Maxwell v. Brown Shoe Co. , 114 Ala. 304 ( 1896 )

McCLELLAN, J. —

Under the rule frequently declared by this court, three facts are essential to arm the seller of personal property with the right to disaffim the sale on the ground of fraud, and reclaim the property : First. The purchaser must have been insolvent or in failing circumstances at the time of the sale. Second. Pie must then have had either a design not to pay for the property, or have had no reasonable expectation of being able to pay for it. And, third. He must have made some fraudulent misrepresentation either as to his financial condition or in respect of his intent not to pay, or of his expectation as to paying or he must have fraudulently concealed his condition or his intent not to pay, or his want of expectation that he would be able to pay. — Loeb v. Flash, 65 Ala. 526 ; Spira v. Hornthall, 77 Ala. 137 ; McCormick v. Joseph, 77 Ala. 236 ; Hornthall v. Schonfeld, 79 Ala. 107 ; Kyle v. Ward, 81 Ala. 120 ; LeGrand v. Eufaula National Bank, 81 Ala. 123 ; Robinson & Ledyard v. Levi, 81 Ala. 134; Wollner & Lowenstein v. Lehman, Durr & Co., 85 Ala. 274 ; Darby & Co. v. Kroell, 92 Ala. 607 ; Johnston v. Bent, 93 Ala. 164; Traywick v. Keeble, 93 Ala. 498 ; Cohn Bros. & Co. v. Stringfellow, 100 Ala. 242 ; Hudson v. Bauer Grocery Co., 105 Ala. 200. It cannot be said that this is a very happy or concise statement of the doctrine . One who comes to buy goods on á credit impliedly represents that he is or will be able, to pay for them, and that he intends to pay for them, and he impliedly promises to pay for them ; and he knows that the seller parts with them on the faith of these implied representations and this implied promise. If in fact he intends not to pay for them, or if he has not reasonable expectation of paying for them, and is insolvent or in failing circumstances, so that payment cannot be coerced, he deceives the seller and practices a fraud upon him in the very act of purchasing his property. The purchase itself being a representation that the buyer intends to pay the price, to so represent or profess by the act of purchasing,when in truth he intends to do the contrary, “is as clear a case of misrepresentation and of fraud as could be made.”— Bigelow on Frauds, 484; Swift v. Rounds, 33 L. R. A. 561. Obviously, there need.be no misrepresentation by word of mouth, and no affirmative concealment, so to speak, of the purchaser’s insolvent condition, or of his intention not to pay, or of his want of reasonable expectation of being able to pay. If these facts exist, and are not disclosed, the seller, proceeding, and known by the purchaser to be proceeding, on the assumption of their non-existence, or, in other words, on the assumption that the purchaser is solvent and intends and reasonably expects to pay, is deceived and defrauded. This inaptness of the terms in which the doctrine is stated first above from our own decisions, and the necessity for a qualification thereof, have been fully recognized by this court. Thus, in LeGrand v. Eufaula National Bank, 81 Ala. 123, supra, it is said that “an intentional concealment of, or failure to disclose one’s financial status would be per se fraudulent,” and the same would, of course, be true in respect of a concealment of, or failure to disclose,the would-be purchaser’s intention not to pay, or that he had no expectation of being able to pay. And so in Hudson v. Bauer Grocery Co., 105 Ala. 200, supra, it is unequivocally held that the mere failure of the purchaser to disclose his insolvency and his intent not to pay to the seller, is to all intents and purposes a fraudulent concealment thereof within the meaning of the rule. On these principles and authorities, we feel safe in restating the rule as follows : A sale and purchase of goods is fraudulent and open to disaffirmance by the seller, when the purchaser was at the time thereof insolvent, or in failing circumstances, and had the design not to pay for them, or had no reasonable expectation of being able to pay for them, and either represented that he was solvent or intended to pay or had reasonable expectation of being able to pay, or failed to disclose his financial condition or the fact that he did not intend to pay or expect to be able to pay for the goods. This is the sense and substance of the rule as laid down in our own cases with the qualification or explanation which there accompanies it; and in the form we have given it no tendency is involved to mislead to the conclusion that an affirmative, fraudulent concealment is essential to its application, an illustration of which is found in the case at bar.

The action of the trial court in giving charge 2 requested for the plaintiff, and in refusing charges 12, 13 and 14, asked by the defendant, is fully sustained by the foregoing views of the law in the premises.

It was not essential to a recovery by plaintiff that lad faith on the part of Mrs. Maxwell should be shown, assuming that she paid value for the goods. It would have been quite sufficient to a verdict against her if the jury had found that she knew facts and circumstances which should have excited inquiry on her part, which if diligently prosecuted would have led to a knowledge of fraud of J. K. Maxwell & Co., and that either her suspicions were not thereby aroused, or that she negligently failed to prosecute the inquiry. And while the purchase by her under these circumstances would have been a purchase constructively in bad faith, or in what the law deems bad faith, though untainted with any evil intent, the jury would not have so understood charges 4 and 5 requested for defendant in all probability; but to the contrary they might have been misled thereby to the conclusion that their verdict should be for the defendant unless they believed Mrs. Maxwell had actually and affirmatively intended to defraud. These charges were, therefore, properly refused.

The fact that one of the firm of purchasers represented to the agent of the seller, who made the sale involved here, a year before such sale, that his firm owed only one hundred dollars, when in fact they owed largely more than that, though perhaps of little probative force because of the lapse of time, was yet pertinent, relevant and material, as tending to show concealment of their insolvent condition from the party who subsequently made the sale involved here. — Robinson & Ledyard v. Levi, 81 Ala. 134.

We have considered all the rulings of the trial court referred to in the brief of appellant’s counsel, and find no error in them.

Affirmed.