McClune v. Cain — 3 Abb. Ct. App. 76

Majority

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McCLUNE v. CAIN.

September, 1865.

Headnote

It is not, fraud, as against the creditors of an insolvent, for a son of the insolvent to purchase his stock in trade, and furnish means to enable him to carry on business, as agent, leaving him in possession, and allowing him to take all the proceeds.

Whether the insolvent acted as agent or really on his own account, is a question of fact for the jury.

Gideon 0. McClune sued Josiah H. Cain, George Ward, Rodes Cole, and James H. Lyon, in the supreme court, for the conversion of plaintiff’s property. The facts were as follows: In 1856, William G. McClune, the father of the plaintiff, being in indigent circumstances, James McClune .(his son) started him in the business of a grocer. The purpose was to give him employment and enable him to support himself and family. The capital for starting the business (four hundred dollars) was borrowed on the notes of his two sons, James and the ' plaintiff. The father managed the business as James’ agent, until the death of the latter in November, 1856. At that time, the .concern was insolvent to a small amount. The paintiff then took the store by James’ request, and paid James debts, contracted first, and thereafter the father acted, or professed to act, as plaintiff’s agent. The sign on the grocery was “William G. McClune, agent,” and the business was principally conducted by William G., though the plaintiff attended the

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grocery when he could. The purchases were made on the plaintiff’s credit and with his money and means; and the vendors were uniformly informed, so far as appeared on this appeal, that the purchases were made for him, and that he was the person responsible for the payment. ■ The father had no means of his own, and there was no proof or pretense that he ever put anything in the concern. He received, by assent of the plaintiff, all the profits arising from the business, and goods purchased from the store by the plaintiff .himself were generally paid for by the latter.

The property converted by the defendants was bought by the father, as he distinctly testified on the" trial, not on his own account, but as plaintiff’s agent, and for him, and shipped to blew York in March, 1858. It consisted of twenty-eight barrels of apples, two firkins of butter, six barrels of peas and thirty-four barrels of eggs. The apples were bought of one Giles. He told Giles, when the purchase was made, that he was doing business for the plaintiff. Both Giles and William G. McClune testified that they were purchased for and on account of the plaintiff, and the plaintiff himself swore that he had paid Giles a part of the purchase money. The butter he purchased from one Rightmire. He informed him that he bought it for plaintiff, as his agent, and Rightmire testified that he sold it to him for and on the credit of the plaintiff, and would not have sold it to William G. himself. The eggs and peas were bought from various persons, and were paid for from the proceeds of notes discounted by the Tompkins County Bank and the Merchants’ & Farmers’ Bank. The notes were signed "William G. McClune, agent.” They were presented by William G. in that form for discount, he explaining that he was the agent of the plaintiff. As a precautionary measure, the bank required him to get the plaintiff’s name to the paper, which he did. The plaintiff paid the notes at maturity.

Whilst the business of the grocery was being carried on, sometimes the plaintiff, but more frequently the father, would borrow money for its purposes, the father signing the notes as agent; and paying such notes as were paid when the store was in operation, from the receipts of the business. The latter lived out of the proceeds of the business, and kept no account

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of what he spent on his own living; nor, up to the time of the trial, had there been any accounting with the plaintiff as to profits.

After the property in question in this suit had been seized and sold by the defendants, the father had for a short time most of the management of the store; but soon thereafter the goods therein were sold, and the store closed, by the plaintiff’s direction. The plaintiff received fifty dollars of the avails of the sale, and applied it toward the payinent of the notes at the banks, and the remainder of such avails were applied on other debts.

On the trial, by consent of the parties, it was agreed that the only issue for the jury to try was whether the property belonged to the plaintiff or to William GL .McClune.

The evidence in the case having been put in, and the facts having appeared as above stated, the defendants requested the judge to charge the facts proved did not show any title to the property in the plaintiff. The request was denied, and the case was submitted to' the jury, who rendered a verdict in favor of the plaintiff.

The supreme court, at general term, reversed the judgment entered thereon, and ordered a new trial. In the opinion of the general term, though not in the order, it was stated that the verdict was set aside as being against evidence. The court were of opinion that the evidence showed a mere loan of credit. From the order reversing the judgment the plaintiff appealed to this court, stipulating that if the order should be affirmed judgment absolute should be rendered against him.

Dana & Beers, attorneys for plaintiff, appellant.

Benjamin Q. Ferris, for the defendants, respondents.

There was, by stipulation of the parties, but one issue really to be tried in this action, viz: Was the property in question, at the time it was levied upon by the defendants, the property of William GL McClune, or was it the property of the plaintiff? If this was a questisn of fact, it was settled by the jury, audit would be our duty only to hold the judgment entered upon the verdict to he correct, unless it was clearly against evidence.

■ The general term reversed the judgment on the ground, as

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stated in the opinion, that the verdict was against evidence. In this respect it seems to me the general term was clearly in error. There was no conflict of testimony in the case. Two witnesses distinctly swore it was the plaintiff's property. There was no fact sworn to that was contradicted. All the oral evidence in the case, is, that the property was the plaintiff's. The jury could have given no other verdict than they did, but upon inferences arising from the manner of transacting the business, which amoiint to an impeachment of the oral evidence. If these circumstances, and the inferences to be drawn from them, were in conflict with, or contradictory of, the oral evidence, the question was still a question for the jury. If the manner in which the plaintiff loaned his money and the conduct of the business by William G-. McClune was evidence of fraud against the creditors of the latter, still it was only evidence, and the question was still one for the jury. Unless such conduct of business by one, upon capital advanced by another, is a fraud in law, fraud per se, then it is only evidence of fraud to be weighed by a jury.

It is not fraud per se, for one person to employ another who is insolvent, and indebted largely to others, to act as his agent in the transaction of business; he only runs the risk of creating circumstantial evidence which may affect his title to the property thus controlled by the agent. It is not fraud, per se, for a son to advance money or credit in aid of, or entirely to support his father, — he is under a moral as well as a legal obligation to do so. There is no rule of law directing or limiting the manner in which he shall afford the voluntary support in such case. If he gives his father no false credit before the world, by-the manner of his advances, he commits no fraud. The defendants are not persons who have dealt with the plaintiff's agent, and who claim to have been deceived, or induced to the giving him a false credit. Assuming that the method and object of this business was solely for the support of the father of the plaintiff, and that the plaintiff not only loaned his money but his credit for this purpose, it might still be, — it is possible that it might be, — not only an honest but a praiseworthy act; it was not necessarily, and as a matter of law, fraudulent.

Whether, therefore, it was the one or the other, depended

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upon the evidence in the case; and the learned judge at the trial rightly submitted this question upon the evidence to the jury. If there was evidence to go the jury, as it seems to me clearly there was, it is an unusual exercise of the power of review to set their finding aside as against evidence. It will be seen the court did not reverse the judgment on the ground that the evidence was insufficient to go to the jury; or that the judge should have nonsuited the plaintiff; or even that the judge erred in his charge, or in his refusal to charge, but, “ that the verdict is clearly against evidence.” With great respect, I think the verdict was strongly sustained by evidence — certainly there is evidence enough to support it. That the court below were satisfied with the dispensation of the law by the judge on the trial, is clear, by putting their reversal not upon any error committed by the judge, but alone on the ground of its being against evidence.

They say “ the evidence in the case shows that it was a mere loan of credit by the plaintiff to his father, William G-. McClune.” This question was put to the jury by the learned' judge at the trial, as a question of fact: “ That it was a question of fact whether it was a mere loan of credit, or a case of agency.”- And the jury answered it by their verdict. The supreme court themselves say, it was a question oí t evidence. The jury passed upon it as a question of evidence; and that the court differed with the jury in their finding in this particular is not a sufficient reason for reversing the judgment. The cases are" too numerous and uniform upon this point to require them to be cited. It cannot be assumed, as a matter of law, that a son may not support his father by indirection, in aiding him with loans of money and credit, to enable the father thus to conduct business and to thus contribute to his own support. Much less may it be assumed that a son may not support his father by giving him the use or profits of business in the way of an agency, the son continuing to hold the title as principal. And, whether the act be one of genuine filial duty and kindness on the part of the son thus to aid a parent, or a fraudulent scheme to cheat creditors, is, above most others, a question of fact exclusively the province of a jury to determine. If it was the former, there was an advantage to the son in support

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ing the father in chis manner, and he would not he a mere volunteer loaning his credit to another without advantage to himself. The case of Taylor v. Perkins, 86 Wend. 124 , is not controlling, as authority, in this case; it is unlike it in most important particulars. That was a case where one made and assumed advances to aid another in carrying on business, without any benefit or advantage to him who made the advances, and where the person receiving the advance, claimed and held himself out to be the owner of the property. True, there was a verbal agreement between the parties that the party thus advancing means should have the control and disposition of the property acquired by the means furnished, but the party advancing the means, and allowing the business to be conducted in the name of the borrower, gave him a false credit, and the creditors so trusting were held to have the superior right. The distinction is plain.

I am clearly of opinion that the court below were in error in reversing the judgment, and that their judgment should be reversed.

I think the proper disposition was made of the case at the circuit. It was admitted that the property had been taken and sold by direction of the defendants. To entitle the plaintiff to recover, it was only required of him to show that he was the owner of it when converted. This he did; or at least the testimony adduced by him on the question of ownership was such, that it would have been an error in the judge to have granted a nonsuit, or what was the same thing in effect, to have complied with the request to instruct the jury, as matter of law, that such testimony showed that he had no title to the property.

[Here the learned judge stated the facts in the case, as -jabove:]

In view of these facts, there is no force in the suggestion that the judge should have nonsuited the plaintiff. On the contrary I think, it wo uld clearly have been error to have determined as matter of law, that he had shown no title to the property in controversy, which the judge must necessarily have done had he granted the motion. Stress might be laid on the eircum

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stance that the purchase and shipment of the particular property to the New York market, was a mere speculatory venture —an isolated transaction; and the goods no part of the stock in trade of the grocery, which the defendants insist was established and conducted solely for the benefit of the plaintiff’s father. That business did not consist in buying produce to resell in the New York market. But treating the transaction as being in some way parcel of the grocery business, the question recurs, was the plaintiff or William G. McClune the purchaser of the property converted ? On this question the proof tended but one way. William G. McClune himself was the principal witness, and he testified distinctly that he bought the property for and on account of the plaintiff. The vendors corroborated him in his statements, and the plaintiff likewise, for he ratified his agency in the matter by subsequently paying the purchase money in whole or in part. The claim made on the trial, and reasserted here, that the goods were not bought by the plaintiff, but by William G. McClune, the father, with money borrowed on the plaintiff’s credit, rests not, as is asserted, “on admitted” facts. William G. McClune, it is true, was the actor in making the purchases, but whether he made them as plaintiff’s agent and for him, or for himself, was the'point in dispute. To have held that he acted for himself, and not for the plaintiff, in this particular transaction, — that no case of agency was shown, but that McClune himself was the purchaser, and the plaintiff occupied the relation only of Ms creditor, — would have been clearly against the whole drift of the evidence.

Again,. if it were conceded that the property, the title to which is involved in this case, was brought as part of the stock in trade of the grocery, it would not follow as a legal consequence that William G. McClune, and not the plaintiff, was the owner of it. I apprehend it was competent for the plaintiff to have established the grocery, provided the means, and made his *, father his agent for carrying it on, and given the latter the entire proceeds. Such an arrangement would not make the father the owner of the property brought into the business, nor would the plaintiff be exonerated from liabilities incurred by his agent within the scope of the business. This is claimed, on one side, to have been the real nature of the transaction.

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On the other, it is insisted that the case showed William G. McClune to have been the principal in the business, the plaintiff merely loaning to him his credit, and that the only relation existing between them was that of debtor and creditor. I think the evidence preponderated in favor of the former instead of the latter view of the case; but it is quite enough that there was any question on the subject.

The order granting a new trial should be reversed, and the judgment of the special term- affirmed.

A majority of the judges concurred.

Order reversed, and judgment for plaintiff on the verdict, with costs.