Hyperlawhypertext legal database Morehouse v. Yeager 41 N.Y. Super. Ct. 135

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Morehouse v. Yeager

41 N.Y. Super. Ct. 135 9 Jones & S. 135 Court N.Y. Super. Ct. Decision date 1876-04-03 English

Delivered by *144 By the Court.—Monell, Ch. J.

Contents

Majority

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THOMAS A. MOREHOUSE and WILLIAM E. DUDLEY, Plaintiffs and Respondents v. ISRAEL YEAGER, Defendant and Appellant.

Headnote

I. PRACTICE.
1. APPEAL BOOK CONTAINING NONE OP THE EVIDENCE.
Í. Effect of., as to consideration of requests to charge by the General Term.
1. It will be assumed by the General Term that there was no evidence upon which the jury might have found in favor of the requesting party upon any of the requests.
1. Therefore, in such case, the General Term, will regard . the requests as mere abstract propositions of lato which it is not called on to examine or decide.
H. FRAUDULENT REPRESENTATIONS.
I. ACTION FOR DAMAGES BY REASON.OF. a. "Necessary elements op ; falsity op the representations and intent to deceive.
1. When intent to deceive not established.
(a) HONEST BELIEF; when it appears that the defendant honestly believed in the truth of the false statement.
1. This proposition (if there is sufficient evidence to carry the case to the jury upon it), may properly be cha/rged without any qualification.
(5) Evidence as to honest belief.
1. What sufficient to show its non-existence.
If the defendant had information and knowledge of facts which in the exercise of common sense and ordinary prudence, were sufficient to put him on inquiry, and would have led him to the knowledge of the truth, he will be liable, the same as if he had actual knowledge. In such case he had not an honest belief in the truth of the false statement.
1. This doctrine is established by Craig ®. Ward, 3 Keyes, 387.
(c) Charge combining this last proposition with the one that if defendant honestly believed in the truth of the representation, the jury must find for him, is not erroneous; e. g.,
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one to the effect that if the jury found that defendant had no information or knowledge of such facts, as, &c., and honestly believed his representations to be true, they must find for the defendant.
Before Monell, Ch. J., and Sedgwick, J.
Decided, April 3, 1876.
HI. Oraig p.--Ward, 3 Keyes, 387, commented on, and various authorities bearing on it reviewed, the result being that the case was declared binding on this court.
Appeal from a judgment.
The action was to recover damages for deceit in fraudulently representing the responsibility of one Stern.
The action was tried by the court and a jury. None-of the evidence taken on the trial is given in the printed case.
Exceptions were taken by the defendant to the charge of the judge, and also to his refusals to charge.
The cause of action as alleged in the complaint was a conspiracy to defraud. It is alleged that the defendant combined with one Stern and one Heineman to cheat the plaintiffs; that by falsely representing Stern to be responsible, he induced the plaintiffs to sell to Stern certain cattle; that the defendant’s statements were false, and a device and contrivance to cheat the plaintiffs; that the defendant at the time knew Stern to be irresponsible and unworthy of credit; but relying upon the truth thereof, and being deceived thereby, the plaintiffs delivered the cattle to the defendant, receiving Stern’s check for the price thereof, which was at that time worthless ; and was made by Stern for the accommodation of the defendant, and for his benefit, and for the preconceived purpose of enabling the defendant to get possession of the cattle without paying for them, and to cheat the plaintiffs; that to
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consummate the fraud, the defendant represented to the plaintiffs that he well knew Stern’s financial condition, and could say positively, that he was solvent; that relying upon such statements, the cattle were delivered to the defendant, and. the check of Stern, post-dated some twenty days, received in payment; that the said statements were untrue, and were intended and known to be, by the defendant, at the time of making them, or that he had good reason to believe the same were, untrue ; that Stern was at that time insolvent, and that the said check was given without any intention of its being paid, Stern then having no funds in the bank to pay the same, or at any time since.
It is then further alleged, that in the making and delivery of the checks, neither Stern nor the defendant ever expected them to be met and paid; that Stern suffered himself to be, and to be used as, a willing tool in the hands of the defendant, for the sole and express purpose of cheating and defrauding the plaintiffs out of their property in the cattle, and to the amount of the checks; and that the aforesaid statements, representations and declarations, by and on the part of the defendant, as to the pecuniary liability of Stern, the making and a delivery of said checks, together with the whole transaction thereinbefore set forth, was a device, a contrivance and a trick, unlawfully, wrongfully and fraudulently entered into, by and between Stern and the defendant, to carry out the said scheme, and for the purpose of cheating and defrauding the plaintiffs out of said cattle, to the amount of the said checks ; and by reason of which the plaintiffs wholly lost the said cattle, and have sustained an injury to the amount of two thousand two hundred and forty-two dollars.
The court, among other things, charged the jury as follows : “If you believe that Stern and Heineman, or
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any one else, entered into a scheme to get the plaintiff’s cattle without paying for them, and the defendant Yeager came in, and aided them in the execution of such scheme, by making representations which were false, and which ought to have been known to him to be false, or which any reasonable man, situated as he was, would have known to be false, the plaintiffs are entitled to your verdict.”
To which the defendant excepted.
The several requests to charge were as follows:
First. If at the time of making the representations in question, Stern was good and responsible, the jury must find for the defendant.
The court declined to charge further or otherwise in this respect, than as it had already charged. To which refusal to charge, the defendant excepted.
The defendant then requested the court to charge the jury: •
Second. “ If the jury find that the defendant Yeager, at the time of making the alleged representations, on April 18, 1872, honestly believed that F. Stern was good and responsible, they must find for the defendant.”
The court declined to charge further, or otherwise, in that respect, than it had already charged.
To which refusal to charge the defendant excepted.
The defendant then requested the court to charge the jury:
Third. “ If the jury find that the representations so made by the defendant Yeager, as to the solvency or responsibility of F. Stern, were not made ip pursuance of any conspiracy, combination, or understanding between the said Yeager and the said Stern and Heine-man, or any other person, nor with intent to defraud the plaintiffs, they must find for the defendant.’ ’
The court declined to charge further or otherwise
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in that respect than as it had already charged. To which refusal the defendant excepted,
The counsel for the defendant then requested the court to charge the jury :
Fourth. “That whatever statement Yeager may■ ha ve made to Morehouse on the 18th of April, 1872, as to the responsibility of F. Stern, was to be considered to have been made with reference to the transaction then being negotiated, and as to the responsibility of Stern for the amount for which Morehouse then proposed to give credit.”
The court refused to charge further or otherwise in that respect than as it had already charged. To which refusal, the defendant excepted.
Fifth. “ If the j uvy find that the defendant Yeager, at the time of making the alleged representations or statements as to the credit or responsibility of F. Stern, honestly believed such statements or representations to be true, they must find for the defendant.”
The court refused to charge further or otherwise in that respect than as it had already charged, and the defendant excepted to such refusal.
In respect to the “second” and “fifth” requests to charge, the court, after reading them to the jury, added to and charged them with the following alterations or modifications, viz. : —
“If you find that the defendant Yeager, at the time of making the alleged representations or statements as to the credit or responsibility of Stern, had no information or knowledge of facts which, in the exercise of common sense and ordinary prudence, was sufficient to put him on inquiry, and would have led to a knowledge of Falk Stern’s pecuniary condition, and of his en dit and pecuniary responsibility, and honestly be
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lieved such statements or representations to be true, you must find for the defendant.”
“ Hence, it is for you to inquire whether the defend ant Yeager had such information or knowledge of facts from his intercourse with Falk Stern, and the surroundings of the case, as in exercise of common prudence and ordinary common sense was sufficient to put him on inquiry, and to have led to a knowledge of Fa.lk Stern’s pecuniary condition and his credit and responsibility at that time.”
The defendant thereupon, at the close of the charge, requested the court to instruct the jury in the language or to the effect set forth in each of the above requests, which the judge refused to do, and the defendant excepted.
The plaintiff had a verdict for the amount of the checks and interest, upon which judgment was entered, and from which the defendant appealed.
Stilwell & Swain, attorneys, and B. M. Stilwell, of counsel for appellant, upon the propositions contained in the second general division of the head notes, urged :
The question is therefore distinctly presented to the court, whether an action for damage can be maintained against a person who has, without fraud, made statements in regard to the credit of another, which statements he at the time honestly believed to be true, though such statements were in fact untrue, and the. person to whom the statements were made has suffered damage thereby. The modification made by the learned judge in the defendant’s request to charge, were made under the authority of the case of- Craig v. Ward (3 Keyes, p. 392), decided in March, 1867; the doctrine of that case has been reviewed and disapproved in numerous cases since, and this is not now an open ques tion in this State (Chester v. Comstock, 40 N. Y. 575 ,
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decided by the Court of Appeals in March, 1869 ; Paisley v. Freeman, 3 T. R. 5 ; Addington v. Allen, 11 Wend. 374 . In Marsh v. Falker ( 40 N. Y. 565 ), decided in June, 1869, the doctrine of Chester v. Coin-stock was approved to its full extent. The head note of the case reads: “False representations as to the solvency or pecuniary condition of another, to be actionable as fraudulent, must at the time have been known to have been false, by the party making them ; or he must have assumed, or intended to convey the impression, that he had actual knowledge of their truth, though conscious that he had no such knowledge.” In Oberlander v. Speiss ( 45 N. Y. 175 ), decided Dec., 1870, it was held that “an action founded upon the deceit and fraud of the defendant cannot be maintained in the absence of proof that he believed, or had reason to believe, at the time he made them, that the representations made by him were false, and that they were therefore fraudulently made.” But when that case was cited in the Court of Appeals, in Meyer v. Amidon ( 45 N. Y. 170 ), decided in March, 1871, the court declared that Oberlander v. Speiss, must be read in connection with Marsh v. Falker ( 40 N. Y. 562 ), and fully re-affirmed the doctrine of the latter case. The case of Oberlander v. Speiss came before the court of appeals again in Nov. 1875, and any doubt which might have existed as to the meaning of the court in declaring ( 45 N. Y. 170 ) that the opinion formerly given on that case (reported 45 N. Y. 175 ) was to be read in connection with Marsh v. Falker ( 40 N. Y. 562 ), is removed by the express declaration of the court itself as to what it had formerly decided. Miller, J., delivering the opinion of the court, November 29,1875, says : “Upon the former appeal of this case to this court it was decided that in an action founded upon the fraud and deceit of the defendant, based upon false representations, it was not
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only necessary to show that the representations proven were false in fact, but that the defendant had reason to believe, and did believe at the time they were made, that they were false, and for that reason they were fraudulently made.” The learned judge, therefore, erred in refusing to charge the jury in accordance with these requests.
Wm. R. Baldwin, attorney, and M. Compton, of counsel, for respondent, upon the proposition contained in the second general division of the head notes, urged :
I. The defendant requested the court to charge : if the jury find that the defendant, Yeager, at the time of making the alleged representation or statement as to the credit or responsibility of F. Stern, honestly believed such statement or representation to be true, they must find for the defendant.”
The court charged: “If you find that defendant, Yeager, at the time of making the alleged representation or statement as to the credit or responsibility of Stern had no information of facts which in the exercise, of common sense and ordinary prudence was sufficient to put him on inquiry, and would have led to a knowledge of Falk Stern’s pecuniary condition, and of his credit andpecuniary responsibility,and honestly believed such statement or representation to be true, you must find for the defendant.” 1st. Here the court charged the jury the exact language requested, modified by that clause which is in italics, being the modification referred to by the court. Having charged the exact language requested, and the clause in italics in addition, if the defendant was dissatisfied he should have objected to the court’s having charged the language of that clause, and excepted to it. If the court had. repeated the. fifth request, the same proposition would still be in the case modified by the clause in italics without objection or exception.
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2d. The court having previously charged the jury that “If, at the time of making the representations in question, on the 18tli day of April, 1872, Falle Stern was good and responsible, the j ary must find for the defendant.” And again : “If you find that the defendant Yeager, at the time of making the alleged representations, on the 18th of April, 1872, honestly believed that Falk Stern was good and responsible, you mast find for the defendant.” So that the jury could not possibly have found a verdict for the plaintiffs, without disregarding these instructions until they were convinced, 1st. That on the 18th day of April, 1872, he was not good and responsible, and 2d, they were not convinced that on the 18th day of April, 1872, the defendant honestly believed Stern was good and responsible, if, in the language of the modifying clause referred to above he had been, “ informed of the facts which in the exercise of common sense and ordinary prudence was sufficient to put him on inquiry, and would have led to a knowledge of Falk Stern’s pecuniary condition and of his credit and pecuniary responsibility.” He had no right to tell these plaintiffs, under the circumstances, he was “as good as gold, and say he would not introduce him unless he knew him to be such.’’ Stern, at this time, as the jury have necessarily found, was not good; the defendant, even if he had no Ttnowledge on the subject, by declaring that he knew him to be good, “ without knowledge of its truth or falsity, was as much guilty of a fraud as if he knew it to be untrue ” (Bennett v. Judson, 21 N. Y. 238 ; Marsh v. Falker, 40 N. Y. 562 ; Wakeman v. Dally, 51 N. Y. 27 ). Under the decision of Wakeman v. Dally, supra, the modifying clause was proper.
There were no printed points submitted on either side as to the propositions in the first general division »f the head notes.

Not having been furnished by the appellant with any of the evidence given on the trial of this action, we must assume that all the allegations in the complaint were sufficiently supported by the evidence to justify and sustain the verdict of the jury. In other words, that the cause of action, as stated in the complaint, was fully and sufficiently proven on the trial.

Nor do I think that the defendant can now claim that upon his several requests to charge the jury, there was any such conflict in the evidence, or any evidence whatever, upon which the jury could And facts to support the propositions of law propounded by him.

Thus, the first request, that if Stern was good and responsible, the jury must find for the defendant. The complaint alleged otherwise, and we must assume that the proof fully sustained the allegation. The jury therefore could not have found that Stern was good and responsible. So in regard to the defendant’s belief of Stern’s responsibility and of the conspiracy to defraud. The complaint alleged both the insolvency of Stern, and the conspiracy, and the proof is presumed to have sustained the allegations.

With these presumptions against the defendant, his requests were mere abstract propositions of law, which I do not think we are called upon to examine or decide. We at least should be able to see, that the jury might have found for the defendant upon some of the requests. How can we do so, when we must presume the evidence was wholly the other way %

We might, I think, very properly dispose of all the defendant’s exceptions to the refusals to charge upon the reasons already stated. The defendant made up the case, and could have shown that there was evidence which the jury could have applied to his propositions of law. Having omitted to do so, every legal presumption should be taken against him.

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The verdict of the jury has established, that there was a conspiracy between the defendant and Stern to defraud the plaintiffs ; that to perpetrate the fraud, the defendant induced the plaintiffs to sell their property to the defendant, upon the credit of Stern, whom the defendant falsely represented to be responsible, Knowing at the time that such representations were untrue.

To such a case, thus established,with the light shed upon it by the judge’s charge, we are asked to examine the propositions of law submitted by the defendant.

The first.request to charge was that “if Stern was good, the jury must find for the defendant.” 1 do not understand that this was refused. The judge read the several requests and said he would charge them with some modifications.

In respect to the first request he said, “ you (the jury) have the evidence whether he (Stern) was good, and you are to pass upon that question.”

Taking the request, and the remark upon it by the judge, it was sufficiently indicated that if the jury should find that Stern was good, they must find for the defendant. The request contained just that proposition, and it was given to the jury, under a submission to them of the question of fact involved in it.

The second and fifth requests are like the first, except that if the defendant “honestly ~believedfi that Stern was good, &c., and this raises the principal question discussed upon the argument.

The court, after reading the requests, said to the jury, if you find that the defendant, at the time of making the representations as to the responsibility of Stern, had no information or knowled of facts, which in the exercise of common sense and ordinary prudence, was sufficient to put him on inquiry, and would have led to a knowledge of Stern’s pecuniary condition, aid

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honestly believed such statements to be true, you must find for the defendant.

The request of the defendant presents the naked proposition, whether an honest belief in the truth of a false statement, is not a defense to an action for damages for a fraud.

I have no doubt it is, and such is the current of decision and authority at the present day. The law on the subject is clearly and forcibly stated in the opinions of the court, in Marsh v. Falker, and Cbester v. Comstock ( 40 N. Y. 562 and 575), where it is said that, an intent to deceive, is the essential ingredient.

But I do not understand that the cases in 40th N. 7. undertake to interfere with the question of fact which maybe involved in any given case ; or to decide what kind of evidence shall be regarded as sufficient to show the intent to deceive. Those cases do decide, as matter of law, that representations made without intent to deceive, in the belief that they were true, ■whether it be of the existence of a fact or of the knowledge of a fact, are not per se fraudulent. That the whole question is whether the representations were fraudulently made ; and the intent to deceive must concur with the falsity.

This general proposition has been affirmed in several subsequent cases. In Oberlander v. Speiss, 45 N. Y. 175 , and in Meyer v. Amidon, Id. 170. In a second appeal, in Oberlander v. Speiss (not reported), the court explains its former decision. They say that it is not only necessary to prove the falsity of the representations, but that the defendant had reason to believe, and did believe they were false. But that goes no further than the former cases, which hold an intent to deceive essential.

The proposition contained in the defendant’s request was fairly within the principle laid down in

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the cases referred to, and might have been very properly submitted to the jury without any qualification.

Whether the addition pub to it by the learned judge, changes or affects the legal proposition, remains to be seen.

Tne words interpolated by the learned judge were extracted from the opinion of the court in Craig v. Ward (3 Keyes, 387), where a charge to the effect, that even if the defendant did not know the representations were untrue, yet if he was informed and 'knew of the facts which in the exercise of common sense and ordinary prudence, were sufficient to put him on inquiry, and would have led him to a knowledge of the truth, he would be liable, the same as if he had actual knowledge, was upheld by the court of appeals, and has not since, that I am aware of, been reversed.

The learned judge, however, in that case, did not, nor did the court, intend todo more than to decide that case. They did not intend to lay down any general principle. The representation was by an agent in respect to the validity of a mortgage upon land, and the court say, that the proof was clear that Clark (the agent) was informed of every thing respecting the condition of the mortgage, and understood all the facts in regard to it. And then the learned judge says, (p. 303), “ Upon the case as it was presented by the proof, the charge was right;” and he adds, “I am inclined to the opinion that it is right in the abstract;” referring to Bennetts. Judson, 21 N. Y. 238 .

But Bennett v. Judson, as well as Marsh v. Falker, (ubi sup.) expressly, and Craig v. Ward, by necessary implication, have been limited in their application by Oberlander v. Speiss ( 45 N. Y. 175 ) to the class of cases where the party making the representation of a fact has asserted its existence as within his personal knowledge, as contra-distinguished from belief or opinion.

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In the several cases I have examined, and I have examined all in this state decided since Craig v.Ward, I can not find any modification of the principle as it is stated in Chester v. Comstock (ubi supra), namely that there must be anintent to deceive, and such intent can be ascertained only from some knowledge or information of the falsity of the statements. That they were imprudently or indiscreetly made, is not enough. In Meyer v. Amidon (ubi sup.), it is said the action can not be maintained in the absence of proof, that he believed or had reason to believe, at the time when he made them, that the representations were false, and that they were for that reason fraudulently made. And in Oberlander v. Speiss (sup.), the referee found the representations false, but did not find that the defendant knew them to be false, or any fact inconsistent with the idea that the defendant in good faith believed them at the time to be true; and it was held there could be no recovery.

Still the enunciation of the general principle does not, except very inferentially, perhaps, touch the precise point decided in Craig v. Ward (sup.), that if the defendant knew or had information of facts which were sufficient to put him on inquiry, and would have led to a knowledge of the matter represented, he would be liable. And the point is left, I think, unreversed, and in one case among the last decided by the court of appeals, is so far approved as to leave it binding upon us.

In Atkins v. Elwell ( 45 N. Y., 753 ), in reviewing one of the requests to charge, the court quote from the charge, which was literally in the language of Craig v. Ward, and say (per Folger, J.): “ The request should have embodied this element of knowledge of the falsity of the representations or informa tion of facts and circumstances which would put upon inquiry.”

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Without inquiring further into the correctness of the decision in Craig v. Ward, we think it is so far affirmed by Atkins v. Elwell, that we must follow it.

The third request was -charged. There was no alteration or modification of it in its legal effect. The addition of the judge was a mere illustration of the evidence necessary to establish a conspiracy, and upon which the jury were to find its existence.

The fourth request was an attempt to limit the fraud to the first purchase. But the charge in the complaint, which, as we have seen, must be assumed to be true, was that the second purchase was in furtherance of the first conspiracy, and the reliance of the plaintiffs was upon the first representations.

Under these facts the jury could not have separated the transactions. So far as they were affected by the fraud, they were one transaction.

There was no error in refusing the request.

The portion of the charge excepted to, contains no principle of law different from that which we have already had under review, an 1 falls within the case of Craig ®. Ward.

We think there was no error committed o .1 the trial, and the judgment should be affirmed.

Sedgwick, J., concurred.

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