North American Smelting Co. v. Temple

Opinion by Beaver, J., The defendant was director and manager of a corporation authorized by and organized under the general corporation Act of April 29, 1874, P. L. 73. It is sought in the present action to hold him personally liable for a debt due originally by the [101] corporation. There is no allegation or intimation of liability under the corporation act, nor is there any question as to the identity of the purchaser' of the goods. It is true the statement alleges that the defendant purchased from the plaintiff the merchandise set forth therein, but admits that it was consigned to the West Chester Publishing Company, and that nothing has ever been paid and nothing whatever can be collected therefor from the said West Chester Publishing Company, by reason of its insolvency. This we regard as a practical admission that the plaintiff knew at the time of the purchase that the goods were purchased for the corporation of which the defendant was manager and director and that the sale was in fact so made. The only ground, therefore, upon which personal liability can be successfully enforced is that of fraud. The plaintiff proposes to establish the existence of fraud and alleges it in his statement as follows :, “ That at the time of said purchase by Temple the said publishing company was insolvent and Temple knew it was insolvent; that said Temple thus perpetrated a fraud upon the plaintiff, and, by a fraudulent concealment of the condition of the said publishing company, induced the consignment of said merchandise to-said company, wherefore the plaintiff claims to have and to recover the amount of its claim from the said defendant.” Admitting, as we must, the truth of the allegations in the statement as to the insolvency of the corporation of which the plaintiff was manager and his knowledge thereof and the failure to make known to the plaintiff such insolvency, does that of itself constitute such a fraud as will enable the plaintiff to recover? The conduct of the plaintiff in concealing the insolvency of the corporation which he represented is not more fraudulent than if, in the purchase of goods on his own account, he had concealed his own insolvency, if it had existed; but notwithstanding the fact that our appellate courts have sometimes regretted it, the law is regarded as well established that mere concealment of insolvency, although known to the vendee, will not constitute such a fraud as will enable the vendor to rescind the sale. To constitute such a fraud there must be not only insolvency and the knowledge of it, but also artifice, trick or false pretense: Rodman v. Thalheimer, 75 Pa. 232; Cooperage Co. v. Gaul, 170 Pa. 545; Paul Bros. v. Eurich, 3 Pa. Superior [102] Ct. 299; Ralph v. FonDersmith, 3 Pa. Superior Ct. 618; Claster Bros. v. Katz, 6 Pa. Superior Ct. 487; Diller v. Nelson, 10 Pa. Superior Ct. 449. It is true that in several of these cases our appellate courts have said that “ insolvency and the knowledge of it at the time of the sale are evidence to go to the jury, with other facts to show the intended fraud,” but the other facts are wanting in this case and are not alleged in the statement. We cannot, in the face of these authorities and many others of the same character, determine that to be a fraud here which has been so generally held not to be fraudulent per se in the case of sales to original vendees. The principle, notwithstanding the difference in the facts, is as applicable in the present case as in those cited. The court below was clearly justified, upon undoubted authority, in sustaining the demurrer to the plaintiff’s statement. Judgment affirmed.