Case ID: iowa_56/html/0122-01.html
Source: Caselaw Access Project
Author: {"author": "Day, J. Adams, On. J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Darland v. Rosencrans.
    1. Evidence: time of introduction: practice. A court may, in its discretion, allow the introduction of evidence after the arguments of counsel have been concluded.
    2. Sale: fraud: instructions. Instructions in an action to set aside a sale on the ground of fraud considered and approved. Adams, Ch. J., dissenting.
    
    
      3. -: -: partnership. The purchase by one partner of his co-partner’s interest in the firm property is not rendered void for fraud because of the fact that the buyer has knowledge of his partner’s insolvency, if he has no reason to suppose it is the latter's intention to defraud his creditors by the sale.
    
      Appeal from, Floyd Circuit Court.
    
    Saturday, April 23.
    The plaintiff is a judgment creditor of one William Wade. As such, he seeks to reach a certain alleged interest of Wade in a stock of goods in the possession of the defendant Rosencrans. For that purpose he garnished Rosencrans** and took his answer. The answer showed that at one time Wade was in partnership with Rosencrans, and that the stock of goods»at that time belonged to the firm, but that, on the 13th day of August, 1877, Rosencrans bought out Wade, paying him for his interest in the stock $800, of which sum $600 was paid in cash and $200 in the cancellation of pre- . vious indebtedness due from Wade to Rosencrans. On this answer the plaintiff took issue,- averring that the pretended purchase was void, as having been made with intent to defiaud "Wade’s creditors. There was a trial by jury, and verdict and judgment were rendered for the defendant garnishee. The plaintiff appeals.
    
      Starr, Harrison <& Da/nforth, for appellant.
    
      J. E. Owens and J. S. Boot, for appellee.
   Day, J.

I. The plaintiff introduced as a witness one S. E. Shephardson, who testified that he was a banker, and that the defendant Eosencrans borrowed some money from his bank about the time of the alleged purchase. He was then asked if he recollected having a conversation with Eosencrans as to what he wanted to do with the money, and he answered that he did not. He was then asked a question in these words: “Hid you tell me that you were present and loaned that money to Eosencrans that night?” To this question the defendant objected as incompetent and improper, and the court sustained the objection. The ruling sustaining the objection the plaintiff assigns as error.

In no possible view can we see how it was material what the witness told the plaintiff’s counsel. We infer from the counsel’s argument that he hoped, when he put the witness upon the stand, to show that Eosencrans, when he obtained the money, made some damaging admissions to the witness; that upon examination of the witness he found he was mistaken, and concluded that the admissions must have been made to the plaintiff’s partner, whose testimony he might have had if he had not been misled by the witness. But suppose the counsel had been permitted to show that he had been misled by the witness, the jury would, not have been justified in inferring that the admissions could have been proven by some other witness, and, therefore, that they were made.

II. The defendant offered in evidence a bill of sale of the property in question, executed by Wade to .the defendant, Tbe plaintiff objected upon tbe ground that tbe evidence had been closed and tbe arguments made. Tbe court overruled tbe objection and tbe plaintiff assigns tbe overruling thereof as error.

We see nothing to show that the evidence bad been closed and tbe arguments made at tbe time this bill of sale was introduced, except so far as appears from tbe plaintiff’s objection, which is insufficient. Besides, tbe court, in its discretion, might allow its introduction even though offered after the evidence was supposed to be closed and tbe arguments bad been made.

III. Tbe court, at the-request of tbe defendant, gave an instruction in these words:

“ 3d. Persons who are in debt, and even persons who are insolvent, must be allowed to sell property as well as others, and if they sell for full value for cash, or for cash and a preexisting debt, there is nothing in such a transaction alone to indicate fraud.” Tbe giving of this instruction tbe plaintiff assigns as error. (J

He claims that tbe instruction was calculated to mislead tbe jury, because there was no question as to any one being in debt. Tet tbe whole theory of tbe plaintiff’s case is that tbe alleged sale was made to defeat the plaintiff in collecting bis debt against Wade, and that tbe plaintiff . ought to be allowed to collect bis debt out of tbe stock, notwithstanding tbe sale.

It is further objected to tbe instruction that it was calculated to lead tbe jury to think that a sale for full cash value would not be fraudulent, whatever tbe other circumstances might be.

But tbe instruction says that such sale would not alone indicate fraud,' and negatives, by plain implication, what tbe plaintiff contends that tbe jury might have inferred.

IV. Tbe court, at tbe request of tbe plaintiff, gave an instruction in these words:

“ 4th. The fact that a suit is pending against a person does not prevent* him from selling his property and giving a good title thereto.” The giving of this instruction the plaintiff assigns as error.

The objection made to it is that it only partially states the law. But it would not necessarilly be erroneous, or mislead the jury, for such reason. The instruction, taken in connection with other instructions given, we think is unobjectionable.

V. The court, at the request of the defendant, gave an instruction in these words:

“ 8th. Partners have peculiar relations to each other and either of the partners is always justified in purchasing the interest of the other, whenever he believes that bis material interests will be improved or bis financial credit will be saved or that his general reputation will be saved or improved, if in the purchase he is actuated alone by these considerations without regard to the fact that he is indebted beyond his individual means to pay, and that the purchasing partner may know of the indebtedness; under the above circumstances a sale from one to the other is not fraudulent.” The giving of this instruction is assigned as error.

In our opinion, a purchase is not necessarily to be deemed to be made in bad faith where a partner purchases of an insolvent copartner and with knowledge of the insolvency. This seems to us to be the rule enunciated in the instruction. It is true it emphasizes to some extent the motive which a partner may have to purchase of his co-partner, but we do not think that that necessarily vitiates the instruction. If the partner is induced to purchase solely by a regard for his own interest, so far the purchase would be an honest one and it would not be rendered fraudulent simply by knowledge of the seller’s insolvency.

It is true if the purchaser has knowledge of a fraudulent intent on the part of the seller no exigency on the part of the purchaser will prevent the purchase from being regarded as fraudulent. The instruction complained of,'•while it does not recognize this rule, does not necessarily contravene it. It recites certain circumstances and proceeds to say that “ under the above circumstances a sale from one to the other is not fraudulent.” Possibly if the instructions stood alone, we might deem it objectionable for want of fullness. But it is helped out, we think, by an instruction which the court gave on its own motion, and which is in these words:

“ 14th. But if Wade sold his interest in' the firm property with intent to defeat, delay or defraud his creditors', and if the defendant, at the time or before he purchased Wade’s interest •had notice■ of this intent, defendant would not have been a purchaser in good faith and his purchase would be fraudulent and void as to plaintiff’s attachment.”

We think that the instruction complained of, taken in connection with this instruction, is unobjectionable.

YI. The Court, at the request of the defendant, gave an instruction in these words:

“ 9th. The position of the parties to this transaction, that is, the .position of the vendor, Wade, and Rosencrans, as partners, can be considered by the jury in determining whether there was honesty of intention and purity of purpose in the 'acts of the defendant, Rosencrans.” The giving of this instruction the plaintiff assigns as error. Tie insists that the fact that the .parties to the sale were partners had no tendency to evince honesty "on the part of Rosencrans.

Where a person purchases property of such a character or under such circumstances as to make the transaction a strange and unnatural one, it constitutes, doubtless, a circumstance which the. jury is entitled to consider in determining whether the purchase was made in good faith. If this is so, it appears to us that the jury may be allowed to consider any circumstance tending to show that the transaction was not a strange or unnatural one. The fact that the parties to this sale were partners is not, to our mind, an important one, and yet we are not prepared to say that there was error in instructing the jury that they might consider it. If either partner wanted to dissolve partnership for any reason it might be naturally expected that one would buy out the other, and if one had the ability to buy and the other had not, the one who had the ability would naturally become the buyer.

VII. ' The Court, upon its own motion, gave two instructions which are in the following words:

“11th. A member of a firm or co-partnership is justified in purchasing the interest of his partner in the firm property, although suits may be pending against the partner from -whom he purchases to the knowledge of the purchasing partner, if the purchase is made in good faith, and a purchase so made would be valid as against the creditors of the selling partner.

“ 12th. But if the purchase is not made in good faith; if the selling partner sells for the purpose of hindering, delaying, or defrauding his creditors, and the purchasing partner knows of this puipose at the time of the purchase, he would not be a purchaser in good faith, and his purchase in such case would be fraudulent as against the creditors of the selling partner, and void as to them.”

The giving of these instnictions is assigned as error. The objection made is that they imply that positive knowledge by the buyer of a fraudulent intent on the part of the seller is necessary to render the sale fraudulent, whereas it is sufficient if the buyer had such knowledge as should put him upon inquiry.

Conceding, as plaintiff claims, that the defendant should be deemed to have had knowledge of the fraudulent intent, if he had such knowledge as should have put hjm upon inquiry, still we do not think that the instructions contain reversible error. The rule enunciated is correct, the only objection being that they do not fully instruct the jury as to what they might find to be knowledge. We think that if the plaintiff desired a more explicit instruction upon this point he should have asked it:

VIII. The plaintiff complains that the verdict is contrary to the evidence. We are free to say that we think that the jury might more properly have found for the plaintiff, but we cannot say tlmt the verdict is wholly without support, and the judgment must be

Affirmed.

Adams, On. J.,

dissenting. I think that the counsel for the defendant, in drawing and asking the 8th instruction designed that the jury should be led to believe that a partner may always jmrchase from his co-partner when he thinks that his interest requires it. I think that the instruction was well calculated to lead the jury so to believe. If so, it is erroneous, and the error was not cured by the giving of another instruction which contravened it, and expressed the correct rule, because one instruction is as authoritative as another.