Court Opinion

ID: 6515284
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:26:02.853263+00
Date Added: 2024-06-11T15:55:00.143437
License: Public Domain

STONE, C. J.,
dissenting. — About the year 1887 Isaac Pinkus commenced business as a merchant in Decatur, Alabama. He dealt in dry goods, clothing, shoes, and, probably, other lines of trade. In 1889, and, until March 3,1890, *638he occupied a storehouse which was the property of M. T. Cartwright, father of Herbert Cartwright. The latter, Herbert Cartwright, was born in September, 1868, and in January, 1889, he went into the service of I. Pinkus as a salesman in his store, at an agreed salary of one hundred dollars per month. He had been employed in Huntsville a part of the year 1888 at fifty dollars per month. He continued in the service of Pinkus until the goods of the latter were attached, to be shown further on. When Isaac Pinkus’s stock of merchandise was attached — March 3, 1890 — Herbert Cartwright was twenty-one years and six months old.
I will now proceed to state the case presented, by this record, as claimed to be shown by the testimony most favorable to Herbert Cartwright:
In 1887 Herbert Cartwright was, or had been relieved of the disabilities of minority. His father had been his guardian, and then paid over to him a fraction over twenty-three hundred dollars in money. This money he kept unemployed until May, 1889, when he lent it to Pinkus. On March 3, 1890, this lent money demand had become $2,500, and Pinkus owed Herbert on his salary a fraction over $400. Total, $2,900. Pinkus had also become indebted to M. T. Cartwright, father of Herbert, in about $1,800. In this was included unpaid rent for the storehouse.
In February, 1890, Pinkus boxed up a part of his winter stock which was becoming unseasonable, and stored it in the warehouse of M. T. Cartwright. There was no concealment about this, and Herbert Cartwright had knowledge of it. These goods invoiced, at cost prices, about $2,400. On March 1, 1890, Pinkus sold this lot of goods to M. T. Cartwright at 75 cents on the dollar of their cost price. This in payment of the rent of the storehouse, which he owed him, and in payment of other debts — the whole amounting to $1,800. Herbert Cartwright knew of this sale, made as it was to his father.
Between the Saturday, when this sale was made to M. T. Cartwright, and the following Monday, March 3, 1890, the Cartwrights — father and son — had a conference in reference to the latter’s claim on Pinkus. When Herbert reached the store Monday morning, he found some of the goods boxed up, and the boxes still in the store. Inquiring about this, he was informed by Pinkus that the object was to make room for other goods expected to arrive. It is not shown that the said Herbert had discovered that any goods had been carried out of the store, but the inference is that he had not. Herbert demanded that the $2,900 due him be paid, and, if not paid, threatened to attach. Pinkus im*639plored him not to attach, as it would break up his credit and business. He informed him, too, that he, Pinkus, owed his own mother some $2 200 or $2,300, for borrowed money; owed Spitzer, Pinkus’s prospective brother-in-law, about $2,700, and that he owed the First National Bank of Decatur fourteen hundred dollars; all of which he desired to pay. Herbert Cartwright thereupon inquired of him if his mother, Mrs. Pinkus, and Spitzer, his friend and prospective brother-in-law, would sell their claims? Pinkus could not answer; but soon after, Cartwright was brought in contact with them, obviously through the intervention of Isaac Pinkus, and readily effected a purchase of the two claims, giving to each of them his unsecured note due at twelve months for the amount claimed to be severally due them. He also gave his note to the bank for the amount due to it, $1,400, but was required to give his father as surety on this debt, to be paid in four months.
Having thus secured these several claims, aggregating with his own demand $9,500, he sued out an attachment against Pinkus, and by 12:30 p. M. o’clock on Monday, March 3, had it levied on the entire stock of goods in the store, which, at cost prices, invoiced at about $12,000 to $14,000. The particular grounds of the attachment was that he had effects liable to the satisfaction of his debts which he fraudulently withheld.
The testimony of the two Cartwrights, father and son, proves this cash fund of twenty-three hundred dollars as belonging to Herbert, the younger. This is claimed to be thé money loaned to Pinkus. Herbert testified that in March, 1890, he owned other property valued at $1,900, but none of it was money assets, or shown to have been susceptible of conversion into money.
Cartwright, the father, testified that in March, 1890, his property was worth twenty-five or thirty thousand dollars. Of this, some seventeen thousand or more was in city real estate in Decatur. It is not shown what moneys, or money secureties he held. This was the financial condition of the Cartwrights, father and son, as testified to by themselves. Pinkus is not shown to have owned any property save his merchandise, and unpaid dues for merchandise sold. He owed, in addition to the debts of which Herbert Cartwright claimed to have become the owner, some fourteen or fifteen thousand dollars, as the testimony tends to show.
One Friedman, a liquor dealer, or saloon keeper, had his place of business near to Pinkus. Pinkus, as the testimony tends to show, owed him about $1,600. Shortly before *640Gartwright’s attachment was sued out against Pinkus, he, Pinkus sold, and transferred the notes and book accounts due him, amounting to about $2,100, in payment of said indebtedness, Eriedman agreeing that if lie realized from the claims more than was due him, he would pay the excess to him, Pinkus. During the night of March 1st or 2d, 1890, Pinkus took out of his store merchandise, consisting of shoes, of the invoice-cost value of about $1,400 or $1,500, and secreted them in the upper room of Friedman’s saloon. The fact of this withdrawal and secretion, however, was not known to Herbert Cartwright, as he testifies, until after his attachment was levied. Still, Friedman became and was one of the sureties on the attachment bond of Herbert Cartwright, when he attached the goods of Pinkus March 8, 1890.
At the time Pinkus’s store was broken up by Cartwright’s attachment, Henry Clayburn was the porter in the store. He was made a witness by Herbert Cartwright in this suit. In his cross examination he gave tliis testimony : “I was usually about the store all day. The reason that I was not about the store that day, because it was late when I got there, and he told me to go to my breakfast; and when I went to breakfast, his mother told me they would not need me at the store that day. When Mr. Pinkus told me to go to my breakfast, I don’t know whether he had been to his breakfast or not. I can’t tell what was the usual time they had breakfast. When I first went to the store that morning I saw no one but him, Mr. Pinkus.” There were no objections or exceptions to this testimony, although if objected to, the legality of what Mrs. Hannah Pinkus said to the witness is not perceived.
It is manifest the witness was speaking of what took place on March 3, 1890, the day on which the Cartwright attachment was sued out and levied. And when he was told by Pinkus to go to his breakfast, only Pinkus was there. Considered in connection with, the other testimony, the conclusion is rational, if not positive, that this took place before Herbert Cartwright reached the store that morning, and consequently before he demanded his money from Pinkus, and threatened to attach him, as he testifies he did. If so, is not this a circumstance — a pregnant circumstance — -tending to show that the attachment was determined on before Herbert reached the store that morning, and that Herbert and Pinkus so understood it? Else, why hurry off the porter to breakfast, and why should, or could he be told his services would not be wanted .at the store that day ? Does *641this not show a, common understandings common purpose? And, in this connection, may we not inquire how it happened that Spitzer, whose business habitation was Mobile, arrived in Decatur that morning ?
In giving his testimony in this case, Herbert Cartwright was interrogated as to his motive in purchasing the claims from the bank,- from Mrs. Pinkus, the mother of I. Pinkus, and from Spitzer ? His answer was : “By purchasing an amount of claims equal to what I thought the stock of Pinkus &'Co. would bring under an -attachment sale, which amount I knew would be less than the actual cost of said goods, and therein I thought would be a good opportunity for speculation. • .* My object in buying the claims of Mrs. Hannah Pinkus, Abe Spitzer and the First National Bank of Decatur was to get possession of the stock of goods of I. Pinkus-& Co., as I had an idea-of going into business for myself. I believed this was a good opportunity, ■ • • and thought that I could make a thousand or so dollars by buying this stock under an attachment sale.”
M. T. Cartwright, father of Herbert, gives substantially the same reason the son gave, for buying the additional claims against Pinkus. And Spitzer testified that while Herbert Cartwright was negotiating for the purchase of his claim, in reply to the inquiry why he wished to purchase, he replied, “He wanted to buy up as many claims against Pinkus as possible, so that when his stock of goods was sold under attachment, he could buy at reduced prices.”
Is it not extraordinary, if Herbert Cartwright and Pinkus were dealing with each other at arm’s length, as a creditor exacting payment, and a debtor imploring forbearance, that this statement should have been made by Herbert Cartwright to Spitzer ?
When the goods were sold under the order of court, Herbert Cartwright became the purchaser of the stock of goods, sold in gross, at 40 per cent discount from their original cost prices. In other words, he paid sixty ce'nts on the dollar of the sum Pinkus had paid or promised the wholesale merchants for them. They cost Herbert something over $8,000, as I understand the testimony; but the goods which had been previously purchased by M. T. Cartwright appear to have been included in this sale. Herbert Cartwright, the purchaser, paid the purchase price, which has ever since remained in the court, subject to the final disposition of this cause. If I am mistaken in the amount thus paid into the registry of the court in the purchase of the goods, there can be no question that the sum, independent of the proceeds of *642the goods claimed to have been purchased from Pinkus by M. T. Cartwright, exceeded materially the sum of six thous- and dollars. This large sum, according to the contention of appellant, was paid into court by him, when he purchased the goods, and has lain there ever since. In addition, he shows, by his own testimony, that he paid the $1,400 to the First National Bank when it matured, and in September, 1890, settled with Mrs. Pinkus, the mother, paying her then $2,000, the residue being remitted, in consideration of payment before maturity. He also paid Spitzer $500 on his claim. These sums added together make a gross sum of ten to twelve thousand dollars paid out by Herbert Cartwrightj and of the use of which he has been entirely .deprived during all these years, while it is not shown that he has had any profitable or available use of his own means. His original daifa of $2,900 against Pinkus has been locked up in the litigation, and it is thus shown that he has had no use or control of it. From what source has he been able to meet these heavy drafts? True, he testifies that he borrowed the most of the money with which he paid for the goods which are the subject of contention in this suit; but borrowed money debts, íike other debts, will mature, and, as a rule, must be provided for.
We think it clear that the debt, $1,400, to the First National Bank, is sufficiently proved to be bona fide. The proof is also satisfactory that Pinkus had owed his mother about the sum claimed to have been due her. She had to be supported, however, and the conjecture would be reasonable that she had found it necessary to draw somewhat on that fund- But I do not make this a special ground for an opinión. I do, however, invite special attention to the claim of Spitzer. The proof of the bonafides of that debt is far from satisfactory; and the fact that he had not, when his testimony was taken, collected exceeding $500 of the $2,700 he claims to have sold to Herbert Cartwright, is itself a suspicious circumstance. He owed no courtesy, or forbearance, to Herbert, if, as contended for, he simply sold his claim, as a means of saving it from loss; selling it, as he did, to the man who was taking steps to bring Pinkus, his friend and prospective brother-in-law, to bankruptcy and ruin.
Let us consider another question, as shown in the testimony in this record. Herbert Cartwright, in purchasing other claims against Pinkus, assumed the burden and risk of proving those claims to be just. This, on the plain principle that dealing with a debtor in failing circumstances— known to be in failing circumstances — the law permitted *643him to use all lawful means to secure the collection of his own claim, even though in doing so he deprived all other creditors of the means of collecting their demands. But his authority extended no farther. He must simply collect his own claim, depriving the other creditors of no greater amount of the assets of their common debtor, than was reasonably necessary for such purpose. He must not secure any benefit to the debtor, and must not secure to himself any thing in excess of the sum due him. If he go beyond this permissible boundary he perpetrates a fraud. And we may take another step. The facts of this case are so extraordinary — so entirely without the routine of ordinary business transactions — that fuller and more satisfactory proof is required to uphold such transaction.—Borland v. Mayo, 8 Ala. 104; Lehman v. Kelly, 68 Ala. 192; Lipscomb v. McClellan, 72 Ala. 151; Barnard v. Davis, 54 Ala. 565; Hubbard v. Allen, 59 Ala. 288; Hamilton v. Blackwell, 60 Ala. 545; Harrell v. Mitchell, 61 Ala. 270; Thomas v. Rembert, 63 Ala. 561; Donegan v. Davis, 66 Ala. 362; Tryon v. Flournoy, 80 Ala. 321; Gordon v. McIlwain, 82 Ala. 247; Shelley v. Tardy, 84 Ala. 327; Lehman v. Greenhut, 88 Ala. 478; Cartwright v. Bamberger, 90 Ala. 405; 8 So. Rep. 264.
I trust I will be pardoned for grouping what appear to me to be the uncontroverted, salient facts of this case. A young man, just six months past the period of his majority, is the owner of $2,900 — no more — of available assets. He claims :to own other property worth something less than two thous- and dollars; but he furnishes neither proof nor presumption that his other property is in such shape as to be available for commercial purposes. His $2,900 is not in his possession, but is due to him from his employer, who is a merchant, engaged in trade. Becoming alarmed for the safety of this sum of $2,900 due from his employer, on Monday, March 3,1890, after breakfast time on that day, as I think the circumstances show, he approaches his employer with a view of collecting or securing his claim. Is informed by Pinkus, the debtor, that the latter owes his own mother twenty-two or twenty-three hundred dollars, and to Spitzer, his friend and prospective brother-in-law, twenty-seven hundred dollars, which he desires to pay. Also, that he owes the bank fourteen hundred dollars, which he wishes to pay also. That through Pinkus, as mediator, he procures himself to be brought- into communication/with the' mother and future brother-in-law of the latter, and purchases their claims, apparently without ’evidence of their bona fides, for their face value, promised to be paid without condition at the end of *644twelve months; that these claims are readily sold to him, Herbert Cartwright, with knowledge that the latter’s object in making the purchase was to make them the foundation for an attachment against Pinkus, the son of the one and the friend of the other, by which the latter’s goods were to be seized and sold at a sacrifice, and his business broken up; that, with the same end in view, he, Herbert Cartwright, purchased, at its face value, the claim of fourteen hundred dollars due from Pinkus to the bank, and secured its unconditional payment to the bank in four months. That, secur- • ing the control of these claims, he, Herbert Cartwright, sued out an attachment, charging fraud against Pinkus, and had his entire stock of merchandise seized thereunder. And, according to the testimony of Herbert Cartwright and his witnesses, all this was conceived, determined upon and executed within little, if any, more than four hours.
There are other strange features of this transaction which should not be overlooked. Friedman is shown to have been the friend of Pinkus. He permitted the latter to secrete some of his goods in his, Friedman’s business house. Yet, he became one of the sureties of Herbert Cartwright on his bond for the attachment, under which the goods of Pinkus were seized. Was not this a strange spectacle? Mother and prospective brother-in-law agreeing at once to sell, and actually selling, without delay or reflection, as it would seem, claims against the son and future brother-in-law amounting to $5,000, with the knowledge that an attachment was to be immediately issued for their collection, whereby the son and brother-in-law would be broken up; and the trusted, if not the best friend of the latter contributing to the result, by becoming surety on the attachment bond. Were not these extraordinary attendants of an attachment for the enforcement of a debt? and all .the more extraordinary, when it is clearly proven that the debtor himself aided in having the transfer of the claims made, which led to, the attachment.?
Another circumstance should be noted. The notes, $1,40 \ which Herbert Cartwright purchased from the bank, were what are known as waive notes. They expressed on their face that the debtor waived his exemptions as to personalty. The personal exemption under our statute is one thousand dollars in value, and a waiver, thus expressed, operates as a bar to such exemption, so far as the debt is concerned. Yet, although this litigation has been pending for more than three years, and although the goods attached did not sell for enough to pay what is claimed by Herbert Cartwright to *645be due him, he has taken no step to bar or cut off Pinkus’s exemptions of personal property.
Nor must another important inquiry be overlooked. As I ■have shown, Herbert Cartwright’s available effects- — $2,900— were locked up in this litigation. So has the money for which the goods were sold under the attachment been kept in the' registry of the court. The money paid to the bank, to Mrs. Pinkus and to Spitzer was $3,900. In the purchase of the goods, as the record shows, Herbert Cartwright had to pay an additional six or eight thousand dollars. Of none of this has he since had the use. In what way has he been able to command and control this large sum of money ? The record does not satisfactorily inform us. It is manifest that the proof falls far short of showing that the father did or could supply the requisite funds.
I have grouped these facts because they show how utterly improbable it is that this was a simple, bona fide attempt by a bona fide creditor to collect a debt due him. They tend very strongly to show :
First, that there was collusion; and this generates- a strong suspicion that Pinkus was to be benefitted by the collection of the alleged debts to his mother and to Spitzer.
Second, that by these extraordinary proceedings, Herbert Cartwright attempted to collect, not alone the debt alleged to be due him, but a large profit beyond that, which must necessarily be at the expense of other creditors.
Third, that this transaction is surrounded by so much that is unusual — so much that is suspicious — that it should require a strong, clear showing — much more convincing than is found in this record — to uphold it against the assault of creditors.
The City Court, after what appears to have been a very careful consideration of the testimony, employed the following language, which I consider eminently just and proper:
“The complainantsj having assailed the attachment for fraud and having shown to the satisfaction of the court that it was sued out in collusion with Isaac Pinkus & Co., and having proven the existence of their debt against said Isaac Pinkus & Co., at the time of the attachment, the onus is on defendant Herbert Cartwright to establish the bona fides of the several debts which constitute the consideration of his attachment; and complainants having further alleged and shown to the court’s satisfaction that said defendant was the chief clerk of said Isaac Pinkus & Co., and as such entrusted with the general supervision of the business, especially in the absence of Isaac Pinkus, and a large part of his alleged debt having been purchased from the mother *646and contemplated brother-in-law of said Isaac Pinkus, exciting just suspicion of the fairness of the transaction, he is required by the law to produce clearer and more convincing proof of the good faith of the transaction and of the adequate and valuable consideration, than if this relationship did not exist. All the facts and circumstances taken together show a collusive attachment and a conspiracy to defraud the creditors of Isaac Pinkus & Company. A collusive attachment sued out for fraudulent purposes stands upon the same footing as a fraudulent conveyance, and the defendant’s measure of proof must come up to the standard the law requires in such cases.
“The court has given this case much careful and patient study, and, considering all the legal evidence submitted, the court is forced to the final conclusion that the attachment, which is here sought to be set aside, was the result or outgrowth of the unlawful combination charged in the bill; that there was no real ground for an attachment as between Herbert Cartwright and Isaac Pinkus ; and that Isaac Pinkus knew of and connived at the attachment; and that it was sued out with the intent to use it to affect and prejudice the pre-existing rights of the bona fide creditors of said Isaac Pinkus & Company; that the bonafides of none of the claims going to make up the total debt of Herbert Cartwright, upon which the attachment was based, (except that of First National Bank) has been shown by the measure of proof required by law; and further that in the purchase of the claims of Hannah Pinkus and Abe Spitzer the said Herbert Cartwright went ‘beyond the permissible purpose of securing his own claim,’ his declared purpose being to get more than was necessary for his own indemnification; he thus ‘put himself outside of the pale of the law’s protection from the just demand of other creditors ;’ his whole and only- purpose was evidently not the payment of his own debt; he went beyond the boundary of the reward and protection which the law gives the vigilant creditor. This had the effect .to hinder or delay other creditors or to impair their -rights. The circumstances attending the attachment were so unusual that the conclusion is irresistible that Pinkus had something to do with it, and that his purpose was to hinder or defraud his creditors.; and the circumstances attending the purchase by Cartwright of the claims against Pinkus were so unusual that they show a willingness on his part to aid,' and that he did aid said Pinkus -in defeating any efforts that were made, or might have been made, by other creditors to obtain satisfaction of their demands.”
My opinion is that the decree of the City Court ought to be affirmed,