Court Opinion

ID: 5560862
Source: CourtListenerOpinion
Date Created: 2022-01-11 00:50:13.858085+00
Date Added: 2024-06-11T08:35:28.404855
License: Public Domain

Hall, Justice.
1. All the questions made in this case depend upon the interpretation to be placed on Code, §§2633, 2634, which ■provide that fraud, by which the consent of a party has been obtained to a contract of sale, voids the sale, which fraud consists in a misrepresentation made by the one party with a design to deceive, or which does actually deceive the other; and in the latter case, such misrepre-i sentation voids the sale, though the party making it was not aware that his statement was false. It is not indispensable that the misstatement should be by words; it may be by acts as well, or by any artifice designed to mislead ; but it is requisite that the misrepresentation should be acted upon, in order to have this effect. The precise question presented for our determination is whether these misrepresentations must have been known to the party and have induced him to make a sale which, without them, he would not have made; in.other words, whether they must have been made prior to or at the time of the contract ? The words of the Code, it seems to us, ex vi termini, compel an affirmative answer to this question. The “ consent ” of a party must have been “ obtained ” to the contracts of sale by means of the fraud. Again, the misrepresentations must have been made to the party with a design to deceive, or he must have been actually misled by them, and as if to leave no doubt upon the subject, it is stated that a misrepresentation not acted on is no ground for annulling a contract.
2. If this be so, it follows, that testimony offered in an action of trover to recover property, in which it was alleged that the plaintiff was induced to sell and deliver by the fraud of the defendant, of transactions by -the defendant of a fraudulent character, with other parties than the plain.tiffs and with whom the plaintiffs had no connection, and of *509which it is not shown that they had knowledge, is irrelevant to the issues made in the case, and was improperly admitted, when objection was made thereto by the defendant in the action, who, in this instance, was not the original purchaser of the goods from the plaintiffs, but who held under the purchaser as assignee for his creditors, including the plaintiffs themselves. This assignee and the creditors whom he represented, were not shown to have knowledge of any fraud which would vitiate the sale, if any in fact existed; there was no connection between him and the parties to the transactions, between the assignor and Hardeman, or between him and Hardeman and the assignor’s wife, nor between him and White, to whom it seems the assignor sold goods at an under-value for the purpose of raising money for fraudulent purposes, with a covinous intent, as was insisted ; nor had the plaintiffs the slightest knowledge of these facts when they made the sale to the assignor, and consequently did not act upon them in making it. The same considerations apply with full force to the transactions from the assignor’s books, which were admitted in evidence over objection.
3. The declarations of the assignor, made after the exe cution of the deed of assignment, were clearly inadmissible in a suit brought for the purpose of annulling the assignment or of recovering property embraced in the deed, because such declarations did not accompany the making of the deed, and were not so nearly connected with it in point' of time as to be deemed part of the res gestee. Code, §3773. Nor were they made in disparagement of the assignor’s title while he was in possession of the property, nor in favor of his title while thus in possession to prove adverse possession. Ib. 3774. Nor was there the slightest evidence to show that the assignor and assignee were in collusion, or that a conspiracy existed between them. Ib., 3775. “ It is laid down as an established rule of evidence,” says Burill (assignments §404), “ that declarations made by a person under whom the party claims after the de*510clarant has parted with his right, are utterly inadmissible to affect any one claiming under him. The acts and declarations of the assignor, however, have in some instances been admitted as binding upon the assignee. Declarations made at the time of executing the assignment are thus admissible as part of the res gestee, and it has been held that the declarations of the assignor, while he was in possession of the assigned property, were competent evidence. It has also been thought that the admissions of the assignor, after the assignment was conxpleted, were admissible, on the theory that the assignee is the representative and agent of the assignor. This doctrine, however, is not sustained by principle or authority. There is no identity of interest between an insolvent assignor in trust for his creditors and his assignee. The latter holds primarily for the creditors and for those in hostility to the assignor. He does not represent merely or primarily the assignor, nor hold chiefly for his interest and benefit, but rather for the creditors of the assignor, and is accountable in the first place to them. In order to make the declarations of the assignor, after the assignment, competent evidence, it must be shown that the assignor and assignee are combined in a common conspiracy to defraud the assignor’s creditors, and this common purpose must be established by..evidence other than the declarations themselves.”
This extract is deemed as brief, comprehensive, and accurate a statement of the law as can be found, and is well supported by the authorities cited. For a full discussion of this question, see the able and exhaustive opinion of Woodruff, J., in Cuyler vs. McCartney, 40 N. Y. R., 221, and also Caldwell vs. Williams, 1 Ind., 405.
4. The suit was originally brought against the defendant as assignee; it was subsequently converted by an amendment into a suit against the defendant as an individual. After this was done, a motion was made to reject testimony taken while the suit was in its original form. The motion was overruled, and the propriety of the decision will *511depend to some extent upon the fact of this amendment having so changed the suit as to make it a new and distinct cause of action, or one between new and distinct parties (Code §3380), and upon the character of the issue tendered by the defence set up. While it is at least questionable if the amendment did introduce a new and distinct party defendant from the one originally proceeded against (64 Ga., 519), yet the defendant, after the amendment was made, insisted upon his defence, to the effect that he held the property sued for as assignee for Whittendale’s creditors, including the plaintiff, and holding in that character, he was not liable to this action at law, or at all events, not unless these plaintiffs should elect either to claim solely under their action or-should pursue their rights under the assignment; so that it is apparent that the evidence objected to bore directly upon the issue which the defendant, himself tendered; and from this it follows that, so far as it was otherwise unobjectionable under the rulings in this case, it should have been admitted.
5. George J. Zeigler, one of these plaintiffs, was examined by commission; and before an announcement was made the defendant moved to dismiss and remand for re examination of the witness the entire deposition, upon the ground that the witness had failed to answer the sixth cross-interrogatory ; which question and answer is as follows:
Sixth cross : “ Is this writ intended by you as renouncing all benefit as a creditor, under the deed of assignment aforesaid ; or, in other words, if you fail to recover in this action the goods themselves, do you still claim to be a creditor of Whittendale to the amount of this sale, and that he is liable? Define your understanding of your claim under this action, and state particularly upon what ground you claim the right of ownership of these goods.”
Sixth answer: “ This is a question of law, and we leave our rights to be asserted by our counsel and determined by the court. . We regard the reception of these goods by 0. Whittendale as a fraud, and such a fraud as gave him *512or his representatives, wherever they may be, no title to them ; and should we be wrong in this as a matter of law, our counsel will do the next best thing for us in the matter, whatever this may be.”
Which motion was overruled by the court. Whether or not the answer evades the question, or the witness is interrogated as to his intention in bringing this suit, and is directly asked whether it is his purpose to rely upon the suit or to claim under the assignment, or whether it is a response to the question to reply that the purpose, as to the matter inquired about, is a question of law, which he proposes to leave to the determination of his counsel, in our view, is quite immaterial. If there was fraud in the contract of sale, the vendor might either “ affirm and enforce it,” or he might “ rescind it.” He might “ sue in assumpsit for the price, and this would affirm the contract,” or he might “sue in trover for the goods or their value, and this disaffirms it. But in the meantime, and until he elects, if his vendor transfer the goods in whole or in part, whether the transfer be of the general or of a special property in them, to an innocent third person, for a valuable consideration, the rights of the original vendor will be subordinate to those of such innocent third person.” Benjamin on Sales, 3 American ed., §433, and authorities cited. So a creditor cannot be permitted both to assail and claim under an assignment; one or the other of these alternatives he must take. His election should be made before he commences proceedings, and he should not be permitted to await the result of his suit in order to make his election. This would be unfair to others claiming under the assignment. In this case, he has elected to annul the sale by bringing the action of trover, and the cross question which it is claimed he has failed to answer, was not pertinent or proper.
As to the portion of the answer which characterizes the conduct of the assignor, that is open to objection, *513which we need not indicate more particularly, but which will not fail to arrest the attention of the counsel.
6. The other questions made in this record are determined by the judgment of this court just delivered, in the case of Whittendale vs. Dixon & Brothers.
Judgment reversed.