Ballard v. Fuller

By the Court, Leonard, J. The action is for the recovery of $3300, on three checks, two of which are drawn upon a bank at Eahway, N. J. and the other upon a bank in the city of New York; the latter check being post dated one day. The checks were all negotiated in this city. The affidavit, on which the order of arrest was granted, shows that the checks on the bank at Eahway were drawn by the defendant without any funds to meet them, although he represented that they were good, and that he was authorized to draw for $40,000. The affidavit also states that the defendant failed two days afterwards, and avowed himself unable to pay the checks; and that the debt was fraudulently contracted. The defendant denies that he made this representation at the time he obtained the money; states that he was authorized to overdraw on the bank at Eahway to the amount of $15,000, which sum he had secured to the bank by a mortgage previously executed to secure discounts and overdrafts; that his line of accommodation at this bank, under the said arrangement, including the two checks, was not full; that he believed, when he obtained the money from the plaintiffs, that he could go on in business and pay his debts; that he realized the impossibility of doing so upon learning that a creditor was about prosecuting an attachment against his property, as a non-resident debtor. The defendant also introduces the affidavit of [70] the president of the hank at Rahway, who says the defendant was allowed to overdraw his account; that on the 21st of June, which was the day before his failure became public, and the same day that the defendant obtained part of the money from the plaintiffs, the bank learned that the defendant was embarrassed in business, and declined to honor the checks in suit. In reply, the plaintiff Henderson, who made the first affidavit on which the order of arrest was granted, reiterated his former statement; and he is further sustained by Mr. Maurice, who states that he was present when the defendant obtained the money on these checks, and heard him represent to the plaintiff Henderson, that he had the money in the bank at Rahway, and that the checks were good; also that he, the defendant, was good for the amount of the checks, himself. The plaintiffs also showed, by affidavit, that two days before the defendant obtained the money on the checks, his notes, to the amount of #6000, had been protested, and still remained unpaid; that the defendant was insolvent at the time he obtained the plaintiffs’ money, and unable to pay his debts, and that he well knew it. The plaintiffs also read affidavits showing other cotemporaneous attempts by the defendant to obtain large amounts of goods on credit from other parties, upon like representations of his responsibility. The defendant objected, at the hearing of the motion at special term, to the reading of any affidavits showing other grounds of arrest than those contained in the affidavit upon which'the order of arrest was founded. • The defendant also insists that no facts establishing fraud were alleged in the affidavit upon which the arrest was granted, in respect to the check on the bank in this city, and that this check, as to which no fraud is shown, being embraced in the action, the order of arrest must be vacated. There were some other statements contained in the affidavits, read on behalf of the plaintiffs to resist the motion, to [71] which I have not adverted, as they came within the defendant’s first objection, or were irrelevant or inadmissible as grounds for sustaining this arrest. I do not think the decision of Justice Allen, reported in 12 How. Pr. Rep. 197, is an authority in point for excluding any of the foregoing facts which were before the court at special term, in answer to the defendant’s motion. Evidence of other concurrent frauds has long been admitted by the courts, as proof of the intent in committing the particular fraud charged; and this practice has been sanctioned by a recent decision of the court of appeals. (18 N. Y. Rep. 588.) Two grounds for the arrest are disclosed in the affidavit on which it was granted, viz. 1st. The defendant’s representations, affecting the two checks on the Eahway Bank. 2d. The failure of the defendant occurring in two days after obtaining the money, and his avowed inability to pay the plaintiffs’ demands, showing a probable intent to defraud the plaintiffs, and affecting the whole transaction upon the three checks; and in connection with the fact that the defendant had no funds to meet the checks upon the Eahway Bank, establishing a prima facie case of fraud in obtaining the money on the check, drawn upon the bank in this city. It is satisfactorily established that the defendant represented the checks on the Eahway Bank to be good, and that he had the funds in bank to meet them. The weight of evidence sustains the allegation that this representation was in fact made, at the time the money was obtained. The alleged authority to overdraw his account does not excuse the defendant. From the statement of the president of the bank there appears not to have been an authority to overdraw, but a permission, only, which the bank had a right to withdraw at pleasure, and which was in fact withdrawn at a time when the full amount of the contemplated accommodation had not been used. It was not an agreement which the defendant could enforce against the bank, and is not a right which he can assign to the plaintiffs or to his general [72] assignee, or upon which he could maintain an action for damages, so far as is shown by the affidavits. It in no manner warranted the defendant in making the statement to the plaintiffs that the checks were good, or that he had funds to meet them, upon which they parted with their money. The defendant’s conduct becomes more inexcusable when we advert to the fact .that §6000 of his paper was under protest, at the moment when he obtained the money on these checks, and represented himself to be good. The concealment of such a fact is strong evidence of a fraudulent intent; but when accompanied by an assertion that he was pecuniarily good, followed by attachments on these very demands under protest, (as I infer from the defendant’s statement of his reason for abandoning the intention of going on with his business so soon after obtaining the plaintiffs’ money,) I think there can be no doubt of his fraudulent intent in respect to the check on the bank in this city, as well as the two other checks. The fact of the protested paper was germain to the original charge that the defendant had become publicly insolvent two days after obtaining the money on the three checks in suit. It was not a charge of a new fraud, but was corroborating evidence of the fraudulent intent already charged. It was evidently known to the defendant; for he discloses that he was threatened with attachments. He should have adverted to the fact, and explained it, if it was capable of an explanation consistent with a fair intent in relation to the question to be considered on the motion. He should have anticipated the disclosure, at the hearing, of so important a fact, and have been prepared to meet it in advance. It is also to be observed that the defendant nowhere alleges that be believed himself to be solvent when he obtained the money, except in the modified manner that he expected to go on in business and believed that he would be able to do so, and that he did not expect to fail when he did. He discloses facts that warranted the belief that he knew he was insolvent, but was resolved to go on, without a public failure, and pay [73] as long as he could. He in fact pursued this course until his creditors were about procuring attachments against him as a non-resident debtor, when the impossibility of satisfying these creditors compelled him publicly to acknowledge his insolvency. [New York General Term, May 7, 1860. Sutherland, Bonney and Leonard, Justices.] The order appealed from must be affirmed with $10 costs of the appeal, to the plaintiffs.