Case ID: neb_49/html/0321-01.html
Source: Caselaw Access Project
Author: {"author": "Norval, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Dempster Mill Manufacturing Company v. First National Bank of Holdrege.
    Filed October 7, 1896.
    No. 6733.
    1. Fraudulent Conveyances: Preferring Ckeditobs. An insolvent debtor has the right to pay or secure a creditor to the exclusion of others, and the intention to defraud cannot be inferred from the mere fact that such preference was given.
    2. Review: Instructions. An allegation of error as to the giving of a group of instructions is insufficient, unless all the instructions included in such group are erroneous.
    3. Evidence: Lost Documents. Parol testimony is not admissible to prove the contents of a written document until its absence is accounted for.
    Error from the district court of Phelps county. Tried below before Beall, J.
    
      G. Norberg and G. G. Flansburg, for plaintiff in error.
    
      Rhea Bros, and W. P. Hall, contra.
    
   Norval, J.

On, and for some time prior to, December 18, 1891, J. G. Moore & Co. were engaged in the windmill and pump business at Holdrege, and on said date they executed a bill of sale to the First National Bank of Holdrege of all the firm property, consisting of the stock on hand, horses, etc., for the expressed consideration of $3,538.94. The bank at once took possession of the property and caused the bill of sale to be recorded. The next day the Dempster Mill Manufacturing Company commenced an action in the county court of Plielps county against said J. G. Moore & Co., and an order of attachment Avas issued in the case and placed in the hands of the sheriff, avIio executed the same by levying upon a portion of the property covered by the said bill of sale. The bank thereupon brought replevin against the sheriff for the recoArery of the property. Subsequently the attaching creditor Avas substituted as defendant. From a verdict and judgment in favor of the bank the defendant prosecutes error.

The assignments relied upon, for a reversal of the judgment may be classified as í'oHoavs:

1. The verdict is contrary to the laAV and the evidence.

2. Erroneous rulings of the court upon the admission and exclusion of testimony.

3. Errors in the instructions.

Under the first head it is argued that the transfer of the property to the bank by Moore & Co. Avas fraudulent and void as to the creditors of the latter. The evidence introduced by the plaintiff tends to establish that Avhen the bill of sale in question Avas executed Moore & Co. Avere indebted to the bank in about $2,600; that the consideration for the transfer of the stock of goods, horses, notes, and accounts Avas the said indebtedness, $257 paid at the time by the bank to Moore & Co. and the assuming by the bank the follOAving debts of Moore & Co., viz.: Cooper & Cole Bros. for $622.20; Nate Brown in the sum of $59; Bogue & Co. for $89, and W. P. Hall for $6. The said several amounts assumed have been paid by the bank. It Avas also shoAvn that prior to the sale George W. Updike, the president of the bank, and one Rathbum made an examination of the stock of goods and the horses and estimated their value at $1,800 or $2,000, and they valued the notes and accounts at $1,345. The evidence is conflicting as to the actual value of the property covered by the bill of sale when the transfer was made;, but that on behalf of the bank was sufficient to authorize the jury in finding that the consideration for the purchase was fair and adequate, and that the sale was made in good faith and with no intention on the part of the officers of the bank to defraud the creditors of Moore & Co. If any reliance can be placed upon the testimony of plaintiff’s witnesses, the sole purpose of the purchase was to obtain payment of a bona fide debt' due. That by the transfer other creditors of Moore & Co. were prevented from securing or collecting their claims does not stamp the transaction as fraudulent. A failing debtor has the right to pay or secure a creditor to the exclusion of others, and the intention to defraud will not be inferred from the mere fact that a preference was given. (First Nat. Bank of Denver v. Lowrey, 36 Neb., 290; Jones v. Loree, 37 Neb., 816; Kilpatrick-Koch Dry Goods Co. v. McPheely, 37 Neb., 800; Farwell v. Wright, 38 Neb., 451; Hewitt v. Commercial Banking Co., 40 Neb., 820; Meyer v. Union Bag & Paper Co., 41 Neb., 67; Hunt v. Huffman, 41 Neb., 249; Chaffee v. Atlas Lumber Co., 43 Neb., 224.)

Complaint is made of the action of the court in giving instructions 4, 6, and 13 requested by the plaintiff below. As no exception was taken to the fourth instruction at .the time it was given, error cannot be predicated thereon in this court. (Omaha Fire Ins. Co. v. Berg, 44 Neb., 522.) It follows that the other instructions cannot be reviewed, since the record discloses that both in the motion for a new trial and in the petition in error the assignment was to the instructions en masse. (Diers v. Motion, 46 Neb., 126; Kaufmann v. Cooper, 46 Neb., 645; McCormal v. Redden, 46 Neb., 776.)

It appears that one Nate Brown made an invoice of the property at the request of an officer of the bank in December, 1891, and placed the value at $4,854. The same person was one of the appraisers in this case to determine the valuation of the property for the purpose of fixing the amount of the bond to be given by the plaintiff, and he also testified by deposition on behalf of the defendant that the value of the stock of goods was the same as stated in the inventory mentioned above. The court permitted John Craig, over the objection and exception of the defendant, to testify to the valuation given in the appraisement, and that he had compared the same with the invoice made by Brown, and that the value of the property in this suit was put down in the appraisement at the sum of $4,300, while the same articles were invoiced at $1,380. Manifestly the testimony of the witness Craig was incompetent, and the objection to its introduction should have been sustained. The appraisement was the best evidence to prove its contents, but it was not introduced, nor was any attempt made to lay the foundation for secondary evidence. It is true the appraisement is part of the record, but in not such a sense as to make it part of the proofs upon the trial, unless offered and received as evidence, which, as already stated, was not done. Again, the purpose of the testimony of Craig was to impeach or contradict the defendant’s witness Brown upon the question of value, and that, too, without laying any foundation therefor, by calling Brown’s attention to the appraisement and giving him an opportunity to explain, if he so desired. The theory of the defendant was that the bill of sale was fraudulent, and testimony was introduced to show that the consideration for the transfer was so grossly below the value of the property as to render the sale void as to creditors of Moore & Co. There being such a decisive conflict in the evidence as to the actual value of the property, the testimony of Craig could not have been otherwise than prejudicial to the defendant, and its admission is error, for which the judgment must be reversed and the cause remanded, without considering the other assignments of error based upon the rulings during the trial.

Reversed and remanded.

Ragan, C., not sitting.