Grant v. Lewis , 14 Wis. 487 ( 1861 )

By the Court,

PAINE, J.

This was an action brought for tbe alleged wrongful taking and detention of a stock of goods. The plaintiff claimed them under a sale from Am- _ mon, and the defendants had seized them upon an attachment against the goods of Ammon, issued in favor of some of his creditors subsequently to the sale. The material question upon the trial was, whether the sale to the plaintitt was fraudulent and void as against Ammon’s creditors ?

It appeared that • Ammon was left in possession of the goods, and the defendants, to show fraud "in the sale, offered in evidence his declarations just preceding the levy, in respect to the character of the transfer from him to the plaintiff. This was rejected by the court, which we think was error.

The general rule is, it is true, that the declarations of a vendor, made after he has parted with his title, are not admissible in evidence to affect the title of the vendee. But an exception to this rule is so far established, that where the vendor remains in the actual possession of the goods, his statements explanatory of such possession and of the relation which he then holds to the property, are admissible as original evidence, and.for the purpose of showing fraud in the sale, if they have that tendency. Phillips’ Ev., Cow., Hill & Ed. Notes, vol. 1, p. 197 (4th Am. Ed.); Carnahan vs. Wood, 2 Swan, 502. The case of Donaldson vs. Johnson et al., 2 Chand., 160, decided that in the case of a chattel mortgage, the declarations of the mortgagor, made after the filing of the mortgage, although he was in possession of the property, were not admissible. But the decision was expressly placed upon the ground that the filing was made equivalent to a change of the possession, and the opinion clearly implies that in the case of an absolute sale, where the vendor is left in possession, his declarations concerning that possession and the nature of his right, would be evidence.

The court below also erred in refusing several of the instructions asked for by the defendants’ counsel. They asked, among others, the following: “In-this case the plaintiff must show by satisfactory proof on his part, that the sale by Ammon to him was made in good faith and without any intent to defraud, creditors.” There can be no doubt, upon . tbe evidence, that this instruction should have been given. All the witnesses who testified on the subject, stated that Ammon was left in the actual possession of the property sold. It is true the plaintiff offered evidence tending to show that he continued in such possession as the plaintiff’s agent. But even if that were really so, and the sale made in good faith, yet that is not such an “actual” change of possession as the statute contemplates, in order to rebut the presumption of fraud. It means such a change that the vendor ceases to possess the goods in any capacity whatever. There may undoubtedly be an honest sale, and the vendor left in possession in good faith as the vendee’s agent. But it looks so much the other way on the face of it, without explanation, that the statute makes the mere fact of the continued possession of the vendor presumptive evidence of fraud, and conclusive unless the purchaser shows by satisfactory evidence that there was really no intent to defraud, that burden being thrown upon him. R. S., chap. 107, sec. 6; Camp vs. Camp, 2 Hill, 628; Hanford vs. Artcher, 4 id., 297. The instruction asked was therefore nothing more than the statute plainly provides for.

A number of other instructions were asked for, and seem to have been uniformly refused. They relate principally to the evidence tending, as was claimed, to show a secret trust reserved for the benefit of Ammon. Among others the following was asked: “ If the jury believe from the testimony that it was a secret part of the arrangement at the time of the sale from Ammon to the plaintiff, that Ammon was to have the privilege of paying Grant the amount of his claim and have the goods back again, such agreement or arrangement would create a trust for the benefit of Ammon, and [render] the sale from Ammon to the plaintiff void as to creditors.”

The correctness of this instruction would seem to depend upon the question whether the goods were of a greater value than the amount of Grant's claim. If they were, then such a provision in the contract would undoubtedly reserve to the vendor a beneficial interest. Assuming that the goods were of tbe value at which they were invoiced, which was something over $3,500, Grant's claim being only $2,600 — the right reserved in the sale by the vendor to have the goods again on paying the claim, would clearly be a beneficial right, to the amount of the excess of value over and above the debt. Such a transfer would be very similar in its nature to a mortgage where the mortgaged property exceeded the value of the debt secured. But there was some evidence tending to show that the real value of the goods was no greater than the plaintiff’s claim, and if the jury had so found, then, it is very doubtful whether the reserved right of buying them back at their full value would constitute such a benefit to the vendor as to avoid the sale. The court was therefore right in refusing this instruction in the absolute form in which it was drawn.

But the defendants also asked the following; “ If the jury believe from the testimony that Ammon was to sell the goods and account to the plaintiff at' the price which they cost, or the invoice price, and to retain all he could sell them for over and above that price, that would constitute a secret trust in law, and [render] the sale from Ammon to the plaintiff void as to creditors, and the verdict must therefore be for the defendant.” It seems very clear that upon the facts assumed in this instruction, Ammon would have reserved to himself the entire profits to be derived from conducting the business. It may be that an employer may pay an agent by giving him what he can sell for beyond a given price. But where a vendor is retained nominally as the agent of the vendee, but with a right to sell and have all he can make beyond the actual cost, that is such an interest reserved as is utterly inconsistent with good faith in the sale.

We do not consider it necessary to notice in detail all the instructions that were asked and refused, as what we have already said will sufficiently indicate the views of this court in regard to the law applicable to the case.

The judgment is reversed, with costs, and a new trial ordered.