Court Opinion

ID: 7195292
Source: CourtListenerOpinion
Date Created: 2022-07-24 17:01:59.798759+00
Date Added: 2024-06-11T16:16:18.731439
License: Public Domain

On the Merits.
Sundry creditors of Covington unite in this suit for the revocation of an alleged fraudulent sale by him to one Fudickar.
Their complaint is, that the conveyance covered the entire contents of the vendor’s two store-houses, situated in the town of West Monroe, composing his stock of merchandise, and that the transaction was fraudulently and collusively entered into by both parties —same being out of the usual course of vendor’s business, the price inadequate, and the insolvency of the vendor being known at the time to the vendee.
Averment is made that the. alleged sale was entered into with the intention of defrauding Covington’s creditors, and of giving an undue preference to some of them, whereby petitioners will be injured if same is consummated.
Further averment is made that all of Covington’s other property was under seizure by various attaching creditors; that they had also attached, but their attachments were subsequent in order, and of inferior rank and privilege; and, hence, the revocation of said fraudulent sale is necessary in order that they may collect their ■claims.
The prayer is that said sale be annulled and revoked in so far as same affects their rights, and the property be restored and applied to the satisfaction thereof.
The intervenors joined the plaintiffs in their demand for the revocation of the sale, on the grounds above assigned.
Substantially, the defendants’ answers set up the general issue, coupled with a special denial.
On the trial there was judgment for the defendants, rejecting plain - tiffs and intervenors’ demands.
The following is a fair summary of salient facts necessary to be considered, viz.:
At date of sale, Covington owed the two intervening banks about *890$6000, represented by two notes bearing the names of two indorsers. Two days prior thereto, a conversation occurred between Fudickar and these indorsers, in the course of which one of them suggested to the latter the propriety of the sale, and the other approved of it as ♦feasible, giving it as his opinion that Covington was solvent — thus, inferentially, suggesting that there existed no legal impediment to its accomplishment.
On the following day Covington began taking up his stock, and when completed the ■ inventory amounted to $5900. On the following day the sale to Fudickar was accomplished by the execution and delivery of his note to Covington for $3850, maturing at twelve months — the price paid being a little less than two-thirds of the inventoried value of the goods.
On the following day ¡Covington delivered the note to one of his indorsers, accompanied by ,the request that he should hold it as collateral ¡security for himself and his other indorser, for whose benefit the sale was made.
On the day of the sale the Ouachita National Bank caused a writ of attachment to be issued against Covington, and process was placed in the sheriff’s hands prior to the consummation of the sale to Fudickar.
Contemporaneously therewith a writ of attachment was obtained by the Merchants and Farmers Bank against Covington.
The two indorsers of Covington were directors in each-of the two banks, and it was upon information furnished by one of them that the former acted in suing out its attachment.
The sheriff did not seize Covington’s stock of goods, because he had been informed by him, that he had sold them to Fudickar, and upon demand being subsequently made upon him by other attaching creditors, to seize the stock of goods, he declined to do so, and required a forthcoming bond, but it was not furnished.
On this summary of the testimony, it is our opinion that the judgment appealed from is correct, inasmuch as there is nothing to show that Fudickar had any knowledge of Covington’s fraudulent purposes in disposing of his property. For it may have been the intention of the latter to give an unfair preference to others of his creditors over the plaintiffs, ultimately, but Fudickar not being a creditor, the price of the goods was not absorbed to any extent by *891any debt of Oovington, and nothing in the transaction itself pointed to such an intention or purpose on the part of Oovington.
Fudickar paid the price, which was a fair one, by giving his note, which was a gilt-edged piece of commercial paper, and at once took the goods to himself.
By this transaction, it is true, the goods and property of Oovington were illegally absorbed and misapplied, to the injury of his creditors, but they can not be reached and recovered by them without convicting Fudickar, a mere stranger, of participation in the fraudulent design.
It is of no consequence, in such a case, that the vendors were notoriously insolvent to the knowledge of the vendee, and that the transaction was not “in the usual course of the party’s business.” The provisions of R. O. O. 1984 and 1986 have exclusive reference to reprobated transactions between debtor and creditor.
In Pochelu vs. Catonuet, 40 An. 327, we had under consideration and construed the last cited article as appertaining to a precisely similar case, and, in the course of our opinion, said: “It is evident to our minds that neither Maylie nor Rougagnac were'bound in an way for the payment of the debt due the plaintiff. There was no legal impediment existing to prevent Maylie loaning, or Rougagnac borrowing the $4000 with which he paid the .purchase price to Navos. There was nothing to prevent Navos from selling to Rougagnac for cash, even though he were in insolvent circumstances to the knowledge of the purchaser at the time. A sale to one not a creditor must be considered as one made in the ordinary course of business, if made for an adequate consideration, paid in cash. The fact that a portion of the puchase money was applied to the discharge of vendor’s debts will not vitiate it as an onerous contract.”
In support of that view we quoted with approval Maurin vs. Rouquit, 19 La. 594, and affirmed it. The principles therein announced are strictly applicable to this case.
Counsel for defendants insist that the indorsers of Covington were not, at the time of. sale, his creditors, and, for that reason, ask us to declare the transaction between them and Covington exempt from the operation and effect of the statute of frauds. That is a question we can not, at present, decide, for the indorsers, neither as such nor as directors of the intervening banks, are cited in this suit and made parties, and, therefore, no judgment can be rendered that would be *892binding upon them. In addition, we are informed that this question is involved in another suit against the banks, which is pending in the district court. We are at present concerned with the sale of Covington to Eudickar alone, and not with Covington’s disposition of Fudickar’s note, with which the latter had nothing to do, and with which the plaintiff’s petition does not deal.
For these reasons we are of opinion that, the judgment should be affirmed, and it is so ordered.