| NY | Mar 21, 1871
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *182 The judgment upon the report of the referee was properly reversed and a new trial granted by the Supreme Court. The reasons assigned by Judge BOARDMAN for such action, are satisfactory. The money for the recovery of which this action was brought, was not advanced to or for the defendants or upon their credit, and the notes transferred to the plaintiff were not in fact, and did not purport to be notes of the defendants firm and were not given in their business.
The transaction was entirely disconnected with the business of the partnership composed of the defendants and was so understood by the plaintiff who gave credit only to Bemis, by entrusting him with the money to purchase for him and as his *183 agent, the notes of another firm, before then dissolved, and the notes transferred were delivered to and accepted by the plaintiff as the notes of that firm. Bemis perpetrated a fraud on the plaintiff but not in the business or as the agent of the defendants. Had the plaintiff shown that the money, although entrusted to Bemis for a special purpose, had been diverted and appropriated by the defendants to their use with knowledge that it was the money of the plaintiff, an action upon the notes, or for money had and received, might have been maintained. They would then with knowledge of the facts and with their assent have become the debtors of the plaintiff, but the evidence came far short of proving such a state of facts. The money was placed by Bemis to the credit of the firm in bank and checked out by him in the firm name, and chiefly, if not entirely, in the payment of the debts of the extinct firm, and if in a sense the defendants (the new firm), may be said to have received the money, it was not as the money of the plaintiff, but of Bemis, who had credit for it. Had the money been borrowed for the firm in the ordinary course of business, the defendants would have been liable. But Bemis was the trustee and agent of the plaintiff and having the money in his hands in that capacity, placed it with that of the firm and took to himself credit for it. The other parties were ignorant of the relations between him and the plaintiff, as well as of the source from which the money came. The relation of debtor and creditor as between the plaintiff and the defendants, did not result from that transaction. (Jaques v. Marquand, 6 Cow., 497" court="N.Y. Sup. Ct." date_filed="1826-10-15" href="https://app.midpage.ai/document/jaques-v-marquand-5464753?utm_source=webapp" opinion_id="5464753">6 Cow., 497; Hutchinson v. Smith, 7 Paige, 33; Richardson v.French, 4 Met., 577; Smith v. Craven, 1 Cr., and Jer., 500.)
The order granting a new trial should be affirmed, and judgment absolute go against the plaintiff pursuant to the stipulation.
All the judges concurring, judgment affirmed. *184