New-York tribune., 1886-03-18
DECIDED AGAINST WARNER,
ORDERED TO REFUND A LARGE SUM-
RrrEREE COLES REPORT on THE HOLT CASE

81 81 the excess with interest OF money that he
received what he put into the firm in the "con-
tract" business and also mus, within twenty days re-
convey to the receiver the S5s0000 IN real and personal
property which Ward conveyed 10 him on the morning
after the failure OF tho firm Tie referee exonerstes
Mr Warner from the charges Of bad faith In his doal
ings finds that Ward owed 100000 more than he was
able to when the firm formed, that he aud tho
firm hOpeessy nsolvent from the formation OF the
firm its collapse and that Ward knew IL.
and that the In and property which went
to Warner simply OF the firm The referee
accordingly orders restitution. The port FOL
lows:
This action Is brought from the defendant
Warner certain moneys paid to him by Ferdinand Ward
and the firm OF Grsnt& Ward, and also to recover from
him certain real estate and personal property trans
ferred to him by said War Tho vsr other defend
ants made parties claiming some interest In the
properly sought be reached The can OF the detsnd
ant Julien T. Davies receiver OF the 6rm OF Graut Il
Ward is cO-extensve with that OF the plain
tiff; the defendant the Marine National
Bank and Walter 5. Johnston az receiver claim cer-
tain portions of said property. The defendant, John H.
Norris assignee, claims that prior 10 the commence
meut of this action he had commenced a similar action
and that pendency OF that action Is bar 10 pres
ent one. The Sheris OF New.YOrk aud Kings Counties
liens upon portions Of the property by virtue OF
warrants of attachment, while tue defendant Ella C.
Ward claims the premises No. 81 PerrepOntst In tho
City Of Brooklyn dover the other real estate de-
scrbed In the complaint.
The sources OF all claims the dealings OF tho
defendant Warner and Ferdinand Ward and the firm of
Grant Ward from the latter part Of the year los2
until tho suspension OF that tirm on May q, lss4.
These dealings were substantially as follows: Warner
would place in WARTS hands a certain SUN OF money
and tako from him obligation In tue name Of Grant
Ward the effect that int crest had been purchased
IN a certain contract which there would become duo
on day named a certain which wolld generally 90
the principal sum with 20 per cent per month added.
The form of these ob gatons somewhat changed In
February 1888 but the effect remained antaly the
same. OF these oblig cations fell due, the amount
called for would either be paid part paid and new
obi CATION for the balance. her with adj
ditiOnal moneys paid n obligation taken FOR the
Whole amount These transactions were many times re-
peated, aud the result far the defendant Warner
was concerned, that when Grant Ward suspen ded
on May g. 1ssi. he hs received pack all the money no
mad put IN and the sum OF fl,23136l ~ IN addition
thereto and the time hot Opg Oi the nr
OF Grant * Ward as above described to very large
On May :. 1884. Ward conveyed to Warner the real
sought this action and return therefor received
Warner certain Of the obligations before described
calling for the payment or SJ1c,0GO.
Although these DlsatiOns mentioned that interests
had been taken In certain contracts there never was
poyed. Tne statement TO that effect IN tie papers was
wholly false. The whOe Transaction on the part or
Ward was a fraudulent scheme whsre0y he induced tho
loans of money by the PROMISE % these large pr"nta
The eydrnc shows that many persons were induced To
part with their money Ia reliance upon the statements
profits ma ie and the moneys paid 10 Warner wero
Il ha. been tnslseI on by the various claimants
that Warner had actual knoweds" of these facts 0r thaC
II he aid actually know all the details Of Warls
transactions. he snll knew enough to affect MIN WIN
notice and that therefore Warner liable TO refund All
moneys obtained by Nun through the Haliu hi Ptao,
ices OF Ward IN which he himself participated anu
should the tct be as claimed that Warner knew or IS
affected by nouce OF Wards transactions, the aDhy on
his part would clearly follow. ,.
Bnt [ cannot hnd the fact. The transactions
indeed peculiar IL seems now that they haye been
laid bare that would 6e dhcat FOR any ono 70 DrieFo
fra
But when linding OF bad Lhth or par.
epiton IN MIRA fraud deoe af'e .enee InSf mus ac
pears in this It happens hero that warner
receyed these large profits It appears that he furnished
the blanks upon wndh these obligations were written,
and tha ne Alew Of the private accounts ot some or
them which Ward kept this socaiie contrast" blsI
ness, bat this is ALL ami it Is wholly insufficient %
support flu ing 81 pad tith on the part OF "lFner OF
participation IN the frauds 0. rl WarneEinItht nave
considered that the plohs were enormous he might
nave Thought mat thty were UoI eathc, ou, icle ~
nothing IN these Icts To- 'turaly c@Hs7 tue uttIeo
that Ward Obt lining these moneys hrolSA fraud "
that th9 nrn oi uiaaI ~ M"rH W"' ,vrsi
hrm had prominent huthclu st.h1llG, ,nt ~ ~"hIFiSi
impression that the firm aud Il Individual members
were OF wealth. Now, whether the rrohS were
earned or not II the hr of Grant Nard "',r 7n'ent
they had "a right to give theIr money TO warner, IL
they chose ant no one could OBJECT lhe very mdght
tudo ani unusual rh ttd ,et o. t"e ltd'' w
Ward is the slrongcst dr.nthJ against lhltfrlhs her
existence from The facts proved.
Icannot however make "a finding OF positive good
faith on he part OF Werner. lie dd not choose TO 20
permits any zone whose good nteItOs are asSaild and
the question material to the controversy 10 testify
directly as his motive. have no doubt that MdInsr
was advised III this case that the evidence wa, n,ui-
cient to establish Dai fath on his part ana thiht no
was correctly advised. lie Is emitted TO the pre-
sumption Of good alth winch tAe Ia" lhltrs 10 every
one in the absence OF proof To Tho contrary, aud the
effect upon the ju gnent is the though posi-
tive fudIug OF good faith was maie
n therefore Grant * ward az the time these pay
mrnts 10 Warner we're made under no disabilities
as To the disposition OF their properly no recovery can
he had of Wtrrcr IN this action.
If warner was a valid creditor OF Grant * Ward TO the
OF these payments abb oi the properly Trans
terrei no recovery be had, to- have no douot out
to another bona te and for Naid cons irrilOn eau
br held hy the att"r }u dnilhS N Woe 'trn Oh lts
existence, Including tn periods covering Tue trans
actions mentioned between Warner ana Grant " N"rd'
that firm noprlessiy ln'0.Y'nL Il kept gong lfoni
btd TO wO SO until It's sus pension. .
The firm altnOlgn nso.vont. could cOninlo its bus
ness operations unt forced 10 suspend. II cod'd pay
It's Hey and dispose OF It's property Tor vtlIt
sderatOn but II cOud not pay out ts moneys ana
dispose OF s property ana give go'i tls a. agalse
its creditors to any one who took the same without CON
solvcucy firm not aui no matter whether no
took the money or properly IN go1d ialtn Oh not mo
being nsOveut Its asset wore impressed with a
trust in favor OF its creditors and these assets be
followed the hands OF any one who has not parted
with value the faltn thereof As - the excess ot
moneys received Warner has not parted wth vdlde aud
canu0 lod such ys against tae creditors ot tho
firm, as lie IL not pure has, for value thel eO.
The pro erty tr4isf-- cd bV Wart On May :. 1854.
stands IN the same situation as he money claimed.
see no elements OF duress Ia this matter nor did War
employ any save leslun tr ln.an' To OBTAIN ms
transfer II lie was valid creditor of Grant Ward 10
amount Of the obligations Oi that nrm ued ny htn
But this transfer Tas wholly without consideration;
The obligations gwen We're mere vast paper Ind eould
uot be enforced against any one. When warner took
no Ot Tie Insolvency OF TN" HF n
Ills right to mold the property depe ds entirely upon
ms being valid cre or and hod that hc w. not
valid creditor OF either Ward % ~
n ard There here for tho doctrine -s' 9p-
pei That doctrine app les where one has rrlirL Ap)n
repre ,cutaOn his damage, ana MOI where he nts re-
lied upon the representation OF partner To ms enor
nous profit the expense or the lrH ana It, creditors
It may be that "a recovery In this would depend
upon Warmers continued possession Of the money paid
and property transferred. Having been traced into hts
presumcs they stll continue there
the absence Of any evidence To their ispOsitlon
No recovery he had against Warner FOR the amount
NJ fcorta heck d %
appear These transactions must be assuue TO be vad
In tue abscuce OF proof To the contrary Nor any
cOvery be had upon profits paid upon certain pool"
transactions sufficiently appearing that these
were not actual transactions
There remains TO he determined the question a To
who entitled these moneys aud property
from Warner fail 10 any valid claim the part
OF John H. Morris, assignee. tho attachments under