Joslin v. Cowee

By the Court, Potter, J. There are leading features in this case which are in the way of giving effect to the admirable argument and clear logic of the counsel for the defendant. What is called the first assignment of the wool in' question by Alden, Frink & Weston, which appears in the case, how valid soever it may be in regard to all the estate therein described, except that obtained of the plaintiff, was, upon the finding of the referee, which is well sustained by the evidence, fraudulent and void as against the- plaintiff at his option ; the wool having been purchased with a knowledge of the -insolvency of Alden, Frink & Co., and with a preconceived design not to pay for it. To give to a transaction so conceived in iniquity, and so consummated in sin, moral and legal soundness, requires either the performance of a legal miracle, or a corresponding obliquity on the part of the party sinned [53] against, by acts of omission or commission, whereby he has lost his status, and is thus deprived of the power of making complaint. The burden of showing that the plaintiff is- in this condition, is upon the defendant. Especially is this so, when the referee has found as facts, thát neither the plaintiff or his factors, Rankin & Co., have done anything in relation to the subject matter of the action to waive their rights; that the right to rescind was not waived; and that the contract was rescinded by the plaintiff. That the fraud found was committed upon the plaintiff, is neither denied or attempted to be justified, palliated or excused; but it is claimed by the defendant, that by the technical operation of law- growing out of the acts of the fraudulent purchasers in their mixing this wool with other wool, which altogether was in such a forward state of manufacture that it lost its identity as wool, and became, with such other wool, changed into a new product before the transfer by the assignee of the fraudulent purchaser of the same, to the defendant Cowee. It is also claimed that the plaintiff’s right to recover must depend, upon the simultaneous title of the plaintiff, and the conversion by Cowee, the defendant; that the wool having thus lost its identity as wool when it was conveyed to Cowee, thé defendant, he could not have converted it as wool, inasmuch as there could be no conversion of that which had ceased to be; and that therefore the demand of the wool of Cowee did not authorize the bringing of this action for its conversion. This embraces a brief outline -of the skillfully prepared argument of the defendant’s counsel. I have no disposition to struggle with the science of metaphysics, or with logic, nor to deny their legitimate use in argument; but I am at all times prepared to deny that the perpetrator of a willful and deliberate fraud can, either by the cunning or skill with which he Accomplishes his unrighteous advantage, or by the sudden or rapid change with which he'has been.able to transform his ill [54] gotten gains from one commodity or product to that of another, he can-, even through the agency of metaphysics or logic, secure from the courts an indorsement of such fraudulent devices. And this I am prepared to'■hold, how skillfully soever the argument may be framed, or how eloquently or plausibly soever it may be presented. The courts, whenever their aid is invoked, in such cases, will look at the animus of the transaction, and declare the transaction a nullity, when conceived and carried out in fraud. Such transactions are not merely defeasible or voidable, requiring legal action to effect it; they are absolutely void at the option of. the vendor, unless the defrauded party waives his right by unreasonable delay in making his demand; though I do by no means deny that there is a class of cases which, under other circumstances, sustain the theory and the law as contended for by the" defendant’s counsel. They do not, however, apply to this class of frauds. The question of unreasonable delay on the part of the plaintiff is not made a point in the case. The delivery of this*wool to Alden, Frink & Co. gave them no title to it. They obtained ten sacks on the day of the agreement, the 17th,’ and twenty-one sacks on the 18th, all of which, it seems, was put in the process of manufacture; and on the next day, Friday, the 19th, they assigned it, with other property, to Thompson & Sons and Rockwell to secure their prior indebtedness and liabilities. These assignees were not in law absolute and bonafi.de purchasers. Their title was no better than that of Alden, Frink & Co. They parted with no consideration at the time, and their assumption of wages to hands was not at all equal to the value of other property assigned at the same time, from which they realized more than the assumed liability, and which it must be assumedgfwas legally assigned, and out of which they must pay such wages, if at all. The assignment itself is [55] evidence that the assignees were not absolute purchasers, but merely trustees of the estate assigned.. Nor is it denied that there is a large class of cases in which the doctrine is established that a Iona fide purchaser from a fraudulent vendee acquires a good title; but we need not in this case draw the distinction in regard to such as do, and such as do pot, come within that rule. This case does not come within the rule. Cowee, the defendant, not only took the wool in question from the assignees of Alden, Frink & Co. as trustees, and not as absolute purchasers, on the day they got their assignment of the same, but before he paid anything thereon, or .became liable for wages, he was served with full notice of the plaintiff’s claim, and of the fraud by which the wool was obtained. He was not a bona fide purchaser, and can claim no protection as such. It is only innocent purchasers, who purchase property converted into a different species, that can be protected ; and not even the innocent purchaser is so protected, w'ho takes the title from a trespasser or wrongdoer ; because the trespasser had none to give. The owner of the original material may still retake it in its improved state, or he may recover its improved value. (Silsbury v. McCoon, 3 N. Y. 384.) The case of Nichols v. Michaels, 23 N. Y. 264,) does not sustain the position that fraud in the sale renders the sale only voidable, as to the vendor, of whom the property was fraudulently purchased. It does indeed hold that as to the vendee upon whom a fraud has been committed, it is voidable at the option of the vendee. It is claimed by the defendant that the second assignment by Alden, Frink & Co. of the surplus, to the plaintiff and others, after paying the first assignees, was a ratification of the sale of the wool. The referee has nowhere found as a fact, that the plaintiff either ..ratified such assignment, or even' knew the fact that such an assignment had been made in his (plaintiff’s) favor. Such [56] assignment bears, date Saturday the 20th of October, and on Monday, the-22d of the same month, the plaintiff, in writing, expressly repudiated and rescinded the contract of sale, and demanded the wool; and for caution, it would seem, on the trial the plaintiff tendered a release of all interest in such second assignment; though it does appear that the plaintiff’s factors, Rankin & Co., accepted the second assignment conditionally, that it should not affect the plaintiff’s right to bring an action to recover the wool. The right or authority of Rankin & Co. to make a conditional agreement, or any agreement, for the plaintiff, after the fraud, to ratify it conditionally or otherwise, was not discussed upon the argument. [Third Department, General Term, at Binghamton, June 6, 1871. bio other point of merit is presented, that requires dis-' cussíon. I have not been able to find a sufficient cause-for reversing the judgment, and think it must be affirmed, with costs. Judgment affirmed. Miller, P. J., and Potter and Parker, Justices,]