Shade, Franklin Sav Bank v. (Pa.). 912

Shaeffer v. Hoffman (Pa.)..

Shamburg v. Abbott (Pa.).

Sharp v. City of Erie (Pa.).....

THE

Atlantic Reporter.

VOLUME IV.

ROSE and others v. KEYSTONE SHOE Co.1

(Supreme Court of Pennsylvania. April 12, 1886.)

FRAUDULENT CONVEYANCE-PARTNERSHIP-CONFESSION OF JUDGMENT-SALEEMPLOYMENT AS AGENTS.

A. & B., partners, in failing circumstances, confessed judgments to various friends and relatives for money loaned, etc., under which the property of the partnership was sold at sheriff's sale, and purchased by the plaintiffs in the judgments. The purchasers, with the goods thus obtained, then formed a company, limited, and employed A. and B. at a salary. C. who held a judgment against A. & B., contended that the confessions of judgment, the sheriff's sale, and the formation of the company were fraudulent and void as to creditors, and that the goods were still the property of A. & B. Held, this was a question of fact for the jury, and they having found for the company established the bona fides of the transaction.2

Error to common pleas No. 2, county of Philadelphia.

Feigned issue, under a sheriff's rule for interpleader, between Keystone Shoe Company, Limited, plaintiffs, and George L. Rose, George L. McAlpin, and William W. McAlpin, trading as Rose, McAlpin & Co., defendants, to test the ownership of certain goods levied upon by the sheriff as the property of Thomas P. Smith and Samuel S. Smith, trading as T. P. & S. S. Smith, and claimed by the said the Keystone Shoe Company, Limited. Rose, McAlpin & Co. sold to T. P. & S. S. Smith a bill of goods, taking in payment promissory notes, upon which they obtained a judgment on April 26, 1884, for $799.40, and on May 24, 1884, levying upon certain property as the property of T. P. & S. S. Smith, which was claimed by the Keystone Shoe Company, Limited, a company organized under act June 2, 1874, (P. L. 271,) and supplements, whereupon this feigned issue was formed to try the title to the property. On the trial, before FELL, J., the plaintiffs in the feigned issue offered nu

1 Edited by Messrs. Hatfield and Cresswell, of the Philadelphia bar.

2 For a full discussion of fraud and fraudulent intent, evidence of fraud, presumptions, burden of proof, and the like, see Knight v. Kidder, (Me.) 1 Atl. Rep. 142, and note,

143-150.

v.4A.no.1-1

merous witnesses, receipts, and vouchers. The defendants offered no evidence whatever. The property levied upon and claimed by the Keystone Shoe Company, Limited, was derived from two sources: (1) Goods purchased in the market which never had at any time been the property of T. P. & S. S. Smith; and (2) goods purchased from the vendees of the sheriff, the sheriff having previously sold the goods to these vendees as the property of T. P. & S. S. Smith. The judgment notes upon which the sheriff's sale was made were given for the exact amount of the indebtedness of T. P. & S. S. Smith to the firm creditors to whom they were given. Executions were issued thereon, and the sale made March 28, 1884. A part of the goods here in question were purchased at this sale by the judgment creditors, who subsequently sold the said goods to the plaintiff, the Keystone Shoe Company, Limited. Notes of the latter were given in payment, which were paid at maturity. The evidence disclosed that, of these four judgment notes upon which the sheriff's sale was made, two were given February 11, 1884, and the other two on March 17, 1884. They were entered in court on March 20, 1884. One of them was given to John B. Iredell, a brother-in-law of the Smiths, as trustee for his wife, his wife's cousin, his sister-in-law, and one of T. B. Smith's daughters, for loans by them of $582.69. Another of them was given to Edward S. Deemer, book-keeper, for 14 months' salary and for loan, of $1,173.49. Another of them was given to Sarah S. Smith, mother of the Smiths, for loans made to each of them individually, amounting to $4,339.58; and the last of them was given to David Florman, father-in-law of S. S. Smith, trustee for his daughter, the wife of S. S. Smith, for amount loaned by her, and amounts due two of her children, $1,694.93. The Keystone Shoe Company, Limited, was composed of John B. Iredell, who contributed $200, and was manager; Elizabeth F. Smith, wife of S. S. Smith, who contributed $1,200, (borrowed for a few days from T. P. Smith,) and was president; and Mary L. Smith, wife of T. P. Smith, who contributed $1,200, (borrowed from T. P. & S. S. Smith,) and was secretary and treasurer. T. P. and S. S. Smith were employed by the company, at a salary of $35 each per week, and, by powers of attorney, managed the whole business.

Defendants requested the court to charge as follows:

"That the loans or advances by Mrs. Sarah P. Smith to her sons individually, and put into the business by them as part of their capital, did not constitute a valid consideration for a confessed judgment by the firm." Answer. "If the money went into the firm for the firm use, it was a valid consideration for the judgment, notwithstanding it was loaned to her sons individually, and put into the firm by them as a part of their capital."

"That the use of the debtors' money in making the purchase from the sheriff's vendees for the Keystone Company made the transaction fraudulent as to creditors." Answer. "If the purchase was made with the debtors' money or on their account, this view is correct, the transaction was fraudulent. A loan to their wives to make up their subscriptions to the stock of the Keystone Company does not affect the title to the goods."

"That the transfer of the sum of $1,100 on the books of the firm, from the capital account of S. S. Smith to his wife's credit, in August, 1883. could not constitute her a creditor of the firm so as to entitle her to claim against part