Kyle v. Ward , 81 Ala. 120 ( 1886 )

SOMERVILLE, J.

— The action is one of trover for the conversion of a stock of merchandise, brought by the original vendor, against a sub-purchaser from the first alleged fraudulent vendee.

We have held that, in cases of this nature, the order and onus of proof is as follows ;

(1.) The plaintiff, in the first instance, is required to prove that the first vendee, being insolvent, obtained the goods on credit, by misrepresentation, or by fraudulent concealment of his financial status, with no intention or reasonable expectation of paying for them. — Loeb v. Flash, 65 Ala. 526; McCormick v. Joseph, 77 Ala. 236.

(2.) When this proof is made by the plaintiff, it is then incumbent on the defendant, as sub-purchaser, to show that he paid value for the goods. — Spira v. Hornthall, 77 Ala. 137.

(3.) The onus is then again shifted on the plaintiff, or original vendor, to prove that the defendant, or sub-purchaser, had notice of the fraud when he made his purchase, or before he paid the purchase-money. — Roswald v. Imbs, 78 Ala. 318 ; Spira v. Hornthall, supra; First Nat. Bk. v. Dawson, 78 Ala. 317; Craft v. Russell, 67 Ala. 9.

The second charge given by the court, on request of the plaintiff, conflicted with the latter principle in requiring the defendant to prove that he was an innocent purchaser without notice. It was sufficient for the defendant to prove that he paid value, and when this was done, the onus was on the plaintiff to show that the defendant was charged with notice of the fraud, not on the defendant to show that he did not have notice.

2. It is very clear that the plaintiff can not maintain his action in this case, unless the jury are reasonably satisfied, from the evidence, that both of the purchases involved in this transaction — the one by Morris from King as well as the one by King from the plaintiff — -were fraudulent. If either King or Morris was a bona fide purchaser for value without notice, then the title of the sub-purchaser, Morris, would be good. — Allen v. Maury, 66 Ala. 10, 19; Thames v. Rembert, 63 Ala. 561; Spira v. Hornthall, supra. If the charge requested by the defendant had gone no further than to assert this proposition, it should then have been given. But it was misleading in failing to recognize the rule that when the first purchase by King from plaintiff was satisfactorily proved to be fraudulent, the onus was at once shifted on Morris to show that he paid value. It. was not until the latter fact was proved that the plaintiff was required to prove notice on the part of the sub-purchaser.

3. A person is not chargeable with notice of a fact, even though reasonable inquiry on his part would disclose the existence of such fact, unless the law casts on him the duty of making such inquiry. This duty exists only where he has knowledge of facts sufficient to excite such inquiry, or, what is the same thing, a knowledge of facts which would naturally and justly (or reasonably) be calculated to awaken a suspicion of tbe existence of tbe main fact, — notice of which is sought to be charged on bim. — Sheely v. Edwards, 75 Ala. 411; Hodges v. Coleman, 76 Ala. 103; Bump on Fraud. Con. (3d Ed.) 201-2; Hopkins v. Langton, 30 Wis. 379. This is a proposition which does not at all conflict with that settled in Grant v. National Bank, 97 U. S. 80, that a reasonable cause to suspect a person to be insolvent is not tantamount to a reasonable cause to believe such person to be insolvent. This is upon the clear proposition that suspicion of tbe existence of a fact is not necessarily belief of its existence. It may nevertheless be sufficient to put a person on inquiry, and thus be equivalent to notice. A person, in other words, may be charged with notice of a fact, in the existence of which be does not fully believe.

The seventh and ninth charges can easily be tested by this principle, and do not seem to be clearly free from misleading tendencies.

The other errors assigned are not insisted on, and we do not, therefore, consider the other rulings of the court.

Reversed and remanded.