Crawford v. Neal

Answers and replications having been filed, the cause was referred to a master to take testimony, and to report his findings of fact and conclusions of law thereon.

The master found the various judgments, and that execution had been issued and returned unsatisfied upon those in favor of Sibson, Quackenbush & Co. and W. C. Noon & Co.; that Foster was insolvent on February 6, 1884, and had so continued since that time, and had no property out of which the judgments of complainant and the other creditors could be satisfied; that on February 6, 1884, Foster conveyed to John A. Crawford certain parcels of real estate numbered from 1 to 5, and certain personal property, and to William Crawford another parcel of real estate, known as the 'Brick Store Property,' numbered 6, and that on February 7th Foster conveyed to Ashby Pearce a certain other parcel, numbered 7, and a small amount of personalty; and that the parties to these transfers, at the time they were made, agreed upon the prices of the property, which aggregated $79,000.

'That at the time of the transfer the said several parcels of property, real and personal, so transferred by Foster to J. A. Crawford, were fairly and reasonably worth—

Tract 1 & 2................. $30,000

"  3........................ 2,500

"  4.......................... 500

Tract 5....................... 3,000

Book accounts................. 3,000

Grain sacks................... 3,000

--

Total............................... $42,000

The property conveyed to William Crawford

at the time of the transfer was

actually worth...................... 18,000

The real property conveyed to Ashby

Pearce was at the time of the transfer

actually worth............. $3,500

And the personal property.... 700

---

Total............................... 4,200

-

$64,200"

The master further found—

'(18) That in 1867 J. H. and John Foster were partners in a mercantile business under the firm name of J. H. Foster & Co., and in that year bought the Magnolia mill from Wm. Crawford for $16,000, paying $6,000 cash and executing five notes for $2,000 each, of date July 20, 1867. These notes were secured by a mortgage on the mill property and a brick store, which mortgage was duly recorded.

'That in 1876 J. H. Foster bought out John Foster's interest in the mills and business and assumed all the debts and liabilities of J. H. Foster & Co., and thereafter individually continued the business under the same firm name.

'That the business of the Crawfords with J. H. Foster was for a considerable time conducted under the name of Crawford Bros., and was transacted by John A. Crawford, who was the agent and representative of Wm. Crawford.

'That on or before the 6th day of February, 1884, J. H. Foster was owing said J. A. Crawford on notes and accounts for money lent and water rent the sum of $27,733, which was then due and unpaid, and that at the time said J. A. Crawford was also liable as surety for $16,000, or thereabouts, upon indorsements which he had made for the accommodation of said Foster.

'That on said 6th day of February, 1884, said J. A. Crawford, as a part of the consideration for said transfer, executed and delivered to J. H. Foster his note for $10,000, with the understanding that said Foster should hold said note as a security that said Crawford should perform a verbal agreement then made between said J. A. Crawford and said Foster, to the effect that said Crawford should purchase the wheat of, or satisfy divers persons who held warehouse receipts of, said Foster, for wheat stored by them with said Foster in his warehouse, and which wheat Foster had converted to his own use, to the amount, in all, of about 20,000 bushels, and save said Foster harmless therefrom.

'That said J. A. Crawford then agreed with said Foster that, as a part consideration for the transfer of said property, he would assume and pay the said $16,000 for which he was security for said Foster, as aforesaid.

'That all of said indebtedness of said J. H. Foster to said J. A. Crawford was at the date of said transfer surrendered to said Foster, and canceled, as a part of the consideration for said property so deeded and transferred as aforesaid, and that said Crawford has since taken up and canceled said wheat receipts, and satisfied said note of $10,000, and has since said 6th day of February, 1884, paid said debts, on which he was security for said Foster, and caused the same to be canceled as to said Foster.

'That the purchase of said property from said J. H. Foster by J. A. Crawford, as aforesaid, was made in good faith, and that full value was paid therefor.

'That the defendant Ashby Pearce was an accommodation maker, only, of the note to J. H. Foster & Co., which said Pearce afterwards paid to John Conner; that at the date of the transfer by J. H. Foster to said Pearce, as aforesaid, said Foster was indebted to Pearce in the amount of said note so paid by Pearce as surety for Foster, (said note was for $5,000;) that the purchase of said property by Pearce was in good faith; and that more than full value was paid therefor.

'That on the said 6th day of February, 1884, said J. H. Foster was not indebted to William Crawford; that the mortgage referred to in finding 18 was prior to its satisfaction on the record, which took place on the 31st of July, 1883, paid in full; that said mortgage was satisfied of record by Wm. Crawford on the last-mentioned date; that no valid consideration for the transfer of the brick block to said Crawford by said Foster passed from said Crawford to said Foster; that said conveyance of said brick building by said Foster to said Crawford was a voluntary one.

'That since the transfer of said brick building by said Foster to said Wm. Crawford the latter has expended thereon in permanent improvements, some $2,000.'

And as conclusions of law the master reported:

'(1) That the complainant's bill should be dismissed as to defendants Ashby Pearce and John A. Crawford.

'(2) That the deed of J. H. Foster to defendant Wm. Crawford is constructively fraudulent and void as against the complainant and the other creditors of said Foster, named in the pleadings, and should be canceled and set aside.'

Exceptions were filed to the master's report by complainant and by William Crawford.

The case as to Goltra was disposed of adversely to him upon a cross bill filed by Foster and the Crawfords, and, as he did not appeal, requires no further reference. 34 Fed. Rep. 496. The defendants Foster, the Crawfords, and Pearce, in addition to denying that any of the conveyances were fraudulent or without consideration, or made to hinder, delay, or defraud creditors, denied that the complainant was the real owner of the two judgments of which he claimed to be the assignee, and averred that they were transferred to him without his knowledge and without consideration; that said transfers were made for the sole and only purpose, and with the object and intention, of collusively giving, or attempting to give, jurisdiction to the federal court; and that Sibson, Quackenbush & Co. and W. C. Noon & Co. were and had ever been, since the judgments were rendered, the real owners thereof, respectively; and that complainant had no interest in either of them.

The case was heard upon the bill and answers, the testimony and the exceptions to the master's report, and a decree entered dismissing the bill as to the defendants John A. Crawford and Ashby Pearce, and setting aside the conveyance by Foster to William Crawford, and directing a sale of the property included in that conveyance and the application of the proceeds-First, to the satisfaction of the judgments held by complainant as assignee, and the costs and expenses of the sale; and, second, to the satisfaction of other judgments referred to in the pleadings. From this decree Neal and William Crawford, severally, took appeals to this court.

The opinion of Judge DEADY, holding the circuit court, will be found reported in 36 Fed. Rep. 29.

John H. Mitchell, for the Crawfords and Pearce.

C. E. S. Wood and Geo H. Williams, for Neal.

[Argument of Counsel from pages 591-593 intentionally omitted]

Mr. Chief Justice FULLER, after stating the facts in the foregoing language, delivered the opinion of the court.