Lee v. Simmons

The facts are undisputed. They appear by the stipulation of the parties, and the testimony of the defendant, his assignor, and his clerk. They more than justify the findings as above stated. From these facts we think the court was justified in holding that the purchase was fraudulently made. Where, as here, a person orders goods knowing himself to be insolvent, without disclosing his insolvency, and with the preconceived purpose of not paying for them at all, or, at most, only a very small per cent., and with the further preconceived purpose of having them swell his assets for the benefit of those whom he intends to make his preferred creditors, the purchase is fraudulent, and the vendor, upon discovering the fraud, may rescind the contract, and retake the goods, as against the vendee. Nichols v. Pinner, 18 N. Y. 295; S. C. (Nichols v. Michael), 23 N. Y. 266; Hennequin v. Naylor, 24 N. Y. 139; Devoe v. Brandt, 53 N. Y. 462; Pike v. Wieting, 49 Barb. 314; Wright v. Brown, 67 N. Y. 1; Dow v. Sanborn, 3 Allen, 181; Thompson v. Rose, 16 Conn. 71; Morrill v. Blackman, 42 Conn. 324; Shipman v. Seymour, 40 Mich. 274; Donaldson v. Farwell, 93 U. S. 631; Stewart v. Emerson, 52 N. H. *527301. The case of Garbutt v. Bank of P. du C. 22 Wis. 384, is clearly distinguishable. The defendant, as assignee for the benefit of creditors, took the goods subject to the equities between the original parties, and hence is in no better position to defend against this action than Whittelsey would have been had the suit been brought against him before the assignment. Nichols v. Michael, supra; Devoe v. Brandt, supra; Dow v. Sanborn, supra.

The mere fact that the defendant voluntarily advanced to the railway company the freight on the goods did not make him a bona fide holder, nor entitle him to retain the goods until he should be reimbursed; nor did the fact that the vendee received and appropriated to his use the goods sent by express, before the plaintiffs discovered the fraud, prevent them from reclaiming the goods not so appropriated when they did discover the fraud.

By the Court.— The judgment of the circuit court is affirmed.