Comins v. Coe

Morton, J. From the facts stated in the report, it is clear that there was a completed sale of the stock in question by the plaintiff to Coe. The plaintiff sold the stock, received Coe’s check in payment therefor in the usual course of business, and transferred it to Coe upon the books of the company. This vested the title to the stock in Coe. The fact that no new certificate was issued by the company is immaterial. The only ground upon which the plaintiff can obtain the relief he seeks is, that he has the right to rescind the sale because he was induced to make it by the fraudulent acts or representations of Coe, The bill alleges that Coe, intending to defraud the plaintiff, pretended that he desired to buy the stock, and that in pretended payment therefor, he delivered to the plaintiff his check upon the Massachusetts National Bank, “ well knowing that he had no funds in said bank to meet said check.” But it was found by the justice who heard the case, that Coe, when he purchased the stock of the plaintiff, had no intent tc defraud him, and that when he gave the check he supposed that [49] it would be paid, having funds enough in the bank to meet it. These findings negative the allegations of the bill, and show that there was no fraud in the transactions with the plaintiff which gives him the right to rescind the sale. It further appeared at the hearing, that on the day when the plaintiff’s check was given, it was discovered that Coe had previously committed several forgeries by altering certificates of stock. One of these forged certificates was held by the bank as collateral security for a loan to Coe, and upon discovering the forgery, the bank charged off the amount of this loan to Coe’s account, who gave them a check therefor. But there was left a balance in favor of Coe sufficient to meet all the checks he had drawn. Another forged certificate made out to the bank had been previously held by the bank as collateral security, and the cashier, in order to return the stock to Coe, had signed a transfer in blank, on the back of the certificate. Upon learning that the present holder of this certificate claimed to hold the bank liable for its apparent value, the officers refused to pay any of the checks drawn by Coe. The plaintiff contends that these facts give him the right to rescind the sale, but we can see no principles of law upon which this claim can be. sustained. The previous forgeries by Coe were entirely independent transactions, having no connection with his purchase of the plaintiff. The fact that one of the incidental effects of their discovery was to prevent the plaintiff from obtaining payment of his check, does not taint such purchase with fraud. If it did, then all the creditors who sold goods to Coe after the forgeries, if prevented by their exposure from getting their pay, could avoid the sales and regain the goods if they remained in Coe’s possession at the time of his bankruptcy. The fact that a man commits a crime or fraud, the exposure of which will destroy his credit and render him insolvent, and conceals it, cannot be held to make voidable every purchase which he makes upon credit, if made without fraud and in good faith. As the plaintiff has failed to show the fraud which he charges, or any fraud which enters into and forms part of the purchase of the stock in question, we are of opinion that he is not entitled to a decree that the stock shall be conveyed to him, but that it belongs to the assignees of Coe, to be distributed among his creditors with his other property. Bill dismissed.