Tappan v. Powers — 2 N.Y. Super. Ct. 277

Majority

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Arthur Tappan and others versus Thos. A. Powers, Thos. E. Davis and Jonathan Lawrence.

Headnote

In an action upon the case, in the nature of a conspiracy, the declaration alleged a combination among the defendants, for the purpose of defrauding the plaintiffs of certain merchandise, under color of a purchase of it by the defendant, Lawrence, that it might be converted to the benefit of Davis, and described the various acts whereby the fraud was to be perpetrated. Some of these acts were charged to have been done by all the defendants, and others by one or two of them, but all in pursuance of the original combination. Upon demurrer to the declaration, (both general and special,) it was held, that whatever is done in pursuance of a fraudulent combination, by any of the parties concerned in it, may be .averred to be the act of all. That the conspiracy is only important as it gives a character to the acts of the parties to it, and charges them with the legal consequences of such acts.

[n all cases where fraud on the part of the defendant is averred, and damage to the plaintiff as the consequence of it, an action will lie. And where the declaration sets forth a conspiracy, the act of each defendant, done in furtherance of its objects, may be stated to have been done individually: and such act, in judgment of law, is the act of all; the gist of the action being the damage to the plaintiff and not the conspiracy.

This was a special action upon the case against the defendants, for obtaining goods of the plaintiffs by a fraudulent combination, and under false pretences.

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The declaration contained two counts. The first set forth that the plaintiffs, during the time of the wrongs complained of, were partners, dealing in dry goods in the city of New-York, and transacting business under the name of Arthur Tappan & Co. That during the same period, Thomas A. Powers, one of the defendants, was indebted to Thomas E. Davis, another of the defendants, in the sum of $5000 and upwards, which he was wholly unable to pay, as “ Davis well knew, but fraudulently concealed “ from the plaintiffs and others, for the purposes herein afterwards “ set forth : for which debt, or a large portion of it, the said Davis held the bond and warrant of attorney of said Powers,” that he might “ at any time enter a judgment against said Powers upon “ the same, when he might find it to his interest so to do. That “ in the month of February, 1828, the said Thomas A. Powers, “ and the said Thomas E. Davis, became acquainted with the “ said Jonathan Lawrence, who was then a merchant, dealing in “ dry goods in the city of New-York, as a jobber and wholesale “ dealer, possessing a small capital of a few hundred dollars, but “ extensively known to the dry good merchants in said city, and “ generally believed to be a man of integrity, and capable of “ transacting business on a more extensive scale; all which was “ well known to the said Davis and Powers. That Davis and “ Powers, with a design to cheat and defraud the plaintiffs, and “ all others whom they might be able to deceive, and rvith a de- “ sign to get property into the hands of Powers, without paying for “ the same, under such circumstances as that Davis might obtain the “ same, to satisfy the aforesaid debt due from Powers to Davis, and “ for other unlawful purposes, in pursuance of a wicked and “ fraudulent combination for that purpose had and entered into, “ proposed to the said Jonathan Lawrence, and agreed with hi m, that two thousand dollars should be raised and placed to the cre- “ dit of the said Lawrence, in the hands of some person or per- “ sons of credit, subject to the orders of said Lawrence, and to “ give him a credit, and that upon the credit thereof, and such fur- “ ther credit as he might by other means obtain, he, the said Law- “ rence, should purchase, without disclosing his real connexion “ with said Powers and Davis, dry goods to the amount of eight

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" or ten thousand dollars, in his own name, of the plaintiffs, and of ” such others as he might be able to purchase goods of on credi t, and for the drafts of said Lawrence on said Powers, to he by him accepted, and whom said Lawrence was to represent as about to become his silent partner, and a man of good credit and property; and after having made said purchases, said Law- “ rence was to open a store in said city, in his own name only, hut in which store and goods, the said Powers was to be interested, " as a silent partner, as was represented to said Lawrence. That, n pursuance of said fraudulent agreement and understanding, a ‘ store was taken by Lawrence in his own name, and two thousand dollars were raised and placed in the hands of Hicks, Lawrence & Co., a respectable mercantile house, in said city, to whom reference, if necessary, might be made ; and in pursuanee of said fraudulent design, and in execution of said fraudu- “ lent understanding, the said Lawrence proceeded to purchase, “ and did purchase, mostly on credit, about fourteen thousand dollars worth of dry goods, for said store, in his own name, and on “ credit, and for accepted drafts, made on said Powers, whom sai d Lawrence represented as about to become his silent partner in “ the dry goods business, and as a responsible man, and in good credit; all which was in pursuance of said fraudulent agree- “ ment, and for the purposes aforesaid, and without any intention “ on the part of said Powers of paying for said goods. And the “ plaintiffs further say, that on or about the second of April, in the ■“ year 1828, in pursuance of said fraudulent agreement, the said Jonathan Lawrence purchased, in his own name, of the plain- “ tiffs, a large amount of goods, consisting of silks and other dry “ goods, amounting to the sum of seven hundred and fifty-three “ dollars and fifty cents, upon which hill of goods, said Lawrence “ paid one hundred and eighty-eight dollars and thirty-seven cents, “ leaving due on the same, five hundred and sixty-five dollars and ■“ thirteen cents, for the payment of which sum, said Lawrence re q uested four months credit, and offered the acceptance of said “ Thomas A. Powers therefor, at four months,—lie, the said Law- “ rence, then and there representing that Powers was a responsi- “ ble man, and about to become his silent partner, and concealing

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“ from the knowledge of the plaintiffs, the interest and concern the “ said Powers and Davis had in said purchases. And the plain- “ tiffs, relying upon the honesty and integrity of the defendants, “ delivered said goods to said Lawrence, and took said acceptances “ for the four months, as requested. And the plaintiffs further say, “ that in pursuance of said wicked and fraudulent understanding “ and agreement, said Lawrence, at the time he purchased said “ goods of the plaintiffs, and obtained said credit, held himself out “ as the ostensible purchaser, and represented that the goods were “ to furnish a store, by him opened in said city, on his own account, “ and in which ,he had commenced, and was transacting regular business as a dealer in dry goods'; whereas, said goods were in “ truth purchased for the purpose of being secretly and fraudu- “ lently conveyed to Powers, for the benefit of said Powers and “ Davis. And the plaintiffs further say, that in pursuance of said “ fraudulent understanding and design, immediately after said “ goods were obtained by said Lawrence, in the manner aforesaid, “ the said Thomas A. Powers, the better to enable said Davis to “ levy an execution upon, and seize said goods for said debt, due “ him from said Powers, with the knowledge of said Davis, pro- “ cured a secret conveyance of all said goods from said Lawrence “ to'him, said Powers, and in pursuance of the same fraudulent “ designs and understandings, the said Davis, on or about the sixth “ day of May, eighteen hundred and twenty-eight, caused said “ goods to be seized and taken to satisfy an execution which he, “ the said Davis, had taken out against said Powers, upon a judg- “ ment by him entered, upon said bond and warrant of attorney, “ and the said goods, the said Davis and Powers, by the aid of said “ Lawrence, have fraudulently converted to their own use. And “ the plaintiffs further say, that said Lawrence and Powers now are, “ and at the time of said purchase were, wholly insolvent and “ unable to pay for said goods, all which was well known to the “ said Davis and the defendants, but wholly unknown to the plain- “ tiffs, and "that the said sum, due for said goods, remains wholly un- “ paid and unsatisfied. And the plaintiffs aver, that the said Davis « and Powers, by making use of said Lawrence in manner afore- « said, procured said goods from the plaintiffs under a pretence of

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“ a purchase of the same on credit, without any view or intention “ of ever paying for the same, and without any belief or expec- “ tation, that said Lawrence could or would ever pay for the same, “ but with the intention of converting said goods to their own “ use, under the pretence of paying a debt due from said Powers “ to said Davis, in which fraudulent scheme said Lawrence was, “ by fraud or flattery, or both, made to participate and lend bis “ aid : whereby the plaintiffs, by the aforesaid wrong doings of “ the defendants, have been defrauded and damnified, as they say, “ in the sum of one thousand dollars.”

The second count was substantially like the first, but differed in some of its averments, as to the manner in which the goods, obtained by Lawrence, were to be disposed of. It set forth, that the defendants, “ with intent to cheat and defraud the plaintiffs, and “ such others as they might be able to deceive, and with a view “ of obtaining property by false and fraudulent means, and dividing “ the same among themselves,” entered into the combination described in the first count. That, for the purpose of carrying their ‘ designs into effect, it was agreed, that Lawrence should take a store, in Pearl-street, in the city of New-York, and purchase goods in his own name, ostensibly, to the value of ten or fifteen thousand dollars, which were to be placed in said store. That a fictitious credit was to be given -to Lawrence, in the manner described in the first count; but that the connexion of Davis and Powers with him should be kept concealed; “ whereas, it was well understood “ that the goods, which said Lawrence might obtain and deposit “ in said store, should be secretly taken therefrom, and sold at auc- “ tion, and the money be divided between the defendants,—or the “ goods otherwise be secretly appropriated to the use of said “ Davis and Powers, and that the same should never be paid for “ by them.”

This count then set forth the purchase of the goods of the plaintiffs, in pursuance of said fraudulent combination, the receiving of the same by Lawrence, at his store, and that they were soon afterwards sent by the defendants secretly to auction, and “ sold “ for cash, and the same converted to their own use, or delivered

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“ to said Davis and Powers, and by them converted to their own “ use,” &c.

Lawrence was defaulted, but Davis and Powers separately appeared by different attorneys, and demurred generally to each count of the declaration.

On the part of Davis, there were also special causes of demurrer assigned. To the first count it was objected:

1. That the plaintiffs, in averring that Powers was indebted to Davis, did not state with the necessary legal precision and certainty the time when, and the place where, he became so indebted, or the amount and consideration of such indebtedness. 2. That the bond and warrant of attorney of Powers, which are averred to have been held by Davis, were not set forth with sufficient particularity. 3. That the first count was argumentative in stating, that Davis held the bond and warrant of attorney of Powers, “ that he might at any time enter a judgment against Powers upon the same, when he might find it for his interest to do so.” 4. That the averment, that Powers and Davis became acquainted with the defendant, Lawrence, who then was a merchant, &c., is an unnecessary and immaterial averment; and if necessary and material, then, that it is bad, for want of time and place. 5. That the averment of a design on the part of the defendants, to cheat and defraud others besides the plaintiffs, whom they might be able to deceive, is impertinent. 6. That the averment, that two thousand dollars should be raised and placed to the credit of the defendant, Jonathan Lawrence, in the hands of some person or persons of credit, &c., does not set forth the time when, and the place where, such agreement was made, or the name of the person with whom the money was to be so placed. 7. That the averment, that a store was taken by the defendant, Lawrence, does not set forth the time when it was taken, or the place where it was situated. 8. That the averment, that two thousand dollars were placed in the hands of Hicks, Lawrence & Co., does not set forth the names of the individuals composing the firm. 9. That the averment setting forth the purchases, dealings and representations of the defendant, Lawrence, from, with and to persons other than the plaintiffs,

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is impertinent. 10. Thatthesettingforthofthemotives,whichinfluenced the defendant, Powers, in procuring a conveyance of the goods from Lawrence, is argumentative and bad. 11. That the averment, that the goods were caused to be seized under execution, does not state the day, nor place of seizure. 12. That the averment, that the defendant, Lawrence, was made to participate in the alleged fraudulent scheme, “ by fraud or flattery, or both,” is bad for uncertainty, and because it is immaterial to the plaintiffs’ claim what means were used, to procure Lawrence’s participation in the scheme.

To the second count it was objected, 1. That the time when the agreement between the defendants and Lawrence was made, is not set forth with sufficient certainty. 2. That the averment of an intent to cheat and defraud others, besides the plaintiffs, is impertinent. 3. That the averment, that ten or fifteen thousand dollars worth of goods were to be purchased, is uncertain and impertinent. 4. That the averment, that it was agreed, that it should not be known, that Davis was in any way concerned in said purchases, or the business of said store, does not state when and where such agreement was made. 5. That the averment, that the goods should be secretly taken from said store, and sold at auction, and the money divided between the defendants, or that the goods should otherwise be secretly disposed of, is bad, because it is in the alternative, and does not state time and place. 6. That the averment, that Lawrence took a store in his own name, and that the defendants raised the sum of two thousand dollars, and placed, the same in the hands of Hicks, Lawrence & Co., does not state when and where the said store was taken, or when and where the money was raised, or the names of the persons, who composed the said firm of Hicks, Lawrence & Co., and is without a venue. 7. That the averment, that Lawrence proceeded to hold himself out as a man safely to be trusted, and to make large purchases of dry goods, on credit, in his own name, ostensibly, concealing the interest of the said Davis, without averring of whom the purchases were made, is uncertain and impertinent 8. That the averment, that the said goods were secretly sent to auction, and

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sold for cash, and the same converted to the defendants’ use, or delivered to said Davis and Powers, and by them converted to their , ... . . use, does not state either time or place, and being m the alternative, is bad for uncertainty. 9. That the averment, that Lawrence anc[ Powers were then both insolvent, and wholly unable to pay for said goods, does not state time particularly, and is without a venue. 10. That the averment, that the said goods were bought with a view of being converted into cash, and the avails divided among the defendants, or of being appropriated by said Davis and Powers to their own use, being in the alternative, is bad for uncertainty. 11. That the negative averment, stating what the goods were not bought for, is impertinent.

The cause was argued by Mr. D. B. Tallmadge, and Mr. Hugh Maxwell for Davis; by Mr. J. Anthon for Powers, and by Mr. George Goddard and Mr. S. P. Staples for the plaintiffs.

Mr. Tallmadge observed, that he should not enter upon an argument,'to prove the special causes of demurrer to be well taken, as they were set forth with sufficient precision to explain themselves. He insisted, however, that the judgment of Davis against Powers, was not well set out. I. Because the facts in the first count of the declaration, do not show a case of fraud between Powers and Lawrence, independent of their connexion with Davis.

They are charged as partners in fact: and although Powers is represented as a dormant partner, that cannot make their transactions fraudulent, especially in this case, where Powers accepts a draft for the goods. It is, therefore, their connexion with Davis and his judgment, which makes them parties to the fraud; for without that judgment, there would be no fraud. The judgment and execution, therefore, are the very gist of the action, and should be set forth, with the name of the court where the judgment was obtained.

If a plea aver, that the defendant was discharged by due course of law, without showing how he was discharged, it is bad in substance: [2 John. R. 437.] and if a party plead a judgment, he must show in what court it was obtained. [2 Salk. 517.] Anal-

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legation, that the plaintiff was compelled to pay by a court of competent jurisdiction, without stating what court, would be bad on general demurrer. [1 Wend. R. 207.]

If this be an action for giving a false credit to Lawrence, or obtaining one for him, then Davis is not liable, because he has not done any thing to give Lawrence a false credit. Davis was a bona, fide creditor of Powers, w ho was indebted to him beyond all doubt. If the name of Davis were withdrawn from the first count, then there would not be any thing left, to show fraud against Lawrence and Powers. Take away Davis and his judgment, and there would be nothing left, wherewith to charge the other two. The manner, therefore, in which the judgment and execution were to be made use of, lies at the very foundation of the first count; and they should have been set out with precision and accuracy.

II. But if the objections to the first count, should not be deemed sufficient to sustain the demurrer, there are others, which must prove fatal to the declaration.

The facts set forth in the second count, establish a clear case of partnership between all the defendants, Davis and Powers being silent partners. If this be so, then the action is misconceived ; it should have been assumpsit, founded on the draft accepted by Powers. But no action upon the draft would lie, until the time of credit had expired* and the time of credit cannot be ascertained by the declaration, because the time of purchase is not mentioned.

If it be contended, that the second count is but an action of assumpsit against the partners, then the declaration is bad, because a count in assumpsit, cannot be joined with a count for tort. There ' is nothing fraudulent in having a secret partner, because the plaintiffs have a better security than that, which they agreed for. [Penny v. Martin, 2 John. Ch. R. 566.] In the case cited, there was a suit and judgment against two: afterwards the plaintiff discovered that a third person was a secret partner, and filed a bill against him. The Chancellor said, there was neither mistake nor fraud here, and refused relief.

III. There is another test, which may be applied to this decla

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ration. The facts disclosed by the first count, will warrant an action of trover; those in the second count assumpsit; a special action on the case, therefore, will not lie. [1 Chit. Plead. 84.] If the declaration contain an averment in the alternative, the defendant has a right to select that, which is least favorable to the plaintiffs.

At a very early period, specific forms of actions were provided for such injuries, as had then most usually occurred ; and Bracton observing on the original writs, on lukich our actions are founded, declares them, to be fixed and immutable. The ancient forms of actions are collected in Registrum Brevium. At common law, where no form could be found in the register adapted to the nature of the plaintiff’s case, he was allowed to bring a special action on his own case, and writs were framed accordingly.

Where the prescribed form of action is to be found in the register, the proceedings should not materially vary from it, unless in those cases, where another form of action has long been sanctioned by usage; for the courts have considered it of the greatest importance to observe the boundaries of the different actions, not only in respect of their being most logically framed, and best adapted to the nature of each particular case, but also in order, that causes may not be brought into court confusedly and unmethodically, and that the record may at once clearly ascertain the matter in dispute.

In this case, the plaintiffs have remedies by forms of action fixed, prescribed, and well known to the law. They are not driven to invention by any necessity, and this special action, therefore, will not lie.

Mr. George Goddard, for the plaintiffs.

The special causes of demurrer, assigned in this case, are all to such parts of the declaration as are merely matter of inducement, or aggravation; none of them are applicable to the statement of the cause of action.

The cause of action is the damage to the plaintiffs, in depriving them of their property; and the narration, which precedes the averment, that the goods were obtained, is merely a summary of some

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of the means, by which the fraud was committed, and is matter of inducement: being useful to a clear statement and understanding . , , . _ of the case, but not material to sustain the plaintiff's action, bo the averments, which follow the statement of the cause of action, are matter of aggravation, proof of which might enhance the damages, but if not proved, the action might still be sustained.

[As to what is inducement, see 1 Chitty Pl. 292. Archbold Pl. 93. Stephen 311. Yelv. 17, 18. Alsope v. Sitwell.]

It is well settled, that matters of inducement, or aggravation, do not require certainty of time, place, or other circumstances. [1 Chitty Pl. 282. 1 Plow. R. 191. Stephen 374. 5 Com. Dig. Pleader C. 20. 31.]

The objects of certainty, are to give the other party notice of the claims, and to preclude a second action for the same cause. Both are attained, if the strict rules in regard to certainty, are confined to the statement of the cause of action.

The plaintiffs are also excused from greater particularity, from the consideration, that the facts are necessarily more within the knowledge of the defendants. [Stephen 372.] The charge is fraud; and it cannot be expected, that the plaintiffs should be able to specify the time, place, and attendant circumstances of each act of fraud, which, to accomplish its object, must be studiously concealed from the knowledge of those against whom it is directed. For the purposes of this argument, the fraud is admitted. The plaintiffs can state the result of the defendants’ acts, as regards them ; but not the means by which it was produced.

The rule, requiring certainty of time and place, is wholly technical in transitory actions, and as it exists at present, is of no use, but rather enables one party to mislead the other. But the special causes of demurrer, are not true in point of fact. As to the place, the mention of it in the margin is sufficient. [9 Johns. R. 81. Slate v. Port. 13 Ib. 449. 3 P.R. 387 . Archbold 89. 1 Dunlap’s Prac. 247.] And in the body of the declaration, the place is frequently stated, and there is sufficient connexion between the parts in which it is not stated, and those in which it is, by reference from one to the other, to make it available for the whole. This last remark is likewise applicable to the statement of time.

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Those parts of the declaration, which are objected to, as argumentative, are not so within the proper meaning of this term, as applied to pleading; to set forth the motives of the parties is not argumentative and is objectionable only as being surplusage. Argumentative pleading is leaving that to be made out by inference, which should be stated positively. [Stephen 384.]

Some of the causes of demurrer were, that the averments objected to are impertinent. If by impertinence is meant scandal, which is its true meaning, this is not the mode to object to it; but it should have been referred to the court, or a Judge, to be struck from the declaration; but if the pleader means, that they are not relevant to the case, then they are merely surplusage, and not the proper subjects of demurrer.

The declaration is good in substance, as well as in form. This is an action on the case ; the name, history and definition of which, show that the declaration may always be adapted to the injury. The definition of it is, “ where a party sues for damages for any wrongs, or cause of action to which covenant or trespass will not apply.” [Stephen 15.] Every wrong has a remedy, and an appropriate remedy, and no other form of action, or mode of declaring, would be more appropriate to this case, than the one adopted. Even the right to make new writs, “ according to the case,” if necessary, is provided by statute 1. R. L. p. 80., sec. 6. But this mode of declaring is supported by precedent. [3 Pick. R. 33. Livermore Co. v. Herschell, 2 Day, 205 . Gardner v. Preston, et al.]

That the plaintiffs have other remedies is no objection to this. There are few cases, which do not admit of more than one form of action, and in which it is not at the election of the party to adopt either.

It is said the defendants should have been sued as partners; this is not correct, unless every fraudulent combination constitutes the parties, combining partners, and exempts them from all liability, except as partners; and this would be wholly to confound torts and contracts, and would be equally applicable to all other cases of joint fraud, by which money or goods are obtained. Though the defendants might have been sued as partners, it does not follow

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that they must be so sued. Persons who are acknowledged as partners, may jointly be guilty of a fraud, and liable in tort, and the privilege of waiving it, rests with the party injured. The defendants could not have been proceeded against, as partners, until the credit given had expired, when it might be too late.

The same remarks furnish an answer to the argument, that the action should have been trover, and a further answer to both of these modes of proceeding, is, that in these the plaintiffs would be limited to the value of the property, as the rule of damages; whereas in the present action, the jury would be authorized to give exemplary damages, to compensate the plaintiffs for their trouble and expenses, and furnish a salutary lesson to the defendants and others.

Mr. Staples on the same side, entered into a general and minute examination of the special causes of demurrer, supporting the ground taken by Mr. Goddard. He insisted, that they were all applicable, either to matters of inducement, or matters of aggravation ; neither of which, are the subjects of demurrer. That matters of inducement are not traversable, and need not have certainty, either of time, or place; and an issue tendered upon them, would be wholly immaterial. If there was any thing impertinent in the declaration, or if there was surplusage, it might be stricken out on motion to the court; but such defects cannot be taken advantage of in this way. The gist of this action is fraud, and the special causes of demurrer do not meet the cause of action. They are not, therefore, well taken.

II. But there is a grave question raised by the general demurrer, (said Mr. S.,) which goes to the foundation of this claim, and it is seriously contended, that the declaration does not disclose any cause of action against the defendants.

It is a maxim in the law, that for every wrong there is a remedy, and if the plaintiff state the subject of his wrong in proper form, the courts will not fail to give him relief. It was said by Lord Kenyon, in Paisley v. Freeman, [3 T. R. 64,] that laws are best administered, when they are made to enforce moral and social

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duties. And it would be a reproach upon our jurisprudence, if a clear case of fraud, could not be reached by any remedy known to the laws.

This is an action on the case, in the nature of an action for a conspiracy, and fraud and damage are the grounds upon which it rests. “ An action on the case lies, (it is said,) when a man does any deceit to the damage of another [Paisley v. Freeman,] and if this be a correct proposition, the principal subject of inquiry would be, whether any damage has been done in this case, to the plaintiffs, by the deceit of the defendants.

There is a plain distinction between a writ of conspiracy and an action on the case, in the nature of a conspiracy. [1 Saund. 230. Skinner v. Gunton, and note 4.]

Mr. Maxwell, in reply for Davis, said he should rely upon the general demurrer alone; for although the special causes might all be well taken, yet as the principles involved in the case were important, the general demurrer would determine whether the action could be maintained.

The conspiracy alluded to in the declaration, may be laid entirely out of view, because the case does not contain principles in any way analagous to those upon which such actions rest.

The declaration when stripped of its unnecessary verbiage and peculiar phraseology, and independent of the allegations of conspiracy, charges nothing against Davis,, but the fact, that he concealed his judgment from the plaintiffs, and then levied upon the goods of Lawrence. Does this, in itself, furnish a substantive ground of action against him 1 The judgment held by him, was bona fide, and he was not bound to communicate the facts, relating to his own private affairs, to any body. View it as you will, and it amounts at most, but to an act of non-feasance, and the books tell us, in what cases an action for non-feasance will lie. This, certainly, is not one of them. [Chit. Plea. vol. 1. 368, Elsie v. Gatewood, 5 T. R. 143.]

The declaration charges no act of misfeasance against Davis; and it is not pretended, but that Powers actually owed him the full amount of his judgment, and there is no allegation that the

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debt was fraudulently created. If it be" intended to charge the defendants with a false representation, then the charge should be set out in the declaration, specifically and correctly, that they may know what it is that is alleged against them. [Paisley v. Freeman, 3. T. R. 64. 12. East. 635.]

The allegation of conspiracy is mere surplusage, and the plaintiffs cannot, by that, charge Davis, unless they allege fraud against him expressly. [3. Con. Rep. 418. Otis v. Raymond. Young v. Scovell, 8. John. R. 25.]

In all cases of tort, the damage must be the legal consequence of the acts charged. [Butler v. Kent, 19 John. R. 238.] In this case, Davis has not caused any injury to the plaintiffs by his acts: nor was the injury sustained by them, the natural or legitimate consequence of his conduct. In the case of Jones v. Baker, [ 7 Cow. Rep. 479 ,] there were averments of certain facts, dr rather of certain acts done by the defendants, from which the plaintiffs sustained an injury. The action did not rest upon averments relative to conspiracy, and the court will find, in the opinion of the Chief Justice, proper distinctions to be observed in actions upon the case. [See also 1. Saund. 230, and the note.] The gist of the action, in Jones v. Baker, was the arresting of the defendant in an improper manner, and not the conspiracy, and the averments, relative to the latter, were "mere surplusage, intended as matter of aggravation.

If the defendants are all to be made liable in an action of this nature, facts against all should be charged, and you cannot connect one with the other, by imputing to him a fraudulent design, unaccompanied by fraudulent acts. A mere constructive fraud, cannot be made the subject of an action, but each individual is answerable for what he does, in contravention of- the rights of another.

In the case of Livermore v. Herschell, 3 Pickering, p. 33,) the declaration expressly charged that the false affirmation was made by the three defendants; and Wilde J. says that the conspiracy was matter of aggravation merely. So in the case of Gardner v. Preston, (2 Day, p. 205,) the acts complained of, are charged against all the defendants, and they are not connected by implication merely.

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But here, an attempt is made to charge Davis for not doing an act which he was under no obligation, legal or moral, to do. It would be extremely unsafe to allow any plaintiff to sustain an action for consequential damages merely, without compelling him to point out against each of the parties charged, the facts to be proved against him. Here are general allegations merely, of a corrupt design, without any specifications of the acts done by each to accomplish the design. By blending the parties together, and by the free use of the charge of a fraudulent intent, the plaintiffs seek to confound the innocent with the guilty, and make good their loss from the pockets of those who never had any connexion with them.

The action is not founded upon any correct principles of legal right, and the declaration cannot be supported.

Mr. Anthon for Powers.

The declaration in this case, is sui generis; it is without model and without precedent. If the defendants take issue upon the facts charged in the declaration, they will go before the jury without any knowledge of what each one is called upon to answer. We demur to the declaration, for the purpose of causing such lines of legal discrimination to be drawn, as shall enable us to go before the jury with some knowledge of the charges against us. As the charges now stand, they establish no illegal act againsf any one of the defendants; and we ask to know whether, in an action like this, the plaintiffs’ case can be made stronger, by merely connecting the defendants together.

The declaration alleges that Powers was indebted to Davis; that these two became acquainted with Lawrence, and made the propositions which are recited. It appears that a fund was to be raised for the common benefit of all the defendants, and that Lawrence was to be treated as a man entitled to confidence. If these facts be true, what do they prove 1 Not fraud, but the mere common case of establishing an artificial credit. The plaintiffs had the power of inquiry, and if they trusted to the fund imprudently, it was at their own peril. If they trusted to Lawrence, it was from their own credulity ; for there is not a single allegation

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that either Davis or Powers ever made any representation to the plaintiffs, or did any act in direct reference to them, which can be made the cause of complaint against them. The first charge is, that Powers, one of the defendants, was indebted to Davis, and that he was unable to pay this debt. That Davis well knew this fact, but fraudulently concealed it from the plaintiffs.

Can it be seriously pretended, that if Powers was the debtor of Davis,-the latter was bound, either legally or morally, to commanicate that fact to the plaintiffs ? They were strangers to each other, in no way connected, and not in any habits of intercourse. How could Davis be called upon to communicate his private affairs to Arthur Tapp an & Co., to whom he was unknown 1 The very statement of the proposition proves its absurdity, and shows that there could be no fraud in withholding a knowledge of the facts from the plaintiffs. It is an abuse of terms to call it a concealment, for that implies an obligation to communicate, whereas there was nothing of the kind here.

The next allegation is, that Davis held a bond and warrant of attorney against Powers, upon which he intended to enter up a judgment whenever he should find it for his interest to do so. If the bond were for a bona fide debt, and there is no allegation to the contrary of this, where was the impropriety of entering up the judgment 1 It does not enhance the wrong, that Davis was to delay that act, until prompted by his interest to do it, for he certainly would not, with common understanding, do it against his interest. There is, then, no fraud or wrong in this charge.

The next charge is, that by a fraudulent combination, Lawrence was to be induced to procure goods for the express purpose of allowing Davis to levy an execution, to be obtained under the judgment, upon them; but in anticipation of this, the sum of two thousand dollars were to be raised by Davis and Powers, to be at the disposal of Lawrence. As Powers is alleged to be insolvent, Davis, of course, was to advance $2000, for the purpose of securing a debt of $5000, and all this was to be done by Lawrence, for the accommodation of Davis, without any apparent benefit to himself ! This may be called an absurdity in terms.

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But no act is charged thus far upon the defendants ; a corrupt agreement merely is alleged. Afterwards, Lawrence went to' the plaintiffs, and represented to them that Powers was a responsible man, and about to become his silent partner. The plaintiffs the n' trusted to the representation of Lawrence, and gave him credit, but no act of any kind is charged'against Powers or Davis. The declaration alleges, however, that the plaintiffs, “ relying upon “ the honesty and integrity of the defendants,” delivered the goods to Lawrence, and took the acceptance of Powers. How could they rely upon the honesty of the defendants, when they, up to this period, as the declaration itself shows, had no knowledge of Davis whatever 1 And besides this, the declaration then goes on to say, that Lawrence held himself out as the ostensible purchaser, and represented that the goods were to furnish a store for him. How does this correspond with the allegation, that the plaintiffs trusted to the honesty of Davis and Powers 1 It is evident that they trusted to Lawrence alone,—and the facts show a mere case of a common speculator, who purchased goods, by his own representations, without any connexion with Davis.

If Powers gave his acceptance to the plaintiffs, through the intervention of Lawrence, he is bound by it, and you cannot charge him in a form of action, new and unusual, for the purpose of connecting him with a stranger. He and Lawrence are already bound for the value of the goods, by contract, and cannot be made answerable for a fraud in the same matter, the amount of which does not exceed the debt.

II. There is another objection to this action : It is an attempt to evade the statute of frauds. That statute declares, that no man shall be answerable for the debt or default of another, unless he manifests his consent to be thus answerable, by a contract in writing.

The object of the statute was to save third persons from the dangers of vague and uncertain oral testimony; and it called upon the plaintiffs to produce the defendants’ written promise. Here is a debt created by Lawrence. If Davis intended to answer for it, where is his promise 1 If the plaintiffs relied upon Davis,

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when they gave credit, where is the evidence of their confidence in h im ?

The case of Paisley and Freeman sets the utmost bound to which the courts will go in cases of this nature, and all the cases; . . i . . . „ since that decision, are m our favor.

In Haycroft v. Creesy, [2 East. 103,] an attempt was made to extend the doctrine of Paisley and Freeman, by making the defendant liable for the consequences of his acts, without charging a scienter upon him. But the court refused to go beyond their original limits, which have always been considered as approaching the very bounds of prudence. Lord Elden [6 Ves. 186] even condemned the doctrine of Paisley v. Freeman; and our Supreme Court, in Ward v. Center, [3 John. R. 280,] thought that case an attempt to evade the statue of frauds.

I admit that in Upton v. Vail, [6 Johns. R. 181,] our courts have, in some measure, sanctioned the doctrine of Paisley v. Freeman ; but that case has always been limited to its own peculiar facts. It does not establish a principle, which can comprehend all cases, of constructive fraud.

A case analagous to the present, was once decided, at Nisi Prius, in this city, against the plaintiffs’ right of action. I allude to the case of Rumsey v. Lovell. In that case, Lovell had a bond and warrant of attorney against a certain debtor of his. He represented that debtor, to the plaintiff, as a man of responsibility, and he thereby obtained a quantity of goods, upon which Lovell levied an execution, obtained his debt, and his debtor became insolvent. Upon the trial of the cause, the plaintiff failed to recover, as it did not appear that Lovell had any knowledge of the true state of his debtor’s affairs.

This ground is to be trenched upon with caution, and we are not lightly to charge acts of fraud, where none was intended.

Chief Justice Marshall says, ( 7 Cranch. 69 ,) that it may be doubted whether the objections of Grose J. to the decision in the case of Paisley v. Freeman, have ever been answered. And it may be laid down as an axiom, that in no case can A. be made liable for the debt of B., except where he has given his writing, or made false representations of his credit scienter.

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Here, no fraudulent act is charged against Davis, for he had a right to collect his debt of Powers. He made no representations, true or false, and his judgment was bond fide. There is no allegation of any active or efficient agency on his part, and it does not appear that he even gave advice or counsel to Lawrence. The facts relative to his judgment, he was not bound to disclose, and there is no legal ground upon which this action can be supported. The attempt is to extend a class of cases which have already gone as far as it is prudent to go, and I ask the court, if they are prepared to advance one step beyond the limits of Paisley v. Freeman ?

The first count of the declaration in this cause, states, in substance, that Powers being indebted to Davis, in a large sum of money, which he was unable to pay, and for which a bond and warrant of attorney, to confess a judgment thereon, bad been executed to Davis ; a combination was entered into by all the defendants, with the intent to defraud the plaintiffs, and Other merchants in the city of New-Yorlc, and to get property into the hands of Powers, with the view that Davis might seize it for the satisfaction of his said debt. That, as a part of the said fraudulent plan, the sum of $2000 should be raised, and placed to the credit of Lawrence, in the hands of some person of respectability, in order to give the said Lawrence credit; that Lawrence, on the credit thus to be obtained, should purchase, in his own name, goods to a large amount, of the -plaintiffs and others, without disclosing his real connexion with Powers and Davis, which purchases were to be made on credit, and for the drafts of Lawrence on Powers, whom Lawrence was to represent as a man of property, and about to become his silent partner in business; and, that after such purchase was made, Lawrence should open a store, in his own name, but in which Powers was to be a silent partner. The declaration then avers, that in pursuance of the said fraudulent combination, a store was taken by Lawrence, the said $2000 were raised and placed in the hands of a certain mercantile house, to which reference might be made to give credit to Lawrence: that Lawrence purchased for his said store, in his own name, and mostly on cre

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dit, and for his drafts on Powers, a large amount of dry goods, representing Powers to he a man of respectability, and about to become his partner; that, also in pursuance of the said fraudulent combination, Lawrence purchased of the plaintiffs a quantity of goods, in his own name, paid a small part of the purchase money, in cash, and gave the acceptance of Powers, at four months, for the balance, representing to the plaintiffs that Powers was a man of respectability, and about to become his partner; that Lawrence also represented to the plaintiffs that said goods were intended to be placed in his store, for the purpose of regular business as a dealer in dry goods; that, in truth, they were purchased with the intent of carrying them secretly to Powers, for the benefit of himself and Davis; that the same were, accordingly, immediately after they were purchased, conveyed to Powers, to enable Davis to seize them on execution, and that the same were levied upon by Davis, by virtue of an execution, taken out by him on a judgmént entered on his bond and warrant of attorney, and were thus con verted to the use of the said Powers and Davis, and that Lawrence and Powers were, at the time of the purchase of the goods of the plaintiffs, actually insolvent, and known to Davis to be so; and that the goods in question have never been paid for, &c.

The second count in the declaration, is substantially like the first, varying only in the averment, that the fraudulent combination was entered into for the purpose of obtaining the property, and secretly selling the same at auction, and dividing the proceeds among themselves, and that the same was so sold at auction, and converted to the use of the defendants, or delivered to the said Davis and Powers, and converted by them to their use.

To this declaration, Davis and Powers demurred separately, Powers assigning various causes of demurrer. Lawrence has suffered judgment to pass against him by default.

I am not able to perceive any foundation for this demurrer. This is an action on the case, in the nature of a conspiracy. The conspiracy is only important, inasmuch as it gives gives character to the individual acts of the parties to it, and charges all with the legal consequences of such acts. It is well settled, that whatever is done in of a fraudulent combination, by any of

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the parties concerned in it, may be averred to be the act of all, the present case, the declaration avers a fraudulent combination among the defendants, for the purpose of cheating the plain-^ids, and sets forth various acts, as the means by which the fraud was perpetrated.' . Some of these acts are charged to have been ¿one directly by all the- defendants, and others by one or two of them, but all in pursuance of the original combination. It cannot be doubted, that if the declaration had averred that all the defendants used the fraudulent means of obtaining the plaintiffs’ property,whichare charged against Lawrence, that such an averment would be supported by proof, that they were used by him in pursuance of a plan concerted among them all; and it seems to me equally clear, that where the declaration sets forth a conspiracy, the act of each defendant, done in furtherance of its objects, may be stated to be done individually; and that such act, in judgment of law, is the act of all. This appears to be the well'established doctrine on this subject. [Jones v. Baker, 7 Cow. R. 445. Gardner v. Preston, 2 Day’s R. 205. Livermore v. Herschell, 3 Pick. R. 33.] In these cases, it is also well settled, that the damage to the plaintiffs is the gist of the action, and not the conspiracy. It seems also to be a rule, that in all cases, where fraud on the part of the defendant is averred, and damage to the plaintiff, in consequence of the fraud, an action will lie. This was so settled in the case of Paisley v. Freeman, (3 D. E. 51,) where the fraud was not intended to benefit the party committing it, and where there was no collusion between such party, and him who did, in fact, receive the benefit. The doctrine of Paisley v. Freeman, though sometimes questioned, has been fully sanctioned and established. [ Upton v. Vail, 6 J. R. 181.]

Applying the foregoing principles to this case, it certainly is one of no difficult solution. The declaration, though somewhat informally drawn, sets forth a ease of gross fraud practised upon the plaintiffs, whereby they were induced to sell their goods to Lawrence on credit. They have been injured, and the defendants, or some of them, benefited by the fraud. It would be a reproach, indeed, to the law, if it did not afford redress for such a wrong.

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The defendant, Powers, has assigned several special grounds of demurrer. I do not think that any of them are well taken. The averments of the declaration, specially objected to, are either by way of inducement, or are impertinent, or surplusage, or relating to matters which, from their nature, (if true,) lie peculiarly within the knowledge of the defendants. Impertinent matter may be stricken out of the pleadings, upon proper application to the court; and matters of inducement, or those which the plaintiff cannot be supposed to know with certainty, may be generally stated. [ Com. Dig. Pleader, C. 26, 27. 36. 31.] They do not afford any ground for a special demurrer. The omission to lay a venue in the body of the declaration, cannot be taken advantage of, as reference may be had to that stated in the margin, (Slate v. Post, 9 J. R. 81 ;) and there appears tobe a sufficient statement, as to'time, in both counts of the declaration, which may be applied to any material averment. There must be judgment for the plaintiffs on the demurrer.

Judgment for the plaintiffs, with leave to the defendants, &c.

[W. S. Johnson, Att’y for the plffs.]

[E. Anthon Att'y for Davis. W. P. Hawes Att'y for Powers.]

Cases cited

Russell v. Clark's Executors 7 Cranch. 69 SCOTUS 1812-03-05 p. 295