Court Opinion

ID: 5514496
Source: CourtListenerOpinion
Date Created: 2022-01-10 04:28:04.807908+00
Date Added: 2024-06-11T08:34:15.350985
License: Public Domain

By the Court,

Savage, Ch. J.
If the judge was correct in considering the defendant a bona fide purchaser of the goods in question, then the charge was right; otherwise not. It is necessary, therefore, to inquire what constitutes a bona fide purchaser from a fradulent vendee of goods ? The vendee in the assignment in this case recites, that “ Abel French has endorsed and become responsible for me, on divers promissory notes and responsibilities, to the amount of $1921and in consideration of the said sum of $1921, he assigns the goods in question. Was this such a bona fide purchase as bars the title of the rightful owner? That a fraudulent purchase of goods gives no title to the fraudulent purchaser, as against the vendor, is a proposition which will not be denied. Had there been no assignment by Jenkins to French, of the goods in question, there is no doubt that the plaintiff might have taken his goods by replevin from Jenkins, assuming- that the purchase was fraudulent on his part. Before the revised statutes were passed, it was held that trespass would not lie in such a case, where the goods had been delivered; and as replevin then could be brought only in such cases where trespass might also be brought, replevin could not then have been brought; the party would have been driven to his action nf trover, or other actions on the case, but now the action lies whenever *572oyoclg or chattels shall have been wrongfully taken,or shallbe wrongftilly detained. A tortious or wrongful taking is not noto necessary to sustain the action of replevin ; a wrongful detention sufficient. 2 R. S. 522, § 1. If, therefore, Jenkins procured the goods in question by fraud, he acquired no right to them as against the plaintiff; a detention of them, after demand by the plaintiff, would be wrongful, and the plaintiff might have regained possession of his goods by the writ of replevin. As between the plaintiff and Jenkins, Jenkins had --no title to the property in question. It is a general rule that a person who has no title to property can convey .none ; but to this rule there are some exceptions. To create such exception, and to give a third person a better title, and a superior equity to the true owner, such third person must have given value for such property, or incurred some responsibility upon credit of it,and without notice of the fraud. Such innocent thirdperson is a bona fide purchaser for valuable consideration. In such a case the vendor, who has been defrauded of his property, and the bona fide purchaser from the fraudulent vendee, are both innocent parties; and when one of two innofcent parties must suffer from the fraud of a third, the loss [should fall on him who enabled such third person to commit the fraud. Possession of personal property is prima facie evidence of property. This is a general rule to which there are some exceptions also. The bona fide purchaser, therefore, is justified in considering the fraudulent vendee the true owner—such bona fide purchaser as the terms bona fide import, having no notice of the fraud; and considering the possessor as the owner,the bona fide purchaser is justified in purchasing such property and giving value for it,or in making advances upon it, or incurring responsibility upon the credit of it, or in receiving it in pledge for money or property loaned upon it. He is protected in doing so upon the principle just stated,that when one of two innocent persons must suffer from the fraud of a third, he shall suffer who, by his indiscretion, has enabled such third person to commit the fraud. A contrary principle would endanger the security of commercial transactions,-and destroy that eonfidencejipon whidh what is called the usual mirse of trade materially rests,
*573The doctrine just adverted to is applicable to all dealings between men ; not only to the purchase and sale of property, but to then egotiation o f bills o f exchange and promissorynotes. In a case of the latter description Oh. J. Spencer says : “ I understand,by the usual course of trade, not thatthe holder shall receive the bills or notes thus obtained (that is, from a fraudulent payee) as securities for antecedent debts, but that he^ shall take them in his business, and as payment for a debt con-ij trac ted at the time.” Codington v. Bay, 20 Johns. R. 651. (| If this is true of negotiable paper,which in commerce answers many of the purposes of money, a fortiori is it true of goods and chattels merely. In Collins v. Martin 1 Bos. & Pul. 651, Ch. J. Eyre, speaking of the defence to be made to a bill of exchange, says: “ If it can be proved that the holder gave no value for the bill,then indeed he is in privity with the first holder, and will be affected by every thing which would affect the first holder. This all proceeds upon an argumsntum ad hominem. It is saying,you have the title, (technically he means,) but you shall not be heard in a court of justice to enforce it against good faith and conscience.” In Evans v. Smith, 4. Bin. 368, it was decided that a bill of exchange, assigned as securityfor the payment of a debt, was not passed in the usual course of business. The case of Buller v. Harrison, Cowp. 555, contains a principle which is applicable here, to wit, that one shall not be benefitted by the mistake of another; and if not by the mistake, he surely shall not by his fraud. That was an action for money had and received to recover back a sum of money paid by the plaintiff to the defendant, as agent of certain merchants at New York, upon a policy of insurance; the loss then was supposed to be fair; it proved to be foul. The defendant, on receiving the money, gave credit to his principals in account with them, they being indebted to him in an account greater than the sum paid upon the policy, but he had accepted no fresh bills, advanced no money, nor given any new credit to his principals. The jury found for the defendant ; a new trial was granted. The law, in case of an agent, is, that if he has paid over the money improperly received by him, no action lies against him, but against his pr im *574- cipals ; but Lord Mansfield held, that the passing money to the credit of the principals was no payment. His situation was not altered ; he had advanced nothing, nor incurred any new responsibility upon the credit of the money so mispaid to him. Lord Mansfield asks: “Is it conscientious then that the defendant should keep money which he got by the misrepresentations of his principals ?” In the case now before us, the Sdefendant obtained possession of the goods in question through Ithe fraud of Jenkins, who was his debtor. So far this case runs parallel with Buller v. Harrison. The only difference is, that this defendant has in his hands goods; the defendant in that case had money. Here the plaintiff was clearly entitled to recover against Jenkins, who, for the purpose of this comparison, may be called the principal, as the defendant makes title through him. In that case the plaintiff was clearly entitled to recover against the principals of the defendant. In both cases there was no new credit given—no money or property advanced—nor any new responsibility assumed; but in both the money and property are received upon an antecedent debt. In that case the court said it was not conscientious for the defendant to retain the money: can it be conscientious in this case for the defendant to retain the property in question 1 That a fraudulent purchaser of goods acquires no title as against the vendor, and has no interest which can be seized on execution, I cite Allison v. Mathien, 3 Johns. R. 238, Van Ceef v. Fleet, 15 id. 150, Buffington v. Gerrish, 15 Mass. R. 156, Earl of Bristol v. Wilsmore, 1 Barn, & Cress. 514, 8 Com. Law R. 146, Mowry v. Walsh, 8 Cowen, 238. The case of Buffington v. Gerrish was much like this case, except that the defendant there was the sheriff, who had levied upon the property by virtue of executions in favor of bona fide creditors. The court consider those creditors as the real defendants, and say that the plaintiff’s right to reclaim his property from the fraudulent purchaser is indisputable. He had done no act by which his creditors had been deceived with respect to this property; their debts all existed before the fraudulent purchase; they claim through him; they were in the same condition as to their debts that they were before the fraud, and they ought not to reap the fruits of it, no credit having been *575given on account of that property. It is intimated in that case, that had there been a sale of the property and value paid for it without notice of the fraud, the purchaser would have a good title; and this would be the case, whether the sale were public or private. It is not denied that the defendant in this case stands in the relation of assignee merely. In Peacock v. Rhodes, Dougl. 636, Lord Mansfield says: “ An assignee must take the thing assigned, subject to all the equity to which the original party was subject.” He then draws a distinction in that respect between an assignment of a chattel and an endorsement of a promissory note. In that case a stolen bill had been endorsed to the plaintiff for cloth and other articles, in the way of the plaintiff’s trade as a mercer, and the plaintiff paid the full value of it in the course of his business. The defendant in this case, according to these principles, was not a bona fide purchaser for valuable consideration. His title therefore is not equal to that of the original owner, who was defrauded of his property. The judge should have so charged the jury. A new trial must be granted ; costs to abide the event.