Kraft, Hoffman & Co. v. William Dulles & Co.

Miner, J. The errors alleged are: 1. That the verdict is against the weight of evidence. 2. That the verdict is against law. 8. That the court erred in its charge to the jury. The third ground of error will be first considered. Whenever goods are obtained from their owner by fraud, and the facts show that the owner intended to transfer both the property in, and the possession of the goods to the person guilty of the fraud, there is a contract of sale, however fraudulent the device, and the property passes. In such case the contract is voidable but not void ab initio; and, on discovering the fraud, the vendor may rescind the sale and repossess himself of the goods if found in the possession [121] of the fraudulent vendee, or of any one deriving title from him except an innocent purchaser for value, and without notice. Such we understand to be now the settled law both in England and America. Benjamin on Sales, 319; Load v. Green, 15 M. & W. 216; White v. Garden, 20 L. J., C. P. 167; Stevenson v. Newnham, 13 C. B. 285; Pease v. Gloahec, 3 Moore P. C., N. S. 566; Story on Sales, sec. 200, and cases cited in note; Lacker v. Rhoades, 45 Barb. 499. Such being the general rule of law in respect to fraud in such eases, it was the duty of the court to instruct the jury what constituted such fraud; and the jury were told, in this part of the charge, that if the vendees “ purchased the goods in question with the intention of not faying for them, or with the knowledge that they were insolvent and would not be able to fay for them,” though they made no representation at the time of the purchase, they acquired, in law, no title, and the plaintiffs must recover.” Now, the only error that can be predicated on this part of the charge is, that there is no actual fraud, on the part of a vendee, in purchasing goods “ with the intention of not paying for them,” or “ with the knowledge that he is insolvent and will not be able to pay for them.” It has been frequently held, and seems to be well settled, that where a vendee purchases, with a preconceived design of not paying for the goods, it is a manifest and direct fraud, Story on Sales, sec. 176; Earl of Bristol v. Wilsmon, 2 Dow. & Ryl. 755; Stevenson v. Hart, 4 Bing. 476; Load v. Green, 15 M. & W. 216; Ferguson v. Carrington, 9 B. & C. 59; Carey v. Hotailing, 1 Hill (N. Y.), 311; Thompson v. Rose, 16 Conn. 71; Bedingti v. Roberts, 25 Vt. 694; Lacker v. Rhoades, 45 Barb. 499; Hennequin v. Naylor, 24 N. Y. 139. Though it has been held otherwise in Pennsylvania. Smith v. Smith, 21 Penn. St. 367; Backentoss v. Speicer, 31 Penn. St. 324. As to the other proposition contained in this part of the charge, namely: If the vendee made the purchase, “ with the knowledge that he is insolvent and will not be able to [122] pay for the goods” (if, in this charge, it is to be treated as a distinct proposition, and not as a repetition of the former proposition in different language, the latter being, most probably, the understanding and intention of the judge)— the authorities are not so clear. In Congers v. Ennis, 2 Mason, 239, Judge Story says: “If a man, knowing his own insolvency and utter incapacity to make payment, purchases goods of another who is ignorant of any change in his circumstances, and sells them under the most implicit belief of the good faith and solvency of the buyer, in what respect does the transaction differ from a direct affirmation, by the buyer, of his own good faith and solvency?” And, in Torvell v. Bradlee, 9 Gill & J. 220, it was held that, “If parties purchase goods, knowing themselves to be insolvent and without any expectation- of paying for them, and in circumstances which preclude the vendor, by ordinary prudence, from becoming acquainted with the facts, which are concealed from him by the purchaser, who shortly afterward fails and applies for the benefit of the insolvent laws, the contract of sale is fraudulent and void, and passes no title.” And see Biggs v. Barry, 2 Curtis C. C. 262, 263. Mere insolvency of the purchaser and inability to pay for the goods at the time, though well known to himself and not disclosed, will not avoid the sale. Redington v. Roberts, 25 Vt. 694; Nichols v. Primer, 18 N. Y. 295; Biggs v. Barry, 2 Curtis C. C. 259, and other cases. "We have not, in our limited researches, found any case, except perhaps the case in 21' Penn. St., above cited, which reaches to the extent of deciding that a purchase made under the state of facts presented in that part of the charge now under- consideration would not be a fraudulent purchase. See Irving v. Motley, 7 Bing. 543, 544; Cross v. Peters, 1 Greenleaf, 376; Biggs v. Barry, 2 Curtis C. C. 262, 263. Submitting the matter to our own moral perceptions [123] alone, we can not see a shade of difference as to the mala fides between the two propositions presented in this part of the charge. The second proposition submitted to the jury, and remaining to be considered, was as follows: “If you find that Kraft, Hoffman & Co. purchased the goods in question, on condition that they were to be paid for with their note at four months, and without giving or tendering to the plaintiffs said note, failed and assigned, then plaintiffs are entitled to recover, in this action, the possession of the goods, the defendants not having complied with the terms of sale.” "We omit, from this' part of the charge, the qualifying conditions stated by the court, as we do not think there was any question of waiver, or want of due diligence, on the part of defendants in error. In Coggill v. Hartford and New Haven Railroad Co., 3 Gray (Mass.), 545, 546, the court say, “It has long been the settled rule of law, in this commonwealth, that a sale and delivery of goods, on condition that the property is not to vest until the purchase money is paid or secured, does not pass the title to the vendee, and that the vendor, in case the condition has not been fulfilled, has a right to repossess himself of the goods, both against the vendee, and against his creditors claiming to hold them under attachments ; ” and cite Hussey v. Thornton, 4 Mass. 405; Marstin v. Baldwin, 17 Id. 606; Barrett v. Pritchard, 2 Pick. 512; Whitewell v. Vincent, 4 Id. 449; Hill v. Freeman, 3 Cush. 257. And, the jury having found that the sale was conditional upon the giving of the note (the vendee having failed and stopped payment without doing so), the court held, that parties to whom the goods had been sold by the vendee, and who had no notice or knowledge of the terms of the sale to their vendor, and to whom the goods were in transit by the railroad of the defendants when reclaimed by the plaintiffs, were not entitled to hold them. In Congor v. Chicago and Galena Railroad Co., 17 Wis. [124] 477, the court say, “Change of ownership and payment were to be concurrent acts; and when, as in this case, payment was to be made in the notes of the vendees, we suppose it well settled that the interest does not vest until the giving of the notes.” — p. 487. We take the law to be, in every such case, that when possession is delivered before payment is made, change of ownership and payment are to be concurrent acts, whether payment is to be made in cash or by note, unless otherwise stipulated in the contract or such payment is waived by the vendor. Warren v. Porter, 2 Disney, 126, opinion of Gholson, J.; Powell v. Bradlee, 9 Gill & J. 220. And that, if payment is not so made or waived, the vendor may reclaim the goods from the vendee, or from any one claiming under him, except an innocent purchaser for value and without notice — as to which exception the authorities are not agreed; but this question does not arise in this case. Our conclusion is, that there is no error in the charge given by the judge at the trial. The custom testified to, if sufficiently proven, of allowing, in such sales, thirty days within which -to deliver the note, can not make any difference in this case. The note was not given or tendered prior to the actual failure of, and assignment by, the plaintiffs in error. After that the defendants in error were certainly not bound to receive it. It was earnestly insisted, by counsel for the plaintiffs in error, that the verdict of the jury is not supported by the evidence. We do not think so. The case involved questions of fraud peculiarly appropriate to be determined by the jury, and in determining which they had the right to infer the fraud “from the circumstances and conduct of the vendees, not only in respect to the sale in question, but in other contemporaneous transactions.” Hennequin v. Naylor, 24 N. Y. 139. Judgment below affirmed.