Court Opinion

ID: 6580079
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:37:35.060579+00
Date Added: 2024-06-11T15:57:14.723491
License: Public Domain

Park, 0. J.
At the request of the plaintiff the court below charged the jury as follows :—“If an insolvent, who is carrying on business with knowledge that he can no longer continue it, and that his property is liable at any moment to be taken by his creditors, and that in that event he will not be able to pay for goods purchased on new credit, purchases goods upon credit without disclosing the circumstances to the vendor, his willful concealment thereof amounts to fraud, and his assignment passes no title to such goods to his assignee, and the vendor is entitled to his goods.”
We think this charge is incorrect. In the first place, it is not an element in it that the vendee knew that he was *328insolvent. The fact that he knew that he could not carry on his business any longer, does not necessarily imply it. He may have been transacting a losing business, and to go on with it, might require the raising of a sum of money beyond his means of procuring, and so he may have become satisfied that he could not continue his business .longer. The fact that he knew that his property was liable to be taken by his creditors at any moment, is a fact that exists in every case where a man has creditors, although not in debt to such an extent as to make him insolvent. When money is scarce and times are hard, how many persons of large property are made insolvent and utterly ruined financially by their creditors seizing their property on executions and selling it to the highest bidder. The defendant may have so regarded his affairs when it is said that he knew that in the event of his creditors seizing his property he would not be able to pay for goods purchased on new credit. What his belief was in regard to their so doing, is not made an element in the charge. He may have considered it highly improbable; so much so that he may have had no doubt of his ability to pay for the new purchases. Thus it will be seen that, under this charge, a man might be held guilty of fraud in the purchase of goods, who had an honest intention at the time to pay for them, and believed himself able to do so. This clearly is erroneous.
But it is said that the court in a subsequent part of the charge told the jury, that if the purchase was made with the intention and expectation of payment, the sale was legal, although the purchaser knew that he was insolvent; and so it is claimed that this part of the charge prevented the harm that might have been done by the first part. ■ We do not so regard it. Here are two distinct propositions of law stated to the jury, designed to meet two different phases of the case presented by the evidence. The first proposition, stripped of all verbiage, amounts to this; that the defendant was guilty of fraud if he purchased the goods knowing his inability to pay for them, unless he disclosed the fact of his inability to the vendor at the time. There is nothing stated *329in this part of the charge about the purchaser’s intention to pay.' It may have been as good as the intention supposed in the later part of the charge, where the jury were told that the defendant was not guilty of fraud if he made the purchase with the expectation and intention to pay for the same, although he knew at the time that he was insolvent. It might be asked, if he knew that he was insolvent, how much better was his ability to pay and consequently his expectation of payment, than the purchaser might have had in the case supposed in the first part of the charge; but still a disclosure of his condition is deemed essential in the first part of the charge, and is made to take the place of an intention to pay in the subsequent part of the charge.
Furthermore, it is not true that a man is necessarily guilty of fraud who purchases goods knowing his pecuniary inability to pay for them and does not disclose the fact to the seller at the time. The expression in the charge, “ will not be able to pay,” was used in the sense of pecuniary inability to pay. This is clearly shown by the context in relation to the creditors taking all his property; and also by what is said in the closing part of the charge, where the court instructed the jury, that a man in purchasing goods holds himself out by the act of purchase as able to pay for them, and is guilty of a false representation implied by his act unless he is able to do so.
To constitute fraud in such a case, there must be such facts and circumstances attending the transaction, not only in relation to the purchaser’s want of property and credit, present and prospective, if such is the case, but facts sufficient to prove to the satisfaction of the jury that the purchase was made with the intention of not paying for the goods; and where this is the case a party will be guilty of fraud whether he discloses his pecuniary condition or not. Want of property can only be evidence tending to show the state of mind in which the purchase was made. How many purchases are made by honest men, where the purchaser relies, for his ability to pay, upon his credit alone, and is not disappointed ?
A new trial is advised.
*330In tliis opinion the other judges concurred, except Phelps, J., who did not sit.