Majority
p. 659Frederick R. Farwell et al., App’lts, v. Lucien J. Prescott, Resp’t. (Supreme Court, General Term, Third Department, Filed November 28, 1890.)
Headnote
Pbaud—Bona vide purchaser.M., doing business in Canton, went to Ogdensburgh and there by bill of sale at 4 p.m. transferred to defendant, to whom he was justly indebted, the stock of goods “on sale” in his store at Canton, defendant surrendering notes held by him. Neither party knew exactly what was in the store. At 2 p.m. there was delivered by railroad at this store flour of plaintiffs which was sold on thirty days and which M. did not intend to pay for, he knowing himself to be insolvent. The same night defendant went to the store and took possession. Held, that defendant was a bona fide purchaser and could hold the flour as against the plaintiffs.
Appeal from a judgment entered upon the decision of the court upon trial without a jury at the St. Lawrence circuit.
The action was brought to recover the possession of flour worth $64.50 alleged to be the property of the plaintiffs and wrongfully ■detained by the defendant.
Prior to October 29, 1889, Ellis J. McIntosh was keeping a grocery store in Canton, FT. Y. He was insolvent and knew it. He owed the defendant $1,500 upon a note due October 15th previously. The defendant on that day at Ogdensburgh, twenty-five miles distant from Canton, met Me Intoshand pressed him for payment or for security. McIntosh’s father was present. The defendant held a note of $800 against the father, which the father had given the defendant as an accommodation to his son. Various propositions were made. The result was that Ellis J. McIntosh at four o’clock in the afternoon executed and delivered to the defendant a bill of sale of his entire stock of goods “ on sale ” in his store in Canton. The defendant in payment thereof delivered up to the son his note against him for $1,500 and to his father the said note of $800 which he held against him, and promised to -pay the amount of the sou’s overdraft at the bank which proved to be $120. The defendant subsequently paid this overdraft. The defendant returned to Canton and took possession of the stock of goods and store that evening. Flo question is made that the consideration paid was not ample.
At two o’clock on the afternoon of the same day a cartman drew from the railroad depot in Canton and delivered at the store the flour in question. Ellis J. McIntosh ordered it of the plaintiffs, who did business at Watertown, by letter dated Octobefl 19th, on the usual credit of thirty days. It reached the depot at Canton
p. 660
at ten o clock October 29th. McIntosh when it was delivered did not intend to pay for it. It had not been delivered when McIntosh left Canton for Ogdensburgh, October 29. Neither McIntosh nor defendant knew that it was in the store when the bill of sale was delivered. It was received during McIntosh’s absence, by his clerk. The defendant did not know except in a general way what was in the store when he took the bill of sale.
The following is the opinion delivered by the trial court:
Putnam, J.—Had McIntosh not parted with the possession, of the flour in question, under the facts proven, the plaintiff could have reclaimed it Testimony was given from which the inferences are that, being insolvent, McIntosh purchased the flour with intent not to pay for it
The question in this case is, has defendant shown he is a purchaser in good faith and for value ? He is clearly a purchaser for value. Paddon v. Taylor, 44 N. Y., 371 -2.
It is an old rule that a fraudulent buyer may convey to a bona fide vendee for value good title. Simpson v. Del Hoyo, 94 N. Y, 194 .
And also, that no duty of active vigilance is cast upon the vendee, requiring him to suspect or investigate the motives of the vendor. Parker v. Conner, 93 N. Y., 119 . '
In this case defendant testifies in effect that he was a purchaser in good faith. It may be assumed that he had notice that McIntosh was insolvent, but there is no proof that he knew that McIntosh had bought the goods without intent to pay for them or fraudulently. The testimony is that McIntosh represented to .him that he owed no debts except an overdraft at the bank,, and should I find as requested by plaintiff I should be compelled tó presume fraud as against defendant in the absence of testimony showing its existence.
I do not think that defendant’s title to the flour is affected by the fact that when he received the bill of sale of McIntosh he did not know that the flour in suit was delivered at the store. It. seems that he had taken no inventory of the articles in the store. He did not, in fact, know what was there. He paid the consideration on the faith that he was buying all the goods the title to-which was transferred to McIntosh that were in the store. On the faith that he was obtaining title to all the goods the bill of sale covered and which McIntosh represented were worth $2,500.
I have reached the above conclusion with some hesitation, and hence conclude that- the judgment should be dismissed, with costs.
Nelson L. Pobinson, for app’lts; John C. Keeler, for resp’t.
We adopt the opinion of the learned trial court. As between McIntosh and the plaintiffs, the fraud of McIntosh in not intending to pay for the flour gave the plaintiffs the better title to it. The fact that McIntosh after delivery had the right to reject the flour if upon inspection it should not be found to conform to his order, was McIntosh’s right, and not in any respect a right of ^he plaintiffs. The plaintiffs’ delivery was complete, and McIntosh thereupon could instantly sell the flour to a bona
p. 661
fide purchaser for value. Defendant was such a purchaser. The plaintiffs, however, contend that since neither McIntosh nor defendant knew at the time the bill of sale of the stock of goods was delivered to defendant that the flour had been delivered at the store, therefore no part of the consideration paid by the defendant for the stock of goods on sale was paid for the flour, and hence the case is not brought within the rule, that only he who has paid value or made advances, or incurred responsibilities upon the credit of goods obtained from the owner by fraud, can claim to own them as against such owner. Barnard v. Campbell, 65 Barb., 286 ; 55 N. Y.. 456 ; 58 N. Y., 73 . But the fact is the defendant bought the stock of goods hastily, without an inventory, without previous expectation of buying them, and at best with but a rough and imperfect estimate or knowledge of the specific articles composing the stock. He bought them under the influence of a fear that unless he bought them McIntosh would manage to evade payment of the debt he owed him. He took the risk of the stock of goods being more or less than was estimated, but he certainly parted with the consideration upon the credit of whatever goods there actually were in the store. His reliance was that whatever were actually there on sale became his. To say that because he did not know about this flour, he did not deal upon the credit of it, would be to enunciate a principle which if applied in detail to the items of his stock might deprive him of them one by one. He dealt upon the credit of the mass of goods, and the flour proved to be a part of it.
Judgment affirmed, with costs.
Learned, P. J., and Mayham, J., concur.
Cases cited
- Barnard v. Campbell 55 N. Y.. 456 p. 661