Case Name: Donelson vs. Young & Clements
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1838-12-05
Citations: 1 Meigs 155
Docket Number: 
Parties: Donelson vs. Young & Clements.
Judges: 
Reporter: Tennessee Reports
Volume: 19
Pages: 155–158

Head Matter:
Donelson vs. Young & Clements.
Chancery. Fraud in sale of a chattel by false affirmation. A machinist, in selling a worthless machine for a good one, is guilty of fraud, whether aware or ignorant of the defect.
SAME. How the buyer is protected. In such case, equity will enjoin the seller from collecting a negotiable security, executed for the price of the machine, and compel him to account for any part of the purchase money, paid to him or Ms bonajide assignee. See 1 M. & S. 525, 526, 527.
Same. Assignee. But an assignee of such security without notice, express or implied, of the fraud, will not be enjoined from collecting it.
Clements, who was a machinist, sold to Donelson a spinning machine for one hundred dollars, for which Donelson executed his bill single, dated September 18, 1831, payable on or before the first of June, 1833. The machine proved to be nearly useless, and on being informed of the fact, he acknowledged that he had sold it for a good one, and said that he would make it good. In attempting to repair, he broke it, and he then directed it to be sent to his shop, where he made repairs and alterations but without bettering the machine. On the 25th of May, 1833, he assigned Do- nelson’s bill to Young, who it seems bad no notice of the failure of the consideration. He sued Donelson in the county court of Overton, and on the 5th of August, 1834, recovered judgment for one hundred and seven dollars. To injoin this judgment Donelson filed his bill in chancery, on the 11th of September, 1834, stating the sale of the machine by Clements as a good one; that it had proved nearly worthless; that he had assigned the bill to Young, but only color-ably, to avoid the equitable defence resulting from the failure of the consideration, and praying an injunction, &c.
December 3.
The answers denied the charge that the bill had been assigned colorably, and alledged that it had been done fairly, for a valuable consideration, before its maturity, and without notice to Young of the failure' of the consideration. And Clements’ answer besides set up a specific defence, which is not stated because no proof was adduced tending to establish it.
His Honor the Chancellor dismissed the bill as to Young, and ordered an account of the bond and interest, with which he directed Clements to be charged, and of the value of the machine, with which he was to be credited. From this decree Clements appealed in error.
S. Turney, for the complainant,
insisted, that the pleadings made a clear case of misrepresentation, resulting in injury to the trusting party, of which the court had undoubted jurisdiction.
A. Cullom, for the defendants,
argued that the complainant’s remedy was at law upon the special contract stated in the answer of Clements, which contract he insisted was free from fraud or any manner of misrepresentation.. Henee there was no ground for the interference of a court of equity, which has no power to enjoin purchase money unless there is fraud and misrepresentation, to which point he cited 4 Yér-ger, 98, Shenault vs. Eaton. He said that the decree, in reciting the facts upon which it professes to be based, makes out a case of warranty, and recites rife fact which sustains the jurisdiction; and he insisted that it was therefore erroneous; 10 Yerger, 41, Bur dine vs: Shelton.
Turney in reply,-
said that the special contract stated in Clements’ answer had not been sustained by any proof; and therefore the case stood upon the facts stated in the bill, which had been fully made out in evidence.
December 5.
Note. The opinion of Buller, J., in Paisley vs. Freeman, 3 T. R. 51, 2 Smith’s Leading Cases, 46, in the Law Library, seems to establish the following distinction between fraud and deceit.
A false assertion, whether the falsehood was known, or unknown, to the as-serter, made in some dealing, and calculated to occasion, and occasioning, injury to another, is a deceit in law. When the falsehood of the assertion is known to the asserter, it is then fraud.
Buller’s words are as follows: “1 agree that an action cannot be supported for telling a bare, naked lie; but that I define to be — saying a thing which is false, knowing or not knowing it to be so, and without any design to injure» cheat, or deceive, another person. "Every deceit comprehends alie; but a deceit is more than a lie on account of the view with which it was practised, (namely,) its being coupled with some dealing and (with) the injury which it is calculated to occasion, to another person. * * * Knowledge of the false hood of the thing asserted, constitutes fraud.” The distinction between deceit and fraud — dolus and fraus — seems to be this, deceit is any subtle machination, whether in words or deeds, designed to circumvent. Fraud imports some detriment and damage. Every fraud, therefore, is a deceit, but not the contrary. Fore. Lex. Verb. Dolus. Labeo defines deceit, dolus malus, to be any subtlety, artifice or machination employed to circumvent, mislead and deceive another. Pothier’s Pandects, Book 4, Tit. 3, Art. 1, § 1, subsec. 2.

Opinion:
Green, J.
delivered the opinion of the court.
It is very clear in this case, that the machine, purchased by the complainant from the defendant Clements was wholly worthless. The bill charges that Clements represented that the machine was a good one, and thus imposed upon the complainant. This allegation is supported by the proof. Thur-sey Smith says, she heard Clements admit that he had sold the machine for a good one. Where a party misrepresents a material fact, by which another is misled or imposed upon to obtain an undue advantage of him, it is fraud. Story's Eq. § 192.
In this case Clements was the manufacturer of the article sold. It was radically defective, so as to be of no value. If he is a good mechanic, capable of making a good machine, he must have known, that the one sold by him to the complainant was not a good one, and by his representation intended to mislead him. If he is, not a master workman, he must be sensible of his want of skill and is equally culpable.
In either point of view, he is guilty of fraud, and consequently, this court has jurisdiction to afford relief.
But the other defendant obtained an assignment of the note before it was due, without notice of complainant's equity, therefore, there can be no decree against him.
Let the decree be affirmed in all its parts.
Whenever a security for money has been obtained by fraud or deceit, a court of equity has jurisdiction to relieve against it; and its being, in any case, a simple contract, only makes it capable of being relieved against in a court of law too, but does not oust the chancery jurisdiction. Dyer vs. Tymewell. 2 Vernon, 122, and cases cited in Mr. Raithby's note 2; especially, Colt vs. Woollaston, 2 P. W. 154; Chitty on Bills, 119; Gladstone vs. Hawden, 1 Maule & Selwyn, 517.