US SUPREME COURT DECISIONS

SHAUER V. ALTERTON, 151 U. S. 607 (1894)

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U.S. Supreme Court

Shauer v. Alterton, 151 U.S. 607 (1894)

Shauer v. Alterton

No. 174

Argued and submitted December 19-20, 1893

Decided February 5, 1894

151 U.S. 607

Syllabus

An assignment of error, based upon the exclusion by the trial court of an answer given in the deposition of a witness to a particular question, will be disregarded by this Court if the answer or the full substance of it is not set forth in the record in an appropriate form for examination. chanrobles.com-red

Page 151 U. S. 608

In an action brought in South Dakota by the assignee of the stock of goods of an insolvent trader (who had taken the stock in satisfaction of an alleged debt due him from the insolvent) against a sheriff who had seized them on a writ of attachment at the suit of a creditor of the insolvent, the defense being set up that the transfer to the plaintiff was fraudulent and in violation of the statutes of that state, it is competent for defendant to put in evidence a confidential business statement by the insolvent to a commercial agency concealing the alleged liability to the plaintiff.

The statutes of that state, strictly construed, invalidate any transfer of property, made with the intent on the part of the owner to delay or defraud creditors, even when the grantee purchased in good faith, and when liberally construed, will not permit the grantee, although taking the property in part in satisfaction of his own debt, to enjoy it to the exclusion of other creditors if the sale was made with intent to delay or defraud other creditors and if he had at the time either actual notice of such intent or knowledge of circumstances that were sufficient to put a prudent person upon an inquiry that would have disclosed its existence. Such a transfer must be accompanied by an open and visible change of possession, without which it will be void as to creditors.

The assignor and the assignee to the transfer being brothers, the court may rightfully instruct the jury that this relation makes it necessary to carefully scrutinize the facts, but that their determination must depend upon whether the transaction was honest and bona fide.

This action was brought by the plaintiff in error in one of the courts of the Territory of Dakota to recover damages for the alleged unlawful taking by the defendant, Alterton, of a certain stock of merchandise in a storehouse that had been occupied by Louis S. Shauer in the City of Mitchell in that territory. The defendant justified the taking under attachments in favor of creditors of Louis S. Shauer, which came to his hands as sheriff of the county. There was a verdict in favor of the defendant and, a new trial having been denied, judgment was entered in his favor. That judgment was affirmed by the supreme court of the territory, and the writ of error in this case was directed to the Supreme Court of the State of South Dakota, as the successor of the supreme court of the Territory of Dakota, by virtue of the Act of February 22, 1889, c. 180, § 22, 25 Stat. 676, 683.

The bill of exceptions shows that there was evidence tending to show the following facts:

In September, 1885, Louis S. Shauer, owner of the merchandise chanrobles.com-red

Page 151 U. S. 609

attached, was indebted to his brother, Gustave G. Shauer, a druggist of Chicago, in the sum of $8,000 and more, for moneys loaned and advanced. While Louis was in Chicago, about September 1, 1885, for the purpose of making fall purchases, Gustave informed him of his intention to buy another drug store, and that he would need the sum Louis owed him. The latter expressed his expectation of being able soon to pay one-half of the amount due from him, and after returning to Mitchell, remitted a smaller sum than his brother expected. Gustave, having written for more and receiving only $200, went to Mitchell, arriving there on Sunday, December 13, 1885. From a conversation with Louis during the evening after his arrival at Mitchell, Gustave concluded that Louis was financially embarrassed, and owed more than he could pay. The following morning he urged his brother to secure him by mortgage on his stock. Louis at first consented to do this, but at a later hour of the same day he declined to give a mortgage. Gustave then proposed that Louis sell him goods to the amount of his debt. This Louis refused to do unless Gustave would take the entire stock at fair market prices. After consultation, it was agreed that Gustave should take Louis' stock at 85 cents on the dollar, invoiced at wholesale prices, and, after deducting Louis' debt to him of $6,788, pay $2,100 in cash and give his notes for the balance. They commenced that afternoon the taking of an inventory, and were so engaged for a day and a half. The inventory was taken publicly, the storeroom being open while the work was progressing. About 10 or 11 o'clock in the forenoon of December 16, 1885, Louis made a bill of sale to Gustave embracing the goods here in controversy. After its execution, the parties proceeded to the store in which the goods were contained, when Gustave delivered to Louis his check for $2,100 and his two notes of $1,247 each, surrendering the note he held against his brother. Louis delivered to Gustave the bill of sale and the keys of the store. The transfer was completed about noon of that day.

Immediately after the transfer, Gustave opened an account with the First National Bank of Mitchell and went with chanrobles.com-red

Page 151 U. S. 610

Louis to an insurance office, where the insurance carried by the latter on the stock was assigned to Gustave. They then went to dinner. That afternoon they caused three other policies of insurance to be changed from Louis to Gustave, after which the latter returned alone to the store and directed Louis' clerk to go to dinner. Having returned to the store and being informed by Gustave of his purchase of the stock, the clerk entered the service of the latter. By direction of Gustave, he changed the "show" in front of the store. During the most of that afternoon, Gustave remained in the storeroom and waited personally upon customers. He prepared, and left for publication at the office of the Republican and Mail, newspapers published at Mitchell, notices announcing the transfer from Louis to himself and asking for the patronage of the public. These notices appeared in the next issue of each of those newspapers. He also ordered letterheads to be printed, and a sign for the store with his name painted on it. He filed the bill of sale for record in the office of the register of deeds. During the afternoon of the day of the transfer, Louis, on one occasion at the request of Gustave, came to the store to assist in making the sale of a trunk with the price of which Gustave was not familiar.

Louis applied the check of $2,100 and the two notes of $1,247 each in payment of demands held against him by several of his relatives.

The goods in controversy were seized by the sheriff under the attachments about ten o'clock in the evening of December 16, 1885. Louis was present in the store at the time.

The bill of exceptions shows that the plaintiff read in evidence the deposition of H. H. Nash, cashier of the Chicago National Bank, relating to three checks of $650, $270.87, and $2,100, respectively, which were in evidence in the case as exhibits and showed upon their faces that they had been drawn by G. G. Shauer upon the Chicago National Bank in favor of Louis S. Shauer. The first two checks named, as alleged by the plaintiff, tended to show the payment of money by the plaintiff to his brother Louis, making a part of the indebtedness in question, and the third check of $2,100 was chanrobles.com-red

Page 151 U. S. 611

the check the plaintiff claims to have passed to Louis in part consideration of the alleged transfer. On the objection of defendant, the court refused, upon the ground of its being incompetent, to allow the plaintiff to read the answer of the deponent in response to the following question: "You may state whether or not that check has all the appearance of having passed through the bank in the ordinary course of business." The objection to this question was sustained upon the ground that it appeared in evidence that the check had passed through other banks than that of which witness was cashier, and it did not appear that the witness was familiar with the course of business of such other banks or their stamp or endorsement thereon, so as to permit him to answer this general question.

To the refusal of the court to allow the answer to be read, the plaintiff duly excepted.

The plaintiff further offered to read in evidence other parts of the deposition of Nash, showing what the marks and endorsements on the back of each of the checks indicated, how such marks were made, and by whom. The court refused to allow those parts of the deposition to be read, and to this refusal the plaintiff duly excepted. The objection to this offer was sustained upon the same ground as that last stated.

It appeared that the deposition was taken in Chicago at the taking of which both parties appeared by counsel, and that Nash was cross-examined at length by counsel for defendant as to his familiarity with the business of the Chicago National Bank, of which he was cashier.

The defendant was allowed, under objection by plaintiff, to which ruling the plaintiff duly excepted, to read in evidence a confidential business statement made by Louis in January, 1885, to Bradstreet's Commercial Agency at Sioux City, Iowa. This statement, the bill of exceptions states, concealed the alleged indebtedness of Louis to his brother, the plaintiff, which existed at that time. It was not shown that this statement was brought to the knowledge of the plaintiff nor to any of the creditors of Louis. All of the indebtedness against Louis chanrobles.com-red

Page 151 U. S. 612

upon which defendant relies "was created at and subsequent to September, 1885."

Neither party asked a peremptory instruction to find in his behalf. The plaintiff asked ten instructions, of which only three were given, the plaintiff excepting to the refusal of the court to give each of the others. Six instructions were given at the instance of the defendant, to the giving of each of which the plaintiff excepted. In addition, the court charged the jury, the plaintiff excepting to six different parts of the charge. chanrobles.com-red

Page 151 U. S. 615



























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