Court Opinion

ID: 6639702
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:44:28.798578+00
Date Added: 2024-06-11T15:59:11.788326
License: Public Domain

PER CURIAM.
Plaintiffs, merchants at St. Joseph, Mo., having received from one Israel, a merchant at Helena, Mont., an order for certain goods, to be shipped June 28, and to be paid for December 31, 1895, applied to the Bradstreet Company, a commercial agency, for information as to the financial standing and responsibility of the prospective purchaser, in order to determine whether the goods should be sold to him on credit, in response to which the Bradstreet Company, on June 10, furnished to plaintiffs a report based upon and containing a statement made by Israel to that company in February, 1895, in which he claimed assets of the value of $165,-*498000, and asserted that his debts amounted to but $36,300. Believing the statement of Israel to be true, and relying upon it, plaintiffs decided that it would be safe to sell the goods upon the terms proposed; and accordingly, on June 29th, they delivered them to a common carrier for transportation to Israel. They would not have sold the goods on credit, nor parted with the actual possession thereof, if they had not believed in, and relied upon, the truth of Israel’s statement. The statement was in fact untrue, since at the time it was made Israel owed at least $78,000, and his assets did not exceed in value $90,000. Its representations were both false and fraudulent, and were made for the purpose of obtaining credit. Israel entered into the contract of purchase without any intention of paying for the goods. He received them on July 12, and on August 19, 1895, he executed an assignment for the benefit of his creditors to defendant, into whose possession, as assignee, the goods passed. Between the time the statement was made, in February, and the day of the assignment, Israel sustained no unusual loss, nor did he incur any extraordinary expense; yet the inventory, verified and filed by him within a few days after the assignment, shows assets of $85,173.08 and liabilities of $102,441.14. Plaintiffs notified defendant that they rescinded the sale to Israel, and demanded possession of the goods, and, upon the refusal of defendant to surrender it, instituted this action on September 3, 1895, to recover the goods. The court found (in addition to the finding hereinafter mentioned) substantially and in effect, the facts to be the foregoing, and rendered judgment for the plaintiffs, from which and the order denying a new trial, defendant appeals.
There is no controversy in this court over the facts just stated. The defendant offered no evidence, and moved for a nonsuit, in the court below. For the purposes of the appeal, he concedes that the plaintiffs were induced to make the sale and to deliver the goods to the carrier by means of the false and fraudulent representations contained in Israel’s statement, and that they were justified in so doing. He concedes, also, *499that Israel purchased the goods without the intention of paying for them. The court further found that plaintiffs, as soon as they discovered the falsity of Israel’s representations, notified defendant that the sale was abrogated. This finding is assailed as as being contrary to the following evidence: On June 28, 1895, the Bradstreet Company at Helena again forwarded to its office at St. Joseph a copy of the February statement of Israel, and the company’s report thereon of June 10th; adding as comment, inter alia\ “In some quarters it is the opinion that he is owing moré than he stated, it being said that he is owing his brother-in-law, L. Auerbach, about $8,000; same not appearing in his statement. Mr. Israel’s real estate, at present market value, is not worth to exceed $85,000. He is generally believed to be heavily in debt to the banks, and no estimate of his worth is offered. Is a man ■of good general reputation, and has a clear business record. He meets all drafts on presentation, and apparently has the confidence of his bankers. ’ ’ This additional report, which materially reduced Israel’s credit rating, was communicated to plaintiffs on July 2d, — three days after the goods had been •delivered to the railway company for Israel. The manager of the credit and financial department of plaintiffs testified that, if the second report had been received before the shipment of the goods, it would not have changed his opinion of the statement made by Israel concerning his financial condition, and that, as he relied upon the truthfulness of the statement made by Israel, the comments of the Bradstreet Company on his condition were not such as to change his belief in the responsibility of Israel, and the truth of his statement. It is contended that this evidence with respect to the second report shows conclusively that plaintiffs knew of the falsity of the representations made by Israel prior to the actual receipt of the goods by him, and that, therefore, they were guilty of negligence in not regaining possession while the goods were in transit; that, by not exercising the right to stop the goods in transit after the knowledge of the fraud so acquired, they elected to ratify the contract of sale, and are therefore es-*500topped from maintaining this action to rescind it; and that such evidence conclusively proves that plaintiffs did not permit the goods to reach the actual possession of Israel in the belief that the false and fraudulent representations made by Israel to them were true. It cannot be said, as a matter of law, that plaintiffs ratified or affirmed the contract of sale by their omission to retake the goods prior to the time when the same-reached the hands of Israel. Nor, as a matter of law, is negligence in not retaking the goods to be presumed from such omission. Neither are the elements of an estoppel present. Nothing in the report of the Bradstreet Company communicated to plaintiffs on July 2d may be said to have the necessary effect of destroying or lessening the belief which it is admitted plaintiffs had in the truth of the statement emanating from Israel himself. It is quite plain that the plaintiffs, under the circumstances, were not bound, in law, to disregard and cease to believe the statement of their debtor. Such portions of the report of July 2d as reflected upon the financial condition of Israel were based entirely upon rumor. A merchant of ordinary business prudence would, we think, be likely at least to question and doubt the propriety and safety of stopping goods in transit for mere insolvency of the debtor (which would affirm the sale), or of retaking them from the constructive or actual possession of the purchaser for fraud (which, if proved, would avoid the sale), and might well decline to incur the risk incident to either act, if the only information concerning the insolvency, in the one case, or the fraudulent representations, in the other, were such as that imparted by the last report. Neither omission to stop the goods before they reached Helena, nor the failure to retake them prior to their transfer to the assignee (who is not a good-faith purchaser for value), may, under the facts disclosed by the record, be deemed an affirmance of the sale. We cannot say that the inference from the evidence leads irresistibly, or even points, to the conclusion that plaintiffs were guilty of negligence, or that their delay and nonaction had the effect of a waiver. The duty of believing the rumor set out in the re*501port was not imposed upon plaintiffs, and they were warranted in taking the positive statement of Israel to be true. The court below necessarily so found, and we perceive no reason why its decision should be disturbed.
There being no error in the record, the judgment and order refusing a new trial are affirmed.

Affirmed.