Case ID: me_124/html/0355-01.html
Source: Caselaw Access Project
Author: {"author": "Morrill, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Fruit Dispatch Company vs. Frank Wolman.
    Kennebec.
    Opinion May 8, 1925.
    
      A written and signed statement of resources and liabilities, addressed and given by a dealer to a wholesaler, stating that it is submitted “for the -purpose of obtaining credit now and hereafter for goods purchased,’’ should have the construction placed upon it, which the parties intended it to have at the, time it was executed.
    
    Such statement, further providing for the termination of any credit and the immediate maturity of any indebtedness thereafter incurred upon failure or insolvency, must mean credit for more than one transaction — that the statement was submitted for the purpose of obt aining a line of credit.
    A further assertion in such statement,, “and (the subscribers) will immediately notify you of any material change in their financial condition,” cannot be construed as an independent promise only, and capable of separation from what • precedes and follows. The entire statement reaches forward in point of time and covers the future financial condition of the maker, unless notice of change is given, as well as future transactions between the parties.
    In the instant ease as present ed the court, cannot, and does not, express any opinion as to whether there was any limit of time, indicated by usages and conditions of the fruit trade, the relations of the parties, or otherwise, during which the parties may have intended the representation to be operative.
    It is for the jury to decide whether the crodit.s given were induced by the representations.
    On exceptions. An action for alleged false representations and deceit. The defendant, a retail fruit dealer, gave to plaintiff, a wholesale dealer in fruits, a written statement of his financial condition signed by him for the purpose of obtaining credit then and thereafter for the purchase of goods and under the terms of the written statement defendant was to immediately notify the plaintiff of any material change in bis financial condition. Subsequently defendant borrowed money and gave mortgages on bis property and largely increased his liabilities without notifying the plaintiff of his changed financial condition, and purchased goods of plaintiff after he had thus increased his liabilities until finally.in September, 1923, about sixteen months after be gave the said statement, he was petitioned into bankruptcy. At the trial the plaintiff offered evidence that defendant, after the giving of the statement and before the sale in question, had encumbered his property and largely increased his liabilities, which was excluded, and plaintiff entered exceptions.
    Exceptions sustained.
    The case is fully stated in the opinion.
    
      James L. Boyle, for plaintiff.
    
      Maurice E. Rosen, for defendant. ,
    Sitting: Cornish, C. J., Philbrook, Morrill, Wilson, Sturgis, Barnes, JJ.
   Morrill, J.

The bill of exceptions states that'this case is an action for alleged false representations and deceit. The plaintiff is a wholesale dealer of fruit in Boston; until about September 1, 1923, the defendant was a dealer in fruit in Waterville.' About that date the defendant ceased to do business, and upon proceedings in bankruptcy later instituted against him, his liabilities were scheduled at approximately thirty-four thousand dollars, including an indebtedness to plaintiff for merchandise sold in August, 1923.

On May 8, 1922, the defendant gave to the plaintiff a written statement of his assets and liabilities, signed by him. The part of this statement material to the present discussion is as follows:

“PROPERTY STATEMENT BLANK.
“To FRUIT DISPATCH COMPANY, New York
“For the purpose of obtaining credit now and hereafter for goods purchased, the undersigned herewith submit to you the following statement of their resources and liabilities, and will immediately notify-you of any material change in their financial condition.
“In consideration of your granting them credit, the undersigned agree that in case of their failure or insolvency, or in case they shall make any assignment for the benefit of creditors, bill of sale, mortgage or other transfer of their property, or shall have their stock attached, receiver appointed, or should any judgment be entered against them, then all and every one of the claims which you may have against them shall at your option become immediately due and payable, even though the term of credit has not expired. All goods hereafter purchased from you shall be taken to be purchased subject to the foregoing conditions as a part of the terms of sale."-

Then follows a detailed statement of “Active Business Assets” and “Business Liabilities,” including particulars as to assessed valuation of real estate owned, and amount of incumbrances thereon. The plaintiff alleged that in selling the defendant the merchandise aforesaid it relied upon the statement given on May 8, 1922, as a continuing representation of the defendant’s financial standing; that the defendant misrepresented the value of his assets and the amount of his liabilities at the time the statement was given; that he did not notify the plaintiff of material changes in his financial condition thereafter, to wit, 'a mortgage to Ticonic National Bank of Waterville, a mortgage to one Rubin on March 10, 1923, for $6,500, and a conveyance of certain real estate to one Louis Wolman, Jr.; that, having no knowledge of these changes in defendant’s financial condition after May 8, 1922, and relying upon the representations of the statement, the plaintiff sold merchandise to the defendant in August, 1923, at a time when, as the bill of exceptions states, the defendant knew that he could not pay for it, and was deceived by said statement.

Thus construing the statement, the plaintiff offered evidence of a mortgage loan by Ticonic National Bank to defendant after May 8, 1922, and before the sale in question. The evidence was excluded. The plaintiff also offered evidence of other transfers of property by defendant during the same period; this evidence was also excluded. The presiding Justice stated his ruling applicable to both offers as follows:

“Of course you may show anything which will tend to disprove his statement made to the creditor, and some of the evidence which has gone in was admitted for that purpose. I am firmly convinced that the agreement which he entered into as part of the statement that ho would immediately notify of any material change in his financial condition, is a promise only, and that evidence showing his financial condition, changes in his financial condition, after the date of the credit, would not, even if proven, be a matter of fraud under this contract, under those representations. In other words, I hold that that stipulation in the paper which he signed representing his financial condition, that he would report any material change, was a promise only on his part, and that it did not constitute a continuing representation as to his financial condition. ”

The only question before the court is the correctness of this ruling and the construction to be given to the statement of May 8. That statement should have the construction placed upon it which the parties intended it to have at the time it was executed. It plainly states that it was submitted ‘ ‘for the purpose of obtaining credit now and hereafter for goods purchased,’.’ and the second paragraph provides for the termination of any credit and the immediate maturity of any indebtedness upon failure or insolvency; this provision is expressly made applicable to all goods thereafter purchased. The language so employed must mean credit for more than one transaction — that the statement was submitted for the purpose of obtaining a line of credit.. The closing clause of the opening sentence, “and will immediately notify you of any. material change in their financial condition,” must be construed as a representation to the party to whom the communication was addressed, that it might rely upon the statement as a true statement of financial standing, not only in the present but for the future, unless notice of change was given. It would be unreasonable to limit the scope of the statement strictly to the time it was made, when in terms it refers both to present and future dealings. The undertaking to give notice, of any material change in financial.condition cannot be construed as an-independent promise only, and capable of separation from what precedes and follows. . The entire statement reaches forward in point of time and covers the future financial condition of defendant, as well as future transactions between the parties. Atlas Shoe Co. v. Bechard, 102 Maine, 197,10 L. R. A., (N. S.), 245, and note. Counsel would distinguish the instant case from the case cited. While the language of the statement now before the court is not so precise as in the Bechard Case, the construction. which the parties intended both statements to have and the objects, they had in view are the same, and the .lánguage used fairly so indicates. Both cases involve something more-than representations true at the time, and mere failures to notify of a change of conditions. Ragan, Malone & Co. v. Cotton, 200 Fed., 546, presents a similar statement.

The statement was made May 8,1922; the merchandise in question was sold in. August, 1923, and the bankruptcy followed in September. The case does not disclose the dealings of the parties between May 8, 1922 and August, 1923, whether continuous, or seasonal with intervals of greater or less length between certain seasons. We are therefore, not in a position to express, and do not express, any opinion as to whether there was any limit of time, indicated by the usages and conditions of the fruit trade, the relations of the parties, or otherwise, during which the parties may have intended the representation to be operative. It is for the jury to decide whether the credits given in August, 1923 were induced by the representations. Zabriskie v. Smith, 13 N. Y., 322, 332; 64 Am. Dec., 551, 554.

Exceptions sustained.

Cornish, C. J., sat at argument and participated in consultation, but, owing to retirement does not join in the opinion.