Court Opinion

ID: 6549437
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:22:47.476179+00
Date Added: 2024-06-11T15:56:04.044076
License: Public Domain

Kirby, J., (after stating the facts). The testimony shows a sudden and hasty transfer of the stock of goods, first from W. C. Grice to his brother, without any investigation on the part of the purchaser to ascertain the condition of the business, or the indebtedness of the seller for the stock he was selling, for a totally inadequate consideration, and the transfer thereafter immediately upon Ms ascertaining that the creditors of his brother, W. C. Grice, were about to proceed against the stock of goods for the payment of their debt, to the Hosmers, for the lands described, wMch are admitted to be worth $2,400. This brother, who made such an exceptionally good trade of so sorry a stock of goods for the land, denied that he assumed any of the debts of his brother upon the purchase of the stock, except for the house and lot, wMch was not included in the sale of the stock of goods, and the brothel selling denied that his .brother was on any note with him which was reckoned in the payment of the stock of goods in the selling of it ; and notwithstanding they were living near together, and the families very friendly, and had been all along, and each knew the financial condition of the other, and that neither had any property of any material value as compared with the stock of goods being bought and sold, their testimony discloses that it was almost by accident that one discovered that the other desired to purchase a stock of goods, and the one desiring to buy that his brother had a stock of. goods for sale, and they had such implicit confidence in each other that no question was made as to the condition of the business, the amount of indebtedness, nor the exact amount that one was to pay the other therefor, and the one to whom the transfer of the stock of goods was made, immediately upon the appearance of the collector for appellant creditors in the town and talk of the proceeding to subject the stock of goods to the payment of their debts, traded it for the tract of land. The brother who purchased the stock of goods and took possession of it knew that he was divesting W. 0. Grice, appellants ’ debtor of all his tangible assets. His recollection as to the amount he paid therefor is hazy and unsatisfactory; does not correspond with that of the seller of the goods, and he made no effort whatever to discover the condition of the business, nor the amount of the seller’s indebtedness. The circumstances within his knowledge were sufficient to put a man of common sagacity on inquiry and with the use of any diligence to lead him to the discovery of the fraudulent purpose of the debtor, and he should be charged with notice of such intention. In Dyer v. Taylor, 50 Ark. 314, the court said: “To avoid a sale actual notice to the purchaser of the fraudulent intent of the vendor is not necessary. If the facts and circumstances within his knowledge are sufficient to put a man of common sagacity upon inquiry, and with the use of reasonable diligence to lead him to the discovery of the fraudulent purpose of the vendor, and he neglects to make the inquiry, he will be charged with notice of the fraudulent intent. No purchaser put upon inquiry has a right to remain wilfully ignorant of facts within his reach. It is not sufficient for his protection that he is a purchaser for value; he must also be an innocent purchaser. By aiding a debtor to convert his property into money, or promissory notes, which can be easily concealed from his creditors, and placed beyond their reach, with notice, actual or constructive, that he is doing so to defraud his creditors, he participates in the fraud of the debtor, by assisting .him in carrying out his fraudulent purpose.’’ See also Adler v. Hathcock, 55 Ark. 579. Moreover, this was a transfer of a stock of goods by an embarrassed and insolvent debtor to his brother, who ought, under the circumstances, to have known his financial condition and neglected every opportunity to ascertain it, for a wholly inadequate consideration and the transfer stripped the debtor of all his property that could be reached by his creditors, and certainly shows a lack of good faith upon his part in the purchase of it, and he can not be a bona fide holder thereof. Wilkes v. Vaughan, 73 Ark. 179; McConnell v. Hopkins, 86 Ark. 225. We are of the opinion that the chancellor’s finding is against the preponderance of the testimony. The creditors who filed this bill were entitled to have the stock of goods, which was fraudulently transferred by the debtor to his brother, who did not purchase it in good faith and become a bona fide holder thereof, subjected to the payment of their debts. The change of the form and character of the property by the fraudulent grantee by exchanging it for the land was but a substitution of the land for the property fraudulently conveyed which will stand in the place thereof and be liable in the same manner to the complaining creditors. 1 Moore, Fraudulent Conveyances, 171; Bryant-Brown Shoe Co. v. Block, 52 Ark. 458; 12 S. W. 1073. The decree is reversed and the cause remanded with directions to render judgment for the amounts sued for by E. I^ess and Johnson, Berger & Co. and to fix the same as a lien against the tract of land purchased of the Hosmers by G. J. Grice, and if said judgment is not paid within a reasonable time to order said lands sold and the proceeds thereof applied to the satisfaction of the said judgment.