Hyperlawhypertext legal databasebeta Hawkins v. Appleby 4 N.Y. Super. Ct. 421

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Hawkins v. Appleby

4 N.Y. Super. Ct. 421 2 Sandf. 421 Court N.Y. Super. Ct. Decision date 1849-04-07 English

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Hawkins and Logan v. Appleby and Moore.

Headnote

Where the plaintiffs, upon a sale of goods to the defendants, were induced to take the note of a third party in payment, upon the representation of one of the defendants that it was good, when, in fact, the defendants knew the makers were insolvent, and the note worthless.. Held, that the defendants were liable to the plaintiffs, either in an action of assumpsit to recover the value of the goods sold, or in an action on the case to recover damages for the deceit practised upon them.
A member of a co-partnership firm is liable either in assumpsit or in an action on the case, for the consequences of frauds practised by his co-partner, in the transaction of the partnership business, although he was entirely ignorant of such frauds, and derived no benefit therefrom.
Where goods are obtained for the use of a firm, by means of the fraud of one of its members, the other partner, by receiving and participating in the use of the goods, will be held to have adopted the fraudulent act of the one who obtained them, and will be placed in the same situation, in reference to the rights of the vendors of the goods, as if he had directed his partner to procure the property, or had concurred with him in the transaction.
And where a partner, on being notified of a fraud committed by his co-partner, and that the firm wilt be held liable therefor, omits to repudiate or disaffirm what has been done by his co-partner, he will be held to have adopted and ratified the fraud, and will, from thenceforth, be deemed a joint wrong-doer. ,
Where, in an action on the case for deceit, in falsely representing the note of a third person, turned out by the defendants in payment for goods purchased, to be good, it appears that the plaintiffs, on discovering the insolvency of the makers, disavowed Ihe ownership of the note, and notified the defendants that they were held liable for the price of the goods, who insisted on retaining the goods, and omitted to pay the price and receive back the note, it seems this will be deemed a waiver of any formal tender of the note before suit brought.
Under such circumstances, it is sufficient for the plaintiffs to tender the note upon the argument.
Where it was averred in a declaration, that the defendants represented a note to be “ a good note, and that it would pass in South-street,” and the proof was that
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they said “ the note was good, and that there were people in South-street who would take it.” Held, there was no substantial variance.
March 8th;
April 7, 1849.
This was an action of trespass on the case. The declaration set forth that, in the month of March, 1847, the defendants applied to the plaintiffs to purchase from them a quantity of tobacco, and offered in payment a promissory note of Barstow Emanuel, & Co., dated New York, January 15, 1847, for the sum of $274 80, payable in six months; that the defendants represented the note to be good, and the makers in good credit, and that the plaintiffs relying upon the representations so made, sold and delivered to the defendants a quantity of tobacco, and took the note in payment. In the second count of their declaration, the plaintiffs averred that the defendants represented the note to be a good note, and that “ it would pass in South-street? The declaration further alleged that, Barstow Emanuel <fc Co., at the time of the transfer of the note to the plaintiffs, were wholly insolvent, and that the defendants, knowing such to be the fact, fraudulently made the purchase as set forth. The defendants pleaded the general issue.
The cause came on for trial on the 18th day of April, 1848, before Chief Justice Oakley, without a jury. Upon the trial, it appeared in evidence on the part of the plaintiffs, that about the 17th of March, 1847, Appleby, one of the defendants, applied to the plaintiffs to purchase a quantity of tobacco from them, offering in payment a note of Barstow Emanuel & Co., for $274, dated January 15, 1847, at 6 months. Appleby said the note was good, and there were people in South-street who would take it. The plaintiffs had never dealt with Barstow Emanuel & Co., but upon the representations of Appleby, took the note, and delivered the tobacco. The bookkeeper of Bars-tow Emanuel & Co. testified that Appleby called at their store about the 13th or 15th of March, 1847, in reference to the delivery of a quantity of cigars which had been ordered by Mr. Emanuel, and which were to be sold on credit; that he, the bookkeeper, declined receiving them, assigning as a reasoú that Mr. Emanuel had gone to New Orleans, and was embarrassed
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in his business; that, on the 13th of March, his notes had been protested; that he distinctly informed Appleby that Mr. Emanuel was in difficulty, and much embarrassed.
Barstow Emanuel, one of the makers of the note, testified, that at the time of the transfer of the note in question, the firm was insolvent; that they stopped payment on the 13th of March, 1847, and that on an investigation of their affairs, they found they could only pay 33 per cent. The plaintiffs then offered in evidence a letter written by them on the 30th of March to the defendants, and produced by the defendants in conformity with a notice, in which letter the plaintiffs stated that they had that day, for the first time, ascertained the insolvency of Barstow Emanuel & Co., and that they should hold the defendants liable for the tobacco sold. The plaintiffs also read in evidence two records of judgments against Barstow Emanuel & Co., upon which executions had been issued, one September 9, and the other October 9, 1847, both of which were returned unsatisfied; also a protest and certificate of a notary public, by which it appeared that the before mentioned note was protested for non-payment, July 19th, 1847.
The plaintiffs then rested, and the defendant’s counsel moved for a nonsuit, on the ground that the plaintiffs should have shown a tender of the note to defendants before suit brought.
The court refused the motion, and reserved the question.
The defendant’s counsel then moved that the defendant Moore be discharged, in order to his admission as a witness. But the court refused, to which decision the defendant’s counsel excepted.
A witness for the defendants testified, that about the 1st of March, 1847, he heard Hawkins, one of the plaintiffs, say, that he had offered to give tobacco to the defendants for Emanuel & Co.’s note, and that after the trade was made, Hawkins informed the witness he had made inquiries, and thought the note was good.
The testimony was then closed, and by consent, a verdict was taken in favor of the plaintiffs for $289 94, subject to the opinion of the court, on a case to be made, and subject to such
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modificaton. or adjustment of the verdict as the court might deem proper, with leave to the defendants to move for a nonsuit.
A. P. Man, for the plaintiffs.
I. The plaintiffs have fully proved their case as set forth in the first and second counts ; and it is a clear case of deceit, viz.: a false affirmation with intent to defraud, and resulting in damage to the plaintiffs. (Pasley v. Freeman, 3 T. R. 51; S. C. in 2 Smith’s Leading Cases, 55, with notes; Allen v. Addington, 7 Wend. 1 ; and S. C. in error, 11 Wend. 374 ; 1 Chit. Pl. 157; Read v. Autchinson, 3 Camp. 352 ; 2 Kent’s Comm. 482, 484; Story on Part. § 108; Longman v. Pole, 1 M. & M. 223.)
II. The concealment by defendants of the fact that Emanuel had failed, (of which fact they had peculiar means of knowledge,) and suffering the plaintiffs to act in ignorance of it, would alone have sustained this action. (Same authorities; also, Weeks v. Burton, 7 Verm. Rep. 67 . Story on Promissory Notes, § 118, and note; Story on Bills, §s 111 note, and 225.)
HI. The plaintiffs are also entitled to recover in this form of action upon the footing of an express warranty. (See 2 East, 451; Peake’s Ev. 229, [279;] 1 Chit. Pl. 157; 3 T. R. 51; 2 Caines’ R. 56 ; 10 Wend. 413 ; 13 Wend. 277 ; 2 Cowen, 438.)
IT. In this form of action, it was not necessary to prove an offer to return the note. (Sedgwick on Dam. 296 ; also, pages 290, 296, 531, 538 to 540; 2 Kent’s Com. 480, and note a; 4 Bibb, 91 ; 1 Smith’s Leading Cases, Am. Ed. of 1844, p. 157; also, see pages 153, 155; Stephen’s N. P. 1296, 1297, 1301; Nellis v. Bradley, 1 Sandf. 560 .)
Y. The measure of damages is the difference in value between this worthless note, and a good one. In the present case, the damages are the full value of the property obtained by the deceit, that being prima facie (as well as by the proof in the case) the amount of the plaintiff’s loss. The defendants, who are chargeable with deceit, have no right to complain of this rule of damages. (See authorities.under preceding point; also, 7 Wend. 10 ,15, 26 ; Monell v. Colton, 13 Johns. 403 .)
The note will belong to the defendants after payment of the
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plaintiff’s damages. And to enable the court to see that no injustice is done to the defendants, we bring the note here, and offer to' surrender it, or to bold it subject to the order of the court.
E. W. Stoughton, for the defendants.
I. There is a fatal variance between the case stated in the declaration, and that found.
• (1.) The second count alleges, that the defendants represented the note to be “ A good note, and that it would pass in South street.” The proof is, that Appleby said, “ The note was good-, and that there were people in South street would take it.” This is a material variance, and between the proof and first count, it is still greater. (See 1 Chitty on Pl. 310, et seq.; 2 Saund. Pl. & Ev. 913, et seq.)
(2.) The declaration alleges, that the defendants made the representation. The proof is, that it was made by Appleby. There is not the slightest evidence to show that Moore knew of or sanctioned the misrepresentation, or that he was aware of the failure or insolvency of Barstow Emanuel & Co. This also is a fatal variance, for which the plaintiffs must be nonsuited. (See Weall v. King, 12 East, 452; Sherwood v. Marwick, 5 Greenleaf, 295.)
II. The language used by Appleby, as alleged by the witness, was not a misrepresentation. He was not questioned by the plaintiffs as to the solvency of Barstow Emanuel & Co., nor did he make any representation concerning such solvency. Courts never presume a warranty or fraud upon the sale of a personal chattel or chose in action. Either, if alleged, must be clearly proved. The statement made, that the note was a good note, did not, by fair interpretation, import that the makers were solvent. Could the defendant, on proof of this representation, and that the makers were insolvent, be indicted for obtaining -the tobacco by false pretences ? The defendant Appleby, further stated there were persons in South street would take the note. What legal meaning can be attached to this representation 1 It may have been strictly true, but whether there are persons in South street who take notes of insolvents, or whether
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good paper alone will pass there, the court cannot judicially know. Nor did Appleby know the makers were insolvent when he parted with the note. This appears from the testimony of the witnesses, Jessup and Emanuel.
III. There is no proof that Moore knew of, or sanctioned, the representation alleged to have been made by Appleby; nor was he really interested in the note : this was known to Hawkins. A fraudulent representation by one partner, will not bind or affect the other, in this action. (Pierce v. Jackson, 6 Miss. R. 242; Sherwood v. Marwick, 5 Greenleaf R. 295.)
If the suit was directly upon the contract of warranty made by one of the partners, the rule would be otherwise. So also, the plaintiffs could have brought trover or replevin for the tobacco, at least after demand madé therefor; as, in such case, retaining possession would be deemed the fraud of both defendants.
IV. The plaintiffs were not induced to take the note, or dispose of the tobacco, by the alleged representation of Appleby.
(1.) If it be contended, that this suit is brought upon a warranty, the answer is, that the representation was not intended or understood by either party as a warranty. It is essential that the affirmation made at the time of sale be intended as such; and this must appear by the evidence. If not, the affirmation is considered mere matter of judgment and opinion. (Swett v. Colgate, 20 Johns. 196 ; 2 Caines’ R. 56; 3 Term Rep. 57.)
(2.) The plaintiffs were not defrauded by the representation. It must appear, in order to sustain the action, that the representation was made with intent to induce the plaintiffs to part with the tobacco, and that they, relying upon such representation, were so induced, and were thus defrauded. (Story Eq. Jur. 204, 5 ; 2 Kent’s Com. 485, et seq.)
It' appears, that several days before this representation was made, Hawkins had offered to take the note, and give the defendant, Appleby, tobacco for it. He was then satisfied as to the solvency of Barstow Emanuel & Co., and willing to part with the tobacco without the aid of this representation. Appleby knowing this, could not have intended, by making it, to obtain
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the tobacco, and the plaintiffs being before anxious to make the trade, could not have made it on the faith of the representation. Indeed, it is clear from the whole case, that the bargain was completed before the representation was used; and that, if made at all, it was uttered without intent by Appleby, and was heard unheeded by the plaintiffs.
Y. The plaintiffs elected to rescind the contract of sale, and should have tendered the note to the defendants before suit brought. Not having done this, they must be nonsuited. (Baker v. Robbins, 2 Denio, 136 ; Massow v. Bovet, 1 Ibid. 69 ; Chitty on Contracts, 741; Pierce v. Drake, 15 Johns. 475 ; Thornton v. Wynn, 12 Wheat. 189 .)
(1.) It is conceded, that where there is a warranty upon the sale of a chattel, a suit may be brought upon it, either in case or assumpsit, without a return of the property; and that damages may be recovered for the breach of the contract; but in every such case, the warranty is set forth in the declaration as the ground of the action, and .the contract of sale thus affirmed. Usually, assumpsit is brought, and when case or deceit is adopted, the contract and warranty must be set out in the declaration, with the same damages as in assumpsit. (2 Chit. Pl., 6th ed., 279, 480 ; 3 Chitty’s Cr. Law, 306 ; Mills v. Dell, 3 Stark. Rep. 23 ; Rex v. Gill, 2 B. & Ald. 204; Towers v. Barrett, 1 Term Rep. 133; Fielder v. Starkie, 1 Hen. Bl. 17; Buchanan v.-----, 2 Term Rep. 745 ; 1 Comyns’ Dig., action on the case for deceit, 350, et seq.)
(2.) If then there had been a warranty in this case, it cannot avail the plaintiffs; for where a party intends to rely upon a warranty, he must expressly state it in his declaration. (Sys ney v. Sebby, 2 Ld. Raymond.)
(3.) Not only do the two first counts charge fraud, and not contract, as the sole ground of action, thereby disaffirming the contract of sale, but the third and last count is in trover for converting the tobacco, alleging it to be the property of the plaintiffs; thereby expressly disaffirming the sale, and electing to rescind the contract.
(4.) Independent of the form of action adopted by the plain-' 1
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tiffs, they have elected to disaffirm and rescind the contract of sale.
(1.) By sending the note to the defendants, stating that they should hold them liable for the tobacco. And,
(2.) By their refusal to compromise with Barstow Emanuel & Co., on the ground, as they declared, that Appleby owned the note. Having thus elected to rescind, they are bound by the election. (Smith v. Field, 5 Term Rep. 402; Green v. Russell, 5 Hill, 183 .)

The evidence suffices to establish, that the plaintiffs were induced to take Emanuel’s note in exchange for their tobacco, by Appleby’s representation that the note was good; when in fact it was not good, and Appleby knew it.

The declaration states this representation substantially as it was proved. Saying that there were people in South street who would take the note, is not essentially variant from saying that it would pass in South street.

The other alleged variance depends upon the principal question in the cause, the liability of Moore in respect of the fraud of his partner Appleby.

It has long been established, that a partner is liable in assumpsit for the consequences of frauds practised by his copartner, in the transaction of their business, of which he was entirely ignorant, and although he derived no benefit from the fraud. (Gollyer on Part 240 ; Story on Part. § 108.) ' This is upon the ground, that by forming the connexion, partners publish to the world their confidence in each other’s integrity and good faith, and impliedly agree to be responsible for what they shall respectively do within the scope of their partnership business ; and if by the wrongful act of one, a loss must fall upon a stranger, or upon the other partner who is equally innocent, the latter having been the cause or occasion of the confidence .reposed in his delinquent associate, must suffer the loss.

Several striking applications of this principle, are to be found among the adjudged cases; of which we will refer to Rapp v. Latham, 1 Barn. & Ald. 795; Stone v. Marsh, 6 B. & Cr. 551;

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Hume v. Bolland Ryan & M. 371; and Boardman v. Gore, 15 Mass. 331 .)

• It is perfectly clear, that if the plaintiffs had wholly disaffirmed the sale, and sued Appleby and Moore in assumpsit for the price of the tobacco, they would have been entitled to recover. Is the rule different in an action to recover damages for the deceit practiced upon them ? The difference in theory is, that in assumpsit the innocent partner is charged with the purchase of goods; while in the action of tort, he is accused of a fraud of which he personally is innocent. In practical effect, the only difference is, that in the one case the plaintiff alleges a sale and proves a fraud; in the other, he both alleges and proves the fraudulent transaction. In both forms of action, the innocent partner is subjected to liability, on the principle that he has held out his associate to be worthy of confidence, in their copartnership dealings. The difference in the ulterior remedy, after judgment, cannot have any effect upon the propriety of the form of action.

It is laid down in a respectable treatise on the subject of parties to actions at law, that where one takes property for the use of another, the latter may adopt the act; and he is thereby placed in the situation of one who had previously commanded the taking, and becomes a trespasser if the act were unlawful. (Hammond on Part. 84.) Now in this case, Appleby obtained the tobacco for the use of himself and Moore. Moore adopted the act by receiving and participating in the use of the property. He was thus placed in the same situation, in reference to the rights of the plaintiffs, as if he had directed Appleby to procure the property, or had concurred with him in the transaction ; and on the authority cited, he become a wrong doer. There is the additional circumstance in this case, that the plaintiffs immediately on discovering the fraud, and within a fortnight after the exchange, notified the defendants in writing, that they had ascertained the note to be bad, and that they should hold the defendants liable for the tobacco.

The omission of Moore to repudiate or disaffirm, on this occasion, what his partner had done, must be regarded as a distinct adoption and ratification of the act $ and we think he

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ought to be deemed from thenceforth a joint wrong doer with Appleby.

Another objection to the recovery, is the omission of the plaintiffs to tender the note to the defendants, before suit brought. The testimony elicited by the defendants showed that the plaintiffs disclaimed owning the note, and referred the maker to the defendants as the parties to collect or compromise it. And the defendants, when notified that they were held liable for the price of the tobacco, were reasonably informed that the plaintiffs disavowed the note ; and could have obtained it at any time on paying such price. Their insisting on retaining the fruit of their fraud, and their omission to pay the price and receive the note, perhaps should be deemed a waiver of any forma:! tender of the latter.

Be this as it may, there is no ground for saying that the defendants have been prejudiced by the failure to tender the note. They have never conceded the right to look to them for the price, and would not have accepted the note if a formal tender had been made. We will therefore adopt the practice sanctioned in Nellis v. Bradley, (1 Sandf. R. 560,) and consider the tender of the note at the argument, a sufficient compliance with the form insisted upon, without expressing any opinion as to the necessity of a tender in any stage of the transaction.

Judgment for the plaintiffs for the amount of the note, which is to be deposited with the clerk, for the defendants benefit on payment of the amount.

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