Randall v. Parker

delivered the opinion of the court : — This is an action of replevin, in which the plaintiff seeks to recover certain goods, articles of household furniture, which had been levied upon by the defendant, as a deputy sheriff, under an execution against Theodore Randall, the son of the plaintiff. That the son was tiie original owner of the goods, and apparently retained the possession when the levy was made, is not denied ; but it. is alleged that the plaintiff became the owner by virtue of a bill of sale, executed and delivered to him by his son, on the 13th of May, 1845. The consideration expressed in the bill of sale is $1100, in hand paid. It is not pretended, however, that any cash was then paid, but the son, who was examined as a witness, swore that the true consideration of the sale was the sum of $1100, moneys borrowed from his father in 1845 and 6 ; for $700 of which sum he had given promissory notes, which he produced upon the trial. There was no evidence, however, .feat those notes were surrendered to him when the bill of

Previous to the execution of the bill of sale, he had been sued for a debt of more than $200, and the plaintiff knew when he took the bill of sale, that an execution upon the judgment recovered for this debt, was about to be issued against him. The plaintiff, who resided at Newark, came to the city on the day the bill of sale was executed, and after or at the time of its execution, the son delivered to him possession of the goods by handing to him the key of the premises. The father then went behind the bar, handed back the key to the son, and appointed him his agent to carry on the business. On the same day the son took down a sign bearing the name of ‘•Theodore Randall,” and put up another containing the name of" Randall” only, and he continued to carry on the business in the same manner he had done before. The only witness pre- -'"'.st ut rise sale was a person in the employ of the son as a barkeeper. A n< ‘flier fact, on which the plaintiff’s counsel laid much -:rc~- hi hk argument, is proper to be mentioned. On the 12th < May, (he ‘-¡in assigned to the father his lease of the premises, bid w- ihi ii'-dgument was made two days before the sale of the dw it is ccriain that it was not designed to operate as a transfer of tlwir piv-ession.

The jury found a verdict for the defendant, and we are urged to gram a new trial, upon exceptions taken to the charge of the judge, and to bis exclusion of evidence upon the trial.

It i~ apianeni from the statement, that the case turn-upon the cund ruction to be given to those important provisions in the statute of frauds, which, as all of us must remember, were the

We apprehend, however, that the true import of the decisions now in question, has been greatly misunderstood. We have diligently examined, and we may add, studied the decisions of the court of errors in the cases of Smith & Hoe v. Acker, 23 Wend. 653 ; Cole & Thurman v. White, 26 Wend. 511 ; and Hanford v, Artcher, 4 Hill 272 ; and we are satisfied that the doctrine which they establish is in no degree inconsistent with the opinion we shall proceed to deliver.

The supreme court had decided, in effect, that the presumption that a sale or mortgage of chattels, of which the possession was unchanged, was made with the intent of defrauding creditors, can only be rebutted by positive evidence, that owing to the situation of the parties, or of the goods, the immediate delivery, and actual change of possession which the statute requires, could not be effected ; while the court of errors, in reversing their judgments, lias held (and such is now the law), that even where the possession of the goods is intentionally suffered to remain in the debtor, every fact and circumstance, tending to disprove the existence, in fact, of a fraudulent intent, may be given in evidence, and must be submitted to the jury. But the court of

We proceed briefly to explain our own views as to the construction of the statute, and to show their application to the facts of the present case. The first, clause in the fifth section (title 2, of the chapter relative to fraudulent contracts and conveyances), our present statute of frauds, so far as it relates to a sale of goods, is in these words: "Every sale made by a vendor of goods or chattels in his possession or under his control, unless the same be accompanied by an immediate delivery, or he followed by an actual and continued change of possession of the thing sold, shall be presumed to be fraudulent and void, as against creditors or subsequent purchasers in good faith." In this clause, the word u actual" is the most important and significant, and demands a special attention. Tt is plainly used in opposition to “virtual” or " constructive.” An actual change, as distinguished from that which by the mere intendment of the law follows a transfer of the title, is an open, visible public change, manifested by such outward signs, as render it evident that the possession of the owner, as such, has wholly ceased. It was the intention of the legislature, that a debtor who wishes to free himself from the imputation of fraud, when he parts with his title to goods, must also part with their use and enjoyment, so as to exclude the hazard of his deriving a false credit from the continuance of his aj (parent ownership; and this intention, recommended as it is by the strongest reasons of public policy, we shall endeavor, upon all occasions, faithfully to execute. The construction that wo now adopt, was given to the statute by the supremo court in Camp v. 6 Hill 628 , and so far from having been repudiated by the court of errors, it received the full and emphatic

Applying then the test of this construction to the present case, it is certain, that no evidence was given of such a delivery of the goods and change of their possession as the statute requires. The change was constructive and secret, not actual and apparent. Use goods remained in the same house, in the same position, applied to the same uses, and so far as the public had any means of judging, in the possession and under the control of the same person, as owner. The substitution of a sign bearing only the surname “ Randall,” if intended not to mislead but inform the public, was a pretence and a mockery ; and the delivery of the key, although symbolically a delivery of the goods as between the parties, in respect to creditors, was an idle and unmeaning ceremony. The learned judge, therefore, following the words and in the spirit of the statute, should have instructed the jury that they were bound to presume that the alleged sale, so far as it affected the rights of creditors, was fraudulent and void.

The presumption, however, of a fraudulent intent which the statute creates, is not juris et de jure, but may be contradicted by proof upon the part of those against whom it is alleged. The section we arc considering proceeds to say, that the facts upon which the presumption is founded, shall be conclusive evidence of fraud, unless “ it shall be made to appear on the part of the persons claiming under such sale, that the same was made in good faith, and without any intent to defraud such credit* n and parchj e>'U' It must be observed, that the words of the statu1 ■- arc no! thuf if it si i all appear to the jury that the sale was not made with an intent to defraud creditors or purchasers, they may disregard and overrule the opposite presumption, which, the statute adopts. The decision of the question is not left to their discretion, but the non-existence of a fraudulent intent must be made to appear on the part of those who claim under the sale. The meaning’ of this provision is clear and unambiguous. It casts the burden of proof upon the person who asserts the validity of the sale. It requires him to

The next inquiry is, what is the nature of the proof that the party asserting the validity of the sale, is bound to give, in order to rebut the statutory presumption of a fraudulent intent'? The statute gives the answer. lie is bound to prove, 1st, that the sale was made in good faith, and 2d, without any intent to defraud creditors and purchasers ; for it is a serious mistake to suppose that those two questions are identical in meaning. The latter words are not superfluous, they are not in technical language mere surplusage : they were necessary to explain the whole intention of the legislature ; they were necessary to give the sanction of the legislature to an important principle, by which the courts of law and equity, in interpreting and enforcing successive statutes of frauds, have invariably been governed. The good faith of the parties, in the restricted sense in which the terms are here used, is evinced by showing that the sale was not colorable and fictitious, but was founded upon a valuable, and as the parties believed, an adequate consideration, and was intended to operate as a valid transfer of the ownership; but it is certain that such a sale may yet be fraudulent in respect to creditors. Even where a full consideration is actually given, the governing or leading motive of the parties may have been the design of preventing the application of the goods sold to the payment of the debts of the vendor, and this is the fraudulent intent which the statute imputes to them, in every case in which the vendor is permitted to retain the possession of the goods. Hence it is this intent that must be disproved, even where the sale is real and effectual. The validity of the sale

The distinction we have thus stated is by no means novel, but the rale of evidence, which it suggests, has prevailed from a very early period in the history of the law. The earliest statute of frauds is the 13 Elizabeth, Cap. 5, and the earliest case under that statute is Twyne's case, 3 Rep. 81. In that case, as in the present, the eondderation of the sale was the satisfaction of an antecedent debt, and the vendor was permitted to retain the possession of the property sold. The chancellor, and the two common law judges by whom lie was assisted, were unaniuimndy of opinion that the coudderation, which was admitted to have Leen proved, was wholly insufficient to rebut the premmption of an intended fraud upon creditors. The authority of this decision has never been denied or doubted ; on the contrary, the rule which it established, is admitted by all the text writers, and ims been followed in all the subsequent cases in the English reports, and this is so certain that the citation of authorities to prove it would be a waste of time, and an idle ostentation of research. It is true, that there is no statute in England, and never has been, which declares that the continued possession of the vendor shall be presumptive or conclusive evidence of an intent to defraud his creditors ; but it is manifest that whether the presumption of fraudulent intent is an inference drawn by judges, or declared by statute, can make no difference in the nature of the proof by which alone it can be rebutted. Hence we assent entirely to the propriety of the decisions of our supreme court in the successive cases of Collins v. Brush, 9 Wend. 198 ; Doane v. Eddy, 16 Wend. 523 ; and Randall v. Cook, 17 Wend. 56 : in each of which the rale in Twyne’s case was held to be applicable to the construction of our present statute. Had we even been compelled to refuse our assent to the propriety of these decisions, we should still have held ourselves to be bound by their authority, since we deny that their authority has been overturned or in any degree shaken, by the subsequent determinations of the court of

The application of our remarks to the facts in the present case, is seen at once to he decisive. Admitting that the reality of the sale was sufficiently proved, there was not a particle of evidence to disprove the existence of a fraudulent intent ; not a particle of e vidence to contradict the presumption that the statute raised, and the facts in the case so forcibly suggested, that the real object of both father and son, purchaser and seller, was to secure the property from the grasp of the impending execution; in other words, to defraud the judgment creditor. Under these circumstances, the learned judge should have instructed the jury, that the presumption of fraud was rendered by the terms of the statute conclusive evidence of the fact.

The observations we have made, relieve us from the necessity of examining in detail the exceptions that were taken to the charge of the judge, since, if these observations are just, it is a necessary consequence that the exceptions are groundless. Some of the expressions used by the learned judge may not have been entirely accurate, and were certainly liable to misconstruction, but his charge, taken as a whole, was much more favorable to the plaintiff than Ms counsel had any right to expect. He distinctly submitted to the jury the question both of a change of possession and of a fraudulent intent, and whether all the remarks that accompanied this submission were critically just, it is needless to inquire ; since, if we have rightly construed the statute, these questions ought not to have been submitted to the

A single exception, independent of those to the charge of the judge, remains to be noticed. One of the witnesses, the barkeeper, swore that a portion of his salary was still due to him ; he was asked to whom he looked for payment, arid the judge is supposed to have erred in overruling this question. Whether the question was proper in itself, we shall not inquire, since, had it been answered as the plaintiff wished, the answer could not have affected the merits or law of the case. In fact, the question had been already answered. The witness had sworn that he had been employed by the plaintiff alone, and, consequently, it was the plaintiff only who could have been liable to him for his wages.

The exceptions are overruled, and the motion for a new trial denied, with costs.