Newman v. Baer

On the Merits.

At the opening of the business season in the fall of 1896, defendants, Baer & Levy, found themselves insolvent.

The crops of the year in the section of country in which they did business had failed and the prospect for collection of outstanding accounts was poor indeed. Realizing their situation and the utter inability to meet their obligations, they, for reasons unnecessary to inquire into, made up their minds to favor H. & C. Newman, plaintiffs herein, who were their largest creditors. Accordingly, through their contrivance and at their dictation, H. B. Coyle, the man'aging clerk of the firm, wrote plaintiffs that he feared something was “going crooked” in regard to the business, and advising them to look after their interests. The pretence of this letter was that it was written by Coyle of his own motion and in the greatest confi*327dence and secrecy, and because (to use his own language) “I owe this much to you.” 'The facts are, as disclosed by the record, the idea of writing the letter originated with defendants, and Ooyle would not have written it at all but for the instructions given him to do so.

On receipt of the letter plaintiffs dispatched David March, a trusted employee, to the scene of action, with directions to protect their interest. Within a few days the attachment was sued out. Before it was sued out he was in Monroe, where the senior member of the firm of defendants lived, and from there he went to the town of Bienville, where the business house of defendants was located.

At Bienville, the day before the attachment, he was closeted with the junior member of defendants’ Arm, who was in immediate charge of the business, and was given access to the books, from which he took a list of forty-two of the best customers of defendants — parties who owed them — and whom he caused to be garnisheed under the writ of attachment, which issued the next day, and under which the store was closed, ai)d all the goods and property of defendants seized, including the books, accounts, notes and other papers of the Arm. These books, notes, etc., were not in the store, but were at the residence of H. B. Ooyle, who was instructed the day preceding the attachment by the junior member of defendants’ Arm, within the hearing and presence of David March, that when the sheriff came to attach the store, to look at the papers, and if they were sued out in the name of H. & O. Newman, then to deliver to him the notes and books, but if found to be in the name of any other creditor or creditors, not to turn them over. When the attachment was made the sheriff was accompanied by one of plaintiffs’ attorneys, who directed him to seize the books, notes, etc., and told him they were at the residence of Ooyle, thus showing the possession of knowledge by plaintiffs through their attorneys and agents, which could only have been derived from defendants or their employees. After seizing the stock of goods the sheriff repaired to the house of Ooyle, accompanied by the latter, who there turned over to him the books, notes and other papers.

It is shown that the books had been buried in Ooyle’s garden by his cook, into whose custody they had been given. It is shown that for eight or ten days before the attachment it was known to defendants’ employees and to mnny other persons in and around *328Bienville that an attachment was imminent, and that the attaching creditors would be H. & 0. Newman. Ooyle knew of it two weeks before and had obtained the information from defendants themselves, and it is further shown that in preparation for the attachment defendants instructed Ooyle to collect as much cotton and money as possible and to close outstanding accounts by taking notes, which were made payable some to A. Levy, one of defendants, others to Ooyle himself, and others to the order of the makers and by them endorsed. Also that the day prior to the attachment a settlement was made with one of the debtors who owed a considerable sum of money, and who was perfectly solvent and responsible, by which settlement, and as an inducement to make it, a discount of one hundred and fifty dollars was allowed. One item of this debtor’s account was twelve dollars for the rent or hire of a horse belonging to defendants for the current year, on which a deduction of two dollars was made for the reaBon that the horse was to be seized before the year was out. In point of fact it was seized the next day.

Baer & Levy undoubtedly procured H. & 0. Newman to attach them. A sifting of the voluminous evidence in the record leads inevitably to this conclusion.

It is impossible to escape the conviction that the purpose of the suit was, on one part, to give, and, on the other, to receive an unfair advantage over the other creditors.

We might acquit plaintiffs themselves, on their testimony, of direct knowledge of this. They were away in New Orleans. But their agent, March, was on the ground with general instructions to act for them and it is vain for him to deny connivance and collusion..

The abundant evidence of his complicity overwhelms his protest, as it does the denial of defendant Baer, whose testimony was taken under commission though residing within two hours by rail of the court house.

Defendant Levy did not go on the stand in the effort to exculpate himself, or his firm, nor was he called to testify by plaintiffs though within easy reach of the process of the court.

Plaintiffs can not escape the consequences of their agents’ acts.

It must be held that David-March, representing them, consented to the acts and doings of defendants in furtherance of their and his purpose to secure to plaintiffs an unfair advantage, and ultimately benefit defendants themselves by shielding the business from the *329pursuit of the other creditors, and, later, enabling them to handle it in the name of or through other parties.

The record teems with numerous other facts, incidents and circumstances that confirm this view, as well as show that defendants aided plaintiffs all through this litigation in the effort to repel the assault of intervenors.

This conduct of defendants, assented to by the representative of plaintiffs, who sought to turn it to their advantage and thereby secure the full settlement of their claim out of property which was the common pledge of all the creditors, was the doing of a thing reprobated by the law and may well form the subject of the revocatory action.

An insolvent debtor can not give in payment to one creditor to the prejudice of the others any other thing than the snm of money due. C. C. 2658; Taylor vs. Knox, 2 La. 16; Lovell vs. Payne, 30 An. 511.

The acts and doings of an insolvent debtor through which he seeks to give a fraudulent preference to one creditor over others are all the more to be reprobated when the machinery of the law is invoked to give the semblance of plausibility and propriety to such proceedings. Haas vs. Haas, 35 An. 885.

The law recognizes no distinction between a voluntary conveyance •of property in fraud of creditors and such an alienation disguised under the forms of judicial proceedings.

It will annul and set aside any machination or contrivance by which this is sought to be done. C. C. 1969, 1970, 1983, 1984, 2658; Muse, Syndic, vs. Yarborough, 11 La. 530.

Neither the law nor the courts are to be used as instruments to work injustice. To attempt this is to aggravate the offending.

An attachment instigated by a debtor for the purpose of giving a favored creditor an advantage will be declared void and of no effect so far as other creditors are concerned who judicially complain of ■the same as a fraud on their rights. O. O. 1977.

Such attachment, however, will be maintained as between the fraudulent debtor and the favored creditor.

The conclusions of the court below in this case were the same as those herein announced.

In determining questions of fact tending to prove fraud, great weight is to be given to the opinion of the District Judge who saw *330and heard the witnesses. Tatum vs. Collins, 43 An. 855; Commission Co. vs. Bond & Williams, 44 An. 844.

Judgment affirmed.

Nicholls, C. J., takes no part, not being present at the argument.