20 Barb. 253 | N.Y. Sup. Ct. | 1855
The basis of this action is, that the sales of the property in question by the plaintiffs to McCabe, were obtained by the latter by a fraudulent concealment from the plaintiffs of important facts in regard to his pecuniary circumstances, which it was his duty to disclose to them, wherefore the sales were void; that the defendant is not a bona fide purchaser from McCabe ; and that he wrongfully withholds and has converted the property.
But assuming that McCabe was, at the time of the purchase of the brandy, insolvent; that his circumstances had become reduced during the period he was buying of the plaintiffs from time to time on credit, and meeting his engagements as to payments ; and that he well knew his insolvency, and intentionally concealed it from the plaintiffs, by simply withholding his knowledge on the subject, without otherwise saying or doing any thing to mislead; yet retained the possession of property and was pursuing his business as theretofore—he was not, in my opinion, thereby guilty of a fraud, entitling the plaintiffs to avoid the sale. The law does not, in ordinary cases, impose upon a purchaser of property the duty to disclose to the seller, at or before the sale, the state of his pecuniary circumstances, however desperate they may be, and be known by him to be. Although the knowledge may be of the highest importance to the seller, for the protection of his interests, the duty of communicating it is only a moral duty, belonging to a large class of similar duties denominated by Chancellor Kent, “ imperfect obligations which are binding in conscience, but which human laws do not and cannot undertake directly to enforce.” (2 Kent's Com. 4th ed. 490.) Parties to contracts must themselves exercise reasonable care to guard against loss, and, in general, that degree of care requires the party giving credit to make
In relation to the sale of the win.e, the other portion of the property in question, there is an additional fact to those which exist and are . assumed to exist, in respect to the sale of the brandy, which, upon the question of fraud in the sale, is entitled to much consideration. The order for the sale of the wine was not made until two days after the assignment by McCabe, and when of course he was entirely divested of property. Hot only was he insolvent, and known by him to be so, but he had then performed an open and notorious act of insolvency. Was it not his duty, arising out of his previous dealings with the plaintiffs, to communicate that fact to them before the sale. The plaintiffs carried on business at Philadelphia, remote from McCabe, whose place of business was the city of Auburn; they had from time to time for the period of five years, made sales
It cannot be claimed, upon the evidence, that the defendant was a bona fide purchaser. He had notice of facts which render him legally chargeable with knowledge of the fraud; and besides it does not appear that he paid any thing on account of the property, or that his situation has been in any way changed.
I do not perceive that the doctrine of stoppage in transitu has any relation to this case. If the right existed while the property was at the depot in Auburn, it was certainly at an end after the property came into the possession of the defendant.
A new trial must be granted, with .costs to abide the event.
Selden, Johnson and T. R. Strong, Justices.]