Case ID: indian-terr_1/html/0523-01.html
Source: Caselaw Access Project
Author: {"author": "Springer, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Noble vs Worthy.
    Opinion delivered October 30, 1897.
    
      issignment Law — Certain Section of Sandel & Hill’s Digest not in \ force.
    
    Section 320 of Sandel & Hill’s Digest of Arkansas, providing that an assignment may be contested for fraud, and proof of fraud on.the part of the assignor shall be sufficient and in validate the assignment whether assignee knew it or not, is not in force in the Indian Territory.
    
      Ixclusion of Testimony — Error.
    | By agreement of counsel representing all parties, the issues between plaintiff and interpleader were first tried by jury. The attachment issue was not tried by a jury and it was agreed by the parties that the court should pass upon the attachment issue upon the same evidence submitted to the jury. Plaintiff offered the testimony of the defendant to show certain facts which would have been proper on the attachment issue, but was not proper upon the issue between plaintiff and inter-pleader. Held, That the exclusion of such testimony before verdict, was error.
    
      
      3. Deed, of Assignment — Preferring Relatives — Not Sufficient Arouse Suspicion of Assignee.
    
    The fact that the assignor preferred his wife and son-in-la' not of itself sufficient to arousq the suspicions of the assig and to cause him to inquire into the bona lides of such d before he could lawfully accept the trust.
    
      4. Unjorseen Solvency Not Stifficient to Arouse Suspicion of Assig,
    
    There was evidence that upon the day before the assignmei appeared upon an investigation that assignor was .insoh The deed preferred claims large enough to consume the e: assets. Assignee testified that his impression was, that firm was in good circumstances. Held, The mere fact oi foreseen insolvency is not a fact which would arouse the picions of ordinary persons as to the insolvency.
    
      3. Duly of Assignee to Investigate Good Faith of Assignor.
    
    Before assignee.will he required to investigate the good fail an assignment for the benefit of creditors, it must appear the evidence that at the time of the execution of the ai ment he was in possession of some fact or circumstance gestive of fraud.
    Appeal from the United States Court for the Sout ■District.
    C. B. Kilgore, Judge.
    Action in attachment by Noble Bros, vs J. N. Wo:
    Lee Cruce, assignee, Interpleader. Judgment Interpleader. Plaintiff appeals.
    Affirmed.
    This was an action begun on January 10, 188 the United States court, at Ardmore, by plaintiffs, Bros., to recover of the defendant, J. N.-Worthy, al owing by him for a bill of goods sold to him by the plaii An attachment was sued out, on the ground that the da , Worthy, had sold, conveyed, and otherwise disposed of' property with fraudulent intent to cheat, or defraud his litors, or to hinder and delay them in the collection of r debts. The attachment was levied upon a stock of ily groceries as the property of the defendant, which sold, under order of sale granted by the court, for 00, and the proceeds were delivered to the clei-k pend-litigation. A number of other attachments were sued by other creditors of the defendant, and levied upon the e property subject to the first attachment, and, byagree-t, all issues in the subsequent attachment suits, includ-ihe rights of the interpleader, are to abide the results of case, both in the court below and in this court. Before irial, Lee Cruce interpleaded in the case, claiming the eeds of the property sold under the attachment, under by virtue of a deed of assignment executed to him on ary 10, 1894, by the defendant, Worthy. The plaintiff v filed a reply to the interplea, denying the rights of iterpleader to the property, and alleged that the as-nent was executed to hinder and defraud the creditors e assignor. The allegations in the repiy, which fur-the issues upon which the case was tried, were specific ull, and are fully set out in the second assignment of The defendant traversed the ground upon which attachment was sued out, and all the issues in ase were submitted and tried upon the same evi-But the issue on the attachment was not submit-the jury, and, after the verdict was returned on the between the plaintiff and the interpleader, the court-need that he would -hold that the- attachment' was' fully sued out, and made an order disolving it. The had instructed the jury impaneled in the case to re-verdict for the interpleader, and a verdict was re-by them accordingly. It was agreed by the parties ihe court should pass upon the attachment issue upon the same evidence submitted to the jury. A motion fo: new trial was filed and overruled, and an appeal was d granted to this court.
    
      C L. Herbert and Ledbetter & Bledsoe, for appellants
    
      Johnson, Cruce & Cruce, for appellee.
   Springer, C. J.

(after stating the facts.) The p| cipal points raised in this case have been determined in No. 74, between the same parties 1 Ind. Ter. and in| case of Martin-Brown Co. vs Morris, No .72,1 Ind. Ter. 495,1 decided at this term of the court. In the Martin-Brown Co. this court sustained the trial court in overruling the demu| to the deed of assignment, which was in its legal featured same, in substance, as the deed in the case at bar, both col holding that the deed was valid on its face. In both of | cases, No. 74 and No. 72, supra, this court overruled point, renewed in the case at bar, that it is not necess under the law in the Indian Territory, to show thal] assignee had knowledge of the fraud of the assignor, or | he had knowledge of such facts and circumstances as si have led to a discovery of the fraud, and that proof of fl on the part of the assignor is sufficient to invalidate aj signment. To sustain this point, counsel contend that tion 320 of Sandels & Hill's Digest of the Laws of Ark ail which was enactéd by the Arkansas legislature Marcl 1887, was put in fórce in the Indian Territory by the acj congress of March 1, 1889, establishing a court in the Ir Territory. The proviso to section 6 of that act is as foil! ‘ ‘Provided, that the practice, pleadings and forms of | ceeding in civil causes, shall conform, as near as may the practice, pleadings and forms of proceeding existiJ the time in the state of Arkansas. ” Section 320 of Sai & Hill’s Digest is as follows: “Any assignment fc iefit of creditors may be contested or attacked for fraud any creditor and proof of fraud on the part of the assignor 11 be sufficient to invalidate the assignment whether the gnee knew of it or not. ” In the two cases above referred this court held that this provision of the laws of ansas was not put in force by congress in the Indian ritory. By the act of congress of May 2, 1890 (section certain general laws of the state of Arkansas in force at close of the session of the general assembly of that state 883, as published in 1884, in the volume known as “Mans-is Digest of the Statutes of Arkansas, ” which were not lly inapplicable or in conflict with that act or with any of congress relating to the subjects specially mentioned at section, were extended over and put in force in the ,n Territory until congress should otherwise ide. Among the acts thus put in force in the .n Territory were the provisions of said stat-relating “to assignment for benefit of creditors, ter eight. ’ ’ It will be seen these provisions were put rce “as published in the volume known as ‘Mansfield’s st of the Statutes of Arkansas.’” Before congress d the act of May 2, 1890, the legislature of Arkansas, |87, had amended the assignment laws of that state, as |ars in section 820 of Sandels & Hill’s Digest. But con-disregarded this amendment, and put in force in the n Territory the assignment law “as published in Mans-Digest in 1884.” On this point, therefore, we adhere opinion stated in the JV artin-Brown Co. Case, and in 4, between the same parties as the case at bar, decided s term of this court.

The second assignment of error is as follows: (2) blaintiffs, in reply to the interplea of Lee Cruce, having pd in substance, that defendant, J. N. Worthy, exe- | the deed of assignment to Lee Cruce with the fraudulent intent of cheating, hindering, and delaying his c-rej tors; and that the preferred debts of his wife and son-in-lJ were fraudulent and fictitious, and were inserted in sq deed to cheat, swindle, and defraud the honest creditors the defendant; and that Lee Cruce, the interpleader, at time of the execution thereof, and when he accepted sar was aware of such facts and circumstances as would him upon inquiry, which, if prosecuted by a person of orl nary prudence and sagacity, would have led to a discova of the fraudulent and fictitious character of said debts; having further alleged that, if any portion of the debts | the wife and son-in-law were valid, it was a fraud upon creditors of the defendant to prefer same in said deed, the reason that the wife and son-in-law were close, col dential friends of defendant, and members of his faml and that he had kept such debts to them a secret, and til had permitted him to build up a credit with plaintiff other creditors in the belief that defendant was in g| financial condition, and was not indebted to his wife son-in-law; and that plaintiffs, without knowledge of existence of such debts to the wife and son-in-law; and | lieving said defendant was in good financial condition, defendant, the goods, wares, and merchandise for the vJ of which suit was brought;-and that the said Lee Cruce, | terpleader, at the time he accepted the said deed, was at of such facts and circumstances in regard to the secret cl actor-of such debts, and of the wrong and injury that w<| result to plaintiffs and other creditors if said, wife and in-law- were pref erred in said-deed, -as -would • put .him inquiry, and which would put a person of • ordinary prudj and sagacity upon inquiry, which inquiry, if prosect would have led to.the disclosure of'the frauds that woulj suit to the plaintiffs and other creditors of the defendar preferring his said wife and son-in-law. Upon the tria the cause the plaintiffs introduced the defendant as a ss, and offered to prove by bim that he commenced the ocery business in March, 1893, without a cent’s capital; at on said date he was, and continuously since then, up to nuary, 1894, when he assigned, he had been, insolvent and thout any capital whatever; that during said period of re he represented to plaintiffs and his other creditors that was solvent; and that, in his representations to his credi-s as to his solvency, he always omitted to disclose the ■t of his indebtedness to his wife and son-in-law. And to > introduction of this evidence the interpleader and de-dant objected, and the court erred in sustaining said ection and excluding said evidence from the jury. ” By :eement of counsel representing all parties, the issues ween the plaintiffs and the interpleader were first tried a jury. At the close of the testimony, the court in-cted the jury to return a verdict for the interpleader, attachment issue was not submitted to the jury, and, ¡r the verdict was returned, the court passed upon the chment issue, and held that the attachment was wrong-y sued out; that the grounds alleged for said attachment not been proven; and decreed a dissolution of the atment. It was agreed by the parties that the court luid pass upon the attachment issued • upon same ence submitted to the jury. Counsel for plaintiffs ed to have overlooked this fact. When they offered ubmit the testimony indicated in their second assign-t of error, the issues being tried were those only een the plaintiffs and the interpleader. The testimony ed would have been admissible on the attachment’ If the court had been passing upon the grounds the attachment, the exclusion of this proposed evidence |ld have been error. But the issue then being tried was | between the plaintiffs and the interpleader. Plaintiffs lot offer to show that Lee Cruce, the interpleader, had ¡knowledge of the alleged fraud of the assignor; did not propose even to show that the interpleader was aw; of such facts and circumstances as would put him upon quiry; which, if prosecuted by a person of ordinary p dence and sagacity, would have led to a discovery of 1 fraudulent and fictitious character of the debts mentioned the deed of assignment. In view of the fact that the iss-between the plaintiffs and the interpleader only were be tried, the court did not err in excluding the testimony h cated in plaintiff’s second assignment of error. If, after issues between the plaintiffs and interpleader had been termined, the plaintiffs had offered to prove the facts cated, the court, in passing upon the ground for the att; ment, would doubtless have admitted and considered same. But counsel agreed “that the court should pass on the attachment issue upon the same evidence submi to the jury.” Plaintiffs, having failed in the issue betv them and the interpleader, were -evidently indifferent a: whether their attachment was sustained or not. They c have their judgement by default against the defendant the amount of their debt; but having failed to hold the tached property, there was nothing for them except as preferred creditors. The sustaining of the attach: could not prejudice their substantial rights.

Issues — Evidence.

The only remaining question of importance in the! is: “Did the court err in instructing the jury to retuj verdict for the interpleader?” We have examined carel the record in the case for the purpose of ascertaining wj er there was any evidence submitted which tended to that Lee Cruce, the assignee, had any knowledge of, or ticipated in, any fraud which the defendant, Worthy, mitted as alleged, or attempted to commit, upon his tors, by executing the deed of assignment. Plaintiffs! tend in their brief that “the fact that he preferred his| and son-in-law for debts amounting to about $1,300 cumstance which should have aroused his [the assignee’s] spicions, and made him inquire into the bona fides of debts and their effect upon the mercantile creditors of defendant. ” There was no testimony submitted to the y which tended to show that these debts were fictitious or mdulent. We have only the mere fact that the assignor iferred his wife and son-in-law in his deed of assignment, this fact of itself, in the absence of any proof that the >ts were fictitious or fraudulent, a circumstance which raid have aroused the suspicions of the assignee, and sed him to inquire into the bona fides of such debts, bee he could lawfully accept the trust? We think not. If tiling merchant honestly owes his near relatives any mnt whatever, why may he not prefer-them, if he may re any preferences as to his creditors? It is true that íy such preferred debts are fictitious and fraudulent. It :ue also of other debts which may be preferred. But law presumes that all the affairs of men are honest, d is never presumed. If alleged, it must be proven ilusively, by the party alleging it. As the issues between ilaintiffs and the interpleader only were being tried by ¡jury, we are of the opinion that there is no evidence in ecord which tends to show that the interpleader had ledge of or participated in the alleged frauds of the de-ant, or that he was in possession of any circumstance h was so fraudulent in its character as to have aroused uspicions, and caused him to institute an inquiry into ona fides of the debts which were preferred in the deed signment, before he could lawfully accept the position signee. Upon a careful examination of the case,- -we f the opinion that there is no reversible error in -.the d. The judgment of the court below is therefore af-d.

Facts heia to arouse'suspicion of assignee,

Clayton and Thomas, JJ., concur. Townsend, J., ieing present did not participate.