Cross v. Peters , 1 Me. 376 ( 1821 )

Mellen C. J.

afterwards delivered the opinion of the Court, as follows.

Two questions are presented for consideration : one, as to the admission of Parker as a witness;—the other as to the opinion delivered by the presiding Justice to the jury.

As to the first question, the objection seems unfounded.—The case finds that the goods the witness purchased have not been paid for:—He therefore stands entirely indifferent. He is liable to the plaintiffs for the price of the goods, if they do not succeed in this action: and will remain liable to Holm if they do succeed. Let this cause be decided either way, one of the witnesses debts must be cancelled and the other will remain due and unpaid. To this point may be cited the case of Bean v. Bean, 12 Mass. 20. The objection as to interest, therefore fails. But it is urged that he is inadmissible on the ground of his connection with the alledged fraud. In the case in 4 Mass. 492. cited by the plaintiffs’ counsel, such an objection is considered as of no importance.

As to the other point reserved, the presiding Justice instructed the jury that unless they should be satisfied that the goods replevied were purchased by Parker pursuant to some secret agreement or understanding between him and Holm, so that they might be attached by Holm for his indemnity, they ought to find in favour of the defendant. It is now necessary to examine and determine whether that instruction was correct. If not, the verdict must be set aside and a new trial granted. As it appears by the report of the case that no arts or devices were practiced, nor any false representations or pretences whatever were made by Parker at the time of purchasing the goods on credit, or at any other time by means of which he obtained the credit; and as the jury have found that there was no such concert or secret agreement or understanding between Parker and Holm; and as it does not appear that Parker knew, at the time, that he was insolvent, though in fact he was so; the simple inquiry is this: “If a man doing business as a trader and in good credit “ (though insolvent at thestime, but not aware of that fact) obtains “ goods on credit in the town where he lives and is known, without “ practising any artifice or making any false representations or “ pretences, or in fact any representations or pretences at all;— “.and removes these goods to his own store openly : Can such “ vender, upon learning the insolvency and circumstances of the “ purchaser, reclaim the goods in the possession of the purchas- “ er or maintain replevin for them against the attaching officer, “ on the principle of his legal right to rescind the bargain ?”— This seems a clear and fair statement of the question.

If in the present case the plaintiffs had a right to rescind the contract of sale, it must be on the ground of fraud on the part of Parker the purchaser; and though in many instances contracts may be avoided by reason of the fraudulent, conduct of one of the parties : and the party attempted to be charged may for that cause be excused from the performance of his contract;— yet in cases of the kind under consideration, where a vender claims the right of rescinding a contract of sale which has been carried into effect and executed on his part by a delivery of the articles sold, it would seem that his right to rescind must be founded on such a fraud on the part of the vendee as would render him liable to an indictment; or if not, would at least subject him to an action of deceit: or in other words, that a vender has not a legal right to rescind a contract of sale and reclaim the goods sold, unless such fraud was practised in making the contract, that if the vender did not rescind it, he would recover damages against the vendee for the injury sustained by that fraud-—But without advancing any direct opinion as to the correctness of this principle, it appears to us to be clear thqt it would require as much proof of fraud and false representation to maintain an action against a vendee in the above circumstances, as an action against a third person, by whose fraudulent and false representations the vender was induced to give credit to the -vendee.—Artifice, misrepresentation,, falsehood and fraud constitute the foundation of all such prosecutions.

It may not be useless to examine the subject in both points of view.

In the case we have stated, would an indictment lie against the purchaser ?

1. Cheating, at common law was an indictable offence; but to constitute the offence two things were necessary. First, the act must be of such a nature as to affect the public. Secondly, it must be such against which common prudence could not have guarded. 1 Hawk. Ch. 71. 2 Burr. 1125.

2. The statute of 33 Hen. 8. ch. 1. made it an offence to obtain money, goods, &c. by a false token. Though this statute in some respects altered the common law, it did not affect those cases against which common prudence would be a sufficient security.

3. The statute of 30 Geo. 2. ch. 1. goes still further and makes it an indictable offence to obtain money, goods, &c. upon a' false pretence. Before this last statute was enacted, it was not an offence to obtain money, goods, &c. by a false pretence, unless false tokens were used. See 6 Mod. 105. 301. 42. 61. 5 Mod. 11. 11 Mod. 222. Ld. Raym. 1013.

This statute was never in force in Massachusetts, as we are informed by Parsons C. J. in the case of Commonwealth v. Warren, 6 Mass. 72. But the Stat. 1815. ch. 136. contains similar provisions, and therefore those decisions which we meet with in the English books upon the Stat. Geo. 2. are applicable to the statute of 1815.

In the case of Young in error v. Rex, 3 D. & E. 98. it is decided that to bring a case within the act of Geo. 2. there must be false pretences or stories, and misrepresentations, deceiving and intended to deceive the person with whom the offender is dealing, and fraudulently contrived for that purpose.—Buller J. says, “ Barely asking another for a sum of money, is not suf- “ ficient: but seme pretence must be used, and this pretence must “ be false, and the intent is necessary to constitute the crime.”— The case of Rex v. Lara, 6 D. & E. 565. shews the nature of those false tokens and pretences which are necessary to support an indictment.—Lara pretended that he wished to purchase certain lottery tickets to a large amount. He did so, and paid for them by a draft on a certain banker with whom he said he had funds, though at the lime he knew he had not.—The Court decided that the indictment could not be maintained. Ld. Kenyon observed that Lara used nothing but his own assertion to gain credit,—“ that he sat down and drew a check on a Bank- “ er; but it would be ridiculous to call that a false token :—that “ it left his credit just where it was before. What the defend' “ant did was highly reprehensible and immoral; but as he “ used no false tokens to accomplish his designs, judgment must “ be arrested.”

Hawk. B. 1. ch. 71. sect. 2. says that “ the deceitful receiving “ money from one man to another’s use upon a false pretence “ of having a message and order to that purpose, is not punish- “ able by criminal prosecution, because it is accompanied by “ no manner of artful contrivance ; but wholly depends on a “ bare, naked lie.”

The above-cited case of Commonwealth v. Warren was decide ed before the act of Massachusetts for the punishment of Cheats was passed. Had it been in force at the time of the trial, Warren would probably have been convicted, as he used several false pretences to obtain credit by means of which his fraud was successful. The ease further shews that if another person had been connected with him in the fraud, the offence would have amounted to a conspiracy without any false pretences ; and might have been charged and punished as such.—This distinction it is of importance to notice, as it may have a bearing on the main question reserved in this cause ; and for that reason it may under this head be also remarked that where two or more conspire to do an unlawful act, or -a lawful act for an unlawful purpose, it is a crime ; and the gist of the conspiracy is the unlawful confederacy. Commonwealth v. Judd & al. 2 Mass. 329. Commonwealth v. Tibbetts & al. 2 Mass. 536.

Our next inquiry is whether, in the case stated, an action of deceit, or an action on the case in nature of deceit, would lis for damages occasioned by the fraud.—Our Law books must answer the question.

Some of the cases relating to this point are founded upon an al-lodged fraud and deceit on the part of the vender: others on the part of the vendee.—Those which are grounded upon an express warranty do not come within the range of our present view. In Ld. Raym. 519. it is settled that possession is a warranty of the implied kind, that the goods belong to the seller; for possession is a colour of title, and an action lies upon a bare affirmation of the possessor that the goods are his own. Roberts on frauds 523.—“ An action upon the case lies for a deceit when a man does any deceit to the damage of another. Com. Dig. Action on the case for deceit A. 1.” “ Fraud without damage or damage without fraud gives no cause of action—both must concur.” 3 Bulst. 95. Roberts 523. “ No action lies against a man for his declaring that a certain person would have given him a certain sum for his farm ; though no such offer was ever made.— It is a mere ground of estimation with which no prudent man should be satisfied;”—but a declaration of the fact that the rent was so much, when it was not, whereby a purchaser is deceived, will support an action. See Roberts 523. and the cases there cited. Many other cases of false or fraudulent repre>-sentations on the part of the vender might be stated, shewing the principles on which actions for deceit may be maintained against them:—but these are sufficient. It is much more to our present purpose to examine those cases in which actions have been supported against vendees or receivers of money, for fraud and deceit on their part, and the facts necessary to support such actions. In the case of Buffinton & al. v. Gerrish & al. 15 Mass. 156. Walker was guilty of gross fraud, and stated a series of falsehoods well calculated to gain him credit, by inspiring confidence in his responsibility ;—and by means of this fraud and false pretence he succeeded in obtaining credit to a large amount. In Badger v. Phinney, 15 Mass. 359. Rand, the minor, obtained credit by falsely affirming that he was of full age : and this affirmation was pointedly made, too, in reply to the inquiries of Badger. Putnam J, in giving the opinion of the Court says, “ the goods were delivered to the plaintiff Rand be- “ cause he undertook to pay for them and declared he was of full “ age. The basis of this contract has failed from the fault if ‘‘.not the fraud of the infant; and-the fraud which induced “ the contract, furnishes the ground for the impeachment of it. “ Thus in the case of Buffinton & al. v. Gerrish & al. where one purchased goods on credit by means of false representa- “ lions, it was holden the vender had not parted with his property, but might maintain replevin against the attaching officer.”

In the case before mentioned of Commonwealth v. Warren, the Court observe that the man defrauded should seek his remedy by action. In that instance false and fraudulent representations had been made. In the important case of Pasley v. Freeman, 3 D. & E. 51. Buller J. observes, “ The fraud is that the defendant “ procured the plaintiff to sell goods on credit to one whom “ they would not otherwise have trusted, by asserting that which “ they knew to be false. Here then is the fraud and the means “ by which it was committed :—the assertion alone is not suffi- “ cient: but the plaintiff must go on and prove that it was false “ and that the defendant knew it to be so.” The action of Pasley v. Freeman was maintained upon the principle that the defendant had been guilty of that fraud and misrepresentation to induce the plaintiff to sell goods on credit to Falch, which would have maintained the action against Falch if he had himself been guilty of the fraud and falsehood.—Buller J. concludes with observing that “ if a man will wickedly assert that which he knows “ to be false and thereby draw his neighbour into a heavy loss “ he is liable in damages.” Ashurst J. in delivering his opinion says “ In order to make it actionable it must be averred that “ the defendant intending to deceive and defraud the plaintiffs, “ did deceitfully encourage and persuade them to do the act and “for that purpose made the false affirmation, in consequence of “which they did act.” “If A. send his servant to buy a “ horse, who buys it and pays for it, and the seller affirms to A. “ that he was not paid, whereby A. pays him ; an action lies. So “ if a man affirm himself to be of full age, when he is an infant, “ and thereby procure money to be lent on mortgage.” See Com. Dig. action on the case for deceit A. 10. and the authorities there cited; also Bean v. Bean, 12 Mass. 20. Numerous other instances of similar imposition and falsehood might be collected and stated ; but it is not necessary, as they are all founded on the same principle, viz. that the money, goods or credit had been obtained by means of false and fraudulent assertions of the defendant. We have not been able to find a single instance in which an action of this kind has been supported, except where the party charged had succeeded in his plan by false assertions and fraudulent misrepresentations. In 3 Chitty on pleading are a number of forms of declarations in actions of deceit—one for selling goods as and for a larger quantity than there was ;-*onc for selling a piece of land as containing more acres than it did contain ;—one lor misrepresenting the value or profits of a certain trade ;—one for representing himself as authorized by a third person to do a certain act or receive a certain sum of money ; and one for personating the plaintiff. In each of these forms there is a strong averment that the defendant made a direct, false and fraudulent representation of facts, with an intent to accomplish his object and defraud the plaintiff; and that by means thereof he had succeeded.

We have thus taken a brief review of some of the general principles of law applicable to indictments for frauds and deceits, and to actions on the case brought by the party injured against him who commits the fraud ; whether he is the vendee of the goods or his artful and fraudulent friend. It appears by the precedents to which we have alluded, that in case for a fraudulent purchase or obtainment of money, the declaration must contain an allegation that the plaintiff was imposed upon by artifice and false declarations—calculated and intended to deceive; and in all the cases which we have cited, the prosecution on civil action was maintained or defeated, according as the proof appeared on trial touching the false and fraudulent representations alledged to have been made by the party charged ; he knowing them to be false and deceptive.—Judging, then, from legal forms and decided cases, it seems to be settled that deceptive assurances and false representations fraudulently made are essential to the support of an indictment or civil action for a fraud committed in the manner above supposed; and of course, that such proof is equally necessary to the support of an action of replevin by the vender who claims the right of rescinding the sale he has made on the ground of fraud in the vendee. Let us for a moment look at the facts in the case at bar.—Parker, it turns out, was insolvent when he purchased the goods, but there is no proof that he was apprized of the fact;—he bought the goods on credit in usual form, refusing the offer of further credit from the plaintiffs :—he made no professions or promises ;— no representations or assertions; practised no other art than obtaining the credit without disclosing his insolvency; a fact, which it does not appear that he himself knew. These facts are essentially different from those appearing in the cases we have collected and stated ; in which it is declared not only that there must have been assertions and representations made—but they must also have hecn false: and to complete the proof the defendant must have known them to be false. Under these circumstances we are not aware of any legal principles on which an indictment could be sustained or an action for deceit against Parker; and we do not perceive how it is competent for the plaintiffs to rescind the contract they have made and reclaim the goods in this action, unless upon the ground of concealment, which has been also urged by the counsel for the plaintiffs, and which we will presently consider.—As the jury have decided that no secret understanding existed between Parker and Holm of a fraudulent nature relating to this property, we do not see why the rule of law is not applicable in this instance, melior esl conditio defend,ends. The plaintiffs may have been guilty of negligence or want of due care ; but as it regards the question before the Court the defendant and he whom he represents seem not liable even to that imputation.

But it is contended by the counsel for the plaintiffs that a vender may rescind a contract of sale on account of fraud in the vendee by concealment of the truth as well as by false assertions and misrepresentations ; that the consequences are the same and of course the law is the same. Before answering this argument, it is natural to inquire wherein this concealment consisted.—-It is stated by the counsel for the plaintiff that it was the duty of Parker, as an honest man, to. have disclosed his insolvency to the plaintiffs at the time he applied to purchase the property. The first reply to be given, is, that it does not ap. pear in the case that he knew he was insolvent.—lie might be suspicious of it, and he might not be ; on that point we have no. information. It does nqt appear, then, that he concealed any facts which he was bound to disclose.—If the principles of law respecting this part of the cause were to be carried to the same extent by the Court as they have been in. the argument of the counsel, all confidence in dealing would be destroyed, and perfect confusion, as to the title of personal property, would be the consequence.—The vendee would never feel safe in purchasing, nor any other person safe in purchasing of him, lest the creditor should afterwards discover that the vendee, when he purchased., was actually insolvent, and that those who afterwards bought of him knew of the insolvency ; and then should come forward, with a sweeping claim of the property he had sold, on the principle of rescinding the sale for a fraudulent concealment.— But supposing that Parker did know of his own insolvency at the time of his contract: we are perfectly satisfied that the sale is not void on the ground of fraud because he did not disclose the fact.

It is true, the fraudulent concealment by the vender of a secret defect in an article sold by him, wholly unknown to the vendee, may be the foundation of an action for damages by him against the vender, and perhaps authorize the vendee to rescind the contract on discovery of the fraud ; because the law implies a warranty that the goods or articles sold are of a merchantable quality. Gilb. Evid. 187. Roberts 523. But we apprehend no case can be found by which it has been settled that the law implies any thing like a warranty on the part of a purchaser that he is a man of property, and sound as to his pecuniary concerns.—In the commerce and intercourse of mankind, such an implication was never understood to exist.

It is also true that in the case of policies of assurance the concealment of the truth is nearly allied to misrepresentation. If the fact be material, it avoids the policy. But it is not on the ground of fraud in the concealment that the contract is void ; because if the concealment be the effect of accident or mistake, negligence or inadvertence, it is equally fatal to the policy as if it were intentional and fraudulent.—See Marshal 347. andbases there cited. But it will be difficult to find a case where a policy was declared void, because the assured, when the policy was effected, was insolvent and yet concealed that fact:—still the reasoning of the plaintiffs’ counsel seems to lead to the conclusion that the policy would in such a case be void because the assured was insolvent and unable to «pay the note he had given for the premium.—We apprehend no conclusion can be drawn from these principles of the law of Insurance unfavourable to those on which we place the decision of this cause.

We have before stated that there might be a conspiracy between two or more to obtain goods or money from another without any false pretences, &c. and which would be punishable as a crime. In reference to this principle of law the jury were instructed that if they believed such conspiracy or secret arrangement existed between Parker and Holm, though there were no false pretences or representations, they ought to find a verdict for the plaintiffs, but not otherwise.

It is to be lamented, if the plaintiffs have lost their property by reposing confidence where it was not deserved ; but this is not a circumstance for our consideration in the decision of the cause.

On the whole, after much thought and the most careful examination, we are satisfied with the correctness of the instructions which were given to the Jury; that the motion for a new trial must be overruled, and that there be an entry of

Judgment according to the verdict,