Cleveland Woolen Mills v. Sibert, Ward & Co.

CLOPTON, J. — The appellant, having disaffirmed, on alleged misrepresentation and fraudulent concealment, a sale of goods made in December, 1884, to Charles Hawkins, a retail merchant, brings trover against appellees, who purchased spme of the goods from Hawkins. On the trial, the plaintiff offered to prove, that about the time the defendants purchased the goods, it was generally known in Gadsden, where they and Hawkins resided, that he was a common mercantile swindler. While proof of notoriety of a fact in a community in which a party resides is admissible, for the purpose of bringing home to such-party notice thereof, the materiality and relevancy of the particular fact, and prima facie evidence of its existence, other than general reputation, are preliminary and requisite. The plaintiff had the benefit of proof of Hawkins’ bad reputation. While his conviction of forgery in Arkansas, his pardon on condition that he would leave the State, and his bad reputation materially affect his character for honesty, and his credibility as a witness, they do not establish the particular fact, that he was a common mercantile swindler. If it were conceded, that such fact is relevant to the issues tried, and that proof of it is competent, which we do not decide, in the absence of such proof, evidence that it was generally known is inadmissible. There is no error in admitting the letters of Moore, Marsh & Co. to Hawkins. They were the agents of plaintiff for the sale of goods in Alabama, to whom his application to purchase was referred. The letters are declarations explanatory of a cotemporaneous act within the scope of their agency, and being written while engaged in its execution form part of the res gestae. There does not seem to be any serious controversy in respect, to the fraud of Hawkins in obtaining the goods from plaintiff. The main contention is, whether the defendants are bone fide purchasers without notice of the fraud. On this issue, the court, at the instance of defendants, instructed the jury, that under the facts in this case, it made no difference whether or not Hawkins acquired the goods by fraud, if they believe from the evidence, that after [145] Lis purchase he sold them to defendants before plaintiff took any steps to disaffirm the sale, and that defendants had no hnowledge of the fraud of Hawkins in the purchase of the goods. The general rule is not controverted, that a purchaser from a fraudulent vendee, for value and without notice of the fraud, will be protected against the right and equity of the original vendor to disaffirm the sale, and reclaim the property ; but the question raised is, whether in the sense of the rule, hnoidedge and notice are equivalent and synonymous ? Notice may be generally classified into actual and constructive. The diversity of opinion which exists as to the particular kinds of notice, that comes within each of these classes, is not of practical importance. For the legal and practical purposes of the generality of cases, the classification may be regarded as most simple, and easy of application, that notice is actual, when there is positive information of a fact, and constructive, when the information is either conclusively or prima facie presumed from certain existing facts; when not conclusive, being strictly implied or inferred notice. Conclusive constructive notice allows no proof of want of information; but when implied, the presumption may be rebutted; either, when established, having the same legal effect. , Knowledge may also be classified, in a legal sense, as positive and imputed — imputed, when the means of knowledge exist, known and accessible to the party, and capable of communicating positive information. When there is knowledge, notice, as legally and technically understood, becomes immaterial. It is only material when, in the absence of knowledge, it produces the same results. However closely actual notice may, in many instances, approximate knowledge, and constructive notice may be its equivalent in effect, there may be actual notice without knowledge ; and when constructive notice is made the test to determine priorities of right, it may fall far short of knowledge, and be sufficient. When the purpose is to subordinate to a prior existing equity or right in another, the subsequently acquired right of a party, who has information of collateral facts, sufficient to put him on inquiry, which if pursued would lead to the truth, such information is regarded as sufficient to charge him with notice of the ultimate fact, but is not tantamount to either knowledge or express notice, nor is either a necessary inference. — Wade Law Not. §§ 3, 10, 36a; 2 Pom. Eq. Jur. §§ §92, 593. When a party sets up, in equity, the defense of being a bona fide purchaser without notice, he is required to deny, not merely knowledge, but notice of the main fact, and all [146] the facts and circumstances charged from which it may be inferred. In such case, “ there is a difference between the want of knowledge and the want of notice.” The party may have been notified without being made to know the prior right. — Ledbetter v. Walker, 31 Ala. 177; May v. Chapman, 16 M. & W. 355. In 2 Pom. Eq. Jur. § 594, the learned author thus defines notice : “ Within the meaning of the rules, notice may, I think, be correctly defined as the information concerning a fact actually communicated to a party by an authorized person, or actually derived by him from a proj>er source, or else presumed by law to have been acquired by him, which information is regarded as equivalent in its legal effects to full knowledge of the fact, and to which the law attributes the same consequences as would be imputed to ■knowledge. It should be most carefully observed that the notice thus defined is not knowledge, nor does it assume that knowledge necessarily results.” To overcome the defense of bona fide purchasers without notice, the plaintiff is not required to prove that the defendants had knowledge of the fraud of Hawkins ; yet the jury must have so understood the charge. Whether knowledge, as employed in the instruction, is construed as ordinarily used, or in its legal meaning as distinguished from notice, the inquiry of the jury' was restricted to narrower limits than authorized by the rule. The circumstances, if any were proved, from which notice of the fraud might have been implied, were excluded from the inquiry. Though knowledge of the fraud of Hawkins in the purchase of the goods is not requisite, notice thereof to be implied must have knowledge as its source and basis. The mere existence of collateral facts and circumstances sufficient to put the defendants on inquiry, and from which notice can not be conclusively presumed, is not enough. It should be shown that the defendants had information of such facts and circumstances. The other charges on the subject of implied notice were in harmony with this view, and with the general rule. We discover no error in the record other than the one mentioned. Reversed and remanded.