93 Ala. 160 | Ala. | 1890
— On February 20,1890, Grambe & Buchanan, dealers in musical instruments in Birmingham, purchased on credit sundry organs from appellee, who resided and was engaged in business in Chicago. On May 10, 1890, Grambs & Buchanan made to appellant an assignment of their assets for the benefit of their creditors. Soon thereafter appellee demanded the organs of appellant, and on his refusal to deliver, and subsequent disposal of them, brought this action for their conversion. The case was tried by the judge without a jury, and judgment rendered for plaintiff, from which the appeal is taken, and said judgment assigned as error.
There is no controversy as to the facts. Buchanan, who was in Chicago, on being asked by plaintiff for a statement of the financial condition of his firm, while seeking to purchase
The authorities differ as to what conduct, misrepresentations or concealments constitute such a fraud as will effectively avoid a sale of goods on credit, so as to authorize the seller to reclaim them. Some hold, that actual artifice, contrivance or false pretense, intended and operative to deceive, is essential; others, that when the vendee induces the owner of goods to sell them on credit by concealing a positive intention not to pay for them, this is a fraud which entitles the owner to dis-affirm the contract, and recover the goods from the purchaser, though there may be no fraudulent misrepresentation, or actual artifice; and others, that the concealment from the seller of the buyer’s insolvency, known to himself, and that he has no reasonable expectation of ability to pay for the goods, is not sufficient, but otherwise if there be actual deceit. As a general proposition, sustained by the preponderance of authority, where a party, being insolvent, or financially embarrassed, indue 3S the owner to sell him goods on credit, having an intent not to pay for them, by fraudulently concealing or misrepresenting his insolvency, he perpetrates a fraud, which entitles the vendor to disaffirm the contract and recover the goods from him.
The case made by the record does not come within either
It is contended that the rule, as stated in the case last referred to, is incompatible with other principles, adopted and applied in many adjudged cases in this State, according- to which, it is insisted, the owner may avoid a contract of sale of goods into which he has been induced to enter by the buyer’s false representation of his financial state, though he may not know that such representation is false, and have reasons for believing it is true, and has no pre-conceived design not to pay for them. Commencing with Munroe v. Pritchett, 16 Ala. 785, this court has repeatedly declared in many cases, that a misrepresentation of a material fact relating directly to the subject-matter of a contract — affecting its substance — upon
The special doctrine we are considering arose from the necessity of maintaining confidence in making sales of goods on credit, of preserving commercial credit, by requiring candor, honesty and fair dealing. The principal basis of such credit being the financial status of the buyer, from which the vendor presumes, and has a right to presume, a Iona fide intent to
Reversed and remanded.