Case Name: Luther B. Hendricks adsm. R. Mount and J. C. Crane
Court: New Jersey Supreme Court
Jurisdiction: New Jersey
Decision Date: 1820-02
Citations: 5 N.J.L. 738
Docket Number: 
Parties: Luther B. Hendricks adsm. R. Mount and J. C. Crane.
Judges: 
Reporter: New Jersey Law Reports
Volume: 5
Pages: 850–857

Head Matter:
Luther B. Hendricks adsm. R. Mount and J. C. Crane.
in CASE.
Trover against
of sale fraudulent, is void against creditors, but ties,
_ canrfot°talce^ advantage of
Jury dec
Seller is a competent witness, if released by plaintiff
THIS was a writ of error to the Court of Common pleas Essex. The cause was tried there in January, 1819. The plaintiffs produced, proved, and read in evidence, a bfu 0f sale, dated the 6th of November, 1816, from one . . . Elijah Day, to them, with an inventory of certain goods thereto annexed, being'the goods stated in the declaration. They then offered Day as a witness, to whose competency the defendant objected, and in support 0f the objection, offered and read in evidence, a petition of his, as an insolvent debtor, to the Court of Common Pleas of the county of Essex, dated the 18th day of November, 1816; also a schedule and inventory thereunto annexed ; and a certain order or decree of the court for his discharge, dated the 23d of December, 183 6. Also, a deed of assign-ment, made by him, to one William R. Williamson, in pursuance of the said order or decree, 'dated the 23d of December, 1816. The plaintiffs then, and before the court had given any opinion, tendered and delivered, to said Day, a deed of release, bearing date the day of 1819; and again offered him as a witness, and the defendant again objected to his admission, which objection the court overruled, and permitted him to be sworn; whereupon he did testify, that some time in July, 1816, he received of W R. Williamson, esq., now deceased, the sum of $137, in trust, to be delivered to Robert Mount, in the city of New-York, for whom W. R. Williamson, who was an attorney at law, had collected the same. A paper in the hand-writing of W. R. Williamson, esq., containing a statement of said money, and of the delivery thereof to Day, for Mount, was then produced ; and being admitted, was read in evidence. Day then further testified, that having occasion for the use of said money, he had applied it to his own use ; then intending shortly to have replaced it and paid it over to Mount; but that, in fact, he never had so paid it. That on the 6th day of November, 1816, he was indebted to John C. Grane, the other plaintiff, upon a promissory note, bearing date the 1st of July, 1816, for $175, payable twelve months after date, •which note was produced and read in evidence. That in the spring of 1815, he commenced business as a storekeeper, in Elizaibeth-Town, and soon afterwards took one Thomson into partnership with him; that shortly after, Thomson failed, leaving a considerable partnership debt unpaid; that after Thomson’s failure, he continued in business, on his own account, until the fall of 1816, when he became embarrassed, and was committed to gaol, in the borough of Elizabeth-Town, on an execution, at the suit of Halsey Munson, and obtained the privilege of the limits of the prison. That on the day of November, 1816, being indebted to defendant, in the sum of $440 or thereabouts, partly on his own account, and principally on account of Day and Thomson, he made an assignment, or bill of sale, by way of mortgage, of all his household furniture and goods, to the defendant, to secure him the said money; which bill of sale was produced ' an(j read in evidence ; that on the 7th day of April, 1818, not having paid 'defendant the money intended to be secured to him by said assignment, he delivered to him all the goods and furniture contained in the said bill of sale, in satisfaction of the said debt, and took his receipt for the same, which was produced and read ; that while he was on the limits, and before the bill of sale was made to the plaintiffs, and after the defendant had been secured by an assignment of the witness’ furniture, defendant came to witness, and proposed, or recommended to him, to take some of his goods out of *the store, and put them away, as otherwise he would have to give them all up to his creditors; that witness told him he did not wish to take any more of them than would be sufficient to secure to the plaintiffs the moneys he owed them; that in the night of the 6th of November, 1816, or soon afterwards, about eleven o’clock at night, he went to his store, in company with the plaintiff, John G. Grane, and the de^ fendant; and that they measured and inventoried the goods in the declaration, and in the invoice to the plaintiff’s bill of sale annexed, mentioned ; that they packed up the goods so invoiced, and requested the defendant to take charge of them ; that he at first declined, but at last consented that they might be put in his cellar ; that the cask was then put in his cellar, and it was twelve o’clock at night before they were done ; that he went at night, because he did not wish to be seen off the limits ; that he afterwards made an assignment of all the rest of his goods and property, in the store, to Jonathan B. Dayton, and for the benefit of his individual creditors, as' he thought he was bound to. pay them, out of his own property, in preference to the creditors of Day & Thomson. Being cross-examined, he stated, that- he could not tell whether the bill of sale to plaintiffs, was executed the day it bears date, but thought it was delivered to John G. Crane, the first time he saw him after the night spoken of, and before he was discharged from confinement. Witness supposed, from what he said to the defendant, previous to putting up the goods, and from what passed when the goods were invoiced, that the defendant knew, and understood that they were to secure and satisfy to the plaintiffs, the moneys due them. In the summer of 1817, he went in defendant’s cellar, in company with him, to see whether the goods were not injured by lying. The four or five last articles on the invoice, being of a perishable nature, were used by defendant, with his consent, and some of them by himself. Being asked whether he was not indebted to John C. Crane, in the sum of $175, at the time he gave him the note, he answered, that he could not say that he was, he supposed the note would charge him for that amount; he did not think, himself, he owed Crane so much ; but there were considerable accounts between them. Crane made up the account, and said the balance was $175, but he did not think there was quite so much due, but could not say, certainly, how much. Defendant *then gave in evidence a bond and mortgage of lands, given by Day to him, for $750, bearing date the 1st of May, 1815. Plaintiff proved a demand and refusal of the goods, at two or three different times, about the 20th or 25th May. The writ in this cause was issued on or after the 20th of May, 1818. The testimony being closed, the defendant, by his counsel, called on the court to charge the jury, that if they should find that the bill of sale was fraudulently made by Day to the plaintiffs, that then they were not entitled to recover of the defendant: whereupon the court charged the jury, that whether the bill of sale was fraudulent or not, was for their determination ; but that if the plaintiffs and Day had contrived it fraudulently between them, for covenous purposes, it was, nevertheless, valid, as between those who were the parties to it; that the statute had, indeed, declared it void, as against the creditors of Day; and if fraudulent, it was absolutely void, as against them, whenever they, or any of them, should seize the goods by legal process, as the property of Day; but that as to the defendant, they were only stored in his cellar, without a claim of title to them in him; and that whether the bill of sale was, or was not, fraudulent, as to creditors, the plaintiffs had a right to recover the value against the de fendnnt. To which opinion of the court, the defendant ■ excepted, and also to the admission of Day as a witness.
There was a verdict and judgment for the plaintiff.
Upon the argument, two grounds of error were principally urged. 1. The admission of Day as a witness; and, 2. The charge of the court.
Scudder.
Day was not a competent witness. He made a bill of sale, and thus gave an implied warranty. This may be released, so far as relates to the bill alone, but if the consideration of it be also released, the debt and all claim on the goods, are released with it. Again. He could not give these plaintiffs, or any other creditors, a preference by a payment of the debt, in this way. Pat. 167, sec. 8. Under the bankrupt laws, if an assignment be made to pay one creditor, in the view of becoming insolvent, it is void. 3 Mass. 325. Bank. Law U. S. section 8. 3 Wils. 47. 4 Wheat. 194. Our insolvent law is the same in principle. Its design is to give all creditors an equal share of the debtor’s property.
*2. The charge was contradictory in itself, and embarrassing to the jury. It declared that the bill, though fraudulent, is binding between the parties to it. This is not so. Pat. 154. This statute has not altered the common law. Conveyances were always void, if fraudulent. A party to a fraudulent deed cannot claim any benefit under it. 4 John. 598. Cowp. 434. If this deed was fraudulent, the jury ought to have been instructed, that the plaintiff could not recover.
Attorney-General, in answer.
The release takes away all interest arising from the bill of sale, and Day was, therefore, not interested in any view.
2. The charge states, that the bill, if fraudulent, is void against creditors; but Hendricks can claim no benefit from this : he was not a creditor. It also correctly states, that the bill, though fraudulent, is binding between the parties to it. Cro. Jac. 207. Fonb. 264. 1 John. 161. Again. Under our insolvent laws, a debtor may prefer one creditor to another; this is a principal distinction between them and the bankrupt laws. Woodruff v. Roff, 1 Vern. 399. Rob. F. Con. 422-8.
See Den vs. Moore, ante 475. Robinson vs. Monjoy, 2 Hal. 173. Hall vs. Snowhill, 2 Gr. 16. Den, Wooden vs. Shotwell, 3 Zab. 466, 4 Zab, 789. Den, Obert vs. HammeL, 3 Har. 74. Owen vs. Arvis, 2 Dutch. 23. Church vs. Muir, 4 Vr. 318. Baldwin vs. Campfidd; 4 Hal. Ch. 600, 891. Tantum vs. Miller, 3 Stock. 551. Danbury vs. Robinson, 1 McC. 213. Sayre vs. Fredericks. 1 C. E. Gr. 205. Lokerson vs. Stillwell, 2 Beas. 357. Eyre vs. Eyre, 4 C. E. Gr. 42. Gardner vs. Short, 4 C. E. Gr. 341. Marlatt vs. Warwick, 4 C. E. Gr. 440. Cutler vs. Tuttle, 4 C. E. Gr. 550. Atwood vs. Impson, 5 C. E. Gr. 150. Metropolitan Bank vs. Durant, 7 C. E. Gr. 35, 9 C. E. Gr. 556. Servís vs. Nelson, 1 McC. 94. Jones vs. Adams, 8 C. E. Gr. 113. Cases cited post 743.
Hampton vs. Swisher, 1 South. 66. Evans vs. Herring, 3 Dutch. 243. Miller ads. Pancoast, 5 Dutch. 250.
Cliver vs. Applegate, ante 481. Farrel vs. Colwell, 1 Vr. 129. And see Watkins vs. Pintard, Coxe 378. Osborne vs. Tunis, 1 Dutch. 634.
See Sherron vs. Humphreys, 2 Gr. 217. Letson vs. Dunham, 2 Gr. 307.

Opinion:
Opinion of the court.
Southard J.
If I understand this case correctly, Hendricks, who was the defendant below, had no claim, of any kind, to a property in the goods for which the action was brought. Day, who once owned them, had been indebted to him about $440, but had secured that debt, by a mortgage on other property, and had eventually paid the debt, by transferring that property, and had received a receipt and discharge in full. Hendricks was, therefore, not a creditor; he could not, in this action, set up the rights of a creditor, by way of defence. The goods had merely been left with him, for safe keeping, and for safe keeping only. He was a mere depositary, and had only a depositary's rights.
It is, further, entirely manifest, from the state of the case, that when he received the goods, he knew the nature of the transfer, which had been made of them. He received them as the property of Mount and Crane. They wore deposited with him for tlieir benefit, and to be under their control. Has he a right, then, when they claim them, when they demand the possession of them, to say, your title is defective; and though I have no claim, you shall not have them ? I think, clearly, not. In the first place, *he received them, with the express condition, to keep for the benefit of the plaintiff. He must comply with his contract. In the second place, although I think he might, in such case, set up a title in himself, of which he was ignorant, at the time of the deposit, yet he cannot set up a right in some third person ; much less may he defend himself by saying that there are creditors, to wljom, in. justice, these goods ought to go to satisfy their claims. But it is argued, that the bill of sale which transferred the goods to Mount and Crane, was in fraud of creditors, and, therefore, ought to avail them nothing. Now although -we were to admit the fraud in the execution of the bill? yet I do not see how it can avail this defendant. The parties to that bill are willing to abide by it; no one has a right to dispute its validity, but he who is interested in -it. This defendant is not so interested. He is a perfect stranger, so far as relates to any rights under it. And although a creditor may dispute the legality of an instrument, yet, as between the parties to it, a stranger has no right to interfere. We recognize the right of no man, in this wajq to turn Quixotte and fight against fraud, for justice sake alone, In the mouth, therefore, of this defendant, I do not perceive the right to set up this defence, even if it were true in fact. But, upon the case, it is not very clear that there was any fraud in the creation of this bill. Mount and Crane appear to have been both creditors ; one of them a creditor of a most peculiar kind. Is there any thing to prevent the debtor from securing their debt, even if by so doing, he should defeat the claims of other creditors ? It is every day done, under our insolvent system; and every day sustained, in our courts of justice. And however improper, in an honest and moral view, it may sometimes be, still it is legal. If then Mount and Crane, were truly and bona fide creditors, Day had a right, before he presented his petition, to secure their claim. Whether they were such creditors, and whether the bill of sale were made before the petition was presented, were inquiries for the jury. The fair inference, from the evidence, is in their favour, on both points.
Let us now look to the charge against which complaint is made, and see if it be erroneous, as applied to these facts and principles. I understand the court to lay down four positions. 1. That the fact, whether the bill of sale was fraudulent, was, under the evidence, for the consideration and decision of the *jury. 2. That if the jury believed the bill of sale to be fraudulent, it was .void, as against creditors, whenever they should legally contest it; and, as against them, could confer no rights on the plain tiff. 3. That, as between the parties, it was binding. 4. That the defendant having no interest in the goods, concern in the transaction, had no right to interfere and set up the fraud, even if it existed.
Upon all these points, the court was clearly and unquestionably right; and it is scarcely necessary to call in the aid of authorities to prove them. The charge, in substance, was correct.
Upon the question of interest, in the witness, Day, I think there is no necessity for argument or illustration. Whatever doubt might have been raised before the execution of the release, none could be fairly raised after it was executed. ' The argument of the counsel, that the release, if it did not discharge the consideration of the bill, left the interest still existing; and if it did discharge the consideration, destroyed the bill, and with it the rights of the plaintiff; will scarcely be insisted on, when he shall more deliberately have investigated its force. The release merely relieves Day from all claim by Mount and Crane ; but it surely does not restore to him the property, which he had, long before, transferred to them. He had sold the goods in discharge of his debt. The bill was the mere evidence of the sale and transfer, and even if the bill were destroyed, their right to the goods, under the sale, would not be destroyed with it.
Judgment must, therefore, be rendered for the defendants in error.
Melville vs. Brown, 1 Har. 366.
Tillou vs. Britton, 4 Hal. 136. Sharp vs. Teese, 4 Hal. 356. Owen vs. Arvis, 3 Dutch. 23. Garretson vs. Kane, 3 Dutch. 209. Doughty vs. King. 2 Stock. 396. Coley vs. Coley, 1 McC. 350. Benedict vs. Benedict, 2 McC. 151. Demarest vs. Terhune, 3 C. E. Gr. 532. Tantum vs. Green, 6 C. E. Gr. 364. National Bank, &c. vs. Sprague, 6 C. E. Gr. 530. Garretson vs. Brown, 2 Dutch. 425, 3 Dutch. 644. Jones vs. Naughright, 2 Stock. 298. Stratton vs. Allen, 1 C. E. Gr. 229.