Court Opinion

ID: 6582503
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:39:25.441175+00
Date Added: 2024-06-11T15:57:20.224878
License: Public Domain

Pardee, J.
It was the claim of the plaintiffs that Leopold Levy was their debtor, and that with the intent to defraud his creditors he transferred a portion of his personal property to the defendant, the Cadden Clothing Company, a corporation, through the agency of F. J. Rosenberg, its president, which received and retained possession of the property, having either actual knowledge or reasonable means of knowledge that the transfer by Levy was with such fraudulent intent.
The defendant claimed that Rosenberg, as an individual, was a creditor of Levy; that the property was delivered by Levy to Rosenberg in payment; and that the latter, as an individual, sold it to the “defendant.
The court instructed the jury that "to vitiate the defendant’s title to the goods on the ground of fraud, it should appear that it was not a bond fide purchaser of them, and did not receive them in good faith, and that it either had a part in or knowledge of the fraud of Levy, or Rosenberg, or Furstner, if they, or either of them, were guilty of any in the transaction ; or that it was aware of such suspicious circumstances with respect to the goods as would reasonably put it on inquiry, and lead it to suspect that there was something fraudulent and wrong in connection with the transfer of them.
“ Fraud is a poisonous element in any transaction, and if proved destroys any sale of property, or other contract contaminated with it. If Levy, being the owner of the goods, or any one else by his direction or for him, with intent to defraud his creditors, sent the goods to the defendant, and the defendant having knowledge or reasonable means of knowledge of the purpose to defraud, received them, the transfer was fraudulent, and no title passed to the defendant. The *216goods would still be Levy’s, and liable to be taken for his debts.”
Also that the “ acts and declarations of an officer of a corporation must, to bind the corporation, be done and made while actually engaged in the performance of his official duty; but the knowledge of the directors and other managing officers of a corporation is generally the knowledge of the corporation when it relates to its interest and business; and the acts and declarations of Dublon and others, if mere employees and not agents of Levy, are not binding on the defendant, unless known to the defendant at. the time, or afterward adopted by it, or by Rosenberg, or Cadden, or both, while acting in the performance of their duties as agents or managing officers of the defendant.”
The plaintiffs had a verdict. The defendant appealed for the following reasons:
1. That the court erred in refusing to charge the jury as requested by the defendant upon each of its six requests.
2. That the court erred in charging the jury in relation to the question of fraud, and especially in charging that knowledge of any fraud of Rosenberg or Furstner, would vitiate a sale to the defendant, and that knowledge of any suspicious circumstances with respect to the goods which would reasonably put the defendant on inquiry and lead it to suspect that there was something fraudulent and wrong in connection with the transfer of them, would have the same effect.
3. Also in charging that if the defendant with knowledge, or reasonable means of knowledge, of the purpose to defraud, received them, no title passed to the defendant.
4. In relation to the adoption of Rosenberg’s acts by the directors, the court should have charged that any assent or adoption by the directors to be binding upon the defendant must be made with full knowledge of all the material facts in the case.
5. The court erred in instructing the jury that if Cad-den or Rosenberg had knowledge of circumstances which would reasonably lead them to believe or fairly suspect *217fraud in the transfer, their verdict should be for the plaintiffs.
6. The whole charge of the judge on the question of fraud was erroneous, besides the particulars above specified.
7. The judge also erred in admitting the evidence of Cassidy, Levy and Goldsmith, as set out in the finding, as there is nothing in the plaintiffs’ evidence as set out in the-finding to authorize the admission of the same.
8. The court erred in admitting the evidence of Isaac M. Levy relating to orders from Dublon to pack and send goods to Goldsmith & Co.; also in admitting evidence of the acts and declarations of Dublon showing that he was keeping away from New York; also in admitting the evidence of Herman Goldsmith as to the goods sent him; also the evidence of A. W. Cassidy in relation to what he discovered in New York; all as set out in the finding.
In Utley v. Smith, 24 Conn., 290, the claim being that certain conveyances of real estate were fraudulent and void under the statute, as having been made with a view of insolvency, the court held that in order to make them so the grantor must not only in fact be in failing circumstances, but must make the deed with a view to insolvency, and with intent to prefer one creditor over another, saying that the true rule is that the quo animo is the important and decisive characteristic.
In Sisson v. Roath, 30 Conn., 15, it was determined that although a conveyance was made with an intent to defraud creditors, yet if the grantee did not participate in the fraud, the conveyance is good.
In Quinebaug Bank v. Brewster, 30 Conn., 559, the marginal note is as follows: “ The court below found that a certain mortgage was given with a view to insolvency if the evidence was to be weighed by the ordinary rules of evidences without giving to any of it an additional legal or constructive effect; but that if the parties to the mortgage were to be held chargeable with the knowledge of the facts of which they had such notice as would lead a prudent man, in a *218matter which concerned his pecuniary interest, to make inquiry, and were to be presumed to have intended the probable' consequences of giving such mortgage, in view of the facts which might have been ascertained by such inquiry, then the mortgage was found to have been given in view of insolvency. It was held that the latter rule could not be applied, and that the mortgage was to be regarded as not given in view of insolvency.” The court said: “ Facts which by inquiry he might have ascertained, if in truth he did not know them or believe in their existence, could have had no influence upon his purposes or his actions. And notice enough of his actual condition to put him upon inquiry, if that inquiry had not been made, could have had no influence upon his actions. Legal fictions and equitable presumptions have no effect upon the actual conduct of men. An omission to inquire may be evidence of negligence, but negligence is not fraud, either in law or fact, and neither proves nor indicates a positive intention to commit a fraud, whatever penal consequences the law-giver in his wisdom may attach to such negligence.”
In Bloodgood v. Beecher, 35 Conn., 469, the court, speaking of a similar question and approving of the foregoing case, adds that the quo animo must be proved as a fact and cannot be inferred or presumed to exist by inference of law contrary to the fact.
In Hawes v. Mooney, 39 Conn., 37, a conveyance was declared void because of actual fraud participated in by the grantee.
In Bassett v. McKenna, 52 Conn., 437, the court held a conveyance of land void because the grantee knowingly assisted in placing it beyond the reach of attachment.
In Luckey v. Roberts, 25 Conn., 486, the plaintiff claimed that the defendant had received goods from his brother with knowledge that the transfer was made with the intent on the part of the vendor to defraud his creditors. The defendant claimed that he bought the goods in good faith, without notice of any fraudulent intent on the part of the vendor in selling them to him. The court charged the jury that if *219“ the defendant made the purchase * * * knowing, or having sufficient reason to believe, that the goods were not paid for, and that it was then the intention of William E. Roberts to abscond and defraud his creditors by means of such sale to the defendant, then the defendant’s purchase was, as against the plaintiff, fraudulent and void, and the defendant could not hold the goods.” In this court, the defendant’s complaint concerning this part of the charge was, that the “ court erred in charging the jury that if the defendant knew that the goods were not paid for and that William E. Roberts (the vendor) intended to abscond and defraud his creditors, he could not hold the goods. All this is consistent with a purchase originally bond fide, and which vested the title fully in the purchaser. An intention to defraud creditors generally would make the defendant’s purchase simply void as against creditors who, by attaching the goods as the property of the defendant’s vendor, could take them from him ; but it would give the plaintiff no right to rescind the original sale nor to claim the property from the defendant, but only to attach and hold it as the property of William E. Roberts on the ground that he was a creditor of said William. Owen v. Dixon, 17 Conn., 492.” The plaintiff claimed that the “ purchase of the goods by the defendant from William E. Roberts was clearly a fraud on the plaintiff and therefore void as to him, if the defendant knew that said William had not paid for the goods and made the sale intending to defraud his creditors thereby.” In commenting upon this part of the charge this court said :—“It is said that this ruling is inconsistent with the law laid down by this court in Owen v. Dixon, 17 Conn., 492, that a fraudulent sale by the owner of goods does not give a title to the goods to a creditor, and that he can get a title only by sale on execution. * * * The defendant here was insisting that he was a bond fide purchaser from his brother William, not that the plaintiff had no title if he had been defrauded, as he claimed he had, but that the defendant had purchased the goods honestly and therefore at all events he had acquired a good title. The court in this part of the charge intended to *220state, and we think did state, what was essential to constitute a bona fide purchase by the defendant.”
From these extracts it is quite plain that there was no claim on the part of the plaintiff that the defendant’s title would be defective if he had sufficient reason for believing, in the absence of actual belief, that his vendor had a fraudulent intent in the transfer. This court was not required either to accept or deny that particular proposition, and is not to be understood as having done either in that case.
In Partelo v. Harris, 26 Conn., 480, the plaintiff had been in possession of personal property delivered to him by one Otis, in payment of a debt. The defendants, creditors of Otis, attached the property so delivered by him to the plaintiff as the property still of Otis, claiming that the transfer had been made by him for the purpose of defrauding his creditors, and in performance of a fraudulent combination for that purpose between him and the plaintiff. The creditors offered to prove that Otis, while in possession of the property and before sale to the plaintiff, had declared his intention to transfer the property for the purpose of preventing an attachment by his creditors. This declaration, not being known to the plaintiff, was rejected by the court. For this the defendant moved for a new trial, and in support thereof claimed that “ to establish the fact of the fraudulent conveyance it was necessary to prove—1st, that the grantor made it with the intent and for the purpose of defrauding his creditors; 2d, that the grantee knew of this purpose, participated in it, and by his concurrence promoted it.” The plaintiff’s claim was “ that to furnish any presumption against the subsequent grantee, he must have knowledge of the fraud.” The court, after remarking that a grantee ought not to be affected by the declarations of a grantor unless they come to his knowledge, adds:—“If indeed the grantee has knowledge of the fraud of the grantor, or of the indicia of his fraud, it will be safe and proper to hold him responsible accordingly, and let the jury pass upon the evidence; but otherwise it should not be submitted to them, as it is not safe, nor in harmony with the laws of evi*221dence, to allow counsel to press upon a jury the fraud of one man to make out fraud in another, without some proof of conspiracy or collusion being first introduced.” Inasmuch as the question whether good reasons for believing, in the absence of actual belief, will vitiate a purchase from a vendor who has a fraudulent intent, was not in the case, and inasmuch as the court remarks later that, “ at all events, the great and necessary fact to be established is the fraud of the grantee whose title is attacked for fraud of his own, without which no case of fraudulent conveyance is proved, and with which a case is proved and established, the court must be understood as saying no more than that, after the creditors had sufficiently established the existence of a fraudulent conspiracy and collusion between vendor and vendee, then declarations made by the vendor, during the existence of the conspiracy, even in the absence of the vendee, might be used against the latter. This is made still more evident by the reason given for the quoted remark, that “ it is not safe, nor in harmony with the laws of evidence to allow counsel to press upon a jury the fraud of one man to make out fraud in another without some proof of conspiracy and collusion being first introduced.”
We have made these references to the decisions of this court for the purpose of showing that in all cases where the title of a vendee has been attacked because of the intent on the part of the vendor to'defraud his creditors by the transfer, those making the attack have been required to assume the burden of proving that the vendee had actual knowledge of and participated in the Laud; that is, that he had an intent to commit a fraud; this to be proven as a fact and not to be imputed by any rule of law. The relations existing between the vendor and vendee, business, social, or family; the opportunities open to the latter for knowing the condition, conduct and intent of the former; the capacity of the vendee to determine motives from actions—are all facts for the jury, and from such they may reach the conclusion that he actually believed that the vendor intended fraud, and was a conspirator with him. Indeed, from such facts and *222in such, manner a fraudulent intent must always be proven; no person can know the unexpressed thought of another. Carroll v. Hayward, 124 Mass., 120; Leavy v. Dearborn, 19 N. Hamp., 351; Parker v. Conner, 93 N. York, 118.
Notwithstanding the defendant’s objection the plaintiffs were allowed to prove that Levy was sending goods from the store to Goldsmith & Co., at about the same time, without previous orders from them; and that this agent declared that he was keeping out of the reach of a summons from the plaintiffs to testify in this case.
In Hoxie v. Home Insurance Co., 32 Conn., 37, this court said as follows:—“ Upon questions of knowledge,’good faith or intent, any other transactions from which any inference respecting the quo animo may be drawn are admissible. And when fraud is imputed and within the issue, and provable by various circumstances, a considerable latitude must be indulged in the admission of evidence. * * * It has sometimes been thought that the other transactions should be cotemporaneous, or nearly so, but that is not essential. A fraudulent combination and fraudulent motive may be inferable from a series of successive transactions of a fraudulent or suspicious character and in respect to such a subject-matter. In this case, if there had been a considerable number of vessels eotemporaneously purchased, mortgaged, insured heavily, both vessel and freight, and both by owner and mortgagee, and lost suspiciously in moderate weather, some inference of fraudulent combination and intent as to all would be unavoidable, But a series of similar transactions effected in the same way by the same parties with the same result, would excite the same suspicion and induce the same inference.” This justifies the admission of the evidence as to the sending of goods to Goldsmith & Co. The conspiracy having been established, the rule of law admits proof of the acts and declarations of one conspirator to affect his co-conspirators, although done or spoken in the absence of the latter, if done or spoken during and in furtherance of the conspiracy. That having come to an end because either of the accomplishment or the abandonment *223of the purpose for which it was formed, the conspirators become individuals again, and cease to be affected by what is said or done in their absence. Therefore the declarations of Dublon, made after the dissolution of the conspiracy, were not admissible as against the defendant.
At the close of the plaintiffs’ testimony in chief, the defendant’s counsel renewed the objection they had previously made, to the admission of all or any of that testimony, on the ground that the facts testified to were not so brought to the knowledge of the defendant as to furnish evidence tending to prove that it was guilty of participation in a fraud or fraudulent conspiracy to prevent the creditors of Levy from collecting their debt through an attachment of the goods. Taking into consideration the family and business relationship and connection of Levy, Rosenberg, and Dublon, and their conduct with reference to the removal of Levy’s goods from his store, and in other respects, the court held that the evidence was admissible as tending to establish against the defendant the claim of fraud and fraudulent conspiracy made by the plaintiffs, and of knowledge or means of knowledge by them of such fraud and fraudulent conspiracy. It was within the province of the court to determine that the plaintiffs had introduced sufficient evidence of a conspiracy to justify the reception of evidence concerning acts and declarations of each conspirator, done and spoken during and in furtherance of the conspiracy, to affect co-conspirators, although done or spoken in the absence of the latter.
The testimony of Cassidy, to the effect that on a day named Levy was clearing his store of goods, was admissible as tending to prove that the latter was then furthering the purpose of the conspiracy. The law imparts knowledge of his acts to his co-conspirators.
There is error in the judgment, and a new trial is granted.
In this opinion the other judges concurred.