LeGrand v. Eufaula National Bank , 81 Ala. 123 ( 1886 )

SOMEBYILLE, J.

— Under the rule adopted in this State, three facts must concur in order to justify a vendor of goods in disaffirming a sale of them as fraudulent, so as to authorize a recovery in detinue or trover against the first purchaser, or any sub-purchaser having notice of the fraud.

1. The first purchaser must have been, at the time of the sale, insolvent, or in failing circumstances.

2. He must at the time have had either a preconceived design not to pay for the goods, or else, what is deemed equivalent, no reasonable expectation of being able to pay for them.

3. There must have been on the part of the purchaser, either a. fraudulent concealment of, or a fraudulent representation in reference to one or more of these facts. And within the meaning of the latter rule, an intentional concealment of, or failure to disclose one’s financial status would be per se fraudulent.

The existence of one of these conditions or facts without the others will not be sufficient. The three must be combined. — Kyle v. Ward, present term ; Loeb v. Flash, 65 Ala. 526 ; Spira v. Hornthall, 77 Ala. 137; Hornthall v. Schonfeld, 79 Ala. 107; McCormick v. Joseph, 77 Ala. 236; Talcott v. Henderson, 27 Amer. Rep. 501, note, p. 504-505 ; Durell v. Haley, 19 Amer. Dee. 444, note, p. 446.

There are many authorities which hold to the doctrine that where one buys goods not intending to pay for them, this fact alone will authorize the vendor to disaffirm the sale for fraud, and recover the goods — the rights of no innocent third person intervening. — Belding v. Frankland, 8 Lea, 67; s. c., 41 Amer. Rep. 630, note, p. 633; 1 Benj. on Sales (Corbin), § 656, note 18. But this rule has been discarded in Alabama. So the mere fact that the purchaser was insolvent at the time of the transaction, and concealed or failed to disclose this fact to his vendor, while evidence of fraud, is clearly insufficient alone to vitiate the sale. — Talcott v. Henderson, 27 Amer. Rep. 501, supra ; Belding v. Frankland, 41 Amer. Rep. 630, 632; Nichols v. Tinner, 18 N.Y. 295; Wriqht v. Brown, 67 N. Y. 4; 1 Benj. on Sales (Corbin), § 656, note 18.

Under this view of the law the court correctly refused the eleventh and twelfth charges requested by the appellants.

2. There was no error in refusing the first charge requested by the plaintiffs. It was erroneous in basing the right of plaintiffs to disaffirm the sale of the goods alone on the invalidity of the sale by them to Stow & Co., the original vendees. Even though this transaction was voidable for fraud, the defendants acquired a good title if they in good faith purchased the goods for value without notice of the fraud in the first sale.

3. It can scarcely be contended that the release and discharge of a debt due to Stow & Co. would not amount to a valuable consideration on the ground that Stow etc Co. was a reputed partnership consisting alone of Mrs. Stow, who was a married woman. A partnership of this kind can be sued as such under the statute, and the coverture of its members is no defense to the action, the execution on such a judgment running against the partnership and being leviable only on its property. It does not issue against the individual members — being in the nature of a proceeding in rem rather than in personam.— Yarbrough v. Bush, 69 Ala. 170; Code, 1876, § 2904. Nor could Mrs. Stow be permitted to deny the existence of such partnership where its name had been assumed publicly, and credit obtained from the plaintiffs on the" faith of its alleged existence. This would be precluded by the principle of estoppel, the chief purpose of which is “ the promotion of common honesty and the prevention of fraud.” — Caldwell v. Smith, 77 Ala. 157. The second charge requested by the plaintiffs assumed the contrary of this to be true, and was further erroneous in withdrawing from the jury all inquiry as to the value and validity, as a consideration of the sale, of the defendants’ promise to assume payment of the rent due by Stow & Co. for the premises occupied by them, for which defendants stipulated in the written contract of purchase. This was a binding promise based on a valuable consideration. — Coleman v. Hatc'er, 77 Ala. 2L7. Charge numbered 8¿- was also liable to the latter objection, and was properly refused.

4 If the consideration paid for property by a purchaser is entire and indivisible, and usury enters into it, he is not regarded, under our .decisions, as a bona fide purchaser of such property. — McCall v. Rogers, 77 Ala. 319; Wailes v. Couch, 75 Ala. 134; Saltmarsh v. Tuthill, 13 Ala. 390. Where, however, there are two distinct and severable considerations for a sale, into one of which only usury enters but not into the other, this does not render the buyer a mala fide purchaser as to the entire property where the question of title arises in a court of law, as in this case, which is an action of trover, dependent on the plaintiffs’ right to disaffirm the sale so as to re-invest themselves with the title to the entire property in controversy. Even if the proposition be maintainable that such a purchaser can be protected as against a superior equity pro tanto to the extent of the non-usurious consideration paid, a court of equity alone would have jurisdiction to adjust the rights of the parties, and the power of a court of law would be inadequate for the purpose, dealing as it does with legal titles only, and not with mere equities.

The giving of charge numbered three was free from error, as was the refusal to give those numbered six and eight, requested by the plaintiffs.

The other errors assigned can not, in our opinion, be sustained.

Judgment affirmed.