Court Opinion

ID: 7986558
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:26:19.51719+00
Date Added: 2024-06-11T16:35:13.018842
License: Public Domain

Cooper, C. J.,
delivered the opinion of the Court.
One Jeffries, being largely indebted to a number of his near relatives and intimate friends, embarked in the mercantile business in the month of September. He bought a large stock of goods on credit, making his paper given therefor mature in sixty and ninety days. About one-half of the goods he converted *160into money and, before the maturity of his commercial debts, he made an assignment to the appellee, Stewart, for the benefit of his creditors. By this assignment he preferred the debts due by him to his family and friends, putting them in class one, a class which was to be paid in fall before any paj^ments should be made to those in class two. In the second class were all his-mercantile creditors. The value of the property assigned will not be more than sufficient to pay class one.
The appellants, creditors for goods sold to Jeffries, sued out an attachment against him and have obtained judgment in that suit. They caused the writ to be levied upon the assigned property, and the assignee interposed a claim thereto.
On the trial of this issue the plaintiffs offered to prove certain declarations made by Jeffries at the times of various purchases made by him of goods, to the various sellers of the goods to him, that R. W. Phillips (one of the preferred creditors) was largely indebted to him, Jeffries, and that he (Jeffries) expected to get the money from Phillips and discount his bills before their maturity. On objection by the claimant this testimony was excluded, on the ground as is stated by counsel, that it was mere hearsay as against the claimant. It is earnestly insisted by appellants that this evidence should have been admitted, and it is said to be competent.
1. To show the fraudulent character of the deed by evidence that one of the debts preferred was not a real debt.
2. To show a general fraudulent scheme contrived from the beginning for the purpose of procuring a large stock of' goods which were to be partly converted into money and partly applied to the satisfaction of other pre-existing debts.
The evidence was properly excluded. It was not competent to prove, by the declaration of the assignor made many months before the assignment, the fact that no debt was due by him to Phillips. The existence or nonexistence of the debt was a fact susceptible of independent original proof, and both Phillips and Jeffries were competent witnesses. If the effort had been to show an admission by Phillips made at the times indicated, that he was then largely indebted to Jeffries, it might well have been argued that the burden was. *161devolved upon him to establish the changed relation of the parties, by showing how and when the preferred indebtedness arose; but Jeffries’ declaration that Phillips was indebted to him was mere hearsay when introduced for the purpose of showing that Phillips was indebted to him, and not he to Phillips at the time of the assignment.
If the declaration had related to anything done by Jeffries in reference to the assignment; if its truth, if true, or its falsity, if false, would cast any sort, of light upon the intent with which the assignment was made, it would have been competent evidence as against the Assignee, even though made out of his presence and before the execution of the deed. The assignee is not a purchaser for value, and because he is not, the fraud of the assignor, though not participated in by him, though in fact he may be ignorant of it, infects the instrument under which he holds, and renders it void as to creditors; and being void, the assignee could not retain the property as against their demands. But the declarations sought to be proved had no reference to the assignment, and however strongly they may suggest the fraud with which the debt to the plaintiff was contracted, they do not serve to show with what intent the assignment was made.
We doubt not that Jeffries fraudulently contracted the debt due to the plaintiffs and to his other commercial creditors ; but this may be true, and yet the assignment may be valid. The acquisition of the goods is one thing; the disposition he made of them is another and distinct thing. The plaintiffs, if they were fraudulently induced to part with their goods by him, might have repudiated the sale and recovered the goods either from the purchaser or his assignee in the deed; but in the absence of such dis-affirmance of the sale the property in the goods remained in the buyer, and being his goods he might lawfully devote them to the payment of any debt he owed. In this ease the seller, after knowledge of the fraud by the purchaser, has affirmed the sale by suing to recover the price of the goods, and has thus waived the fraud. He then, having recovered judgment for the price, seeks to impute the fraud he has waived to the assignment executed by the debtor, and thus to have not only a *162judgment for the price of the goods, but also a right to go against them superior to the right of other creditors who claim under the assignment. If a defrauded seller refuses to rescind a sale, the property in the thing bought is in the purchaser, and because it is he may devote it to the payment of any debt he owes. That he applies such property to the payment of others than those from whom it was bought may shock the sensibilities of right-thinking men ; but such action violates no rule of law, and is but the. exercise of a legal right that arises from and inheres in ownership. Mattison v. Demarest, 4 Robertson, 161; Horwitz v. Ellinger, 31 Maryland, 493; Pierce v. Jackson, 2 R. I. 35; Reinhard v. Bank of Kentucky, 6 B. Monroe, 252; Kennedy v. Thorp, 51 N. Y. 174; Burrillon Assignments, 638.

The judgment is affirmed.