33 Cal. 620 | Cal. | 1867
Whether we regard the validity of the sale from the plaintiffs to Wegener & Shoenbar as depending solely upon the question whether the latter were insolvent on the 24th of October, 1863, the date of the sale, or upon that fact, accompanied by other circumstances, it seems to us that the defendant ought to have been allowed to prove the value of the good will of the business of Wegener & Shoenbar. While it may be true that the good will of a trade or business will not go far toward the payment of debts when the creditors of the concern take possession, by judicial proceedings, of the stock and effects, and in that way undertake to pay themselves, yet it is equally true that the good will is a very important interest while the trade or business is being carried on in the ordinary course, without interruption from creditors, and is of much account in enabling the concern to meet its engagements. It has been defined “ to be the advantage or benefit which is acquired by an establishment beyond the mere value of the capital, stock, funds, or property employed therein, in consequence of the general public patronage and encouragement which it receives from constant or habitual customers, on account of its local position, or common celebrity, or reputation for skill or affluence, or punctuality, or from other accidental circumstances, or necessities, or even from ancient partialities or prejudices.” (Story on Part., Sec. 99.) It is often treated as a part of the partnership property. While not a visible, tangible part of the
A trader is insolvent when he is not in a condition to meet his engagements or pay his debts in the usual and ordinary course of business. His solvency or insolvency does not depend upon the simple question whether his assets at the date alleged will or will not satisfy all the demands against him, due and to become due. (Shone v. Lucas, 3 Dow. & Ryl. 218; Hazelton v. Allen, 3 Allen, 114; Bayly v. Schofield, 1 M. & S. 352.) In Bayly v. Schofield said Mr. Justice Le Blanc : “ I take insolvency, as it respects a trader, to mean that he is not in a situation to make his payments as usual, and that it does not follow that he is not insolvent because he may ultimately have a surplus upon the winding up of his affairsnor, we add, does it follow that he is insolvent because his stock and effects are insufficient to pay all his liabilities upon a sudden interruption of his business and a winding up of his affairs. The test question is not, “ will his effects realize enough to pay his debts due and to become due ?” but “ are his affairs in such a condition as to enable him, in the usual and ordinary course of his business, to make his payments as they fall due ?” and the question is to be answered by the jury in view of all the circumstances
The learned Judge who presided at the trial, in his rulings upon points made while the testimony was being introduced, and in his charge to the jury, followed strictly the case of Seligman v. Kalkman, 8 Cal. 207. Under the law as there declared the whole ease was made to turn upon the single question whether the firm of Wegener & Shoenbar was insolvent on the 24th of October, 1863, the day on which the sale of the tea was made, regardless of the fact whether Wegener & Shoenbar intended to pay for the tea when they bought it, or whether they made, either by themselves in person or through the intervention of other parties, any false representations as to the condition of their affairs, or whether the plaintiffs were at all deceived or misled by any act of Wegener & Shoenbar, or anybody else acting in their interest. In thus putting the case to the jury, we are satisfied that no violence was done to the letter or spirit of Seligman v. Kalkman, on the contrary, the rule in that case was strictly applied to this.
The rule in Seligman v. Kalkman is as follows: Every person about to purchase goods from another on credit is bound to know the condition of his own affairs—that is to say, whether he is insolvent or not, and if insolvent he must disclose that fact to the seller without being called upon to do so or the contract of sale, if made, will be null and void, and the title to the goods will not pass. This doctrine is denounced by the learned counsel for the appellant as unsound; and notwithstanding our great desire to follow the lead of our predecessors whenever it can be done with
We do not consider it profitable to review all the cases which bear more or less directly upon this question. The principal cases are cited in the briefs of counsel. It is sufficient to say that we have not met with a case which in our judgment sustains Seligman v. Kalkman, nor have the very learned and industrious counsel, who represent the respondents, been able to cite a case which takes the extreme view announced by the learned Justice who delivered the opinion in Seligman v. Kalkman. .It is conceded on all sides that the case which affords to Seligman v. Kalkman its chief countenance and support is that of Fitzsimmons v. Joslin, 21 Vt. 130. Mr. Justice Burnett, by whom the opinion'in Seligman v. Kalkman was delivered, seems to have grounded his conclusions mainly upon that case. The case, however, does not in our judgment sustain the extreme doctrine which he seems to have deduced from it. The facts of that ease were as follows: Preston, an insolvent merchant of the City of Vergennes, in Vermont, went to the City of New York to purchase a stock of goods. On his way he stopped at Troy, and called upon two firms with whom he had previously dealt, and to whom he was indebted, and told them that he was unable to pay them then, and that he was on his way to New York to buy goods, and then asked them if he did so if they would give him any trouble, adding that if they intended to trouble him he did not wish to make any purchases. They assured him that it was not their intention to trouble him at all; to go on and do the best he could, and that they were willing to take what was coming to them in small sums to suit his convenience. Accordingly Preston went to New York and returned with a stock of dry goods which he had purchased on credit in that city, intending to purchase his groceries at Troy. He called upon the firms already referred to for that purpose, who declined to sell unless he failed to effect a purchase elsewhere, and upon his inquiring for other grocery merchants, gave him the name of the
Such being the facts, the only question debated by counsel and decided by the Court was whether Preston, having made no representations himself, was bound by or was to be considered as a party to the representations made by the parties whom he named when asked for references, and it was very justly held that he was, upon the familiar maxim qui facit per aliam, facit per se. The fraud was as barefaced as any which has ever been exposed in a Court of justice. It was a plain case of robbing another to pay themselves, on the part of the Troy merchants, through the agency of the purchaser, who was fully advised of the deception to be practiced and which was practiced on the seller—a very different case from that presented by the record in Seligman v. Kalkman or in the present case. It was little else than the ordinary case of false representations by the purchaser by which the seller is deceived and misled to his prejudice. It was a very plain case of that impression, and it was upon that theory that it was argued and decided. We find noth
The whole law upon this question is stated by Parsons, in his work on contracts, thus : “ There are cases in which the intention seems to constitute the fraud, and to have the'force and effect of fraud. For if one buys on credit, and does not pay, still the title of the goods is in him; but if one buys on credit, intending not to pay, this is an actual fraud, and it avoids the sale entirely, so that no property passes to the purchaser. If the question were res nova, perhaps it might be doubted whether the rule established by these cases is correct. It is clear that if a purchaser makes false representations of his ability to pay, his property or credit, the sale is void and no title passes as between the original parties to the contract. But it is equally true that the mere insolvency of the purchaser, and his utter inability to pay for goods when purchased, although well known to himself,
We agree with Mr. Parsons, that the cases which hold that a bare intent not to pay for the goods renders the sale void are of doubtful logic, for it would seem to be of little consequence what the intent of the purchaser in that respect may be, since he may be made to pay notwithstanding such intent (Smith v. Smith, Murphy & Co., 21 Penn. St. R 370); but as to the soundness of the remainder of what is said there can be no question on the score of principle or authority. Stripped of such facts as are sui generis, the cases are all that way. That such is the law is made clear by an examination of the books;' that such should be the law is demonstrated by a moment’s reflection.
The rule in Seligman v. Kalkman grounds the nullity of the contract upon the mere insolvency of the purchaser, thereby converting insolvency into constructive fraud; yet all the cases and all the books agree in placing the nullity of the contract upon actual fraud practiced upon the seller, by reason of which he is misled and deceived as to the ability of the purchaser to pay, and thereby induced to part with his goods when otherwise he would not. There is no relation of trust and confidence between buyer and seller—they stand at arm’s length; the rule is caveat emptor, caveat vendor. Fraud must be acted, not thought. It must act upon the vendor, and not merely exist in the mind of the vendee. If the vendor is allowed to act upon his own judgment, uninfluenced by representations communicated either by words or acts, no fraud is committed, but a bad sale may have been made, which he must charge to the account of his own fault and folly, in not seeking information from the purchaser or some one else.
Some of the consequences which would follow from an adherence to the rule in Seligman v. Kalkman are well stated by Mr. Justice Lowrie in Smith v. Smith, Murphy Co., supra. He said : “If the fact of buying implies an assertion
Order denying new trial reversed, and new trial granted.