Field, Morris & Co. v. Stearns

The opinion of the court was delivered by Prout, J. It is unnecessary for present purposes to consider the question relating to the attachment of the goods in controversy ; whether that fact sufficiently appears or not. As to that, wo express no opinion, as we dispose of the case upon other grounds, assuming it to be as the defendant claims. The replevied goods were obtained of the plaintiffs by means of false and fraudulent representations, made by Edward Culligan, of the firm of Culligan & Harwood, the plaintiffs’ vendees and the attaching creditors’ insolvent debtors. The representations were of such a character as to vitiate the sale and entitle the- plaintiffs to reclaim the property as against that firm. The goods then wore the plaintiffs’, fraudulently obtained by virtue of a sale which gave Culligan & Harwood no absolute title as against their vendors, the plaintiffs. It is however urged, that as to such a sale, if followed by a bona fide attachment on a debt contracted subsequently, as disclosed by this case, and before any measures had been taken to rescind it and reclaim the property, the innocent vendors a.ro divested of their interest, and that the attaching creditors acquire a superior right, which, if perfected [110] by sale on execution, gives them the title. In short, that the attaching creditors stand upon the same ground an innocent purchaser would, had he purchased the goods upon a new and sufficient consideration without notice of the fraud or deceit. This claim of the defendant is based upon the further fact disclosed by the case, that the attaching creditors in this cas'e gave the fraudulent vendees credit for the goods they sold them upon the strength of a stock of goods in their store, supposing them to be their property, and upon no other inducement. It is only necessary to remark, in passing to a consideration of the case, that the plaintiffs had a complete right to reclaim the goods as against Oulligan & Harwood. This, in view of the facts, has been so often decided, and upon grounds so reasonable and just, that it is not drawn in question on this argument. The fact thrown into the case, that the attaching creditors were induced to sell their property on credit in the manner disclosed, does not affect that principle, and in our view is unimportant as between these parties. The case as made up precludes it, as the plaintiffs are wholly innocent in respect to any intent of aiding their vendees in acquiring a false credit to the injury of any one ; but were themselves deceived and defrauded, although they made inquiry, as the circumstances of the case justify in saying, which these attaching creditors did not. They solicited their custom; merely saw a stock of goods in the store of Oulligan & Harwood, made their sales to them on credit, and took the consequent risk; and the proposition insisted upon growing out of these facts strikes us as somewhat dangerous, if it is true that we must close our eyes to the clear legal right of the plaintiffs under such circumstances. All we desire to say of it is, if there was no other inducement than mere possession, and ownership of them was not an element operating upon the minds of those attaching creditors, and calling for inquiry, it is a singular fact in the history of this transaction. The probability is, and that is all there is of it, that they were willing to trust to appearances — did, and misjudged; but were really no more deceivéd than they would have been had the plaintiffs’ goods been in the store under a conditional sale, or to so$ on commission; to which, if such had.been the fact, they qqii1& [111] acquire no lien by attachment as the property of Calligan & Harwood, and as against the real owners. Callanan v. Edwards, 32 N. Y., 483 ; Clark v. Hale, 34 Conn., 398. The case then presents itself unaffected by this circumstance or fact, and we conceive the authorities of our own court,fairly construed and applied, virtually determine it. In Fitzsimmons v. Joslin, 21 Vt., 129, which is a case where goods were purchased on false representations, and which, after they had arrived at their place of destination, were attached as the property of the fraudulent vendee, by two firms, on debts contracted prior to their purchase, one of said firms being a party to the fraud, and the other not: as to the innocent attaching firm or party, the court in that case say, that their right to the goods attached must rest on the title of the fraudulent vendee, and that that question is free from.doubt. “ The question is, has the seller been cheated and deceived by means for which the purchaser is legally responsible.” If he has, as held in that case as against the party not implicated in the fraud, the vendor might, upon obtaining knowledge of it, “ rescind the sale and recover the goods so long as they remained in the hands of the vendee, or had not passed from him on a new and valuable consideration. This is but simple justice if wo consider the parties equally innocent.” The question is again alluded to in Poor v. Woodburn, 25 Vt., 234. We quote: “ a creditor who attaches property obtained by fraudulent practice or misrepresentation does not acquire any better right to hold it than the -fraudulent vendee hadand this, it will be observed, is stated without qualification as being the rule applicable to attaching creditors. “ They get nothing by their attachment. They stand in the shoes of their debtor.” Hackett v. Callender, 32 Vt., 97. A purchaser advances a new consideration for and in respect to the property itself and its title, and comes within the rule founded on principles of policy for the benefit of trade and the security of the community, which -protects him, but which is not the case as to an attaching creditor, whether his debt accrued prior or subsequent to the sale to the fraudulent vendee. There is a clear distinction in the cases, found in the intrinsic character of the transaction under which a lien or title is claimed, as it does not rest in agreement [112] or consent, and this is what the cases moan as applied to the question. In the present case the attaching creditors paid or advanced no consideration in respect to those goods, or in- consequence of any representation as to the title, but stand upon their attachments ; which, if followed up and perfected by a sale, might ordinarily pass the title, but that is a very different mode of acquiring it, than by purchase. They are creditors and not vendees. The case presents another feature which is decisive. These claiming attaching creditors had not so far as appears acquired title to the goods replevied as against Culligan & Harwood when they were taken upon the plaintiffs’ process. At that time there had been no sale on execution — there has not been as yet, but they had at most only a lien upon them by virtue of the attachments. In Hackett v. Callender, supra, the court, alluding to a class of cases involving the rights of conflicting claimants to property affected by a trust and notice of it, say, that notice of the trust before the actual payment of the money for it by a purchaser, although it may be secured and the conveyance executed, is equivalent to notice before the contract and precludes the purchaser from paying the money and perfecting the contract. This principle is applied to an attaching creditor in that case, who was claiming the property in controversy under a levy, and the court observed, that notice to the attaching creditor, before he gets the legal title by levy and so discharges his debt, puts an end to his lien by virtue of his attachment as between him and the real owner. That principle aptly and justly applies to this case. Before these attaching creditors discharged their debts by a sale of the goods bn execution, they had notice, as apparent from the controversy of the fraud vitiating the sale, and are affected by it, and as a purchaser would be before he acquired the title;" as held in the case referred to. So that, regarding either the reason or justice of the case, we think the judgment should be reversed and cause remanded.