29 N.J. Eq. 174 | New York Court of Chancery | 1878
This action is brought by the receiver of the Erie Railway Company against a person who, until just before its commencement, was his purchasing agent, and, also, against Sigmund Dringer, a dealer in old metals, who, at its commencement, was engaged in business at Paterson. The bill presents a case of fraud. In my view, the only question necessary to be considered in deciding it is, has the complainant proved the frauds charged against the defendants or either of them. The question is one of fact exclusively. .No legal rules are in dispute, and none need be considered except those which will aid in solving the disputed questions of fact.
On the argument it was insisted by complainant’s counsel, even if it was found there was a failure of proof of fraud, still it would be the duty of the court to retain the bill for
The bill in this case does not aver that there are any accounts between the defendant Dringer and the complainant, growing out of honest and legitimate transactions, which are intricate or complicated, nor does it show any other reason of justice or convenience why this court should take jurisdiction of the case as a matter of account. Discovery and an account.are both sought; not, however, as distinct matters of relief, but simply as a part of the means the complainant has a right to employ, according to the usual practice of the court, in attempting to establish the fundamental facts of his case. They are, at most, mere adjuncts or incidents to the main object of his bill. The gravamen of his action is, that the defendant Dringer, under the pretext of purchases, has fraudulently obtained a large amount of his property. He asks that the title thus acquired may be declared void, and the property restored to him by the decree of this court. As mere aids in proving the fraud and obtaining full redress, he asks for discovery and an
It would seem, necessarily, to follow, as a matter of principle, that where an account, or any other relief, was asked as a mere incident, or in aid of the main purpose of the bill, if the relief on the main ground is denied, the complainant should be dismissed. I am not willing to sanction a rule of practice which will allow a suitor to come into court charging against his adversary a case of fraud, which, if proved, will blast his reputation, and, when he finds he cannot prove it, will give him the right to escape defeat by turning his case into a collection suit. In this case the complainant has put- his right to relief upon certain frauds which he charges the defendants have committed; if he has proved them, he is unquestionably entitled to relief; and, in my judgment, it is equally certain, if he has failed, that he ought to be dismissed.
Though the bill, as originally framed, contains several sweeping charges of fraud, but one transaction was described with the requisite legal certainty and precision; the others were stated so generally and vaguely that the defendants were not afforded the opportunity the law gives them of being clearly and distinctly informed of what they are accused before they are obliged to answer. The bill described this transaction as follows: In May, 1875, Bowman, pursuant to the direction of the receiver’s superintendent, advertised the sale of eighteen hundred tons of old car-wheels, by soliciting bids; the defendant Dringer bid $22 a ton for one thousand tons; his bid was accepted and delivery ordered; the next day Bowman revoked the order for delivery, without reporting the revocation, and shortly afterwards commenced delivering wheels to Dringer at $19 a ton, and continued to do so until seventeen hundred tons
Upon the question, whether this sale was made by the authority of the superintendent, there is scarcely the semblance of conflict in the evidence. Bowman swears when Dringer made his offer he at once told him it could not be accepted without the approval of the superintendent; he further says, as soon as an opportunity occurred he laid the
On cross-examination, in reply to the distinct question whether Bowman did not tell him the offer was for seventeen hundred tons, and would take nearly all on hand, he says he cannot recall that part of it; that he then supposed a sale of seventeen or eighteen hundred tons had been made, and only a few remained on hand. It thus appears, by the evidence on both sides, that the superintendent ordered a sale at $19 a ton. Whether it was a small or large quantity, the price, in his judgment, was not so grossly inadequate as to render it judicious to hold the wheels. So far, the proof is in perfect harmony. But, it is said, this direction was given under a misapprehension. Misapprehension as to what ? The quantity ? I cannot understand why the superintendent should have approved a sale of ten or one hundred tons, at $19 a ton, and not a sale of seventeen hundred tons at the same price. If seventeen hundred tons were worth $21 or $22 a ton, a less number of tons would
“Motive Power Department. Collection.
Month of July, 1875. Erie Railway Company.
Sigmund Dringer, Post Office address, Paterson.
1875. July.
| To Erie Railway Company, Dr. ] Eor 501 Jffg tons of old wheels, at $19, gross, $9,529.94. From Eastern Car Shop.
Approved:
E. S. Bowen, G-en’l Sup’t.”
By permission of the court, the bill was amended just before the hearing so as to. charge several additional frauds. They may be classified as follows : First, obtaining by false weighing, or not weighing at all, larger quantities than were purchased; second, obtaining new and useful material under the name of waste; and, third, obtaining waste material far below its value. By these frauds, the complainant alleges, nearly four million pounds of metal, representing a value of nearly $40,000, were abstracted. They were perpetrated, if at all, within less than eighteen months, and
The burden is on the complainant. He charges fraud. No presumption, not supported by convincing evidence, can be made in favor of its truth. It must be proved so as to convince the judgment. Dringer may rest securely- upon his contracts and the vouchers issued to him by the complainant, until it is proved they were procured by fraud.
After the most careful and deliberate consideration it is possible for me to give to the case, I am compelled to say, I am not satisfied the complainant is entitled to a decree. There is enough evidence to excite grave suspicions, and to raise painful doubts touching the entire innocence of the relations existing between Dringer and some of the complainant’s subordinates, but it requires something more than doubts and suspicions, even if they are painfully harassing, to justify a court in nullifying contracts, and depriving one man of property, which he holds by a title apparently valid, and transferring it to another. Property acquired by fraud should be restored; but, before restoration can be regarded as an act of justice, the fraud must be so clearly proved as to render it certain that restoration is not spoliation. The court must go wherever the proof leads; to that point it may go fearlessly and with the utmost complacency, but not a hair-breadth beyond.
I shall not attempt to present a full and careful review of all the evidence and arguments designated to demonstrate fraud. A book, rather than an opinion, would be the result of such an effort, if the utmost conciseness was observed. The case is choked to obscurity with books of account and papers containing calculations, and these have been made the basis of ingenious and conflicting calculations and conjectures, thereby, if possible, increasing the density of the obscuration. Obviously, no useful purpose would be served by attempting to review them, nor is it necessary to examine the great body of the evidence intended to prove fraud. Much of it, in my opinion, is distant, shadowy, and
Direct proof of fraud has been given by two witnesses. One swears Dringer gave him $100, in June, 1873, to reduce the weight to be reported of seven or eight car loads of material, from one thousand to three thousand pounds each; that this reduction was made with the consent of the person under whose direction he was working, and who afterwards received $25 of the bribe. He further says, he confessed Ms treachery to the company, in the latter part of 1874, or the early part of 1875, and has ever since remained in their employ. Dringer denies this story in all its parts, and the person accused of consenting to the alleged fraud, and of accepting part of its price, declares, so far as he is concerned, it is false throughout. It is proper to add, this witness’s character for veracity has been impugned. His manner and bearing as a witness did not inspire confidence. The other testified to confessions by Dringer of various acts of bribery and corruption. If the words he puts in Dringer’s mouth are true, the complainant has been extremely unfortunate in selecting Ms subordinates, for it may well be doubted whether there is one among them who has virtue enough to resist the seduction of a bribe. H¿ confesses to a strong hatred of Dringer. There was rancor even in the emphasis with which he confessed it. His character for truth has been thoroughly impeached. An attempt has been made to sustain it. I do. not think it was successful. Indeed, a character so generally esteemed bad, as this man’s seems to be by a large portion of those wTho know Mm, cannot be made good except by a reformation of the life. Dringer has put himself upon his character as a man of integrity. A large
Conclusive evidence of fraud, it is claimed, is furnished by Dringer’s record of his business. It is said, if the quantity of material which he had on hand when this suit was brought is added to the amount of his sales as shown by his books, and from the total thus obtained the sum of his purchases appearing on his books is deducted, it will appear he has obtained, in some unknown way, over four million pounds more than his books show he has purchased. That he has obtained a large amount of property of which his books contain no record, is admitted. If his business had been conducted on business principles, and with a view of pre serving an accurate record of all his transactions, this large discrepancy would tend strongly to show mistake or fraud. But it is clearly shown that his books were not kept to preserve a record of his purchases. ■ Tie commenced business at Paterson, in 1869; he made no purchases, however, of the Erie Railway Company, until 1873. Up to that date nothing like a correct record was kept of any part of his business; it may truthfully be said, his business was conducted without accounts. He can write nothing but his name, and the style in which he writes that renders it certain he is utterly incompetent, for want of education, to keep accounts, even in the crudest form. He swears he cannot read writing. There is nothing in the case to sustain the charge that his illiteracy is feigned'. A considerable portion of the time he has been in business he was without
The charge that new and useful material was sold as waste has been successfully refuted. It is admitted that certain obsolete spring-steel was sold as scrap, but the circumstances attending the sale, as narrated by witnesses, who, at the time of the sale, held important positions under the complainant, and whose apparent intelligence and impartiality entitle them to the fullest confidence, leave no
Fraud in price was mainly practiced, it is alleged, in purchasing a superior class of material under the name and for the price of a less valuable; for example, No. 1 scrap iron was purchased as No. 2 or No. 3. Such a classification was unknown to some of the complainant’s employes, who, it would seem from their business, ought to have known Ml about it. Tlie evidence in support of this charge is drawn almost entirely from Dringer’s books. It is said his sales, of No. 1 scrap iron run up to nearly five millions of pounds more than his books show to have been purchased, and
On a careful retrospect of the whole case, it is impossible for me to say that I am convinced of the truth of any one of the actionable charges made by the complainant against either of the defendants. His bill must, therefore, be dismissed, with costs. I will so advise.