Schoonmaker v. Kelly

Bocees, J.: The action was replevin for a quantity of goods and chattels, sold by the plaintiffs to one "W. "W. Dimmick, and by him transferred to the defendant, who claimed and held the same as assignee of Dim-mick, under a preferential assignment by the latter to him made for the benefit of his, Dimmick’s creditors. The plaintiffs claimed that the property was obtained from them by Dimmick by fraud; and therefore they had the right to rescind the contract of sale, and have return of the goods. The sale was made October 29, 1884, and was of property at the contract price of $273.39, on which there was paid at the time $100, and credit was given for the balance; whereupon the goods were delivered to Dimmick. On the twentj'-fifth of November, twenty-seven days thereafter, Dimmick made an assignment of his property for the benefit of his creditors, to the defendant, who took possession, which possession included the goods remaining undisposed of, so as aforesaid sold to Dimmick and replevied in this action. The $ LOO paid down by Dimmick on the purchase, was not returned or tendered to the latte]-, nor to the defendant, prior to the commencement of the action; but on the trial there was tendered by the plaintiffs to the defendant, twenty-six dollars and sixty-one cents, being the balance of the $ 100, after deducting the value of the goods disposed of before the replevy was made, including the depreciation on the goods replevied. The tender was not accepted. The verdict of the jury was for the plaintiff; and judgment having been entered the defendant appealed. There was evidence tending to establish the fact charged, that the property was obtained by Dimmick from the plaintiff by fraud— hence, that fact must be deemed settled in the plaintiffs’ favor by the verdict; and it follows that the title to the goods remained in the plaintiffs at their election, notwithstanding the formal sale by the latter to Dimmick. The plaintiffs had the right to repudiate and rescind the sale because of the fraud practised upon them ; but they were bound to do so promptly on discovering the fraud, and also to restore, or offer to restore, whatever they had received of value on [301] the sale. Such is the general rule applicable to this class of cases. Here there is no question but that the plaintiffs elected to rescind the fraudulent sale with all needful promptness, but it is insisted, and the point was saved on the trial to the defendant by an exception to the ruling of the court, that there ivas no return or offer to return the $100 paid to the plaintiffs on the sale before the commencement of the action. The answer to this objection is, that on the trial they offered a return of all they had received and held of value to them gi’owing out of the sale, being, too, all that Dimmick or any other person had lost by reason of their act of rescission. This certainly, in equity and justice, should be held sufficient. The wrongdoer conld in right claim nothing more, certainly, than to be made good; that is, to be restored to the same position, in point of value, which he held when he committed the fraud, and this should, too, be measured by his own conduct in the meantime, whereby his victim had suffered from his fraud. In other words, he could of right only claim restoration in a way, and to an extent to make him good, in view of his own conduct in the use and disposition of the property fraudulently obtained, from which use and disposition he had derived benefit. It seems that the case was put in this condition on the trial by the tender of the twenty-six dollars and sixty-one cents, and this, according to the doctrine of the case of Pearse v. Pettis (47 Barb., 278), was all that the law required by way of return in a case like the present. (See, also, Ladd v. Moore, 3 Sandf., 589.) But a tender of restoration to the defendant in this case was not necessary to the plaintiff’s right of recovery against him, and the objection that no restoration or tender of restoration had been made to Dimmick was not open to him as matter of defense. This was so determined in Pearse v. Pettis, above cited. The defendant was the assignee of the property for the benefit of Dimmiek’s creditors, hence was not a bona fide purchaser. In law he must be deemed to have taken the property with notice and knowledge of Dimmick’s fraud in obtaining it. Thus, as laid down in the case cited, he cannot set up the defense that the plaintiffs from whom the property was fraudulently obtained had omitted to perform their duty and obligation to Dimmick, the original purchaser, by returning, or offering to return, the part of the purchase-money paid ; that [302] he is in no condition to raise the question which could only arise in an action between the plaintiffs and Dimmick, the party to the original contract. This subject received a very careful and elaborate examination in Pearse v. Pettis, which case stands, in so far as we have knowledge, unquestioned. See, also, Kinney v. Kiernan (49 N. Y., on page 172), where this case is cited with approval, as is also Stevens v. Austin (1 Metc., 558). In this latter case the fraudulent purchaser had transferred the property to the defendant, with notice to the latter of the fraud, and the question considered was, whether the plaintiff was bound to tender back the note and money he had received before he could bring his action. The court said : “ Wc think he was not. Not to the defendant; for the plaintiff had received nothing from him. Nor could the defendant raise tho question. * * * It was res inter alios, with which the defendant had no concern.” Thus, according to the cases cited, the objection that there had been no restoration of the $100 received by the plaintiff on the sale, was not available to the defendant as matter of defense. The demand and refusal averred in the complaint is not denied in the answer; besides, this was well proved on the trial. Some exceptions to rulings on questions of evidence were entered, but after an examination of them we think the record free from error in that regard. In a case like the present, where fraud is charged, a very liberal rule of examination is admissible in the discretion of the court, and we find no exclusion of evidence against the defendant of which he can justly complain, The judgment and order appealed from should be affirmed, with costs. Landon, J.: The plaintiffs reclaimed from the general assignee of the fraudulent purchaser goods which they had sold him at the price of $235.52, but which the fraudulent purchaser had damaged to the extent of thirty-five dollars and fifty-two cents. It was stipulated that they were worth $200 when reclaimed. Plaintiffs tendered on the trial to the defendant, the general assignee, twenty-six dollars and sixty-one cents. If the defendant is to lose the amount of the deprecia [303] tion the tender was enough; if the plaintiffs should lose it the tender was too small by the thirty-five dollars and fifty-two cents. Why should not the defendant, whose assignor fraudulently obtained the goods, sustain this depreciation in value ? Suppose the goods had been fraudulently purchased for $200, defendant paying $100 upon their purchase-price, had sold none, had damaged them $100. Defendant is bankrupt, and plaintiff’s only practicable remedy is replevin. If they must tender $100 in order to rescind they can only reclaim goods now worth $100, and thus lose all. The law adapts its remedies to accomplish justice. Code of Civil Procedure (§ 1722) allows the plaintiff to recover, in actions of replevin, damages for the injury or depreciation of value of a chattel while in possession of defendant, but requires that the complaint shall set forth the facts. Thus the principle that the fraudulent purchaser ought to sustain such damages is recognized. Here, however, the plaintiffs did not seek an affirmative .recovery for the depreciation, but sought to have the amount allowed in diminution of the sum to be tendered. The plaintiffs, as we judge from the complaint, did not know that the goods had been damaged. They found that out after they had taken possession of them. The defendant, as general assignee for the benefit of creditors, occupies no better position than his assignor. The court adapted the recovery to the proofs, no one was misled and justice was done.