morimura v. Samaha
Morimura v. Samaha
Opinion of the Court
delivered the opinion of the Court:
1. The first questions arise on exceptions taken by the appellants to the exclusion of evidence, and will be considered together.
It appears from Samaha’s testimony that he was engaged in business as a dealer in rugs and other oriental goods in a small store on Fourteenth street, about 14 by 30 feet in floor dimension, with a stock of the average value, during the season, of between $5,000 and $6,000. That he had a stock between $15,000 and $16,000 in value at Atlantic City; that Haggar Brothers and Daavid Company proposed to sell their entire stock at 1110 F street N. W. to him about November 23, 1903; that he examined the stock, made an inventory, and concluded
N. N. Maloof was introduced as a witness for claimant in
Counsel for the creditors then proposed to ask witness some questions concerning his statement as being a stockholder in the N. N. Maloof Company, but were interrupted by an objection offered by the claimant to the effect that the loan had been made by the Maloof Company and the supplemental proceedings related to the witness personally. Counsel for the creditors then said: “I purpose showing by this record that this man testified in these proceedings that he had one share of stock of the par value of $100 in that company; that he had hypothecated to Mr. Macksuld, an officer of the company, for $90. I further purpose to show by this deposition that he was simply an employee of that company, and had no other interest in it but this one share of stock, and that his story that he loaned $4,000 of this company’s money, or promised to loan it, without consulting any of the other officers of the company, is a mere fabrication.” The transcript was then offered, again excluded, and exception noted.
There was no error in excluding this transcript upon the occasion of either offer. There is no rule of evidence, or exception to any such rule, that would warrant its admission as original evidence.
The only proper usé that could be made of it would be in the cross-examination of Maloof. As the fact of the advance of the
It would seem that the purpose of the counsel for the creditors was to proceed in that way, until interrupted by the objection, but as his question was not completed, so far as the bill of exception discloses, we have nothing before us by which to determine its admissibility. Shauer v. Alterton, 151 U. S. 607, 616, 38 L. ed. 286, 289, 14 Sup. Ct. Rep. 442.
2. That Haggar Brothers & Daavid Company made the sale to Samaha with the intent to defraud their many creditors the jury could have had no reasonable doubt. The thing for them to ascertain from the evidence was whether Samaha made the purchase in good faith. To show purchase in good faith the burden was upon him to prove that he actually paid the con
For the guidance of the jury in determining these simple issues three special instructions were given to the jury at the request of the claimant, and eighteen were requested by the creditors, five of which were granted and thirteen refused.
It is unnecessary to consider these in detail. Of those given to the jury in application to the evidence relating to the payment of the consideration, it is sufficient to say that they do not appear to be objectionable. Where a sale has been made by the vendor with the intent to defraud creditors, it is not necessary to constitute bad faith in the purchaser, who may have paid a valuable consideration, that he either actually participated in the scheme to defraud, or had actual knowledge of the fraudulent intent of his vendor. Bad faith may exist where the facts and circumstances of the transaction are such as to put him upon inquiry. Jones v. Simpson, 116 U. S. 609, 614, 29 L. ed. 742, 744, 6 Sup. Ct. Rep. 538; Shauer v. Alterton, 151 U. S. 607, 622, 38 L. ed. 289, 291, 14 Sup. Ct. Rep. 442; Sonnentheil v. Christian Moerlein Brewing Co. 172 U. S. 401, 413, 43 L. ed. 492, 497, 19 Sup. Ct. Rep. 233; Humphries v. Freeman, 22 Tex. 45, 50; Wait, Fraud. Conv. 2 ed. sections 379, 380; Bump, Fraud. Conv. 4th ed. sec. 184.
A purchaser from a fraudulent vendor, as in other cases of purchasers of defective titles, is put upon inquiry where he has knowledge of facts and circumstances reasonably sufficient to excite the suspicions of a man of ordinary prudence and business capacity as to the purpose and intent of his vendor, which, if inquired into with ordinary diligence, would lead to the discovery of that purpose and intent. In such a case his situation is not different in law from that of one who is shown to have had direct and certain knowledge. Bump, Fraud. Conv. 4th
The third special instruction requested by the creditors correctly stated this principle for the information of the jury, and ought to have been given or embodied in the general charge.
After its refusal the court read the statute relating to fraudulent conveyances, and then charged the jury as follows:
“As to what is meant by the words ‘previous notice,’ in our statute, must be largely for the consideration of the jury, as a matter of fact. The words are plain, and a judicial definition cannot be of great aid for a jury of ordinary intelligence in the use of the English language. If Samaba knew that said debtors, Haggar Brothers and Daavid Company, did actually intend to hinder, delay, or defraud their creditors by making said sale, then he had notice, no matter how he obtained such knowledge; and if he was notified of any fact exciting suspicion and which would necessarily make him conscious of having the means of knowledge of such intent within his reach by making inquiry, and he should wilfully abstain from making such inquiry to avoid having notice, he must be held to have notice because of such fact and such conscious knowledge of the means of information.”
This was an incorrect statement of the law. As before pointed out, all that is required is that the surrounding facts and circumstances shall be reasonably sufficient to excite the suspicions of a person of ordinary care and business capacity, and prompt an inquiry which, if prosecuted with reasonable diligence in view of all the circumstances, would naturally lead to the discovery of the fraudulent intent of the vendor. It is not required that he shall “wilfully abstain from making such inquiry to avoid having notice.”
3. The last question for consideration arises on error assigned upon exceptions taken to the allowance by the court of the sum of $150 in each case as the reasonable counsel fee of the garnishee.
Section 470 of the Code permits the levy of an attachment,
We cannot agree with the appellants that this provision is beyond the power of Congress to enact. The Code provides a special remedy by attachment, on behalf of creditors in such cases, before their claims accrue due, which is coupled with the condition aforesaid. If parties avail themselves of the remedy they must do it subject to the condition.
The amount of the fee must be reasonable; that is to say, determinable by the facts and circumstances of the case.
What is a reasonable fee in a particular case of the kind is a matter within the discretion of the court, and the exercise of that discretion will not be reviewed except where palpably abused.
For the reasons heretofore given, the judgment will be reversed, with costs, and the cause remanded, with direction to set aside the verdict and grant a new trial. It is so ordered.
Reversed.
Reference
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- MORIMURA v. SAMAHA
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- Syllabus
- Fraudulent ' Conveyances ; Constructive Notice of Fraud; Evidence; Attachment and Garnishment; Counsel Fees. 1. In a fraudulent conveyance case where the vendee, claiming to be an innocent purchaser without notice, testifies that he borrowed part of the consideration paid by him to his vendor from a third person, the record of a judgment against such third person, rendered a few months prior to the alleged sale, which includes the testimony of such third person in supplemental proceedings in execution of such judgment, to the effect that he was penniless at or about the time the money wa3 so alleged to have been borrowed from him, is inadmissible in evidence on behalf of the attacking creditors. 2. But where in such a case such third person called as a witness by the alleged fraudulent vendee testifies as a witness for him, use may be made of such record in his cross-examination by the creditors for the purpose of contradicting him, and in such cross-examination considerable latitude should be allowed. 3. Where creditors attack a conveyance by their debtor as fraudulent, and show fraud on his part, the burden is on the grantee to show that he actually paid the consideration named in the deed; but on his so showing, the burden is then on the creditors to show that he had notice of his grantor’s fraud. 4. A purchaser from a fraudulent vendor, as in other cases of purchasers of defective titles, is put upon inquiry where he has knowledge of facts and circumstances reasonably sufficient to excite the suspicions of a man of ordinary prudence and business capacity as to the purpose and intent of his vendor, which, if inquired into with ordinary diligence, would lead to the discovery of that purpose and intent, in such case his situation not being different in law from that of one who is shown to have had direct and certain knowledge. (Following Manogue v. Bryant, 15 App. D. C. 245.) 5. A statute allowing a reasonable counsel fee to an alleged fraudulent assignee or transferee as a garnishee, where an issue as to the validity of the transfer to him is found in his favor, is not void, although it does not allow a counsel fee to be taxed against him if the issue is found against him. (Construing D. C. Code, secs. 460, 470, 472, and 473.) 6. What is a reasonable fee under such circumstances is a matter within the discretion of the trial court, the exercise of which will not be reviewed on appeal except where palpably abused.