Tannenbaum v. Reich — 18 N.Y. St. Rep. 931

Majority

p. 931

Lippman Tannenbaum et al., Resp’ts, v. Henry Reich, App’lt. Simon Frankel et al., Resp’ts, v. Henry Reich, App’lt.

(City Court of New York, General Term,

Filed October 26, 1888.)

Headnote

1. Fraud—Evidence oe.

These actions are founded on promissory notes dated on and after September 7, 1887, running from three to seven months after date. These were given for diamonds purchased of the plaintiffs through a broker.

• The defendant represented to this broker that he was solvent and able to pay his debts in full. These statements were communicated to the plaintiffs in each action before the sale of the diamonds by them, and the fact of such communications made known to the defendant by the broker. Upon the faith of these representations the plaintiffs parted with their goods and accepted the notes iri question. On November 1, 1887, a judgment was entered in this court against the defendant for $1,674.07, on November twelfth another for $211.10, on the seventeenth two others aggregating $555, and others before the end of that month, until the aggregate of said judgments was upwards of $5,000. Out of the defendant’s property only $108 was realized tó pay all these judgments Held, that the conclusion was irresistible that the defendant was insolvent when he purchased the goods from the plaintiffs and did not intend to pay for them.

U. Same—Evidence oe fraudulent intent.

Held, that it was fully shown that the representations made to the broker by the defendant as to his solvency were made with a view to their being communicated to the plaintiffs.

3. Orders of arrest—When properly granted.

Held, that orders of arrest granted against the defendant were properly granted and should not be set aside.

p. 932

Appeal from order denying motions to vacate order of arrest,

Horwitz & Hershfield, for app’lt; Wales F. Severance, of counsel; Franklin Bien, for resp’ts.

The papers in the two eases are substantially the same. The motions are made upon the plaintiffs’ papers alone. The actions are founded on promissory notes dated on and after September 7, 1887, running from tlnee to seven months after date. These were given for diamonds purchased by the plaintiffs through a broker named Honigman. The defendant represented to this broker that he was solvent and good, and able to pay all his debts in full.

These statements were communicated to the plaintiffs in each action before the sale by them of the diamonds, and the fact of such communication made known to the defendant by Honigman, Upon the faith of these representations, plaintiffs parted with their goods, and accepted the notes in suit. There can be no doubt of the fact that the representations were made to Honigman with a view to their being communicated to the plaintiffs.

On November 1, 1887, a judgment was entered in this court against the defendant, for $1,074.07; on November 12, another for $211.10. on the seventeenth, two others, aggregating $555, and so on to the end of the month, when upwards of $5,000 appear entered against him. Suits are not ordinarily brought immediately after the incurrence of the liability. Debts aggregating $5,000 put in ' judgment within two or three months after a solemn declaration of solvency, to say the least, demand explanation. And when coupled with the fact that only $103 was realized out of the defend ant’s property wherewith to pay.all these judgments, the conclusion is irresistible, that the defendant was insolvent when he purchased the goods from plaintiffs, and had no intention to pay for them. But, says the defendant, it must be shown that he knew he was insolvent. True, but the law implies that he knows what he ought to know. That is to say, if he is, in fact, insolvent, he cannot close his eyes to that fact, and disclaim knowledge thereof.

The court is not bound to presume that any extraordinary event occurred whereby defendant’s property disappeared. In the ordinary course of events that "property, including the diamonds purchased from plaintiffs, would not have been reduced practically to nothing in the space of two months.

The falsity of the defendant’s representations, has, m my judgment, been sufficiently proven, and the orders appealed from must therefore be affirmed, with ten dollars costs and disbursements m each case.

McGtOwk, J , concurs.