Bay State Milling Co. v. Susman, Feuer Co.

The defendants excepted to the admission in evidence of Exhibit A, the financial statement made by Soloway Katz on April 11th, 1911, on the ground that it was not a continuing representation, and also claimed that the court erred in leaving it to the jury to say whether it was so intended. In this there was no error. The statement was not made for the purpose of a single sale. It was made to procure a continuing credit, and resulted in a written agreement by the plaintiff to give a line of credit for one year. Plaintiff claimed that about four months after the credit began to run, Soloway Katz used it to obtain flour from the plaintiff after they were insolvent, and with the intent not to pay for it. The statement, which showed a considerable surplus, was admissible to prove the conditions under which the line of credit was originally given, and in connection with the claimed insolvency it was admissible as evidence of an intention to defraud the plaintiff, either by furnishing a false financial statement in April, 1911, or by concealing a subsequently developed insolvent condition while still asking for and obtaining a line of credit based upon the original statement. The court correctly charged the jury in this connection that it was for them to say, in view of all the circumstances, whether Soloway Katz did or did not intend Exhibit A as a continuing inducement to extend a continuing credit.

The bringing of these replevin suits amounted of itself to an election by the plaintiff to rescind the sale of the goods replevied; but the defendant, as a second defense, pleaded that the plaintiff had subsequently affirmed the sales to Soloway Katz, by filing and proving in the bankruptcy court a claim for the price of the flour as goods sold and delivered. After it was shown that the original claim and amended claim filed by the plaintiff were lost, certain abbreviated entries in the records of the referee in bankruptcy were offered in evidence by the defendant to show that the plaintiff had filed a claim corresponding in amount to the indebtedness of Soloway Katz. The plaintiff, to rebut the inference of affirmation, offered in evidence copies of the original claim and amended claim filed by it, marked Exhibits C and D, for the purpose of showing that the claim actually proved was not an unconditional claim. The copies were admissible for that purpose, notwithstanding that they were unsigned and that certain blank spaces in one of them were not filled out. the originals being lost, the plaintiff might, if necessary, have proved their entire contents by parol.

The next question is as to the effect of these exhibits on the defense of subsequent affirmance. It appears from Exhibit C, that the original proof of debt was for the entire indebtedness of Soloway Katz, amounting to $8,434.60, accompanied by the statement that a replevin suit was then pending to recover a part of the goods, and that "credit will be given for the goods we may be able to recover on said suit." This left the amount of claim entirely indefinite, and it appears from the imperfect copy of the amended claim, Exhibit D, that the original claim was disallowed on that account, and that as the result of a petition for review the plaintiff was ordered by the District Court to amend its proof of debt by alleging a certain definite amount of indebtedness. The original proof of debt was so amended by stating "that the value of the property replevied in said action amounts to $ , leaving a balance of $ due and owing to said The Bay State Milling Company as an unsecured claim against the above bankrupt estate, and for which amount said Bay State Milling Company makes claim against the said bankrupt estate." In the amended proof of claim as filed, the above blanks were properly filled out. The original proof of debt was also amended, among other particulars, by striking out the statement that the debt consisted of an account of six items maturing at different times. It thus appears that the plaintiff's claim as amended expressly disclaimed the value of the flour replevied in these actions, and claimed only the balance of the purchase price as a debt; also that it no longer expressly comprehends six items maturing at different times. Evidently the plaintiff is not occupying inconsistent positions with reference to any one barrel or package of flour.

Moreover, we cannot see that it is necessarily occupying inconsistent positions with respect to any one sale of flour to Soloway Katz. While it is true that all the sales to Soloway Katz were pursuant to the general terms of the contract, Exhibit B, yet each shipment was the result of a separate order, made at a separate time, and under the express terms of Exhibit B at a price to be separately agreed on. The plaintiff claims that four, and only four, separate shipments of flour were traced into the defendant's hands, one, of two car loads, delivered by Soloway Katz to the defendant on September 8th, and three others, of three car loads each, ordered by Soloway Katz from the plaintiff on September 8th, September 15th and September 30th respectively; and that in all twelve hundred and seventy barrels of the plaintiff's flour were received by the defendant from Soloway Katz between September 8th and October 25th, 1911, of which the plaintiff has replevied ten hundred and seventy-two barrels and a half, and the remaining one hundred and ninety-seven barrels and a half were re-sold by the defendant before these actions were commenced. It is apparent that for the purpose of electing whether to affirm or rescind them, the plaintiff ought to be allowed to treat these four sales to Soloway Katz separately, because they were in point of fact separate agreements both in time and in the essential particular that the plaintiff might be able to prove a fraudulent intent not to pay in the case of one order, and not in the case of another.

The defendant has assumed in its claims and requests to charge that the debt proved by the amended claim includes some part of the purchase price of each of the four shipments of flour, and that thereby each and every one of the sales in question has been affirmed. That would have been apparently true of the original proof of claim, which claimed the whole price of all the flour and described it as an account of six items maturing at different times. But it is not necessarily true of the amended proof of claim, which describes the debt as a balance left after deducting the value of the flour replevied, and omits the statement that it consists of an account of several items maturing at different times.

Only 197 1/2 barrels of flour received by the defendant have escaped these writs of replevin, and these may all have belonged to one of the four shipments, in which case only one of the four sales resulting in the four shipments has, on the defendant's theory, been affirmed. It does not appear whether these 197 1/2 belonged to more than one shipment; nor does it appear to what particular shipment or shipments they did belong; and therefore it does not appear how much of the replevied flour was included in the sale or sales which, on the defendant's theory, have been affirmed by the amended proof of debt. In other words, the defendant has not made good its second defense by proving its alleged affirmance as to all the sale, or as to any one sale in particular. It is, therefore, unnecessary to discuss the question of law which the defendant has argued, — whether in this State an action of replevin against the sub-vendee of a fraudulent bankrupt vendee is necessarily defeated by the plaintiff's subsequently proving in another jurisdiction and against a different defendant a claim for the price of goods not replevied, but included in the same sale as the replevied goods. The assignments of error relating to the defendant's second defense are overruled.

The remaining questions in the case relate to the finding of the jury that the defendant was not a purchaser in good faith and for value.

It is assigned as error that the court erred in admitting the testimony of one Menken, who said that he told one Ginsberg, then in apparent charge of the defendant's office, that Soloway Katz were in failing circumstances. The objection is that Ginsberg was a mere bookkeeper and that there was no evidence that he was at the time of the alleged communication acting as manager of the defendant's business in any respect. The finding, however, recites that there was evidence tending to prove that Ginsberg was and acted as the bookkeeper and assistant manager of the defendant in the conduct of its business. This being so, the court did not err in admitting the evidence, and in then charging the jury that it was a question of fact to be determined by them whether Ginsberg acquired any knowledge or notice of the insolvency of Soloway Katz, and further, that if Ginsberg was not at the time acting for the defendant in acquiring or receiving the information and acting within the scope of his authority, then any knowledge or notice acquired or received by him could not bind or affect the defendant.Jordan, Marsh Co. v. Patterson, 67 Conn. 473, 483,35 A. 521.

The sixth and only other assignment of error which we deem it necessary to discuss relates to the following portion of the charge of the court: "It is claimed, as I have stated, that the defendant and its proper officers and agents, acting within the scope of their authority in the conduct of its business, had such knowledge and notice of the condition of Soloway Katz as to put them upon inquiry.

"Knowledge on the part of the purchaser of goods from another of facts and circumstances which ought reasonably to excite suspicion and put one on inquiry is sufficient to charge him with notice of facts that he might have ascertained by the exercise of ordinary diligence.

"Whatever is sufficient to put a man on inquiry amounts to notice; that is, where one has sufficient information to lead him to the knowledge of a fact he should be deemed to be cognizant of such fact."

It is claimed that this instruction is inconsistent with the rule laid down in Knower v. Cadden ClothingCo., (57 Conn. 202, 17 A. 580) to the effect that where the title of a sub-vendee is attacked because of the intent of the original vendee to defraud the plaintiff vendor, the latter is bound to prove as a fact that the sub-vendee had actual knowledge of the fraud. We see nothing in the charge complained of inconsistent with the rule in Knower v. Cadden Clothing Company. The court was dealing in the first place with the rule as to imputed knowledge of facts, and not with the rule as to imputed knowledge of fraud. It referred to the insolvency of Soloway Katz as a fact of which it was claimed that the defendant had sufficient knowledge to put it on inquiry, and then stated correctly the general rule as to imputed knowledge of facts. The court then went on and referred to some other alleged facts which were claimed to be within the defendant's knowledge, actual or imputed: that up to September 8th the defendant had never dealt in the plaintiff's brands of flour; that the defendant offered a large quantity of it for sale at less than the market price; that after the stock of Soloway Katz had been attached under an alleged collusive attachment, large quantities of goods including some of the plaintiff's flour were removed in great haste from the store of Soloway Katz, some of which were shipped to the defendant and some removed to the New Haven store of the president of the defendant corporation; that the terms of the alleged sale from Soloway Katz to the defendant were unusual as to credit and price, in that Soloway Katz, who received sixty days credit from the plaintiff, turned the bills of lading over to the defendant at no advance in price upon four months credit without interest. As to these and other facts of the same general character, the jury must have understood that they might impute knowledge to the defendant under the rule stated in the above quotation from the charge. This was the correct rule for that purpose. Then as to the cumulative effect of such knowledge of facts on the defendant's title, the court, with equal correctness, charged the jury as follows: "It is not enough to constitute a good title in the defendant of the flour in question that it may appear that it paid full value for the flour. The defendant cannot sustain a title to the same unless it be found that in the purchase from Soloway Katz the defendant acted in absolute good faith, that is, that it acted honestly in making the purchase." The court had already correctly charged the jury as to the burden of proof, and we think that the above statement of the rule for determining the validity of the defendant's title is correct and consistent with Knower v. CaddenClothing Co., 57 Conn. 202, 17 A. 580.

The ultimate question is whether the defendant acted honestly. For the purpose of determining that question, knowledge of any given fact may be imputed to the defendant under the rule laid down by the court, and the question of honest dealing is then to be determined as a fact in the light of the knowledge so imputed.

There is no error.

In this opinion the other judges concurred.