Court Opinion

ID: 7810974
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:12:47.753844+00
Date Added: 2024-06-11T16:30:28.262282
License: Public Domain

Hast, J. (after stating tíre facts). It is first insisted that the conveyance of lot 2 on which the store building was situated was void because it was in violatipn of our bulk sales law. Under it the sale in bulk of any part of, or the whole stock of merchandise and the fixtures pertaining to the conduct of any such business otherwise than in the ordinary course of trade is void against the creditors of the seller, unless the provisions of the act in regard to such sale are complied with. Crawford & Moses’ Digest, section 4870. It is contended that the storehouse is a fixture under the statute. The statement of the proposition negatives its soundness, and we need only say that the statute refers to the trade fixtures connected with the business and not to the building in which the business is carried on. The building itself is a part of the ground on which it is situated. It is also sought to set aside the conveyance of lots 2 and 3 in block 22 in the town of Womble, on the ground that they were made in fraud of creditors, and in this contention we think counsel is correct. In regard to lot 3, but little need be said. W. 0. Robbins made a deed to it to his father, B. Robbins, on the 5th day of January, 1919, and closed his store on account of insolvency on the first of February of the same year. His father allowed him $50 for the lot to be applied on the indebtedness which the son owed the father. The evidence showed the-lot was worth'from $150 to $200. The father visited the store of his son almost daily, and •father and son were seen in frequent-and apparently earnest conversations. It is fairly inferable,'under the circumstances, that the insolvent condition of- the son must have been known to the father at the -tiine-he made the purchase, although .the father denies'this-to-be the faet.- Therefore, the-court was: correct in" holding' the conveyance fraúdulént.' Dennis v. Ball-Warren Commission Company, 72 Ark. 58, and Godfrey v. Herring, 74 Ark. 186. The chancellor was also correct as to his finding with regard to lot 2. This was the lot upon which the storehouse in which W. 0. Robbins carried on his business was situated. W. E. Womble, who sold the property toW. 0. Robbins, testified that it was worth $800. For the reasons above given, B. Robbins must have known that his son was insolvent at the time that it was agreed that the deed to said lots should be made to him upon the payment to Womble of the balance of the purchase money. The transaction was had at a time when Womble was threatening to foreclose his lien and when the undisputed proof shows that W. 0. Robbins was insolvent. The only other consideration paid was the sum of $’85 which B. Robbins said that he allowed to his son for Womble dn the son’s indebtedness to him. W. 0. Robbins owed Womble $425 as balance of the purchase money. When Womble agreed with W. 0. Robbins to sell him lot 2 and executed to him a bond for title, the effect of the contract was to create a mortgage upon the lot in favor of Womble to secure the balance of the purchase money. Mamoaring v. Farmers’ Bonnie of Commerce, 139 Ark. 218. When W. 0. Robbins purchased lot 2 and received a bond for title from Womble, he became the equitable owner of the lot, and his executory contract was assignable in equity. Corcorren v. Sharum, 141 Ark. 572. Therefore when he agreed that Womble should make the deed to his father upon the payment by the latter to Womble of the balance of the purchase price, the effect of the transaction was the assignment by W. 0. Robbins of his equitable interest in the lot to his father. The lot was worth substantially more than the balance of the purchase price due upon it, and the sale under the circumstances detailed above was in fraud of the creditors of W. 0. Robbins. See, in addition to the authorities above cited, Wilks v. Vaughan, 73 Ark. 174. B. Bobbins paid the balance of the purchase price at the time the conveyance was executed to him.. The payment was made with money of his own, and he had an equity to be substituted to the rights of Womble to that extent. It is well settled that when a conveyance is only constructively fraudulent as, for instance, where it is in part voluntary — it will be allowed to stand as security for the money advanced by the grantor to pay off incum-brances. In Boyd v. Dunlap, 1 Johns. Ch. 478, Chancellor Kent states the law on this question as follows: “A court of law can hold no middle course. The entire claim of each party must rest and be determined, at law, on the single point of the validity of,the deed; but it is an ordinary case, in this court, that a deed, though not absolutely void, yet, if obtained under inequitable circumstances, should stand only as a security for the sum actually due. * * * A deed, fraudulent in fact, is absolutely void, and is not permitted to stand as a security for any purpose of reimbursement or indemnity; but it is otherwise with a deed obtained under suspicious or inequitable circumstances, or which is only constructively fraudulent.” In Clements v. Moore, 6 Wall. U. S. 299, Justice Swayne states the law as follows: “When the proceeding is in chancery, the jurisdiction exercised is more flexible and tolerant. The equity appealed to, while it scans the transaction with the severest scrutiny, looks at the facts, and, giving to each its due weight, deals with the subject before it according to its own. ideas of right and justice. In some instances it visits the buyer with the same consequences which would have followed in an action at law. In others it allows a security to stand for the amount advanced upon it. In others it compels the buyer to account only for the difference between the under price which he paid and the value of the property. In others, although he may have paid full value, and the property may have passed beyond the reach of the court, it regards him as trustee, and charges him accordingly. When he has honestly applied the property to the liabilities of the seller, it may hold him excused from further liability. The cardinal principle in all such eases is that the property of the debtor shall not he diverted from the payment of his debts, to the injury of the creditors, by means of the fraud.” Many other cases of proving the rule are cited in a case note to 8 A. L. R. at pp. 535-536. As we have already seen, lot 2 was worth at least $800, and the father only agreed to pay the balance of the purchase price, which was $425, and the sum of $85 to his son. Under the circumstances there was a considerable inadequacy of price, and the court correctly allowed the deed to stand as security only for the $425 and ordered the lot sold in payment of the creditors of W. 0. Bobbins upon their reimbursing B. Bobbins for the amount advanced by him. The plaintiffs, who are the creditors of W. 0. Bobbins, deposited $425 in the registry of the court upon the refusal of B. Bobbins to accept that amount when it was tendered to him. It follows that the decree must be affirmed.