Sinnott v. . German-American Bank

Gray, J. The appellant claims that the character of the financial transactions between Feiock and the bank was such as to negative the inference of an honest intention upon Feiock’s part to pay for the goods which he had purchased of the plaintiffs and that, therefore, they were entitled, for the fraud practiced, to rescind the sale and to - repossess themselves of the goods sold, as they had not passed into the possession of a bona fide purchaser. It is conceded that Feiock’s insolvency, alone, furnished no inference of an intention not to' pay for the goods. The testimony was that he did intend to pay; but it is argued that .the circumstances were such, and that the nature of the insolvency was so affected by his relations to the bank, as to furnish the legal conclusion that the intention and reasonable expectation of the ability to pay did not exist. FTo case is cited in support of the plaintiffs’ position and I do not think that any can be found in the books. I do not think it can find support in any legal principle. Feiock was under no obligation to communicate to persons dealing with him the extent and nature of his transactions with others. The presumption was that, having procured the capital upon which to carry on his business, he would use it *390 in the discharge of his current obligations, with the reasonable expectation that the business would prove profitable enough to satisfy, eventually, what indebtedness had been incurred. Whether in the procuring of his capital his conduct was fraudulent; whether his schemes rendered him amenable .to legal punishment were not matters, of which it could be predicated that they evidenced an intention on his part not to pay for goods purchased in the conduct of the business. His purpose was to continue his business. It might be abortive, or liable to defeat by reason of his fraud in raising moneys for capital; but not only there might be, but there would be, the clear intention to pay for goods purchased. The indebtedness to the bank was a fact. How it arose, or whatever Feiock’s conduct towards it, they were matters between themselves; the disclosure of which he was not bound to volunteer to others with whom he might have dealings. It is an untenable proposition, in my opinion, that the guilt of Feiock’s conduct in his transactions with the bank made his subsequent purchases from the plaintiffs voidable at their election. Without their inquiry, it was immaterial, so far as they were concerned, how he had procured the capital with which he was carrying on the business. The proposition is clear that the bank was a bona fide purchaser of the whisky. If there was any fraud in the transaction of this purchase by Feiock from the plaintiffs, the bank had no knowledge of it. At. the time of taking the demand note, upon which judgment was recovered for the amount of the existing indebtedness to the bank, the latter gave up to Feiock the good notes which it held, as well as the forged notes, and at the execution sale it bought in the property which had been levied upon. Under these circumstances, the bank became the purchaser and holder in good faith of the whisky in question, within the rules of law. • It is further claimed by the plaintiffs that the use by Feiock of the firm name and style of “ B. Feiock & Go.” was unlawful and had the effect of making the transaction of sale between them voidable at their election, This contention has reference ' *391 to the statute, which makes it a misdemeanor for a person who transacts business to use the designation “ & Company,” or “ & Co.,” when no actual partner or partners are represented thereby. (Penal Code, section 868.) I think this contention is, also, quite untenable. If we might assume that the violation by Feiock of the statute disabled him from enforcing the performance of any executory contract, that was not this case. This was an executed agreement and it is inconceivable that, in such a case, the statute should have any operation. It is a highly penal one and deserves a strict construction. (Gay v. Seibold, 97 N. Y. 472.) It was a measure intended to be in the interests of the commercial community and had its foundation in public policy. It simply made it a misdemeanor to do what was therein specified and that is all. To extend its operation as far as the plaintiffs would have it, would be to give a construction to it which would permit of its injurious operation upon persons whose dealings with the guilty party have been in good faith. Such a construction would be foreign to the purpose of the enactment; contrary to public policy and without support in legal principles. For these reasons I think that the judgment should be affirmed, with costs.