Judd v. Weber

Loomis, J. The complaint in this case alleged in substance that the defendant, in order to obtain on credit from time to time large quantities of wool of the plaintiffs, for the firm of Smith & Weber, of which he was at the time a member, stated to the plaintiffs that the firm had a capital of fifty thousand dollars solely at the risk of the business; that the defendant individually was worth from twenty-five thousand to thirty thousand dollars, and had contributed in cash from his own money, not borrowed, twenty-five thousand dollars towards the capital of the firm; and that all these statements were false and known to be so by the defendant when he made them, and that the plaintiffs believing the statements true sold and delivered the goods asked for on credit and thereby suffered loss to the amount of two thousand seven hundred and sixty dollars. The court finds that the defendant did make the false statements as charged, that he knew them to be false, that he made them for the purpose of inducing the plaintiffs to sell to the defendant’s firm on credit, and that he knew the plaintiffs would not have given the credit except for their belief that the representations were true, and that the plaintiffs, believing the statements true and relying upon them, did sell on credit wool to the defendant’s firm as claimed by them, and that the plaintiffs suffered damage by reason of [276] the premises to the amount of two thousand seven hundred and sixty dollars. The court rendered judgment for the plaintiffs for this amount and the defendant appealed. The reasons for appeal as stated on the record are quite numerous, but they may all be disposed of by the answers we may give to the following questions:—Does the finding of the court show that the defendant was guilty of actual fraud, and, if so, did the plaintiffs suffer any injury in consequence, and did the court err in admitting evidence ? The finding, as we have stated its substance above, gives a most emphatic answer to the first question in the affirmative. But the defendant’s counsel base their claim that there was no actual fraud upon an additional clause in the finding, which is as follows : “ It does not appear that in contracting the debt in question the defendant had any definitely formed plan or settled design to defraud the plaintiffs or to defraud-anybody. He had had no especial business training. He was not an accountant. He was wholly ignorant of the trade in wool. He had never had any experience in running or managing a factory and knew nothing of the woolen manufacture. He had an exaggerated idea of the profits that could be made in that business, and had a very much greater confidence in himself as a business man than the subsequent events would seem to justify. He was hopeful and trusting and was actuated by that easy credulousness which comes from inexperience. He hoped and expected to pay all the debts that should be incurred from the profits which he hoped and expected to make. The facts, however, disclosed at the trial, show that there was never any reasonable ground for such expectation. Any person of reasonable prudence and with a reasonable knowledge of business, who knew all the facts exactly as the defendant knew them, would have foreseen that failure was inevitable and that somebody would have to be cheated.” This may have lessened the moral turpitude of his act, but it will not suffice to antidote and neutralize an intentionally false statement which had already accomplished its object of benefiting himself and of misleading the plaintiffs to their injury. [277] Actual or positive fraud consists in deception, intentionally practiced to induce another to part with property or to surrender some legal right, and which accomplishes the end designed. All that this additional finding shows, is, that the defendant’s fraud did not consist in a preconceived design not to pay for the wool, but the fraud was directed to the obtaining of the plaintiffs wool on credit, by statements known to be false, which he knew could not be obtained if he told the truth, and the fraud was complete when the end was accomplished and damage resulted. It is a mistake to suppose that it is essential to a fraudulent intent that it should reach forward and actually contemplate the resulting damage to ■the other party. There is a fraudulent intent if one with a view of benefiting himself by intentional falsehood misleads another in a course of action which may be injurious to him. The ulterior hopes and expectations of the defendant, so much relied upon, were utterly immaterial. It is true that the motive to pay at some future time was innocent, but the motive to obtain present possession and title to another’s property by the use of falsehood and false pretenses, throwing all the risk of loss on another, was corrupt. As well ■might the embezzler of another’s funds plead his innocent purpose of ultimate restitution, or the forger of another’s name as indorser of a note plead his purpose to pay the note himself at maturity. It is conceivable even that one might be guilty of larceny by taking another’s money to meet some present exigency of his own while pleading in the forum of conscience his purpose to make it all right at some future day. Such pernicious reasoning can be accepted neither in the forum of conscience nor in that of law. There are some decisions in other jurisdictions which we think misled the counsel for the defendant into the erroneous position we have endeavored to controvert. The case of Morris v. Talcott, 96 N. York, 100, was cited. There the Court of Appeals found error in the court below in denying a motion to vacate an order for the arrest of the body, but it was placed on the ground that “ there was no evidence in [278] the case to support the charge of fraudulent representations, except the fact that the defendant upon being requested by the plaintiffs to give them an indorser upon a note for the balance of an existing account, refused to do so, saying he was “ perfectly good and solvent without an indorser.” So in Dyer v. Tilton, 23 Verm., 313, and Jude v. Woodburn, 27 id., 415, (cases not cited by the defendant,) we find the general proposition that an action for damage will not lie for false and fraudulent representations made by the defendant in reference to his own pecuniary responsibility and circumstances, whereby the plaintiff was induced to sell property upon credit. But these cases were expressly placed on the ground that the representations were expressions of opinion and not false assertions of fact, and this is the important distinction which controls the case at bar. Here there was false assertion as to specific facts Avhich induced the delivery of the wool on credit. The next question, whether the finding shows that damage to the plaintiffs resulted from the fraud, may be summarily disposed of by reference to- the record. The finding is that “ the plaintiffs have suffered damage to the amount of $>2,760 by reason of the premises.” It is to be presumed in the absence of anything to the contrary that there was appropriate evidence to justify the finding, and this answer is conclusive. But the precise point which the defendant makes in this connection is, that the subordinate facts as detailed in the finding do not show that the plaintiffs’ debt might not have been collected out of Smith, the other partner of the defendant. The court finds that Smith was connected with a' company that previously owned the premises purchased by the firm of Smith & Weber, and that this company had become insolvent, and that when the defendant bought the wool the plaintiffs understood and believed that Smith was a man of no pecuniary means, and it is pretty obvious that the fact of Smith’s insolvency was tacitly at least conceded by the defendant during the trial. At any rate no question whatever Avas raised in the court below in regard to this matter, and we may accept the finding of the [279] court in- regard to the damage as conclusive, with full assurance that no injustice was done the defendant in this regard. There remain to be considered only two questions respecting the admission of evidence, and these are of sucli a nature as to require little discussion. The court finds certain fraudulent representations made on the 15th of November, 1888, and again on the 22d day of February, 1884. The defendant objected to the statements made on the 15th of November because it appeared by the plaintiffs’ bill of particulars that the debt contracted on that day was afterwards paid, and because the question of a fraudulent obtaining of a general credit was not in issue. We think the evidence was admissible. On that day the defendant applied to the plaintiffs to purchase wool of them, not simply at that time, but from time to time in the future, to supply the mill of Smith & Weber. The finding is that he “ wished to open an account with and obtain a line of credit from the plaintiffs,” so that the representations on that day were the first and continuing moving cause to induce the plaintiffs to sell the defendant goods on credit in the future, and did tend to prove fraud in obtaining a general credit; and then the representations which followed on the 22d day of February were made to induce the plaintiffs to continue the credit, and expressly referred to and re-affirmed the truth of the false statements of the November previous, so that the statements were so interlocked as to become virtually one. The letter of February 28th, 1884, which was objected to, expressly referred to the original statements in November previous, admitting that they were made and re-affirming that they were true. It was therefore cléarly admissible. Another question of evidence is referred to in the last error assigned, but as no objection on that account was made in the court below it need not be considered. There was no error in the judgment complained of. In this opinion the other judges concurred.