James F. White & Co. v. Rosenthal

Opinion by Mr. Justice Dean, The plaintiffs’ action was for deceit. The statement avers that plaintiffs were wholesale dealers in dry goods in New York city and defendant was a retail dealer in same goods in Pitts-burg ; that on 9th of August, 1892, defendant called upon plaintiffs to make a purchase of goods on credit, and represented that he had taken inventory the previous year of his assets and liabilities and his financial condition was as follows: Stock on hand in his Pittsburg store, . $18,675.00 Cash on hand,...... 2,350.00 Good book accounts,..... 12,350.75 Unincumbered real estate, .... 4,360.00 Total assets, . . . $37,735.75 That he was indebted on open account, bills payable and borrowed money in the amount of $7,525. He further stated, there were no judgment notes against him, and that he was not liable as surety, guarantor or accommodation drawer, and that he knew of no claim that would affect his financial standing. That on the faith of these representations defendant obtained from plaintiffs $1,000 worth of goods on credit; that said representations were false and known to be so by defendant and were made with intent to cheat and defraud plaintiffs of their goods, in which he was successful, and plaintiffs claimed damages in the amount of $1000. This statement clearly avers a good cause of action. The evidence to sustain and in denial of it was very contradictory; the material point in dispute being, whether defendant had made the false statement on 9th of August, 1892, when this particular bill was purchased. Prior to September, 1891, defendant had made a written statement to plaintiffs in exact accord with that set out in the declaration of claim. Bryce Gray, a partner in the plaintiff firm testifies, that on the 9th of August, 1892, when [180] the last purchase was made, he called defendant into his private room, where in answer to his questions he positively stated his financial condition was if anything better than the year before, when he made the written statement. Rosenthal, the defendant, positively denies this, and asserts Gray asked him nothing about his financial condition at that time and he made no statement concerning it. The written statement seems to have been substantially correct as of the time it was made, but afterwards defendant greatly enlarged his business with no increase of capital, so that his purchases of goods were principally on credit; he admits that they amounted to about $65,000, all on credit, at this last visit to New York. His own evidence shows that his financial condition had greatly changed in the year between the written statement and the last purchase. Assume as argued that his actual indebtedness had not greatly increased before his last visit to New York, nevertheless, he went there with the avowed purpose of purchasing $60,000 worth of goods on a credit from thirty to ninety days, and on the very day of the interview with Gray had bought a large portion of this amount; his actual indebtedness was then not less than $80,000, which he intended should be $60,000 before he left, and his intention was carried out. If he under such circumstances represented to Gray his financial condition was, if anything, better than the year before, it was a gross falsehood, for instead of owing $7,500, he owed, or as he knew in a day or two would owe, ten times that amount; true, his assets would be increased by the value of the stock on hand, but this value was wholly problematical, depending on success in the venture of largely increased business with no corresponding increase of capital. In view of the evidence and its contradictory character, the court fully and fairly submitted it to the jury to inquire, 1. Was a representation made to induce the credit? 2. Was it knowingly false ? 3. Did plaintiffs rely on it ? On the answers to these interrogatories turned the verdict; the jury found for plaintiff on each. They may have erred, but clearly the court did not. The assignment of error to the admission of evidence of debts created by purchases of goods after the 9th of. August would be well made, considered apart from its connection with other evidence tending to establish the deceit., . The plaintiffs had [181] shown purchases made on credit in June and July, these followed by showing continued purchases down to September aggregating nearly $90,000 on credit, then insolvency resulting in a sale of the entire stock for less than $20,000, and the store eventually put in name of defendant’s wife. Plaintiffs claimed that all of the transactions taken together indicated a scheme conceived by defendant to obtain large quantities of goods on credit from plaintiffs and others by false representations, and then in an indirect way profit by a bankruptcy. In this view the evidence was admissible, not as tending to establish that indebtedness was created by the subsequent purchases, but that these purchases constituted part of one scheme to defraud, conceived by him before he practiced it on plaintiffs to their-injury. We see nothing in the assignments of error which- calls for further notice and the judgment is accordingly affirmed. '