117 Ga. 567 | Ga. | 1903
Lead Opinion
On January 21,1898, the Dannenberg Company presented to the judge of the superior court of Pulaski county a petition in which it was alleged, that at different times during the year 1897 the plaintiff had sold.to George D. Mashburn & Company, a mercantile partnership, doing business in Hawkinsville, Georgia, and composed of George D. Mashburn and J. • P. Doster, certain articles of merchandise on credit; that the credit thus extended was based solely upon certain written statements as to their assets and liabilities, made by Mashburn & Company to a named association of merchants of which plaintiff is a member; that these statements were false; that the goods sold to the firm have become mingled with their general stock, and it is impossible for plaintiff at this time to designate the portion of such goods remaining unsold; that on January 6, 1898, the partnership executed to the Hawkinsville Bank & Trust Company (hereinafter referred to as the bank) a mortgage on their general stock, to secure an alleged indebtedness of $6,000, and on January 10,1898, executed similar mortgages to Mrs. Mary C. Fitzgerald and D. T. Mashburn to secure an alleged indebtedness of $1,991.28 to the former and $2,009.46-to the latter; that the mortgage in favor of the bank has been foreclosed and the sheriff is in possession of the stock of goods, and plaintiff is unable to obtain access to them to identify the goods sold by it; that, by reason of the false and fraudulent representations above referred to, the title to the goods did not pass; that, Mashburn & Company being insolvent, unless the sale be rescinded and plaintiff be allowed to reclaim its goods, it can realize nothing on its claim. The prayers of the petition were, that a receiver be appointed to
On this petition the court passed an order granting the injunction prayed for, ordering the sheriff to allow the plaintiff to examine the stock of merchandise and identify the goods sold by it and to mark and set apart the same, and ordering that the sale by the sheriff proceed, the goods identified by plaintiff to be sold separately and the proceeds of the sale turned over to the receiver named in the order, to be held subject to the further order of the court. At the February term, 1898, the plaintiff filed an amendment „ to its petition, alleging that the mortgages referred to in the original petition were given to secure a past-due indebtedness, that the mortgagees were not bona fide purchasers for value, and acquired no lien or equity in or to the property delivered to defendants Mashburn & Company by plaintiff. It was further alleged in
Nothing seems to have heen done in connection with the case until the August term, 1901, when it came on for trial, at which time-the plaintiff further amended its petition, setting out a copy of a statement dated July 16,1897, alleged to have been made by George D. Mashburn & Company, as to their financial standing and worth, to R. G. Dun & Company, a mercantitle agency, their net worth being stated to be $31,000. It is alleged that the plaintiff, in making the sales referred to in the original petition, also relied upon this statement, which was false in that the assets were placed too high and the liabilities too low. The defendants Bowen and D. T. Mashburn also filed, at this term of the court, an amendment to their answers, in which they alleged “ that the goods sold by the sheriff and selected as the goods sold by the plaintiff to Geo. D. Mash-burn & Company in the petition of plaintiff are not the same goods; ” that the hank took a mortgage on all the stock of goods of Mashburn & Company on January 6,1898, for money loaned by the bank to the mortgagors after the sale of all the goods by plaintiff, believing at the time that Mashburn & Company were the owners of the goods, and stood in the same position as a bona fide purchaser without notice ; that these defendants are bona fide purchasers for value from the bank, and stand in its shoes; that the plaintiff has in open court released the bank, by announcing that it would not ask any judgment against it, and this act of the plaintiff releases these defendants, who hold and claim under the bank and are entitled to the same rights, privileges, and protection as the bank was under its mortgage. It appears from the bill of exceptions that the plaintiff did, in open court, release the bank as set forth in the foregoing answer of Bowen and Mashburn. The trial resulted in a verdict for the plaintiff for $438.16, with interest against the defendants George D. Mashburn & Company, George D. Mashburn, J. P. Doster, R. V. Bowen, and D. T. Mashburn. The defendants filed a motion for a new trial, which was overruled; and they, together with the sheriff and Mrs. Fitzgerald, united in a bill of exceptions, in which they
In view of the state of the pleadings at the date of the trial, the case is to be treated simply as a suit brought for a wrongful conversion of personal property. The case of the plaintiff absolutely depends upon whether it sold the identical goods which were set apart by the sheriff, upon the faith of statements of Mashburn & Company as to their financial standing, and whether these statements were false. If it did not sell upon the faith of such statements, then its case fails, without reference to any other question. According to the testimony of the plaintiff’s witness Chapman, none of the identified goods were embraced in any of the invoices dated prior to May 1, 1897. We will therefore eliminate the invoice of March 16, 1897, from this discussion. The only statement made prior to the sale of the goods contained in the invoice of May 1, 1897, was the one dated July 14, 1896, which was more than nine months before the date of the invoice. As to the sale of goods in this invoice, the right of the plaintiff to rescind depended upon whether the credit was actually given upon the faith of the statement made in the preceding year, and whether, under all the circumstances, the plaintiff had a right to act upon the faith of a statement made to a mercantile agency at such a distant day in the past, and whether a merchant making statements to such agencies intends for them to be relied upon after the lapse of such a time. No arbitrary time can be fixed when a statement to a mercantile agency will become “ stale ” and persons should no longer act upon it; but whether such a time has elapsed must be determined by the jury according to the circumstances of each case. See, in this connection, Waldrop v. Wolff, 114 Ga. 613 (4). As to the other invoices, there were other statements claimed to have been relied on as a basis of credit, which were not so remote from the date of sale. The jury should have been instructed that if the identified goods were sold upon the faith of statements, on which the plaintiff had a right to rely as a basis of credit, the plaintiff had a right to rescind the sale of all such goods and recover the same as against Mashburn & Company, if the statements were false; but that if a portion of such goods were sold upon the faith of statements of the character just indicated, and a portion were sold upon the faith of statements made at such a time prior to the date of sale that it
There was evidence from which the jury could find that the plaintiff, in extending credit to Mashburn & Company, relied upon statements made by them to the mercantile agencies as a basis for credit, and that these statements were false. There was also evidence which would support a finding that as to some of the sales, even if not as to all, the statements relied on were made at such a time that plaintiff had a right to act on them, and that Mashburn & Company intended they should be acted on by those to whom they applied for credit. The misrepresentations under such circumstances constituted in law a fraud upon the plaintiff, whether Mashburn & Company knew of their falsity or not. This being so, the plaintiff was entitled, as against them, to rescind the sale and retake possession of such of the goods as were in the stock at the time the suit was filed and could be identified by it, if in making the sale of such goods the plaintiff had a right to rely upon the statements acted on by them. Newman v. Claflin, 107 Ga. 89. There was also evidence from which the jury could find that the goods identified and set apart by the plaintiff under the order of court were sold by the plaintiff and had never been paid for. This being so, the plaintiff was entitled to recover at least a portion of the goods, unless some one or more of the defendants holding mortgages had obtained a valid subsisting lien thereon, or unless Bowen and D. T. Mashburn were to be regarded as bona fide ■purchasers without notice of the fraud of Mashburn & Company. It has been repeatedly ruled by this court that a creditor who takes a mortgage to secure an “antecedent debt” on goods which, although in the possession of the mortgagor, were obtained as a result-of fraudulent misrepresentations as to his financial standing and ability to pay, which induced the seller to act to his injury by parting with the possession of the goods, does not acquire any lien on the goods as against the seller’s right to rescind the sale on account of the fraud. Dinkler v. Potts, 90 Ga. 103 ; Exchange Bank v. Claflin,
A person in possession of personal property is presumptively the owner thereof. One in possession of goods as the result of a sale brought about by fraud is the owner until the seller elects to rescind the sale. Civil Code; §§ 3540, 2696. Hence, when goods are sold and delivered to a merchant, to be paid for at a future time, the title to such goods is vested in the vendee, notwithstanding the sale was brought about by the perpetration of a fraud; and while the vendor may rescind the sale and reclaim the goods if the credit was induced by fraudulent misrepresentations upon the part of the vendee, the vendor can not, in such a case, follow the goods in the hands of an innocent party who has, for a valuable consideration, come into possession of them, or who, for a like consideration, has acquired a lien on them. An examination of the cases above cited will show that in every instance where the creditor was not allowed to enforce his lien, the debt which the mortgage was given to secure was contracted before the goods came into possession of the mortgagor. In Dinkler v. Potts, supra, the rule is laid down that the seller’s right to rescind for fraud is superior to the right of a mortgagee whose mortgage secures an “ antecedent debt.” It is insisted that the word “ antecedent,” in this ruling, refers to the date of the mortgage. We think it refers, not to the date of the mortgage, but to the date of the sale, that is, an antecedent debt is one created before the date of the sale sought to be rescinded. A debt created after the sale on the faith of the property in the possession of the vendee, although not secured by mortgage until some time after the debt was created, is not an antecedent debt within the meaning of the rule, provided of course the mortgage was executed before the seller exercised his right to rescind. An examination of the case of Exchange Bank v. Claflin, supra, will, we think, show this. It was there said: “A title obtained by fraud is voidable in the vendee and is good only when-set up by a bona fide purchaser without notice. Civil Code, § 3540. A creditor by mortgage who did not extend credit on faith of the
If the debt of the bank antedated the sale of the goods by plaintiff to Mashburn & Company, and the bank, after notice of plaintiff’s intention to rescind the sale and retake its goods, either caused the goods to be seized on the mortgage execution, or, if at that time the goods had been seized, caused them to be retained by the sheriff, this act on the part of the bank was such a trespass as would render it liable to the plaintiff for such damages as it sustained on account of this wrongful act. If Bowen, when he took a transfer of the mortgage from the bank, had notice of the plaintiff’s having elected to exercise its right to rescind the sale to Mashburn & Company, and as transferee of the mortgage caused the property to be seized and became the purchaser at the sale, either alone or jointly with another, he would be liable to the plaintiff for the trespass thus committed upon its property. If D. T. Mashburn became a joint purchaser at the sale with Bowen, and had notice of the facts above referred to, and took possession of the property jointly with Bowen, he would thus render himself liable as a trespasser jointly with Bowen, the bank, and Mashburn & Company. On the other hand, if the bank extended credit to Mashburn & Company on the faith of the stock made up in part of plaintiff’s goods, and took a mortgage on the stock to secure the debt thus contracted, having no notice, either at the time the credit was extended or the mortgage was taken, of the fraud of Mashburn & Company, neither the bank nor any one claiming under it would be liable to the plaintiff. If the facts were such as to render the bank liable as a trespasser for either causing the execution to be levied, or causing the
There seems to be much conflict among the authorities as to whether the doctrine of lis pendens is applicable to personal prop
The mortgage to the bank purported to constitute a lien on the entire stock of goods of Mashburn & Company in their possession at the time the mortgage was executed. As we have seen, it was in fact a valid lien on all of the goods sold by plaintiff, except such as were sold after the debt which the mortgage was giveq to secure was created. It is apparent, therefore, that the pendency of the suit would not be sufficient to affect persons claiming under the bank’s mortgage with notice of the particular goods upon which it. did not constitute a lien. The burden was upon the plaintiff to show a right to the possession of the goods in controversy. The presumption is that the possession of the defendants who had control of the goods was lawful and valid; and the mortgages of the other defendants being on their face valid and prima facie constituting liens on the goods, the burden was on the plaintiff to establish a state of facts which would invalidate the mortgages so far as its goods were concerned. The burden is on any one attacking an instrument apparently valid on its face to show its invalidity, and to do this he must introduce evidence which clearly and satisfactorily establishes this fact. See Forsyth Mfg. Co. v. Castlen, 112 Ga. 199 (3). The question is, therefore, whether the plaintiff carried this burden. No effort was made to charge the bank with knowledge of the fraud of Mashburn & Company. The bank’s mortgage was dated January 6, 1898. The evidence shows that on May 1, 1897, Mashburn & Company bought goods from plaintiff amount; ing to $119.65 ; on August 17, $399.46; on October 25, $16.50. It probably can be derived from the evidence that a part of the May bill was paid, but this is immaterial. On May 14, 1897, credit was extended to Mashburn & Company by the bank to the amount of $2,000, on June 15, $2,000, on June 29, $1,000, on July 28, $1,000. The evidence also shows that some small amounts, it does not appear how much, were loaned by the bank after August
It appears from the record that the plaintiff announced in open court that it would not ask any judgment against the bank; and it is contended that this released Bowen and D. T. Mashburn. • "We do not think the release of the bank had this effect. When a tort is committed by two or more persons, each contributing to the injury as a tort-feasor, the party injured may, at his election, hold them liable in separate suits or may sue all or any two or more of them jointly in the same suit. Several persons acting independently but causing together a single injury are joint tort-feasors, ■and may be sued either jointly or severally. 15 Ene. P. & P. 557-8. The general rule is thus stated in Brooks v. Ashburn, 9 Ga. 298: “Where an immediate act is done by the co-operation or the joint act of two or more persons, they are all trespassers, and may be sued jointly or severally; and any one of them is liable for the injury done by all. To render one man liable in trespass fo.r the acts of others, it must appear either that they acted in concert, or that the act of the party sought to be charged ordinarily and naturally produced the acts of the others.” Applying this rule to the facts of the present case as claimed by the plaintiff, we think it clearly appears that Mashburn & Company, the barde, and Bowen and D. T. Mashburn were all joint tort-feasors. The wrong which the plaintiff complained of was that it was deprived of its property. This wrong began with the act of. Mashburn & Company in making false representations which induced the plaintiff to extend them credit, and ended with the sheriff’s sale which resulted in Bowen and D. T. Mashburn coming into possession of the property .claimed by the plaintiff. There was a series of independent acts
The plaintiff elected to bring suit against Mashburn & Company, the bank, Bowen, and D. T. Mashburn. At the trial it was announced that the plaintiff did not ask a judgment against the bank. While the bank was not stricken from the record as a party to the case, the case proceeded, after this announcement, as if the bank was no longer a party. Inasmuch as the plaintiff had a right of election in the first instance as to whom it would sue, and as, under
While, therefore, if the bank had remained a party and had been included in the judgment, the other defendants could have called -on it to contribute, the provisions of the code do not give them the right to look to the bank for any part of the judgment rendered against them alone. But it does not follow that this affords them any ground of complaint against the plaintiff. The right of contribution among joint tort-feasors is absolutely dependent upon the right of election which the law gives the plaintiff.' It •exists among those whom he elects to sue jointly, and does not exist as to those whom he fails to join as defendants to the suit. Under no other construction could the right of contribution and the right of election harmonize, and both are equally the law of this State. As we have stated above, the announcement of the plaintiff that it would not hold the bank liable was the same, in •effect, as if .the bank.had been formally stricken by amendment .as a party defendant to the case; and when the bank was thus released, the case stood as if it had never been sued. The plaintiff having exercised its right not to sue the bank, or, what is the same thing in effect, having determined not to hold it liable after it'was sued, the defendants against whom judgment was rendered can not complain because the consequence of this election deprived them of a right which they would have had if the plaintiff had seen fit to elect to hold the bank liable in the suit. It was distinctly ruled in Southwestern Railroad v. Thornton, 71 Ga. 61, 65, that the injured party had this right of election, and that the question of contribution among the defendants was no concern of the plaintiff. Where goods wrongfully taken from the true owner have passed through the hands of several wrong-doers, the owner can elect which one he will sue, and he need not join the others as defendants. Certainly he can proceed against the one who at the time of the suit has the property in his possession. Bowen was made a party defendant without objection, and after he was made
The plaintiff having elected to take a money verdict, the measure of damages was either the highest proved value of the goods at any time between the date of the conversion and the trial, or the value of the property at the date of the conversion with interest from that date. Civil Code, § 3917; Holmes v. Langston, 110 Ga. 867, and cit. Midville R. Co. v. Bruhl, 117 Ga. 329. We do not think the fact that there was a sale of the property by the sheriff and that plaintiff bid at the sale would change this rule. The amount of plaintiff’s bid might throw some light on the value of the property at that time, but would not estop it from attempting to prove a higher value.
The foregoing disposes of the main contentions raised in the case. The motion for a new trial contains nearly forty grounds. Some of these complain of the admission of evidence which is not set out in the motion, either literally or in substance; others complain of the refusal of the court to permit certain questions to be propounded, but do not state what answers were expected. None of these grounds can be considered. Such of the other grounds as present questions necessary to be dealt with, and which are not alluded to in the foregoing discussion, will now be considered.
The court erred, we think, in ruling out the testimony of D. T. Mashburn, to the effect that he kept the books of the firm and that the statements made by the firm as a basis for credit did not overestimate the business. This was not a mere conclusion on the part of the witness, but a statement made by one who was in a position to
It was also error to admit evidence as to the agreement between D. T. Mashburn and Bowen, that Bowen was to bid in the goods and turn them over to Mashburn, who was to collect the debts due the firm and settle up those due by them. This evidence was irrelevant and shed no light on the issues involved, and may have operated to the prejudice of the defendants.
There was no error in admitting evidence relating to the statement made by Mashburn & Company to the Credit Clearing House, a mercantile agency. If Mashburn & Company made the statement to this company as a basis for credit, it was immaterial that they did not know the plaintiff was a subscriber of this agency. The statement was made for the purpose of being used by all merchants who might be correspondents of the mercantile agency, and the misrepresentations would constitute a fraud on any one of such persons acting on them to his injury. See 14 Am. & Eng. Ene. L. (2d ed.) 151;Benj. Sales (Bennett’s 7th ed.), 469 (notes); White v. Magarahan, 87 Ga. 217.
There was no error in admitting testimony as to how much of the firm’s indebtedness had been paid. This was of little importance, but might have had some, slight bearing on the question at issue as to the amount of assets the firm had prior to its failure.
There was no error in admitting the tax returns of Mashburn & Company for the year 1896. They were competent upon the question as to the amount of the firm’s assets in that year. See Smith v. Haire, 58 Ga. 446; Tolleson v. Posey, 32 Ga. 372.
It was argued that as the plaintiff, through its authorized agent, bid at the sheriff’s sale, it would be estopped bo attack the validity of the sale. If the purchaser at the sale was misled, by the presence of the agent of plaintiff as a bidder, into a belief that the plaintiff was acquiescing in the sale and thereby recognizing the right of the bank to foreclose its mortgage, or by appearing as a bidder was waiving its rights under the pending suit, such conduct might raise an estoppel. We, however, find nothing in the present record requiring a ruling on this subject. See, in this connecbion, Osborn v. Elder, 65 Ga. 360; Byars v. Curry, 75 Ga. 515.
Rehearing
ON MOTION EOR REHEARING.
Application is made for a rehearing upon the propositions laid d‘own in the 5th, 6th, and 7th headnotes. This raises the question as to what is an “ antecedent ” or “ pre-existing ” debt, within the meaning of that rule which asserts that a mortgagee who takes a mortgage to secure a pre-existing or antecedent debt is not a bona fide purchaser for value. It is contended that a mortgagee is not a bona fide purchaser within the meaning of this rule, unless he pays value at the time his mortgage is taken; that is, unless the consideration of the mortgage passes at the date of its execution, the mortgage is given to secure an antecedent debt. In 1 Jones on Mortgages, §460, it is said: “He [the mortgagee] must have parted with some value or some right upon the faith of the mortgage and at the time of it, to entitle him to protection as a purchaser. He must have received some new consideration, or must have relinquished some security for a pre-existing debt due him.” In 2 Mechem on Sales, § 924, it is laid down that a seller who has been induced to make the sale by the fraud of the vendee may recover the property from purchasers, pledgees, mortgagees, or others who have acquired a 'lien on it as security for, or who have taken the property in payment of, an antecedent debt, “ unless they have at the time parted with value, released securities, or otherwise changed their position to their prejudice, in reliance upon the vendee’s apparent power to transfer the goods to them.” In 14 Am. & Eng. Ene. L. (2d ed.) 288, it is stated: “A mortgagee who takes the deed as security for money presently loaned is a purchaser to the extent of his interest in the premises.” The expressions, “ at the time,” and “ presently,” as well as similar expressions in some of the decided cases, seem to give support to the contention made by the applicant for a rehearing. These expressions must, however, be construed in connection with the facts of the cases which are cited to sustain them, or in which they are used.