Case Name: James A. Wright et al., Respondents, v. Arthur A. Brown, Appellant
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1876-09-19
Citations: 67 N.Y. 1
Docket Number: 
Parties: James A. Wright et al., Respondents, v. Arthur A. Brown, Appellant.
Judges: 
Reporter: New York Reports
Volume: 67
Pages: 1–11

Head Matter:
James A. Wright et al., Respondents, v. Arthur A. Brown, Appellant.
If an order of arrest is granted in a case not authorized by the Code, or where the affidavits fail to establish one of the specified causes of arrest, the order may be reviewed in this court; but where the granting of the order depends upon the credibility of witnesses, or upon inferences to be drawn from circumstances as to which intelligent men may fairly differ, the general rule of this court is to follow the conclusions of fact of the court below.
As to whether the court has power to review the merits of the order upon the facts, gumre.
Where a vendee purchases property upon credit, knowing that he is insolvent, without disclosing that fact, and with intent not to pay for the property, fraud may be affirmed.
The alleged ground for an order of arrest was fraud on the part of defendant, in contracting a debt for the purchase-price of 6,000 bushels of malt. The affidavits disclosed that defendant was a brewer; he gave his notes for the malt at two, three and four months. Defendant was, at the time, indebted to his wife about $76,000, and to others about $55,000, a portion of which was in suit and liable at any time to go into judgment. His property was all personal, worth about $20,000. The notes were given January eighth; on the fourteenth he borrowed of Ms brother $9,000, giving a chattel mortgage on all his property, except the malt so purchased; on the fifteenth, he borrowed of another person $4,500, on 5,000 bushels of the malt; on the eighteenth, he sold all his property, except the malt, to his wife, subject to the mortgage, the purchase-price being applied upon his indebtedness to her; and on February eighth he sold to her the malt, subject to the loan, the balance being applied in the same manner, and stopped business. Defendant’s affidavit set forth facts tending to explain these circumstances, and alleged that he intended to continue in business and to pay for the malt when he purchased. No false representations were claimed to have been made by him, and no act or device was resorted to, to deceive plaintiff. Defendant was solicited to purchase, and urged to increase the amount beyond what he desired to purchase. Seld (Church, Oh. J., Earl and Andrews, JJ., dissenting), that upon the case made by plaintiff the inference was legitimate that defendant must have known when he purchased the malt, that he could not continue in business and pay for it, and hence was chargeable with an intent not to pay; that to what extent such case was impaired by the averments and explanations of defendant, depended partly upon the force to be given to the facts and the inferences to be drawn therefrom, and the conclusion of the court below, adverse to defendant, was justifiable, and so conclusive here.
(Argued June 18, 1876;
decided September 19, 1876.)
Appeal from order of General Term of the Supreme Court in the second judicial department, affirming an order of Special Term denying a motion to vacate an order of arrest.
It appeared by plaintiffs’ affidavit, that about December 23, 1874, defendant contracted, through a broker, to purchase of plaintiffs 6,000 bushels of malt for $7,920.57, upon credit, except $476 for storage and charges. The malt was billed to defendant, December 31,1874, and on January 8,1875, defendant gave his notes for the purchase-price less the sum so paid in cash, at two, three and four months. The order of arrest was applied for and granted on the ground of fraud in said purchase. The facts upon which the charge of fraud was based, and the substance of the opposing affidavit of defendant, are set forth in the opinion.
JRobt. Johnstone for the appellant.
If defendant knew that he was insolvent and intentionally concealed this fact, his silence was not a fraud upon plaintiffs. (Mitchell v. Warden, 20 Barb., 253; Nichols v. Pinner, 18 N. Y., 295 ; Brown v. Montgomery, 20 id., 293 ; Hennequimn v. Naylor, 24 id., 139 ; Chaffee v. Fort, 2 Lans., 87; Fisher v. Conant, 3 E. D. S., 199; 2 Pars, on Cont. [4th ed.], 270.) Fraud must be proved affirmatively. (18 N. Y., 300; Wakeman v. Dalley, 51 id., 27, 31; Marsh v. Falker, 40 id., 666; Hathaway v. Johnson, 55 id., 95; Sturges v. Cunningshield, 4 Wheat., 200; Van Hoffman, v. City of Quincy, 4 Wal., 553 ; Claflin v. Frank, 8 Abb. Pr., 412.) To sustain an order of arrest plaintiffs must show an intention to defraud existing in the mind of the purchaser at the time of the purchase. (55 N. Y., 93 ; Burchell v. Strauss, 8 Abb. Pr., 57; Spies v. Jael, 1 Duer, 163; People v. Kelly, 35 Barb., 444.) If a clear case of fraud has not been proved, the order of arrest will not be sustained. ( Un. Bk. v. Mott, 6 Abb. Pr., 315; Chapin, v. Seeley, 13 How. Pr., 490; Hernandez v. Comobete, 10 id., 449; Corwin v. Freeland, 6 N. Y., 565 ; Falconer v. Elias, 3 Sandf., 731.) The fact that defendant sold out to his wife is no evidence of fraud in this case. (Fairbanks v. Mathersell, 41 How. Pr., 274; Sheldon v. Clancy, 42 id., 186; Samage v. O’Neil, 44 N. Y., 298; Vanderbilt v. Gould, 39 id., 639; McCartney v. Welsh, 44 Barb., 271; Wordsworth v. Sweet, id., 268; Danforth v. Woods, 11 Paige, 9.) An appeal will lie to the Court of Appeals from the order of General Term denying motion to discharge defendant from arrest. (55 N. Y., 93; 34 id., 555; 25 id., 501; Tracy v. First Nat. Bk. of Selma, 37 id., 523 ; Townsend v. Hendricks, 40 How., 143; Code, § 11, sub. 4; Guin v. Tompkins, 1 Code R. [N. S.], ; Wright v. Rowland, 4 Keyes, 165 ; 36 How., 115; Laws 1847, chap. 280, § 8; 2 R. S., 167, § 27; Laws 1854, chap. 270, § 1.)
Winchester Britton for the respondents.
The purchase of goods by an insolvent, concealing the fact of insolvency, with the existing intent not to pay for them, is a fraud upon the vendor, though no affirmative representations are made by the vendee. (Nichols v. Michael, 23 N. Y., 264—273; Hennequinn v. Naylor, 24 id., 139; Devoe v. Brandt, 53 id., 462.) This court could not review on appeal the affidavits on which the order of arrest was granted to determine the preponderance upon conflicting allegations. (Hathaway v. Johnson, 55 N. Y., 93.)

Opinion:
Per Curiam.
This is an appeal from an order affirming an order denying a motion to vacate an order of arrest. It is competent for this court to review such an order if it involves a question of law, as when the order of arrest was granted in a case not authorized by the Code, or when the affidavits fail to establish one of the specified causes of arrest. If the party applying for the order fails to establish a proper case, the order should be denied, and if granted, it is the legal right of the party to have it rescinded, and if refused, an appeal will he to this court. But when it depends upon the credibility of witnesses, or upon inferences to be drawn from circumstances in respect to which intelligent men may fairly differ, the general rule is in this court to follow the conclusion of fact arrived at by the court below.
The' alleged ground for the order of arrest is that the defendant wafc guilty of fraud in contracting the debt for the malt, and the question to be decided below was, and in this court is, whether the fraud was sufficiently established. It is not claimed that the defendant made any representations or statements concerning his financial situation or pecuniary means, and it is well settled that a mere failure to disclose insolvency, although known to the purchaser at the time, is not regarded as fraudulent so as to affect the title to the property purchased, or render the purchaser amenable to an order of arrest. (18 N. Y., 295.) " If he makes no false statement, and resorts to no acts or contrivances for the purpose of misleading the vendor, it is not, I think, a fraud, to say nothing on the subject." (Id., per Selden, J., 20 N. Y., 293; 20 Barb., 253 ; 2 Lans., 87.) But if there is a condition of known insolvency undisclosed, and an existing intention on the part of the purchaser not to pay for the property, it has been held that fraud may be affirmed. (23 N. Y., 264 ; 24 id., 139-153; id., 462.) That the defendant was insolvent at the time he purchased the malt, that is, that his obligations were much larger than his assets, and that he did not disclose such insolvency, is not disputed, and the plaintiffs charge that he then knew that he could not pay, and intended not to pay for the malt. The principal facts relied upon to establish such intent, are these: The defendant was a brewer, engaged in the manufacture of ale. He contracted for the malt through a broker, about the 23d of December, 1874, a bill of the same was made the 31st of December, and notes given on the 8th of January, 1875, and the malt was delivered between those dates. He was indebted at the time to his wife about $75,000, and to other persons about $55,000, of which latter sum about $15,000 was in suit, and hable at any time to go into judgment and execution. His qtroperty consisted of material and personal property in and about the brewery worth about $20,000. On the 14th of January, 1875, he borrowed $9,000 of his brother and gave him a chattel mortgage on all the personal property, except the malt purchased of the plaintiffs; on the next day (the fourteenth) he borrowed, upon 5,000 bushels of said malt, $4,500 from an outside party, and on the 18th of January, 1875, he sold all his property in and about the brewery, except said malt, to his wife for about $20,000, subject to the mortgage which she assumed, and the balance of the purchase-money was applied upon the defendant's indebtedness to her; and subsequently, on the eighth day of February, he sold to his wife the 5,000 bushels of malt subject to the loan of $4,500, the balance, about $1,100, was paid by applying it upon her debt. The malt sold amounted to $7,920.57, and except $476 in cash, was sold on a credit of two and four months. Hpon these facts it is claimed that the defendant must have known at the time of the purchase that he was unable to continue the business or to pay for the malt, and could not have intended to pay for it; and that this is confirmed by his stopping business immediately afterwards, and transí ering all his property to his wife, including the property purchased of the plaintiffs.
There were two motions to vacate .the order of arrest, the first having been denied with leave to renew, and the defendant, by way of explanation, alleges that at the time he purchased the malt he was solicited to purchase by the broker, that he intended to purchase only 2,000 bushels at first, but after urgent solicitations he consented to increase the amount to 6,000; that he purchased it in the usual way for use in his brewery, and that he then expected to continue the business and pay for the barley; that he expected to defend the action for $12,000 successfully, and believed that he would do so until the eleventh of January, when he examined the evidence taken by commission in England, and until that time he supposed that he had due him $19,000 from his English firm, and that although disappointed as to both items he still believed that the loan from his brother of $9,000, and the loan of $4,500 on the malt, would enable him to continue business; that he had lost a handsome fortune in three years, partly in commercial ventures and in aiding his son, and partly in building up the brewery business, which he had increased from a business of 9,000 to 25,000 barrels, and that the business was then prosperous, and that during the previous year he had paid his obligations at maturity and had paid out over $200,000; and he assigns as a reason for transferring his property, his continued illness, which became so severe that he was unable to attend to his business, and was then disheartened and discouraged. Upon the case made by the plaintiffs the inference is legitimate that the defendant must have known when he purchased the barley that he could not continue in business, and that he could not pay for it, and hence that he is chargeable with an intent not to pay for it; and this is confirmed by the close connection of events and by finally transferring all his property to his wife, including the malt so recently purchased of the plaintiffs. To what extent the denial and explanation of the defendant should be deemed to impair the case made by the plaintiffs, depends partly upon the force to be given to, and inferences drawn from, the facts, the most important of which are undisputed. From the whole case both the Special and Gfeneral Terms draw conclusions adverse to the defendant, and we cannot say that they were not justified by the facts, judging the defendant by the ordinary motives which influence men in the conduct of pecuniary affairs, and, therefore, within the general rule referred to, the decision of the court below should be deemed conclusive upon this court. To weigh testimony, pass upon the credibility of witnesses, and draw inferences, is in general not the province of this court in reviewing orders of the Supreme Court. As was said in the People v. The Superior Court of New York, "there is no standard by which the weight of conflicting evidence can be ascertained. Different courts and juries and individuals would entertain different opinions upon the subject." The determination of such questions is, in some sense, discretionary, and for that reason orders upon motions for new trials, upon the ground that verdicts are against the weight of evidence, are not appealable. (Id.; 26 Wend., 143; 53 N. Y., 325.) But without passing upon the abstract question of power, it follows from the views expressed that the order must be affirmed.