Court Opinion

ID: 6121293
Source: CourtListenerOpinion
Date Created: 2022-02-04 18:47:46.787932+00
Date Added: 2024-06-11T08:23:25.383185
License: Public Domain

Smith, J.:
The affidavits show that a gross fraud was practiced upon the plaintiffs, the fruits of which have been enjoyed by the defendants’ firm. In so far as the fraud consisted of false representations as to the pecuniary' responsibility of the firm, by which tiie debt in suit was fraudulently contracted, the defendant Peterson was the sole actor in it, there being no evidence that his partner ,Bonderson, knew' of the false representations made by Peterson, until he was served with the affidavits on which the order of arrest was granted. The action being on contract, and not for the wrong,. Bonderson is not liable to arrest, on account of the false representations made by his partner without his knowledge, authority or ratification. The case of Hathaway v. Johnson (55 N. Y., 93), we think, requires us to hold that mere participation by Bonderson as a member of the firm in the fruits of the fraud is not enough to justify his arrest, in the present form of action, he being personally clear of the fraud involved in the false representations made by his partner. True, that was a case of principal and agent, and not of partners, but the principle upon which one partner can bind his associates, by his acts and representations, is that he is their authorized agent in the business of the partnership. (Van Keuren v. Parmelee, 2 Comst., 523.) If, then, the affida*391vits showed no other fraud than that involved in the false representations made by Peterson, the order of the Special Term vacating the order of arrest as to Bonderson should be affirmed.
But it seems to us that the affidavits make a case for the arrest of both defendants on two grounds: That they disposed of their property with intent to defraud their creditors; and that, knowing they were insolvent, they fraudulently concealed the fact of their insolvency, and of their fraudulent disposition of property, and contracted the debt in suit with the intent not to pay the sin-no. It is not necessary that the affidavits should specify the grounds, in terms; it is enough that they state facts sufficient to authorize the conclusion that the grounds existed in fact.
The affidavit of the plaintiff Wilson alleges that two weeks before Peterson made the false representations above referred to, the purport of which was that the firm was fully responsible, and worth four or five hundred dollars over all debts, Peterson and Bonderson, respectively, conveyed certain lands and premises in Jamestown of the value of at least $6,000 to their wives, through the intervention of a third person, without consideration; that the deeds were not recorded until four months after Peterson made his false representations, and the affidavit alleges that said conveyances were made to cheat the creditors of the defendants, and the concealment thereof from deponent was to cheat and defraud the plaintiffs. This is not denied by Bonderson, although he makes an affidavit. The judge at Special Term laid stress on the fact that the affidavit did not allege that the conveyances were made with intent to cheat the plaintiffs specially, or subsequent creditors, generally. But it is alleged that Bonderson as well as Peterson bought of the plaintiffs on credit, and that the fact of such conveyances was concealed from the plaintiffs with intent to defraud them, and this is not denied by Bonderson.
As to the other ground, the affidavit of Wilson distinctly alleges that the defendants were insolvent when each item of the plaintiff’s account accrued; that each partner ordered some of the' items; that the defendants knew they were insolvent and unable to pay; and that they obtained a credit with the plaintiffs with, intent to cheat and defraud them. These allegations, not being *392denied, are enough to warrant the arrest of each defendant. (Wright v. Brown, 67 N. Y., 1.)
The order of the Special Term should be reversed, with ten dollars costs and disbursements.
Present — Mullin P. J., Talcott and Smith, JJ.
Ordered accordingly.