Case Name: Martin Browne Co. vs Morris
Court: Court of Appeals of Indian Territory
Jurisdiction: Oklahoma
Decision Date: 1897-10-30
Citations: 1 Indian Terr. 495
Docket Number: 
Parties: Martin Browne Co. vs Morris.
Judges: Clayton and Thomas, JJ., concur. Townsend, J., being present, did not participate.
Reporter: Indian Territory Reports
Volume: 1
Pages: 495–523

Head Matter:
Martin Browne Co. vs Morris.
Opinion delivered October 30, 1897.
Deed, of Assignment — Recitals—Ejfect as to Validity of Deed.
The deed of assignment-in controversy cited that the assignors “have sold, conveyed and delivered ” the stock of goods to the assignee. Held, That the word “deliver” does not necessarily imply the delivery of possession of the goods to the assignee and the deed of assignment is not for that reason void on its ' face under \ 305 Mansf. Dig. requiring an assignee to file his inventory and bond with the clerk of the court before taking possession of the assigned property.
trial by Court — Findings of Fact — Conclusiveness.
The appellate court regards findings of a fact by the trial judge in the same light as the finding of a jury and will not disturb the finding of facts made by the trial court.
I llegation of Partnership — Burden of Proof .
| Appellants alleged a partnership between assignors, one Mays and one Bridgeman who were named in the deed as preferred creditors. Held, That the burden of proof was on appellants to prove such alleged partnership.
I'nding of Fact by Court— When not Disturbed.
|ln order to sustain an assignment of error on account of the finding of facts by the court and its rulings on the law applicable to such facts, it should appear that the finding was conclusively contrary to the evidence.
f-tain Provision of Arkansas Assignment Law Not in Force.
Dhe provision of the law of Arkansas approved March 31, 1897, providing that “ an assignment for the benefit of creditors may be contested or attacked for fraud * * * whether the assignees knew it or not ” has neyer been put in force in the Indian Territory.
6. Assignment — -Creditors Successfully Attacking Fictitious Prefer Claims Allowed Costs.
A creditor who attacks a deed of assignment, and succeeds striking out fraudulent preferred claims, is entitled to costs and reasonable attorney’s fees out of any funds in hands of the assignee.
Appeal from the United States Court for the South District.
C. B. Kilgore, Judge.
Attachment by Martin-Brown Company and otbl against Morris & Nunn. Lee Cruce, assignee of Morril Nunn filed interplea claiming the attached goods. Judgnl sustaining assignment, except as to certain fictitious del Judgment against plaintiff for costs of suit.
Reversed al taxation of costs, and mandate issued directing assigne| pay costs and a reasonable attorney’s fee to plaintiffs.
This is an action brought in the United States cl sitting at Ardmore, Indian Territory, upon an open accl for a bill of goods sold by the plaintiff the Martin-Bil Company to athe defendants Morris & Nunn. An att| ment was sued out on the 28th day of September, 1892, levied upon a stock of general merchandise in the tow| Ardmore, as the property of the defendants. The proj was sold under an order of the court, and the proc<j amounting to about $1,850, were held by the clerk • oil court pending the litigation. Plaintiffs’ action was pi cuted to a final judgment, and .the attachment sustal subject, however, to the rights of Lee Cruce, who file! intorplea in the case after the property was sold, but b| the final judgment, claiming the attached property and by virtue of a deed of assignment executed to liiij the defendants Morris & Nunn on September 28, 18921 Y the attachment was sued out. In his interplea, Lee ace alleged that he owned the property under and by vir-s of said deed of assignment; that the assignment was exited before the attachment was sued out; that he had ac>ted and qualified as assignee, and attached a copy of the id of assignment to his interplea; that the attached prop-Y was of the value of $7,000, all of which he was entitled recover in this action, and prayed that he be adjudged the íer of the property, and that he have judgment for the session of the property, or the proceeds realized from sale of the same.
The court sustained the plaintiffs’ demurrer to this in )lea in so far as it sought to recover possession of the perty sold under the order of the court before the inter - was filed, or its value, but overruled the plaintiffs’ de-rer in so far as it questioned the validity of the deed ssignment relied on, holding the deed valid on its face, plaintiffs thereupon filed a reply to the interplea of Lee 3e, in substance as follows:
‘The plaintiff the Martin-Brown Company admits prior to the suing out of the attachment herein, the | Morris & Nunn had executed to the said Lee Cruce the of assignment described in said interplea; that while |deed of assignment was not dated, the same was in fact ated and accepted by the said Lee Cruce on the 28th )f September, 1892, just prior to the suing out and levy-j>f the writ of attachment herein; and that afterwards It, on the 14th day of October, 1892, the said Lee Cruce Ified as such assignee by executing the bond and sub-ling to the oath required by law; and that he was' pre-pd from making a full and complete inventory of the arty conveyed in said assignment by reason of the fact I immediately after the execution of said assignment, said goods, wares, and merchandise were seized by t marshal under the writ of attachment coming into his han against the defendants Morris & Nunn. Plaintiff furtb admits that the said interpleader Lee Cruce would be t titled to recover in this action the proceeds arising from t sale of the property attached in this action, to wit, the st of $1,850, if said deed of assignment was valid on its face, unless the same should be held fraudulent and void on prc of the allegations hereinafter made.
“Plaintiff alleges that said deed of assignment ' executed by the said Morris & Nunn, with the fraudulent tent to cheat, hinder, and delay their creditors; that ab the month of May or June, 1892, the said Morris & N came to Ardmore, and engaged in the retail mercantile bi ness; that they associated with them R. L. Bridgeman J. A. Mays, and thereupon entered into a fraudulent spiracy and partnership to purchase all the goods t' could on credit, without regard to their ability to pay the same, and with the fraudulent intention of approp; ing the proceeds thereof to their own use and benefit; t in the execution of said fraudulent partnership and spiracy, the said Morris & Nunn and Bridgeman and prepared certain false and fraudulent statements of th< nancial condition and responsibility of the* said Morri| Nunn, and sent the same to numerous wholesale houses agencies, in order to build up a false and fictitious credi the said Morris & Nunn; and that, in further executio; said fraudulent partnership and conspiracy, the said J, Mays borrowed the sum of $5,000 from the Bank of merce of Purcell, I. T., about the month of August, and caused the same to be placed to the credit of said ris & Nunn in said bank, but so held that the same not be checked out of said bank by said Morris & Num| order that the said Morris & Nunn and the said Bridge might schedule the same as part of their assets, and /holesale merchants to the same in order to procure credit; nd that for like fraudulent purpose, and likewise in execu-Lon of said fraudulent conspiracy and partnership, R. L. >ridgeman caused to he deposited in the First National ank of Ardmore, I. T., in the name of Morris & Nunn, the um of $1,800, which was likewise so held that the same mid not be checked out by the said Morris & Nunn, but in der that the same might be scheduled by them as a part of íeir assets, and the wholesale merchants to whom they ould apply for credit might be referred to said deposit in issing on credit when applied to by said Morris & Nunn; id that; in further execution of said fraudulent conspiracy id partnership, the said Morris & Nunn and Bridgeman id Mays did refer numerous wholesale merchants to said ¡posits; in the effort to procure credit for the firm of Mor- & Nunn, and, by reason of said deposits and the said Lse and fictitious statements sent out as aforesaid to the lolesale merchants and mercantile agencies of the country, 1 procure large credits, and did procure a large amount of ods, wares, and merchandise, amounting to about the sum $10,000; that the said Morris & Nunn were young men, ithout capital or experience in the mercantile business, |t permitted the said Mays and Bridgeman to use their e in carrying out the aforesaid fraudulent partnership conspiracy; and that the execution of said deed of as-[nment was in furtherance of said fraudulent partnership conspiracy and intention to appropriate the proceeds of goods, wares and merchandise purchased as aforesaid to ir own use and benefit; that the debts described in the deed of assignment, and preferred therein in favor of . Mays for the sum of $1,400, and in favor of R. L. dgeman for the sum of $2,475, were simulated, fictitious, fraudulent, and were preferred in said deed of assign-jit in order that the said Morris & Nunn and Mays and geman might thereby appropriate enough of said goods, wares, and merchandise to pay off and liquidate said indebt edness to their own use and benefit, and thereby swindle anc defraud the parties from whom they purchased said goods wares, and merchandise, and the honest creditors of Morrii & Nunn; that on the 28th day of September, 1892, the day oi which said assignment was executed, said Morris & Num were arrested on the charge of murder alleged to have bee: committed on the morning of said day; and that the sail Morris & Nunn and Mays and Bridgeman fearing that thei| fraudulent partnership and conspiracy, aforesaid, might L exposed, caused the said deed of assignment to be executei as aforesaid; that while plaintiffs do not allege that said L Cruce, at the time he accepted said deed of assignment actually participated in the fraudulent conspiracy aforesaic or that he actually knew that the debts preferred in sai deed of assignment in favor of'said Mays and Bridgeman we] fictitious and fraudulent, yet they do allege that they b lieve that, at the time he accepted said deed of assignmen he was aware of such suspicious facts and circumstanci surrounding the execution of the same, and occurring at tl time, as should have aroused his suspicions, and were calc lated to arouse the suspicions of an ordinarily prudent p> son, and cause him to investigate and ascertain whether not said assignment was made in good faith and for an hoj est purpose; that, at the time said Lee Cruce accepted s deed of assignment, he was, and had for nearly a month fore that time been, the attorney for said Morris & Nu and J. A. Mays and R. L. Bridgeman, and was on confide] ial terms with each and all of them; that he was aware the fact that they had been arrested on a charge of mur alleged to have been committed on said day, and was aw of the fact that said deed of assignment was executed un great stress, and in great secrecy and haste, and was aw, of the fact that said Morris & Nunn and the said Bridge had represented to the wholesale houses that the said ris and Nunn were in good financial condition, and worth, from $10,000 to $15,000 net; and that he was aware of the fact that the said R. L. Bridgeman was clerking in said Morris & Nunn’s establishment, and that said J. A. Mays vas a bankrupt, together with a good many other suspicious !acts and circumstances. And plaintiffs allege that had the ¡aid Lee Cruce, at the time he accepted said deed of assign-nent, exercised ordinary care and diligence, he could have bscertained the fraudulent purpose of the said Morris & <Tunn in executing said deed of assignment; and that, had he leeded the suspicious circumstances known to him at the ime he accepted said deed of assignment, and made such in-uiries as a person of ordinary prudence would have done .nderthe circumstances, he could have ascertained that aid deed of assignment was not executed in good faith, but hat its purpose was fraudulent, and thatthe debts preferred herein in favor of Mays and Bridgeman were fraudulent nd fictitious; and that the said Lee Cruce ought to be held ) a knowledge of such facts as he could have ascertained by re exercise of ordinary care or diligence at the time said eed of assignment was executed; and that, by reason of the foresaid facts, said deed of assignment was fraudulent and aid. Plaintiffs further allege that a number of the credit's of the said Morris & Nunn, after the levy of the said Mer of attachment and the execution of said deeds of as-gnment, interpleaded herein, alleging that certain goods, Hares, and merchandise particularly described in said inter-Reas had been procured by the said Morris & Nunn from Rem by means of false and fraudulent misrepresentations as H> the financial conditions of said Morris & Nunn, as herein-Rfore alleged, and executed bond as required by law, and Hithdrew said goods, wares, and merchandise from the levy H the order of attachment herein long prior to the time Hid Lee Cruce interpleaded in this action, and that each of He said interpleaders recovered a judgment in this action for goods, wares, and merchandise so withdrawn and claimec ■by him, which judgments are hereby referred to and made i part of this reply; that after said goods, wares, and mer chandise were withdrawn, there remained, subject to the at tachment herein, goods, wares, and merchandise amounting ■ to the sum of $2,475.10.
“Now, plaintiff alleges that by reason of the fraud perpetrated by said Morris & Nunn and the said Mays an Bridgeman in the purchase of said goods, wares, and mei chandise, as aforesaid, the title to said goods, wares, an merchandise was never in Morris & Nnnn, and could not b asssigned by them, and was thus not subject to the order c attachment in this cause, except as to the goods, wares, an merchandise claimed by Bailard-Webb-Burnett Hat Co.; an that the goods, wares, and merchandise, amounting to $2 475, sold under the order of attachment herein, were tl only property contained in the said deed of assignment, tl title to which was in said Morris & Nunn and Mays ar Bridgeman, to be conveyed by said deed of assignment; th said goods, wares, and merchandise were sold under tl order of the court for their full value, and the sum of 850 was realized therefrom. . Now, plaintiff alleges th<] owing to the fact that the debts preferred in said deed of signment in favor of Mays and Bridgeman, amounting to t sum of $6,375; were fraudulent and fictitious, the title the property conveyed in said deed of assignment did pass to the assignee, and was all at-times subject to attai ment as the property of the grantors in said deed of signment, Morris & Nunn; that according to the terms said deed of assignment, the prime object and purpose executing the same was to prefer ■ said fictitious debts favor of said Mays and Bridgeman; and that, owing to tj diligence of the plaintiff herein and the other attachi: creditors of said Morris & Nunn, the fact that said del] were false and fictitious has been proven and establish ad that thereby the plaintiffs herein and other attaching ^editors of said Morris & Nunn have acquired a lien and a ght to hold said property and its proceeds prior and super-ir to any rights acquired by said Lee Cruce under and by irtue of said deed of assignment; and that, as to the prop-cty intended by the said Morris & Nunn in executing said eed of assignment to be appropriated to the payment of lid fictitious and fraudulent debts, the title thereto did not ass under said deed of assignment; and, as to such propty, said deed of assignment is inoperative and void, and lid property has at all times been subject to attachment as le property of said Morris & Nunn; that it appears from ie terms of said deed of assignment that it was the purpose id intention of said Morris & Nunn to appropriate property value amounting to the sum of $6,875 to the payment of bid fraudulent and fictitious debts; and that, by the dili-mce and litigation instituted by the plaintiffs herein and her attaching creditors, such purpose has been defeated, id the property withdrawn from the payment of such fic-tious and fraudulent debts, and its proceeds ought to be pplied to the payment of plaintiffs’ debt herein and the |ibts the other attaching creditors.
“Wherefore plaintiffs pray that said deed of assign-lent be adjudged fraudulent and void, and that the pro-beds arising from the sale of the property attached in this [dion, be applied to the payment of the plaintiffs’ debt, and the debts of the other attaching creditors, and plaintiffs [rther pray that in so far as the fund arising from the sale said attached property now held by the court is subject the orders of the court, that plaintiffs’ attachment lien lid the lien acquired by the other attaching creditors be Bid superior to any right or claim acquired under and by Irtue of said deed of assignment, and that plaintiffs have ll other relief to which they may be entitled.”
The interpleader Lee Cruce filed a reply to the plea< ing of the plaintiffs, in which he does not specifically der the fraud of Morris & Nunn in executing the deed, but doi deny that he knew of any such fraud or participated in i He denies that he knew anything of the financial conditic of Morris & Nunn at the time of the execution of the dee denies that he knew anything about Mays and Bridgemf borrowing money for the firm; and denies that there we: other partners in the firm besides M orris & Nunn. Tl following interplea in the action was also filed: “No comes M. J. McKinney, Ft. Worth China Co., and Frai Herman and Co., and, after having obtained leave of tl court to interplead in this action, respectfully show to tl court that, on the dates and times hereinafter mentioned, and each of them recovered separate judgments against tl defendants, Morris & Nunn, for the sums of money herei after mentioned in the cases pending on the docket of tl court, numbered as hereinafter stated [statement omittec said amounts being exclusive of interest; that in each said cases the plaintiffs therein sued out an order of attac ment, and caused the same to be levied on the property d< cribed in the return of the marshal in this cause, subje< however, to the levy in this cause; that each of said attai ments was duly and legally sustained in the judgment of t court entered in this cause, which are hereby referred and made a part hereof; that, under and by virtue of s; levy and judgment sustaining the same, each of the defe: ants acquired a lien on the property described in the m shal’s return on the order of attachment in this case, and the proceeds realized from the sale of said property m held in the custody of this court; and that each of said lii is superior to any right acquired by the interpleader Cruce, under and by virture of the deed of assignment, a|| these interpleaders hereby adopt all the allegations in reply of the plaintiff Martin-Brown Co., to the interplea i Lee Cruce, and hereby allege that all said allegations ! true. Wherefore these interpleders join in the prayer ¡he plaintiff in reply to the interpleader Lee Cruce, and ecially pray that the liens acquired under and by virtue ¡he levy of their attachment and the judgment of the rt in sustaining them be declared superior to any right uired by Lee Cruce unde said deed of assignment; that l deed of assignment be declared null and void; and that proceeds arising from the sale of said attached property his case be applied to the satisfaction of the several pnents aforesaid; and that these interpleaders have all m relief to which they may be entitled. ”
The case was tried before the court, without a jury, ¡he trial it was admitted by all the parties that each of interpleaders referred to in the plaintiff’s reply iterplea of Lee Cruce recovered judgement in this or the goods claimed by them, as shown by the mar-eturn on the order of attachment. The actual con-f at the trial was over the proceeds of the attached y sold under order of the court. Judgment was ren-l favor of Lee Cruce, interpleader, for the money in ds of the clerk, sustaining the assignment, and for gainst the plaintiff the Martin-Brown Company and npleaders M.' J. McKinney, the Ft. Worth China íy, and Frank Herman & Co. A motion for a new »s presented and overruled, and an appeal has been osecuted to this court on behalf of the plaintiff and erpleaders,
V. A. Ledbetter and 8. T. Bledsoe for appellants.
. The deed of assignment was void on its face. It that the assignor had “sold, conveyed and deliv-i stock of merchandise to the assignee. “Deliver ” :o transfer, to put into another’s power, to pass from one to another. 5. A. & E. Enc. of Law 521; Anderso Law Dictionary, 535; Teideman on Sales, § 92. Uni the recitals of the deed, the execution of the deed, and delivery of possession of the property to the assignee w simultaneous acts. Rice vs Thrasher, 24 Fed. 460; Line vs Fields, 54 Ark. 571; Raleigh vs Griffen, 38 Ark. : Jaffery vs McGeehee, 170 U. S. 361.
2. The court erred in holding that Mays & Bridgi were not partners with the defendants, Morris & Ni The evidence showed that both Mays & Bridgman borro money from different parties. That the money was de ited in the bank in the name of Morris & Nunn. That aJ wards Bridgman made various statements to wholesa concerning the financial standing of Morris & Nunn; they only owed five or six hundred dollars. Under evidence there is no doubt about Mays & Bridgman b partners of Morris & Nunn. They were all to partici in the profits of the concern to divide their ill gotten g| and each is liable for the debts. The fact thqú their e: prise was dishonest and that their object was to plundei] steal does not make them any the less partners. 1. Li: on Partnership 18-23; Harris vs Sessler, 3. S. W. 316. assignment by a partnership which prefers the indivl debts of its members, is void. The preference in sucj assignment to a dormant partner avoids the assign Clafiin vs Hersch, 19 N. Y. W. D. 348; Whiting vs Hi 39 Hun. 325; Bump on Fraud. Oonv. § § 369 and 209 rill, on Assignments § § 169, 179. Assignments ^ reserve any use or benefit for the assignor are void, on Assignments, § § 318-319.
3. The court erred in holding that the interplq Lee Cruce, did not have any knowledge of the fraud fendants, Morris & Nunn at the time the deed of assigifl was executed, and in sustaining the deed of assignmer of want of such knowledge The act of Arkansas of eh 31, 1887, provided “Any assignment for the benefit editors may be contested or attacked for fraud by any itor, and proof of fraud on the part of the assignor L be sufficient to invalidate the assignment whether the ;nee knew it or not. ” This provision of the laws of rusas was adopted and put in force in the Indian Terri-by the act of March 1st, 1889, providing “That the lings and practice and forms of proceeding in civil 3S, shall conform as near as may be to the practice lings and form of proceedings existing at the time in auses in the courts of record in the state of Arkansas. ” eedings in civil causes mean the performance of an act s wholly distinct from any consideration of an abstract It is a prescribed mode of action for carrying into a legal right. It presupposes the existance of the Rich vs Husson, 1st Duer (N. Y.) 620. Fargo vs er, 43 Hun. (N. Y.) 19. The term “proceedings” s all the steps or measures adopted in the prosecution Eense of an action. Gordon vs State, 4 Kans. The edings of a suit embrace all matters that occur in its ess judicially; proceedings on a trial, all that occurs t part of the litigation. Moorewood vs Hollister, 6. • 320.
4. The court erred in refusing to submit additional isions of fact as requested by the plaintiff as to wheth-|not, at the time the deed of assignment was executed, Slivered to the assignee, Lee Cruce, he was aware of (acts and circumstances surrounding the execution of led of assignment as would have aroused the suspicions prdinarily prudent man as to the fraudulent character of signment, and whether or not by the exercise of ordi-lliligence, under the circumstances he should have dis-|sd the fraud. Hill vs Shragley, 51 Ark. 56; Aaronson itch, 24 Fed, 465; Peters vs Braines, 133 U. S. 670; Bump on Fraud. Conv. § § 387, 184; Waite on Fraud. C § § 319, 376; Burrill on Assignments, § 307.
5. The court erred in holding that the attach sued out on behalf of plaintiff and the interpleaders McKinney, Ft. Worth China Co.', Frank Herman & should be dissolved in so far as it effected the pro; sought to be recovered by the interpleader, Lee Cruce, awarded to him by the judgement of the court in this and in denying the claim of the plaintiff and said inter ers, M. J. McKinney, et al, to have the money in the of the court applied to the satisfaction of their judS| and attachment liens, and in refusing to consider the| dence introduced on this subject. Market National Ba: Hoffman; 23 Fed. 13; Wallace vs Treakle, 27 C-ratton, Tale vs Leggitt, 2 Leigh, 106; Smith vs Post, 3 Thomp, Co., Sup. Ct. N. Y. 647; Price vs Shepherd, 9 Pick* Green vs Moss, 4. Barb. Sup. Ct. (N. Y.) 344.
6. The court erred in its conclusion of law and judgment rendered against the plaintiff and interple: M. J. McKinney, Ft. Worth China Co., and Frank H< & Co., in favor of Lee Cruce, interpleader, for the mo: controversy held by the clerk, said judgment being coi to law and the evidence. Emerson vs Center, 118 U. Hempstead vs Johnson, 18 Ark. 140; Hunter vs Weirm Ark. 77; Crawford vs O’Neal, 144 U. S. 598; Bank of Rock vs Frank, 37 S. W. 400; Bump on Fraud. Convl Ed) 377; Waite on Fraud. Conv. (2nd Ed) § 326; Jess[ Hulse, 21 N. Y. 93; Waples-Platter Grocer Co. vs 54 Fed. 73.
G. L. Potter, W. B. Johnson, A. G, Gruee and Lee| for appellee.
1. The use of the word “ deliver ’’ in the conv 3e of the deed of assignment, did not render it void on ice. By delivery is not always meant a change of pos-on. Delivery does not necessarily mean a transfer of iossession since there are cases in which the property is in the buyer's possession at the time of the sale, so the delivery is effected merely by the seller’s expres-of assent to the transfer of title. Lake vs Morris, 30 . 201; Nicholas vs Patten, 18 Me. 231; Hobert vs Little-13 R. I. 343; 5 A. & E. Enc. of Law 521, a; 21 Id. 532; is vs Sherman, 106 Mass. 433. Where an assignment ¡s of two or more constructions, that one will be given vhich renders it effective. Coverdale vs Wilder, 17 181; Emigrant Bank vs Roche, 93 N. Y. 374; Bank of .e vs Dunn, 67 Ala. 381; Coffin vs Douglass, 61 Tex. lellamy vs Bellamy, 6 Fla. 62; Burrill on Assignments Ed) pp. 480; Grover vs Waitman, 11 Wend. 187; ;Tiede->n Sales, § 84.
2. This court will not disturb the finding of fact by a court that Mays & Bridgman were not partners in the E Morris & Nunn. The findings of the court is as sive as the findings of a Jury when .the case is tried the court without the jury. Reid vs Hart 45 Ark. 52; Carlebon vs Welsh, 38 Ark. 44; Lehman vs Dickson, S. 72; Lancaster vs Collins, 115 U. S. 222; Union etc. ylor, 100 U. S. 37.
|3. Fraud is never presumed, it must be always prov-in the absence of evidence showing that the assignee towledge of the assignors fraud and had reasonable Is for believing the assignment was fraudulent, he It bound to make any inquiry as to the bona fides of pd. 'Burrill on Assignments, (5th Ed) § 340; Hill vs fey, 51 Ark. 56; Joseph Lalone vs United States, 164 155.

Opinion:
Springer, C. J.
(after stating the facts). The assignment of error involved the validity of the deed of signment. The plaintiff below, the Martin-Brown Comp: and the interpleaders M. J. McKinney, the Ft. Worth Cl Company, and Frank Herman & Co., filed a demurrer to interplea of Lee Cruce, on the_ ground that the deed oi signment of Morris & Nunn, under which he claimed the tached property, was void on its fape. The deed of as. ment is as follows: "Know all men by these presents, we, J. G. Morris and E. O. Nunn, composing the firr Morris & Nunn, of Ardmore, Indian Territory, for an consideration of the sum of one dollar to us in hand pal Lee Cruce, and the further consideration hereinafter tioned, have this day sold, conveyed, and delivered unt said Lee Cruce the following'described property, to wit: that certain stock of goods, wares, and merchandise, fixtures situated in the storehouse and wareroom now pied by us as a place of business on the north side of street, in the town of Ardmore, I. T., consisting oi goods, groceries, hats, caps, boots, queensware, clot] hardware, woodenware, fixtures, etc.; also, six cases o: goods now in the Gulf, Colorado and Santa Fe Railroa' depot, at Ardmore, consigned to us. This deed is giv< trust for the following purpose: I desire the sai' Cruce to pay, of the proceeds of said property, a n $600.00, due J. A. Mays 30 days after the 20th day o: gust, 1892; also a note of $800.00, due to said J. A. M: days after August 20th, 1.892, next, to pay R. L. B: man a debt of $2,475; next, to pay what I owe Tom Su Mrs. Mattie Dobbings, and-Webb; next to pay t| mainder that I owe to said J. A. Mays; next to pay Ballard-BurnettHat Co. what we owe them; the restj paid to our other creditors, according to their claims, said Lee Cruce is to be controlled in the management ar of said property by the assignment laws now in force ian Territory. O. E. Nunn. J. C. Morris." The trial rt overruled this demurrer, holding that the deed on face was valid.
Counsel for appellants cite section 305 of Mansfield's est of the Laws of Arkansas, put in force in the Indian ritory by act of congress, which provides "that in all s in which any person shall make an assignment of any perty, whether real, personal, mixed, or choses in action the payment of debts, before the assignee shall bo en-sd to the possession, sell or in any manner manage or ¡rol any property so assigned, he shall be required to in the office of the clerk of the court exercising equity diction a full and complete inventory and description of property, and also make and execute a bond to the : of Arkansas in double the estimated value of the prop-assigned." This statute is, as counsel contend, manda- and contains an explicit direction that the assignee not be entitled to sell, or in any manner manage or con-any property so assigned, until he shall have filed the titory and bond required. Counsel insist that a deed h permits the assignee to sell or in any manner control ssigned property before he files a bond and inventory avenes this statute, and is void, and the words in the which declare that the assignors "have sold, conveyed, elivered" the stock of goods to the assignee render eed void on its face. Counsel for appellants contend y this provision in the deed of assignment the posses-f the stock of goods was transferred to the assignee oment the deed was executed, and before the filing of |ventory and bond as required by the statute; that the if the filing of a bond and inventory is excluded by the [terms of the instrument; and that the execution of the [and the possession of the property by the assignee ¡simultaneous acts. The words used were such as were ed to pass the title from the assignors to the assignee, The deed must have been executed before the assignee coi file a bond and an inventory. While the law requires tl the bond and inventory should be filed before actual poss sion should be taken, yet a deed passing title must be ecuted in the first instance. The words in the deed ££h sold, conveyed, and delivered" do not necessarily imply t the actual possession of the property was delivered to assignee. The word "delivered" is sometimes used to mi a transfer of title, and at other times a transfer of pos; sion. Tied. Sales, § 92; 1 Benj. Sales, p. 231 et seq. where a word admits of two constructions, that interj tation should be given to it which will render the insi ment legal and operative, rather than that which will ren it illegal and void. Grover vs Wakeman, 11 Wend. The overruling of the demurrer to the interplea of Cruce did not prejudice the plaintiffs. It only left the qu ion of the transfer of actual possession of the goods to determined as a matter of fact by evidence. If plain could • prove that actual possession of the goods taken by the assignee before filing a bond and invent this would invalidate the deed of assignment. If it sh' appear from the evidence that actual possession was taken by the assignee prior to filing bond and invent the rights of the-interpleader and of the preferred cred: would have been prejudiced by sustaining the demu: Hence the trial court, in overruling the demurrer, save' rights of all parties, and'secured a determination of case upon its merits, rather than a technical miscarriag| justice.
The second assignment of error by counsel for aj lants is to the effect that £ £ the court erred in holding Mays and Bridgeman were not partners with the defenJ Morris & Nunn. " The case at bar was tried by the coil jury having been waived. At the request of the appelij trial court filed its conclusions of law and fact, which, re as follows. "(1) That on the 28th day of September, )2, Morris & Nunn executed a deed of assignment to Lee uce for the benefit of their creditors. (2) That they pre-red J. A. Mays and R. L. Bridgman and other creditors aid deed of assignment. (3) That J. A. Mays and R. L. idgeman were not partners in the mercantile concern of rris &Nunn. (4) That Morris &Nunn, in making the deed issignment, undertook to prefer certain fraudulent claims 'avor of Mays and Bridgeman, and the said deed of as-ament was made to defraud their creditors. (5 ) That } Cruce, assignee, did not participate in, or have any •wledge of, the fraud of Morris & Nunn at the time of execution and delivery of the deed of assignment. (6) it Martin-Brown Company sued out writs of attachment inst Morris & Nunn, and caused the' same to be levied n the property in the hands of the assignee, and he has pleaded herein, and claimed the property for the benefit e creditors of Morris & Nunn. Conclusions of law: (1) It the assignment is a valid assignment, and conveyed [property to Lee Cruce in trust for the benefit of credi-of the defendants. (2) That the attachment is sustained ed out. (3) That the attachment sued out in 'this case t to be dissolved in so far as it affects property in the s of the interpleader, and that the interpleader Lee e ought to recover herein. "
Finding of fact by trial court— Orn-clusiveness.
It will thus be seen that the court found, as a matter let,- that Mays and Bridgeman were not partners in the pantile concern of Morris & Nunn. In determining |ers of fact, appellate courts regard the findings of fact íe trial judge in the same light as the findings of a jury, ferial court, a jury having been waived, was the judge of [acts, and, with competent evidence on both sides, had lame right to determine them as is accorded to a jury. We could not disturb the finding without violation, not onlj of past precedents, but of sound general principles. Bell vs Welch, 38 Ark. 144. ' ' The court who heard the evidencB and who had an opportunity to test the credit to be given the witnesses, who testified in the case, from their mannl when testifying, as well as .n what they said, is more cor petent to decide correctly than we would likely be." Dickerson vs Johnson, 24 Ark. 253; Lehnen vs Dickson, 148 S. 72, 13 Sup. Ct. 481; Lancaster vs Collins, 115 U. S. 222, Sup. Ct. 33. Counsel for appellants, in their reply briq concede the proposition " that the finding of a trial judge a question of fact, where the evidence is conflicting, wot have about the same weight as a verdict of a jury; but this case, " they contend, ' ' there is no conflict in the tes mony by which the partnership is proven; it is all one wa;j It is true, as contended by counsel, that the question as whether a partnership existed was a mixed one of law fact; but the burden of proving the partnership alleged on the appellants. The trial court found, as a matter | fact, that there was not sufficient evidence to establish alleged partnership. Counsel for appellants, in their fij brief, set forth a synopsis of the testimony upon whj they rely to establish this fact. The testimony of McKinney, among others, is given,and much stress is ll upon her statements. But she states that "the mercanj business was opened up in the name of Morris & Nunn,I Ardmore, but that Bridgman was the manager of the cern, aud bought all the goods. " There appears to be | testimony in the record which tends to show that Brie man's position was other than as stated, viz. "manager! the concern. " In fact, the testimony of the other witne^ fully corroborates Mrs. McKinney's statement that Brie man was the manager of the firm of Morris & Nunn; that| was acting for the firm,, and not as a member of it. McKinney further testified that Bridgeman and MorriJ :unn and J. A. Mays told her "that Mays was interested in íe firm; that be had furnished money to buy goods with; ad that he was to have half of the profits. " This was erely hearsay, except as to what Mays said. None of lose parties so testified in court. Neither persons men-oned as having made this statement were called as wit-isses in the case. As before stated, the burden of proving e alleged partnership was on the appellants. If they tose to rest their case upon mere hearsay testimony, the urt had the right, and it was its duty, to disregard such stimony. The fact that Mays may have made this state-¡nt as to himself could only be competent in so far as it is an admission by him against his interest. He was a eferred creditor in the deed of assignment to Lee Cruce, d it was to his interest to sustain the assignment. Hence was competent to prove his admissions as to his interest the partnership. But all the other facts established in case show this interest in the case was not the interest a partner. The trial court doubtless considered the testi-ny of Mrs. McKinney in view of the deep feeling which must have had against Morris and Nunn, one of whom killed her husband, and gave it such weight as under the circumstances it was entitled to have. It is true, as .tended by counsel for appellants, that the question as to [ether the partnership existed or not was a mixed one of and fact; yet, in order to sustain an assignment of error [account of the finding of fact by the court on this point, its ruling on the law applicable to such facts, it should ear that the evidence conclusively established facts eh proved the alleged partnership. If the record dis-ed such a state of acts, the finding that no partnership ted would be reversible error; but the record fails to dis-e such facts as would in law constitute a partnership, as appellants allege existed.
Allegation of partnership — Burden of proof.
statute of Arkansas of notriCnfoTCe97'
The third assignment of error was as follows: " Th| court erred in holding that the interpleader, Lee Cruce did not have any knowledge of the fraud of defendant! Morris & Nunn at the time the deed of assignment wa executed, and in sustaining the deed of assignment be cause of the want of such knowledge." This assignment error embraces two propositions: First,- that Lee Cruce, tl assignee, did not have any knowledge of the fraud of tl assignors at the time the deed was executed; second, that tl court erred in sustaining the deed because of the want such knowledge. The first proposition is one of fact, ar the finding of-the trial court will not be reviewed by th| court, for the reasons already stated in this opinion. Tl second proposition is one of law, and will be carefully co| sidered. Counsel for appellants call attention to the faj that the legislature of Arkansas, by an act approved Marq 31, 1887, provided that "any assignment for the benefit creditors may be contested or attacked for fraud by ail creditor, and proof of fraud on the part of the assignor shfj be sufficient to invalidate the assignment whether the signee knew ib or not"; and counsel contend that this act lates to ' 'the pleadings and practice and forms of proced ings in civil actions, " and it was therefore put in force in t| Indian Territory by the act of congress approved March 1889, which established the United States court in the dian Territory. We do not agree with counsel as to tl contention. The act of the Arkansas legislature of Mar 31, 1887, does not relate to practice, pleadings, or forms procedure. It is positive and- affirmative legislation, changes an important rule of decision in Arkansas; - butj has never been put in force in the Indian Territory.
Counsel for appellants do not contend that Lee Crul the assignee, at the time he accepted the deed of assil ment, actually participated in the fraudulent conspiracy! he assignors, or that he actually knew that the debts pre-erred in said deed of assignment in favor of Mays and Iridgeman were fictitious and fraudulent; yet they allege hat, at the time he accepted the assignment, he was aware such suspicious facts and circumstances surrounding the xecution of the same, and occurring at the time, as should ave aroused his suspicions, and that such facts were well ilculated to arouse the suspicions of an ordinarily prudent erson, and cause him to investigate and ascertain whether not said assignment was made in good faith and for an onest purpose. Hence counsel submit their fourth as-gnment of error, which is as follows: 'The court erred in fusing to submit additional conclusions of fact, as re-lested by the plaintiff, as to whether or not, at the time ie deed of assignment was executed and delivered to the signee, Lee Cruce, he was aware of such facts and cir-imstances surrounding the execution of the deed of as-gnment as would have arroused the suspicions of an or-narily prudent man as to the fraudulent character of the signment, and whether or not, by the exercise of ordiny diligence, under the circumstances, he should have scovered the fraud." Counsel for appellants in their ief, make the following statement: "We do not claim ¡at Lee Cruce had positive knowledge of the fraud of the ¡signors at the time he drew the assignment and accepted position of assignee, but we do insist that he had full jd adequate means of knowing of the fraud: that he had ¡sitive knowledge of such suspicious facts and circum-,nces and badges of fraud as should have aroused his sus-;ions and quickened his senses to a discovery of the nd; that the atmosphere in which the assignment was ¡íceived and executed was so impregnated with crime and ,ud that the law will impute to him a knowledge of what .an of ordinary sense and prudence, with his eyes open, 1st have discovered. What were the circumstances sur» rounding the execution of the deed? What notice did Lé Cruce have of suspicious facts and circumstances at th time?" As before stated, a jury was waived in this case and it was tried by the court. The court was requested 1 find specially upon the facts and the law, which was don< The facts proved on this point were as follows: "(4) Thi Morris & Nunn, in making the deed of assignment, unde took to prefer certain fraudulent claims in favor of Ma; and Bridgeman, and the said deed of assignment was ma< to defraud their creditors. (5) That Lee Cruce, as assigne did not participate in, nor have any knowledge of, the frai of Morris & Nunn at the time of the execution and delive: of the deed of assignment. " After the court had announc these findings of fact, counsel for appellants requested t further finding of fact indicated in their fourth assignme of error, above quoted. Counsel for appellees insist tb the fifth finding of fact by the court, supra, "complete disposes of the contention of the appellants." If Lee Cru< the assignee, did not have any knowledge of the fraud the assignors at the time the assignment was made, found by the trial court, this finding may have been rega: ed by the court as sufficiently responsive to the special quest for a further finding of fact as to require no additio or more specific finding. The facts were all before the coi and it weighed and passed upon all of the evidence in case. This court will not review the findings of the coH on questions of fact unless it should clearly appear that H court making such findings was actuated by prejudiceH passion. Counsel for appellants, in their first brief, givH synoposis of such facts from the record as, in their opiniH ought "to charge Lee Cruce with a knowledge of the frjfl that surrounded him when he accepted the assignmeiH We have carefully examined this evidence, so set fortbffl appellants' brief, and presume it is stated as favorably H them as the facts will warrant. We will not recapituH ie facts. The most pertinent fact stated is to the effect íat, on the day before the assignment, it appeared npon in-estigation that the firm of Morris & Nunn was solvent; but, in íe deed of assignment the preferred claims of Mays and Bridg-.an were large enough to consume the entire assets. Lee ruc¿ testified that his impression was that the firm was in ood circumstances. On the next day the facts disclosed in the ed show that the firm was insolvent. Is the fact that a ercantile firm, which was supposed to be solvent, is found )on investigation to be insolvent, such a circumstance as .ould have aroused the suspicions of an ordinarily prud-d man as to the fraudulent character of the assignment? ie mere fact of unforeseen insolvency is not, in our opin- , a fact which would arouse the suspicions of ordinarily udent persons as to the integrity of the insolvents. After refully examining the synopsis of the evidence on this int submitted by appellants in their brief, we are of the inion that it does not show that Lee Cruce, at the time the ed of assignment was executed, had any knowledge of the tud of Morris & Nunn, or any knowledge of facts or - cir-mstances sufficient to arouse his suspicions as to the budulent character of the deed. Not being in possession such knowledge at that time, it was not incumbent on , before he could accept the trust imposed upon him by deed, to institute an investigation to ascertain whether not the assignment was made in good faith and for an uest purpose. Before he would be required to institute ;h an investigation, it must appear from the evidence ,t, at the time of the execution of assignment, he was in session of some fact or circumstance which of itself sug-kted the fraud. The rule on the subject of constructive lice is thus clearly stated by the supreme court of the lited States: " When a person has not actual notice, he ?ht not to be treated as if he had notice, unless the cir-ístances are such as enable the court to say, not only that he might have acquired, but also that he ought to ha' acquired, it but for his gross negligence in the conduct the business in question. The question, then, when it sought to affect a purchaser with constructive notice, is r whether he had the means of obtaining, and might, by prr ent caution, have obtained, the knowledge in question, b| whether not obtaining, was an act of gross or culpable na ligence." Wilson vs Wall, 6 Wall. 91. The deed of assigl ment in the case at bar is merely a preference of crédito: and, as such, it should not be rendered invalid as to bo fide creditors by any design on the part of the assignors cheat, hinder, or delay their other creditors, unless that ( sign was known by the assignee, and participated in by hi or that he was in possession, at the time of the assignme: of some fact or circumstance so clearly indicative of fra as to have made it his duty to institute an investigation ascertain the bona fides of the transaction.
Facts necessary to arouse suspicions ot
When as-signee put on notice.
The other assignments of error in this case are to ' effect th at the court erred in refusing to order the money the hands of the court to be paid out in the satisfaction the claims of the appellants. It appears from the evide: that, after the attachment was run, the interpleaders, parties to this case, recovered, by writs of replevin, property attached, which was claimed by them, and t there remained thereafter goods invoiced at $2,450, which sold for only $1,850, which is the amount now in hands of the court. Appellants insist that the proceeds! this property were intended by Morris & Nunp to be appt to the payment of the fictitious and fraudulent claims | Mays and Bridgeman; and that "the fraud of Morris Nunn in preferring these fictitious debts was discovered | exposed solely by the diligence and at the expense of plaintiff and the interpleaders M. J. McKinney, Ft. Wc China Co., and Frank Herman & Co.; and that Lee Crl did not suspect the fraudulent character of these debts ul 0 first trial of this case, many months after the deed of as-fnment was executed. " The case of Bank vs Hofheimer, Fed. 13, is cited by appellants to sustain the doctrine at creditors who have successfully attacked the assign-snt on the ground that it preferred fictitious debts should rewarded for their diligence by having appropriated to 5 satisfaction of their claims the property, or its proceeds, signed by the debtor to be appropriated to the payment the fictitious debts. This contention is not without merit, recognizes the fact that the diligent creditor is in a better sition than one who is indifferent as to his right. In the :e at bar, the creditors, other than the appellants, have íe nothing except to file their claims with the assignee, ay are not represented by counsel, and have incurred no tense to the litigation. If 'this assignment should be sus-íed in toto, none of the preferred creditors will receive a t, except Mays and Bridgeman, whose claims have been nd by the trial court to be fictitious and fraudulent. 3 is sustained in part, so as to exclude their claims, all b will be realized will go to the other preferred creditors. ) have done nothing to protect their interests, who are iding aloof, and watching the contest, and who will ap-r on the legal arena after the appellants have succeeded exposing and defeating the fictitious and fraudulent ns of Mays and Bridgman. Then they will step ford in the shoes of the assignee, and ask the court to tax costs of the litigation to the appellants, and to award proceeds in the hands of the court, which have been res-by the appellants from the grasp of fraudulent creditors, ie payment of their preferred claims under the deed of jnment. If this be the law in such cases, the judgment ie trial court should at least be so modified as to tax the 3 of litigation and a reasonable ' fee to be paid to the •neys of appellants against the assignee, to be paid out .e proceeds in the hands of the court, before distribu* tion of the funds is made to the preferred creditors, wh claims are ascertained to be just. It seems that the aut' ities are conflicting on this point. Burrill, Assignm. 165, § 117, cites the decision on the subject, and conclude; follows: "The question whether provisions in the assi ment for the payment of a fictitious debt will invalidate entire assignment, or whether the instrument will be tained for the benefit of creditors who have not participa| in the fraud, has given rise to conflicting decisions. It be seen from the cases referred to in the notes that the ponderance of authorities seem to be in favor of the opi: that the assignment will be held good as to all debts are bona fide; and this rule would undoubtedly preval those states where provisions is made by statute for tes the validity of claims presented to the assignee for pay: under the assignment. ' ' In the case of Hemstead vs Johnston, 18, Ark. 137, the supreme court of Arkansas held: it be assumed that they [the debts] were simulated, the of trust would, nevertheless, be valid as to the other b ficiaries, unless it had been shown that they were priv; the insertion of the simulated claims for fraudulent poses." There i@ no contention in the case at bar that preferred creditors, whose claims were just, were privj the insertion in the deed of assignment of the fictitious fraudulent claims of Mays and Bridgeman. They) chargeable with nothing except want of diligence and difference as to their own interests. Accepting the elusion reached in Burrill on Assignments, which seem| be sustained by the supreme court of Arkansas in the of Hemstead vs Johnston, supra, whose decisions, ifl binding, are at least very persuasive upon this court, w<| of the opinion that the judgment of the court should bd firmed in so far as it sustains the assignment, and holds) the claims of Mays and Bridgeman are fictitious and fra lent, but that it be reversed in so far as it taxes the inst the appellants. The ease is therefore remanded, h directions to tax the costs and a reasonable fee for the rnneys of the appellants, to be fixed by the trial court, kinst the assignee, to be paid out of the funds in the Lds of the court, and to render judgment for assignee for remainder of said funds.
Clayton and Thomas, JJ., concur. Townsend, J., being present, did not participate.