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said, generally, to the jury, that an intent upon | of the insolvency of his brother, and that the the part of the debtor to delay his creditors in payment of his debt would deprive other credthe collection of their debts was as much within itors of their claims, "this mere knowledge on the statute as if the intent had been to cheat or his part would not make the sale in question defraud; that while a debtor, in failing circum- fraudulent." stances, was at liberty, acting in good faith and openly, to prefer some creditors over others, he could not, as against those not paid, reserve to himself a secret trust in any transfer; that a creditor thus favored by the debtor, will not be permitted to enjoy the preference given him if he seeks, by the transactlon, to cover or protect the remainder of the debtor's property so that it could not be applied to the payment of his honest debts; and that if a creditor seeks to appropriate the debtor's property for a debt, any material part of which was knowingly fic-that "actual knowledge by the purchaser of titious, the whole transaction would be held as tainted with fraud and void as to other creditors.

The plaintiff contends that the instructions of the court upon the question of intent were based upon an erroneous interpretation of the statute, in that they made knowledge that was sufficient, under all the circumstances, to put him, as a prudent man, upon inquiry as to his brother's fraudulent intent, equivalent to actual notice or knowledge of such an intent. That the court held this view is made clear by one of the instructions given to the jury at the request of the defendant, in which it was said

any fraudulent intent on the part of the seller is not essential to render a sale void;" and that "if the facts brought to the attention of Gustave G. Shauer were such as to awaken suspicion and lead a man of ordinary prudence to make inquiry, and he fails to make [621 such inquiry, then he is chargeable with notice of fraudulent intent and with participation in the fraud, and it will be your duty to find for the defendants."

It is admitted that if at the time of his alleged purchase the plaintiff had actual notice that his brother intended, by the sale, to delay or defraud his creditors, the sale would have been void against creditors. But the plaintiff denies that anything short of actual notice or knowledge of such fraudulent intent will suffice, under the statute, to invalidate his purchase. The statute of Dakota, strictly interpreted, would seem to invalidate any transfer of property made with the intent, upon the part of the owner, to delay or defraud creditors, even when the transferee purchased in good faith. But it was not thus interpreted by the court below. It was liberally construed so as to protect bona fide purchasers for value. As

Applying these principles to the facts of this case, the court said: Therefore, should you find from the evidence that Louis S. Shauer was fairly and honestly indebted to his brother, Gustave Shauer, in the full amount claimed, which I believe is about $6700, you will remember the exact amount, and that with the honest intention of securing such indebtedness he purchased the property in question without notice or knowledge of any fraudulent intent on the part of Louis S. Shauer to delay or defraud bis creditors, and without any intent on his own part to secure any interest in said property, present or future, to his brother Louis, and without any intent to delay or defraud the creditors of Louis S. Shauer, then he is entitled to recover whatever, may have been the intent of Louis Shauer himself; for the intent of Louis Shauer can affect the plaintiff only in the case that he knew, had notice, or as a prudent man had knowledge sufficient from the circumstances to put him upon inquiry as to his brother's fraudulent intent. On the other hand,should you find that the alleged indebted-suming, for the purpose of this case, that this ness from Louis to Gustave Shauer, and which forms a part of the consideration of the sale, 620] was knowingly false *and fictitious in whole or in a material part, or should you find that the balance of the consideration money or price was paid by Louis to Gustave Shauer with the intent to place the same out of and beyond the reach of the creditors of Louis Shauer, or should you find that Gustave Shauer in making this purchase had any intent not only to secure his own indebtedness, but also the further intent to hinder and delay the creditors of Louis Shauer, or any intent to so dispose of the remainder of the property after the satisfaction of his own debt either that it would be out of the reach of the other creditors or that it would inure in the future to the use and benefit of Louis Shauer, then and in either event the transaction would be tainted with fraud, and the plaintiff cannot recover."

The jury was further instructed, at the instance of the plaintiff, that if they found that Louis Shauer made a sale of these goods to his brother, it would be presumed, in absence of proof to the contrary, that such sale was made in good faith and with honest intentions; that if the evidence was equally balanced, the defendant must fail in respect to the fraud alleged by him; and that if the plaintiff knew

interpretation was correct, we are of opinion that while the plaintiff was not bound to act upon the mere suspicion as to the intent with which his brother made the sale in question, if he had knowledge or actual notice of circumstances sufficient to put him, as a prudent man, upon inquiry as to whether his brother intended to delay or defraud his creditors, and he omitted to make such inquiry with reasonable diligence, he should have been deemed to have notice of such fact, and, therefore, such notice as would invalidate the sale to him, if such sale was in fact made with the intent upon the part of the vendor to delay or defraud other creditors. Referring to the statute of Dakota, declaring a conveyance of real property, other than a lease for a term not exceeding one year, void as against any subsequent purchaser or incumbrancer (including an assignee of a mortgage, lease, or other conditional estate, of the same property or any part thereof) in good faith and for a valuable consideration, whose conveyance is first duly recorded, the supreme court of Dakota, in Gress v. Evans, 1 Dak. 371, said: "Actual notice of a prior unrecorded conveyance or of any title, legal or equitable, to the premises, or knowl edge and notice of any facts which should put a prudent man upon inquiry, impeaches the

good faith of the subsequent purchaser. There of possession by the changed appearance of the 622]should be *proof of actual notice of prior property or its change of custody. And this is title or prior equities, or circumstances tending true, whatever may be the good intention or to prove such prior rights, which affect the con- bona fides of the transaction; even the law science of the subsequent purchaser. Actual will not tolerate such transfers as against crednotice, of itself, impeaches the subsequent itors. The change of possession must be open conveyance. Proof of circumstances, short of and visible, and if not, as against creditors actual notice, which should put a prudent man without knowledge of the transfer, it will be upon inquiry, authorizes the court or jury to void, though made for a valuable considerainfer and find actual notice. Or, to express it tion in good faith and without any actual inexactly, good faith consists in an honest inten- tent to defraud. In such case the law contion to abstain from taking any unconscien- clusively presumes a fraudulent intent, and tious advantages of another, even through the the party to such sale will not be heard to forms or technicalities of law, together with prove the contrary." an absence of all information or belief of facts In addition to what appears in the charge, which would render the transaction unconsci-the court, at the instance of the defendant, inentious. And notice is either actual or constructed the jury that a change of the property structive." in controversy in this case must not have been merely nominal and momentary, but real, actual, and open, such as could be publicly known; and that if the property was permitted to remain in the possession of Louis S. Shauer, then the transfer was fraudulent in law as to his creditors, notwithstanding the sale may have been made to his brother in good faith and for a valuable consideration.

A less stringent rule cannot be applied to the Dakota statute relating to transfers of property with intent to delay or defraud creditors. The plaintiff had the right, by a purchase of his brother's stock of merchandise, to obtain payment of his claims in preference to the claims of other creditors. But the statute of Dakota, however liberally construed in favor of pur chasers from a fraudulent debtor, will not permit him to enjoy, to the exclusion of other creditors, the fruits of his purchase, when the sale was made with the intent to delay or defraud other creditors, if he had, at the time, actual notice of such intent or knowledge of such circumstances or facts as were sufficient to put a prudent person upon an inquiry that would have disclosed the existence of such intent upon the part of the vendor. The plaintiff could not properly have claimed a more favorable interpretation of the Dakota statute than was given to it by the court below. A statute that declares every transfer of property, made with intent to delay or defraud any creditor of his demands, void against all creditors of the debtor, would be wholly defeated in its operation if the rights of the transferee were not subject to the rule that "whatever is notice enough to excite attention and put the party on his guard, and call for inquiry, is notice of everything to which such inquiry might have lead.' Wood v. Carpenter, 101 U. S. 135, 141 [25: 807, 809]; Kennedy v. Green, 8 Myl. & K. 722.

4. Having disposed of the question as to the intent with which the sale in question was 623]made, *the court referred to the provision of the statute, declaring the transfer of personal property-the vendor having at the time possession or control thereof-to be conclusively fraudulent and void, as against creditors, unless such transfer is accompanied by an immediate delivery, and followed by an actual and continued change of possession. The court said to the jury that the statute means, as declared by the supreme court of the territory in Grady v. Baker, 3 Dak. 296, 299, that the sale shall be open and public, that the world may be apprised of the change of ownership; and that the change of possession must be actual and continued, and not subject to some secret trust between the buyer and seller. "Some of the cases," the court below observed, "say that the change must be of that character that customers and those accustomed to frequent the premises may be at once advised of the change

The specific objection made by the plaintiff to these instructions is that they stated an arbitrary rule, namely, that the change in possession must be accompanied by such outward, visible signs as would apprise the world of the change, and *made no reference to the [624 time within which such signs should be given, or to the nature of the property transferred or to the circumstances attending the transaction. The court, it is said, should have qualified the rule as indicated in the instructions asked by him. We cannot sustain this position. The instructions asked by the plaintiff, on this point, did not substantially differ from those given by the court, except they were more elaborate and referred more in detail to the facts. The court told the jury that the statute required not only an immediate change of possession, but one so open that the public would be apprised of it. While the court was at liberty to recall to the minds of jurors all the facts and circumstances bearing upon this issue, we cannot say that it erred in not doing so, or that it erred in leaving to the jury to determine whether, under all the evidence, there was such immediate delivery and such actual change of possession of the property in controversy as was necessary, under the statute as explained, to make the transfer valid against creditors.

In this connection, it is appropriate to say that the interpretation placed by the court below on the Dakota statute, relating to change of possession, accords with the decisions of the supreme court of California in respect to a similar statute. In Stevens v. Irwin, 15 Cal. 507, 76 Am. Dec. 500, it was said: "A reason. able construction must be given to this language, in analogy to the doctrines of the courts holding the general principles transcribed into the statute. The delivery must be made of the property; the vendee must take the actual possession; that possession must be open and unequivocal, carrying with it the usual marks and indications of ownership by the vendee. It must be such as to give evidence to the world of the claims of the new owner. He must. ir

other words, be in the usual relation to the property which owners of goods occupy to their property. This possession-not taken to be surrendered back again-not formal, but substantial." See also Lay v. Neville, 25 Cal. 545, 553; Woods v. Bugbey, 29 Cal. 466; Parks v. Barney, 55 Cal. 239. There are many other cases to the same effect.

5. Exception was taken to what the court said 625[ to the jury touching the relation of the plaintiff and the vendor of the goods. After observing that the law scrutinizes carefully all transfers of the failing debtor and zealously guards the rights of creditors against fraudulent dispositions of the debtor's property, the court said that it was for that reason that transfers to one's wife or to members of his family are carefully scrutinized, experience having taught that such conveyances are more

the jury to be told that the relations of the parties to the transaction made it necessary to carefully scrutinize the facts, but that their determination must, at last, depend upon the inquiry whether the transaction was honest and bona fide.

We perceive no ground to doubt that the case was well tried. The jury were fully and properly instructed in respect to every aspect of the case, and we have no authority to set aside their verdict, even if it does not appear to be justified by the evidence. New York Cent. & H. R. R. Co. v. Fraloff, 100 U. S. 24, 31 [25: 531, 534]; Lincoln v. Power, ante, p. 224.

Judgment affirmed.

frequently fraudulent than transactions be- JOHN A. BUCKSTAFF ET AL., Piffs. in

tween strangers or those not intimately connected or acquainted. It is said that this language authorized the jury to infer that the mere fact of the parties being related would cause the good faith of the transaction to be suspected. But this criticism of the charge is met by the next succeeding sentence, in these words: "Yet experience also teaches that honest and bona fide sales and transfers of property are made, and that too much stress, or even importance, should not be given to such a fact alone." It is also met by the fact that the court, at the instance of the plaintiff, instructed the jury that if these goods were sold by Louis to Gustave, the law presumed that the sale was made in good faith and with honest intentions; that in absence of proof to the contrary, the validity of the sale could not be questioned; that if the evidence was equally balanced upon that point, the defendant must fail, and that mere knowledge on the part of Gustave that his purchase would deprive other creditors of their debts would not make the sale fraudulent. Again, at the instance of the plaintiff, the court said: "The mere sale by a party of his stock of goods to a relative is not a badge of fraud. If such sales were fraudulent in themselves it would be impossible for family connections to aid each other in case of financial embarrassment without danger of being placed in a false position and losing the entire sum loaned. Under this rule, if Louis S. Shauer owed his brother, Gustave G. Shauer, a just debt, he had the same right to transfer his property to his brother in payment of this debt as he would have had to transfer the same property to any one of these attaching creditors in payment of his claim."

The jury could not have been induced by anything said by the court to give undue weight 626] to the fact that the transaction *in question was between brothers. If that fact induced them, under the instructions-as it might properly have done-to carefully scrutinize the evidence, it must be assumed that they performed their duty without forgetting the injunction that the law presumed the sale, despite the fact of the near relationship of the parties, to have been made in good faith, if accompanied by immediate delivery and followed by actual, continued change of possession.

We are of opinion that it was not error for

Err.,

v.

RUSSELL & COMPANY.

(See S. O. Reporter's ed. 626-638.)

Jurisdictional amount-complaint for machin ery sold-question to witness-when error to exclude.

1.

2.

Where the amount for which plaintiffs sued in their original petition was $4206.07, with interest, and that amount was increased by the supplemental petition to $5882.20, and defendants denied their liability in any sum and by way of counterclaim asked for judgment in the sum of $10,000, and the judgment was in favor of the plaintiff for the sum of $4450, that sum, and the amount sued for in the counterclaim, are in dispute upon the writ of error, and this court, therefore, has jurisdiction.

Where plaintiff agreed to build certain machinry for defendant for a certain price to be paid by defendant, and it was further agreed between them that if after fairly testing its efficiency the machinery did not work to defendant's sat isfaction, he was to notify plaintiff to comply with the contract in sixty days, and if he did not then defendant might declare the contract paid in full or plaintiff should pay back to defendant all money paid by him and all damages to him and might then remove the machinery, it is not necessary in an action to recover the price to allege in the complaint that the machinery worked to defendant's satisfaction, but this is matter of defense; it is sufficient to allege the delivery of the machinery and that the price to be paid therefor has become due and is unpaid.

8. The rule that an assignment of error, based upon the exclusion of an answer to a particular question in the deposition of a witness, will be disregarded in this court unless the record sets forth the answer or its full substance, does not apply where the witness testifies in person, and where the question propounded to him is not only proper in form, but is so framed as to clearly admit of an

NOTE.-As to amount necessary to give jurisdiction in circuit court; cases prior to Act of 1875; amount necessary since Act of 1875; amount in dispute, see note to Schunk v. Moline, M. & S. Co. 37: 256. As to stated sum in contract; whether penalty or liquidated damages, see note to Tayloe v. Sandiford, 384.

5:

As to contracts; their interpretation and validity, see note to Bell v. Bruen, 11: 89.

answer favorable to the claim or defense of the upon this writ of error.
party producing him.
has jurisdiction.

This court, therefore,

4. If a question to a witness is in proper form and 2. By an agreement in writing, made June clearly admits of an answer relevant to the issues 22, 1888, between Russell & Co., a corporation, and favorable to the party on whose side the wit- and Buckstaff and Utt, the former agreed to ness is called, it is error to exclude it, although furnish and deliver to the latter on cars at Linthe facts proposed to be proved by the answer.coln, Nebraska, three boilers, 60 inches by 14

are not stated.

[No. 207.]

feet; one automatic cut-off engine, 125 horse

Argued and Submitted Jan. 17, 1894. Decided power; one automatic cut-off engine, 50 horse

Feb. 5, 1894.

[blocks in formation]

547.

The purchaser cannot retain and use the property and at the same time say he repudiates and rescinds the contract of purchase.

Cookingham v. Dusa, 41 Kan. 229; Aultman v. Mickey, 41 Kan. 848.

The loss of possible profits was not a proper subject for damages.

Wakeman v. Wheeler & W. Mfg. Co. 101 N. Y. 205, 54 Am. Rep. 676.

The general damages in the counterclaim could easily have been prevented by the defendant's quitting the use of the machinery, and hence cannot be recovered.

Wicker v. Hoppock, 73 U. S. 6 Wall. 94 (18: 752); Russell v. Butterfield, 21 Wend. 300.

The verdict being for less than $5000, this court does not have jurisdiction of this case. New England Mortg. Secur. Co. v. Gay, 145 U. S. 123 (36: 646); St. Louis & 8. F. R. Co. ▼. McBride, 141 U. S. 127 (35: 659).

Mr. Justice Harlan delivered the opinion of the court:

1. It is suggested that the amount in dispute 8 less than five thousand dollars. This point is not well taken. The amount for which Russell & Co. sued in their original petition was $4206.07, with interest from October 9, 1888. That amount was increased by the supplemental petition to $5882.20. The plaintiffs in error, who were defendants below, denied their liability in any sum, and, by way of counterclaim, in accordance with the practice in Nebraska, 628] asked for judgment *against Russell & Co. in the sum of $10,000. The verdict and judgment were in favor of the plaintiff and for the sum of $4450. That sum, and the amount sued for in the counterclaim, are in dispute

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power; one Gordon Maxwell duplex pump; one Garfield injector; one heater, and any necessary fittings of sufficient size and dimension sacro er inch diameter, 60 feet long, made of to properly run such plant; also two smokeNo. 12 iron, with fancy tops, guy rods and stays. For those articles Buckstaff and Utt agreed to pay four thousand nine hundred and fifty dollars, as follows: One third cash when the machinery was steamed up ready to run, the balance in six and twelve months, with interest at the rate of 7 per cent per annum from time of erection in Lincoln, providing that with proper and careful management, said engines, boilers, and pumps are hereby guaranteed to work, and that said engines do give the amount of horse power as herein specified, and to be as economical of fuel and as durable as a Corliss non-condensing engine." "It is also understood and agreed," the contract proceeded, "that said Buckstaff and Utt shall use fair and honorable means to satisfy themselves before payments are due, that said engines, boilers, and pumps are working to their entire satisfaction, and should they not be, then, in that event, the said Buckstaff and Utt are to notify said Russell & Co. and said Russell & Co. must at once comply with the terms of this contract within 60 days, and in the event they do not, the said Buckstaff and Utt may declare this contract paid in full, or said Russell & Co. shall pay back to said Buckstaff and Utt all money paid to them, and said Russell & Co. shall pay said Buckstaff & Utt such damage as shall be declared fair by competent judges, and after paying such damages may remove said machinery without cost to said (629 Buckstaff and Utt. It is hereby agreed that Russell & Co. shall ship said machinery not later than July 15, 1888.

Attached to and made part of the contract are certain proposals from Russell & Co. to Buckstaff and Utt. One of them is a proposal to furnish three eighty horse-power boilers, fully described, and contains this stipulation: "All boilers tested to 150 pounds hydraulic pressure; workmanship and material guaranteed to be first class; plans for setting boilers to be furnished without expense to purchaser." Another is a proposal to furnish one right hand automatic cut-off engine, fully described, and contains this stipulation: "We guarantee the above engine to be well made, of first class material, and in operation to work as economically as any similar engine in the market." A third is a proposal for another right hand automatic cut-off engine, accompanied by a similar guaranty.

In the first count of the petition it was alleged that all the machinery covered by the contract was delivered by the plaintiff to the defendants in strict accordance with its terms; that the defendants were to pay for it the sum of four thousand nine hundred and fifty dol

lars, one third in cash when the machinery | ceased husband of the defendant-the agree was steamed up ready to run, one third in six months, and the remaining one third in twelve months with interest at the rate of 7 per cent per annum from the time of the erection of said machinery; that all of the machinery had been delivered, was set up, put in operation, and commenced running on the 9th day of October, 1888, at which time one third of the four thousand nine hundred and fifty dollars became due; that another one third became due on the 9th day of April, 1889; that neither of those amounts nor any part thereof have been paid by the defendants; and that they have refused and neglected to pay the same or any part thereof, although often requested so to do. The second count was for piping and other machinery of the value of $392.86, and the third for grate bars, of the value of $450, alleged to have been sold and delivered by Russell & Co. to the defendants. By a supplemental petition the plaintiff enlarged its claim so as to embrace the last installment of the $4950 for which the contract stipulated. 630] *At the trial below the defendants objected to the introduction of any evidence in support of the first count of the petition, on the ground that it did not state facts sufficient to constitute a cause of action. This objection was overruled, and to that ruling the defendants excepted.

In support of this exception it is said that if it had been alleged, or indeed proven, that the plaintiff did not "use fair and honorable meaus to satisfy themselves," before payment was due, that the machinery was "working to their entire satisfaction," or that the refusal to accept was fraudulent, still no action could have been properly maintained for the sale and delivery of the property, because, at all events, there would have been no acceptance, and, in its absence, the contract would have remained executory; consequently, it is argued, the only action maintainable, if any, would have been one to recover damages for fraudulently refusing to accept the machinery and articles furnished. The counsel for the defendants refer to numerous cases which, it is insisted, sustain the construction of the contract upon which this exception is founded. It may be well to refer to some of those cases.

In Mansfield Mach. Works v. Lowell, 62 Mich. 546, 552, which was a suit upon a contract with a village for the sale of a steam engine and attachments, and which contract provided that a named sum should be paid "when engine and hose are accepted, balance in equal payments-first, on or before six months; second, on or before eighteen months, with interest at six per cent from date of acceptance," it was held that the contract, fairly construed, did not provide for the payment for the engine and machinery until they were tried and accepted; that under its terms the property remained in the vendor until acceptance and after trial of it, the village never becoming the owner of it; and that the remedy of the plaintiff, if any, would be a suit for a breach of the contract and refusal to accept on the part of the defendant.

ment being that she was not bound to [631 take it unless she was satisfied with it-the question was as to the liability of the defendant up on proof that the bust was not only a fine piece of work, and a correct copy of a photograph furnished by the defendant, but that it accurately portrayed the features of the deceased. The court said: "In this case, the plaintiff undertook to make a bust which should be satisfactory to the defendant. The case shows that she was not satisfied with it. The plaintiff has not yet then fulfilled bis contract. It is not enough to say that she ought to be sat isfied with it, and that her dissatisfaction is unreasonable. She, and not the court, is entitled to judge of that. The contract was not to make one that she ought to be satisfied with, but to make one that she would be satisfied with. Nor is it sufficient to say that the bust was the very best thing of the kind that possi bly could be produced. Such an article might not be satisfactory to the defendant, while one of inferior workmanship might be entirely sat isfactory. A contract to produce a bust perfect in every respect, and one with which the defendant ought to be satisfied, is one thing; and undertaking to make one with which she will be satisfied is quite another thing. The former can only be determined by experts, or those whose education and habits of life qualify them to judge of such inatters. The latter can only be determined by the defendant berself. It may have been unwise in the plaintiff to make such a contract, but having made it, he is bound to it."

In Brown v. Foster, 113 Mass. 136, 138, 18 Am. Rep. 463, which was an action to recover the price of a suit of clothes which it was agreed should be satisfactory to the purchaser, but with which he was not satisfied and for which he refused to pay, the court said: "If the plaintiff saw fit to do work upon articles for the defendant and to furnish materials therefor, contracting that the articles when manufactured should be satisfactory to the defendant, he can recover only upon the contract as it was made; and even if the articles furnished by him were such that the other party ought to have been satisfied with them, it was yet in the power of the other to reject them as unsatisfactory. It is not for any one else to decide whether a refusal to accept is or is not reasonable, when the contract *permits [632 the defendant to decide himself whether the articles furnished are to bis satisfaction. Although compensation of the plaintiff for valua ble service and materials may thus be dependent upon the caprice of another who unreason ably refuses to accept the articles manufactured, yet he cannot be relieved from the contract into which he has voluntarily entered."

Among many other cases of the same class are Singerly v. Thayer, 108 Pa. 291: Goodrich v. Van Nortwick, 43 Ill. 445; McCarren v. McNulty, 7 Gray, 139; Cole v. Homer, 53 Mich. 438; Gibson v. Cranage, 39 Mich. 49, 33 Am. Rep. 351; Krum v. Mersher, 116 Pa. 17; Ellis v. Mortimer, 4 Bos. & P. 257. These authorities do not control the deterIn Zaleski v. Clark, 44 Conn. 218, 223, 26 mination of the present case. There is no proAm. Rep. 446, which was a suit for the price vision in the contract of June 22, 1888, which agreed to be paid for a plaster bust of the de-either expressly or by necessary implication

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