Stewart v. Levy

By the Court, Rhodes, J. : The evidence clearly tended to prove that one of the defendants, Levy, who made the purchase, was guilty of fraud in contracting the debt; and the verdict ought not to be set aside as to him, on the ground that it is not sustained by the evidence. There was no error in refusing to give the first instruction requested by the defendants. If they, or either of them, fraudulently intended to procure the goods without payment, the fraud was consummated when the possession of the goods was obtained without making payment on delivery, or on call, according to the terms of sale. The debt was then fraudulently contracted. A payment made after that time, though it might satisfy the debt for the price of the goods, would not remove the taint of fraud from the transaction by which the goods were obtained. A personal demand before bringing suit was, therefore, unnecessary. The third instruction asked by the defendants should have been given. It is as follows: “If the jury shall find from the evidence that the fraud, if any, was committed by the defendant Levy, and not. by the defendant Glass, they must acquit the defendant Glass of the charge of fraud.” All the partners will be bound by the fraud of one of the partners in contracts relating to the partnership made with innocent third parties. That is to say, all are responsible for the injury occasioned by the fraud, and are liable to an action brought upon the contract, or for the recovery of the property fraudulently obtained, whether they were cognizant of the fraud or not. The rule is the same as it is in respect to the responsibility of the principal for the fraud of his agent, while acting within the scope of his authority; and, indeed, a partner becomes liable for the fraud of his co-partner, because of the relation each bears to the other of agent in the partnership business. But such responsibility is essentially different from a liability to a judgment for fraud, upon an issue joined as in this case. The fraud upon which, the [166] judgment proceeds is actual, intentional fraud, and implies moral turpitude. It needs no argument to prove that one partner cannot be adjudged to be guilty of a fraud of that character, committed without his knowledge or assent, and which he neither assents to nor ratifies by adopting the act of his copartner, with knowledge of his fraud. We need not review the authorities cited by counsel, for it will be conceded that if the partner adopts or acquiesces in the fraud of his copartner, or retains the fruits of the transaction with a'knowledge »f the fraud, he also is guilty of the fraud. The instruction does not question this position, but it takes the ground that Glass, if he did not commit the fraud, must be acquitted, though his partner might be guilty—that he should not be adjudged guilty because of the guilt of his partner. If intentional and actual fraud must be shown in order to sustain the issue on the part of the party alleging the fraud, and if “fraud is an offense involving moral turpitude, and is followed by imprisonment, not merely .as a means of enforcing payment, but also as a punishment,” (Davis v. Robinson, 10 Cal. 411,) we have no hesitation in saying that the reasoning of the majority of the Court in Townsend v. Bogart, 11 Abb. 355, to sustain the position that if one party is guilty of fraud, all the parties are in judgment of law guilty, and that the acquiescence of all in the fraud of one is presumable from the existence of the partnership, does not meet with our approbation. The defendants object to that portion of the judgment authorizing the plaintiffs to have execution against the bodies of the defendants, on the ground- that there is no provision of the statute authorizing the defendants to be arrested upon final process. There is no provision expressly authorizing an execution against the person, but the third subdivision of section two hundred and ten provides that: “If it be against the person of the judgment debtor,-it shall , require the Sheriff to arrest such debtor, and commit him to the jail of the county, until he pay the judgment, with interest, or be discharged according to law.” The Act of April [167] 22d, 1850, as amended in 1863, provides for the discharge of a prisoner “ confined in jail on an execution or order issued on a judgment rendered in a civil action.” Both of these Acts contemplate that an execution may be issued against the person of the defendant in a civil action. In Matoon v. Eder, 6 Cal. 57, the point as to the kind of writ that might be issued upon a judgment for fraud did not arise, but the opinion clearly shows that the Court regarded a ca. sa. as proper in such case. In Davis v. Robinson, supra, the question was, whether the issue of fraud of the defendant in disposing of his property should be determined upon the affidavit of the plaintiff upon which mesne process of arrest was issued, and the counter affidavit of the defendant; and in considering that question, the Court mentioned an execution against the person of the defendant to enforce a judgment for fraud, as if-there could be no doubt about its being the proper writ, and added, that it could issue only upon the order of the Court to that effect. This practice, we understand, has been followed from the organization of the Courts in this State to the present time. The issue of fraud evidently may be framed and tried, and the defendant may bo adjudged guilty upon proper proof; and as the Constitution does not prohibit, but, by implication, authorizes imprisonment for fraud, we see no valid objection to the Court’s ordering an execution against the person of the defendant adjudged guilty of fraud. The provision of section seventy-two, that “ no person shall be arrested in a civil action except as prescribed by this Act,” has reference to mesne and not final process. It would be an absurd provision of the law to authorize the arrest of a party upon being accused of a fraudulent act, and to require his discharge upon his being found guilty. There are but few cases in which the Practice Act has prescribed the form of the judgment, and section two hundred and ten seems to have been framed on the theory that the Courts, by virtue of their organization and common law powers, had full authority, except when limited by the [168] statute, to pronounce such judgment as the exigencies of each case required. The portion of. the judgment appealed from affirmed as to defendant Levy, and reversed as to defendant Glass, and cause remanded for a new trial as to Glass. Mr. Justice Sawyer expressed no opinion