Court Opinion

ID: 7063221
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:23:09.99334+00
Date Added: 2024-06-11T16:12:14.861286
License: Public Domain

On Petition for Rehearing.
Boby, J.
Appellants’ counsel argue in their brief upon the petition for a rehearing that the finding of the trial court, to the effect that the sale to Schwabacher was induced by fraud, is without support in the evidence. The facts are not in dispute. If they are such as to admit of the inference of fraud, the finding must stand. The argument is based upon the statement that the facts show a settlement of an existing controversy, and a sale of the goods thereafter uninfluenced by fraud. If the premise is granted, the conclusion is irresistible. Appellees’ agent sold five barrels of whisky to Schwabacher, to be paid for upon delivery. Schwabacher had no title to the goods, and no right to the possession thereof without paying the price. Curme v. Rauh, 100 Ind. 247, 255. Upon learning that the whisky was at the depot at Indianapolis, to which place it was to be shipped, Schwabacher wrote appellees a letter as follows: “Indianapolis, Ind., March 15, 1893. Messrs. Jos. S. Einch & Co., Pittsburg, Pa. Gentlemen: I am in receipt invoice & B — L. 5 Bbls. G. W. Eye Spg. ’90. The goods wore bought on 4 mos. time & you mark bill cash. I will not receive the goods & they will remain at depot subject to your order until I can hear from you. Sorry there should be a misunderstanding on first order. Very truly yours, &c. Jos. Schwabacher. I inclose copy memorandum made with your agent. Memorandum C'opy, *3485 Bbls. 90 Einch Eye, Eeb’y. $1.90, 4 mos. with labels for 25 cases free & 50c. per case (25) allowance for making boxes and labels.”
It is specially found that the statements that said whisky was bought on four months’ time, and that such memorandum had been made with the agent, were false and were made by Schwabacher with the fraudulent intent and purpose of deceiving Einch & Co., and inducing them to permit bim to take the whisky from the depot without the immediate payment of its price.' Immediately upon receipt of this letter, Einch & Co. answered that Lyons, their salesman, had reported the sale of the five barrels as cash, but, as there had been a misunderstanding, to settle it they were willing to malee the terms four months, and directing Schwabacher to go ahead and receive the goods. Schwabacher, upon the receipt of such letter in due course of mail, got the whisky from the railroad company, and later mortgaged it to appellants to secure the payment of a preexisting debt. The appellant does not, therefore, occupy the position of bona fide purchaser. Boling v. Howell, 93 Ind. 329, 331; Hewitt v. Powers, 84 Ind. 295. Appellees were, at .the time ignorant of the fact as to the terms of credit, except as the same was stated to them by the agent when the sale was made, and assented to the delivery of the goods on four months’ time in order to compromise, as they believed, a genuine misunderstanding.
Eraud vitiates contracts. It is frequently, in case of sales, based upon the concealed insolvency of the purchaser and his intention not to pay. It does not follow, however, that such facts alone justify rescission and the recovery of goods. The remedy may be had whenever the contract is induced by fraud, without regard to what particular form it may assume, or what devices may have been followed in working it out. The representation as to the time of payment was a material one. The copy of an alleged memorandum made with appellees’ agent went to the substance. *349The appellees were led to believe that a misunderstanding existed, when in fact there was none, but, instead, a scheme to get the whisky without paying the money for it. It is true that the misstatement of facts equally within the knowledge of the parties does not constitute actionable fraud. It is also true as a general proposition that notice to an agent is notice to his principal. Neither of these propositions are applicable to the facts of this case. Appellees were merchants at Pittsburg, Pennsylvania. Schwabaeher was a wholesale dealer at Indianapolis. Lyons was a traveling salesman in the employment of appellee, and on February 4, 1893, made the sale to Schwabacher of the whisky before referred to, and immediately forwarded the order to his firm who shipped the goods, and sent the consignee a bill of lading marked “cash.” On the evening of the same day that the sale was made, Lyons left Indianapolis on a trip through the western portion of the United States going to San Francisco, California, and, in going and returning, stopped at various cities and towns for the purpose of selling goods, and returned to Pittsburg about the first of April. A necessary element in the deception of appellees was found in the absence of their agent. Under such circumstances, the further proposition that one guilty of fraud can not complain because his statements were credited, becomes applicable. Schwabacher represented by the copy of the alleged memorandum that the agent had agreed to four months’ time. Of this representation the agent had no knowledge. The evidence thus presented to appellees appeared to show conclusively that the report.made to them by.their salesman was erroneous. The letter was adroitly worded, and well calculated not only to deceive appellees as to the main fact, but to prevent them from investigating as they could have done without delay had the salesman returned to Pittsburg. Under such circumstances they had a perfect right to take Schwabacher at his word.
*350The question as to how far and when one party may rely upon the assertions of the other has been much considered in a variety of cases. The logical and just test is found in the standard of a reasonable man’s action under the same conditions, modified, of course, by particular facts rendering the defrauded person unable to use such degree of care for his own protection. The decisions can be harmonized by the application of this rule. The varying facts upon which they rest make a general rule necessary to their correct understanding. A reasonable man might well rely upon such statements made under such circumstances as those established herein. Many authorities are cited to the effect that where, with full knowledge, the settlement of an existing controversy is made, which involves and depends upon the assertion of a false claim by one party, and in which such claim is reiterated, that the settlement is final. The proposition and the authorities do not apply to a case in which the settlement is obtained by means of the concealment of the fraud and by inducing the belief in the existence of a wholly different state of facts. A settlement made with full knowledge, and a settlement induced as this one was, are two different things. Eo question of fraud was involved in the settlement made, but the settlement of an alleged misunderstanding was one step in working out the fraud itself.
The petition for the rehearing is overruled.
Comstock, O. J., Black, Henley, and Robinson, JJ., concur.