57 Iowa 573 | Iowa | 1881
I. The petition alleges that plaintiff shipped to Thompson & Reeves, pursuant to their orders, certain (goods. The other material averments we present in the language of the pleader, as follows:
“ That at the time said goods were so ordered, shipped and received, said Thompson & Reeves, as a firm, and as individuals, were, and had for a long time been, insolvent to their own
“ Plaintiff further states that said Thompson & Reeves concealed frutn it. their insolvency and their inability to pay for said goods, and their intention .not to pay for the same, and their intention to cheat and defraud the plaintiff of the purchase price thereof; and the plaintiff further states that, relying on the solvency and good faith of said Thompson & Reeves, and not knowing of their fraudulent intention, or of their insolvency, it sold said goods and shipped the same as hereinbefore stated.
“ Plaintiff further states that after the writs of attachment, hereinafter mentioned, were levied upon the goods in controversy, but before the br'nging of this suit, it elected to rescind said contract of sale, and without notice thereof, brings this suit.
“That it so elected to rescind the same as soon as it was informed of such fraudulent conduct and intention on the part of said Thompson & Reeves.
•• Plaintiff further states that by reason of such fraudulent conduct and intent and said. election to rescind, the plaintiff is the absolute and unqualified owner of said goods and merchandise.
“ That the defendant wrongfully detains possession of said property from the plaintiffs at Des Moines, Polk county, Iowa, and that the same is of the value of one hundred and nineteen dollars; that said property was taken neither on the order or judgment of a court against the plaintiff, nor under an execution or attachment against it, or against said property.
“That the defendant, the sheriff of Polk county, took and detains' the same on certain writs of attachment against the property of Thompson & Reeves; that said sheriff, having nc
The demurrer to the petition is in the following language:
“1st. Said petition fails to show that any demand has ever been made upon defendant, or Thompson & Beeves, for said goods.
“ 2d. Said petition shows that plaintiff gave no notice of its election to rescind said contract of sale, either to defendant or Thompson & Beeves, or any other party, before the bringing of this suit.
“ 3d. The petition shows that plaintiff elected to rescind s'aid contract of sale after defendant levied on said goods, and also shows that defend mt and the attaching creditors had no knowledge of said alledged fraud, and said contract of sale cannot be rescinded after defendant’s levy thereon, to the prejudice of at-4aching creditors.
“4th. Said petition fails to show or charge Thompson & Beeves with any false representations or fraudulent concealment of the facts or motives or intent charged in the petition, and fails to show that plaintiff had any right to rescind.”
This rule is not questioned by defendant’s counsel, but they urge that as the petition shows that plaintiff had not rescinded the sale when the suit was brought, del'endant did not wrongfully seize the goods, and defendant could not know, without a demand, that plaintiff would not concede and recognize defendant’s claim to the properly. There might be something in this position, if the petition did not, as required by statute, set out defendant’s claim to the property as based upon the title. The petition thus states both sides of the case and takes the place of an answer. (Of course all its averments may be denied in an answer.) The demurrer admits the averments of the petition, one of which is that defendant “ holds” (present
Counsel for defendants cite no case which holds a notice to be necessary. We know of no principle of law which requires it. We know that such a rule would practically defeat the remedy the law secures to vendors, by recovering the property when the sale is induced by the fraud of the vendees. The thought is ludicrous that the rule should be applied to “ lightning rod men,” to the vendors of patent rights and patented articles, to those who travel over the State appointing agents for the sale of agricultural implements, “hog cholera cure,” etc., etc., and to other like adventurers. They are usually far beyond the reach of notices, or become invisible immediately after perpetrating their frauds. It would be quite as wise to require a thief to be notified that a warrant will be issued for his arrest, as to require notice to swindlers before instituting proceedings to recover the property which they have acquired by their frauds. The language of the Illinois Supreme Court in Johnson v. How, 2 Gilman, 345, quoted in Smith v. McLean, supra, holding that a demand for the property is not required,ds just as applicable to the case of notice. It is as follows:
“ It could scarcely be insisted that if one to whom a horse had been loaned, instead of returning him according to contract, should attempt to run him from the country, and the first intelligence received by the owner should be, that he
If the vendee is not entitled to notice of the rescission of the contract, those claiming under him are not. They hold the property under the title of the vendee, and in cases where they are not innocent purchasers for value, they are entitled to no higher rights than the vendee. We shall soon discover that defendant and the plaintiffs in the attachment are not protected as innocent purchasers for value.
The title of the property was not divested by the attachment, bat remained in the vendees. The seizure conferred upon the creditors iio right to the property as against plaintiff other or different from those held by the vendee. The sole effect of the seizure was to place the property in the custody of the law, to be held until the creditors’ claims had been adjudicated and the property could be sold on execution'. They parted with no consideration in making the attachment, and their condition as to their claims were in no respect changed. Their acts were induced by no representation or procurement originating with plaintiff which would in law or equity give them rights to the property as against plaintiff. Plaintiff’s right to rescind the sale inhered in the contract and attached to the
Our position is simply this, that as an attaching creditor parts with no consideration, and does not change his position as to his claim, to his prejudice, he stands in the shoes of the vendee. It cannot be questioned that the right of rescission as between the vendor and vendee inheres in the contract and attaches to the property. The innocent purchaser for value occupies a different position, and his rights are, therefore, different. These views and conclusions find support in the following authorities: Drake on Attachment, section 246; Big-low on Fraud, page 311; Wells on Replevin, page 184, section 324; Buffington v. Gerrish, 15 Miss., 156; Bussing v. Rice, 2 Cush., 48; Wiggins v. Day, 9 Gray, 97; Field v. Stearns, 42 Vt., 106; Fitzsimmons v. Joslin, 21 Vt., 129; Poor v. Woodburn, 25 Vt., 234; Jordan v. Parker, 56 Me., 557; Ayers v. Hewitt, 19 Me., 281; Bradley v. Obear, 10 N. H., 477; Farley v. Lincoln, 51 N. H., 577; Thompson v. Rose, 16 Conn., 71; Barnard v. Campbell, 58 N. Y., 73; Devoe v. Brandt, 53 N. Y., 463; Root v. French, 13 Wend., 570; Hitchcock v. Covell, 20 Wend., 167; Gasguet v. Johnson, 2 La. Ann., 515-523; Galbraith v. Davis, 4 La. Ann., 85; Bristol v. Willsmore, 1 B. & C., 514; Load v. Grun, 15 M. & W., 216; Johnson v. Peck, 1 Wood & M., 336.
These cases all agree in holding that the creditors of a vendee, who, by fraud, induced the sale, cannot hold the property under proceedings to enforce their debts against the ven
The main'ground upon which defendants’ counsel assail our conclusion is that the creditors are deprived of rights by defeating their attachment. They express the thought in this language: “The creditors, in reliance upon the possession and title of the vendee, had exhausted thevr writ and are now placed in the position where the successful assertion of the right to rescind will take from them a lawfully acquired security, upon the faith of which they rightfully relied in measuring the extent of their right of seizure of the debtor’s property.”
In sphaking of the hardship imposed upon the creditors by the doctrine we adopt, they say: “They stand, therefore, as honest creditors, honestly trying, under the law, as we have said, by the only means in their power to secure their debt. They levy upon property, the title to which at the time of the levy thereon, is in the vendee. * "* * * * But, having levied upon this property thus owned by the vendee, they are obliged to cease their effort in the direction of the seizure of property. They must stop. No matter how much other property the defendant has, they can go no further. Their hands are tied.”
Counsel in contemplating the rights and remedies of the creditors, forgot the rights of others. The levying of an attachment <per se gives the creditors no rights to the property seized, and does not defeat the rights of lawful claimants thereto. If the property is not subject to the levy, they acquire no lien thereby. The argument of defendant’s counsel, if sound, would lead to the conclusion that a creditor could hold the property of A, upon an attachment issued against B, for the simple reason that the creditor in good faith is using efforts to collect his debt, and believes the property seized belongs to B.
VI. But the petition distinctly avers an intention on the part of Thompson & Reeves not to pay for the goods purchased of plaintiff, and the concealment from plaintiff of such
While fraud rests in mere intention the law will give no relief against it, for, indeed, an unexecuted purpose to defraud another can work no injury. But when the purpose is carried out by acts, and injury results, the wrong-doer will be pursued by the most effective remedies. Now, an intention of the vendee not to pay for goods purchased is in morals a gross fraud, and when the goods.are purchased with such an intention, the fraudulent purpose is accompanied by the act of purchase. The fraud no longer rests in unexecuted intention, it is actually perpetrated by the purchase.
The use of the words “purpose” and “intention” in this connection must not mislead to the conclusion that the fraud against which relief is sought has not been perpetrated. The purchase of the goods is the fraudulent act, and it is fraudulent because of the accompanying intention. It cannot be said that the law will not grant relief because the fraudulent character of the act is determined by the intention of the wrongdoer. Many acts are by-the law deemed fraudulent only on the ground of the dishonest intentions accompanying- them. Indeed, .the purpose of the wrong-doer usually determines the character of the act. If it be dishonest, the act is fraudulent; if it be honest, the act is a mistake. The intention, therefore, must usually be sought for in cases of fraud.
A sale of goods in order to be valid between the parties must be a contract wherein the minds of the vendor and vendee' meet. The vendor sells for a price to be paid by the vendee. The vendor understands that the vendee assents to pay the price. If the vendee fraudulently intends at the time of the sale not to pay for the goods, and conceals this intention from the vendor, the minds of the two do not meet. ' The vendor does not assent to the sale of the goods upon the conditions which are in the mind of the vendee.
The fact that the intention of the vendee, the virus which poisons the act, rests in his own breast, will not defeat the remedy which the law provides against'the fraud. It may be shown by proof of its manifestations. These are usually the acts done by the wrong-doer, and the circumstances surrounding him and the transaction.
We conclude that an intention on the part of the vendee not to pay for goods bought by him, which he conceals from the vendor, is a fraud which authorizes the vendor to rescind the sale. This rule prevails in Massachusetts. Wiggin v. Day, 9 Gray, 97; Dow v. Sanborn, 3 Allen, 181; Kline v. Baker, 99 Mass., 253; Rowley v. Bigelow, 12 Pick, 309.
It is the law in New York. Hennequin v. Taylor, 24 N. Y., 139; Ash v. Putnam,, 1 Hill, 302; Bigelow v. Heaton, 6 Hill, 44; Byrd v. Hall, 2 Keys, 647; Johnson v. Monell, 2 Keys, 655; Hall v. Naylor, 18 N. Y., 588; King v. Phillips, 8 Bosw., 603.
The doctrine is recognized in Connecticut, Maryland, Missouri, and Vermont. Thompson v. Rose, 16 Conn., 71 (81); Powell v. Bradley, 9 Gill & J., 220 (278); Bidoult v. Wales, 20 Mo., 546; Fox v. Webster, 46 Mo, 181; Redington v. Roberts, 25 Vt., 686 (694).
It has the support of the following English cases: Bristol v. Willsmore, 1 B. & O., 514; Ferguson v. Carrington, 9 B. & C., 59; Kirby v. Wilson, Ryan & M., 178; Noble v. Adams, 7 Staunt., 59. It is also announced in Parker v. Byrnes, 1 Lowell, 539, and in Briggs v. Barry, 2 Curtis, 259 (262).
We think it clearly appears that the question involving the doctrine under consideration was directly presented for decision in the case. There are, however, cases that are in conflict with the rule. See Smith v. Smith, 21 Pa. St., 367; Backentoss v. Spercher, 31 Id., 324. Cross v. Peters, 1 Greenl., 343 is cited by counsel as being to the same effect. But we think it does not go so far. The doctrine of the case is that the purchase of goods by one who was insolvent but not aware of the fact, without artifice or false representations, is not fraudulent.
Bell v. Ellis, 33 Cal., 620, is relied upon by defendant’s counsel as supporting his side of the case. But the point ruled in the case is that insolvency of a vendee, without an intention not to pay for goods bought and without false representations, will not avoid the sale. The case overrules the prior decision in Sleigman v. Kolkman, 8 Cal., 207. Wilson v. White, 80 N. C., 280, is also cited by defendant’s counsel, but the point under consideration was not in the case. The Pennsylvania cases supported by dieta or statements arguendo found in the two cases last mentioned are the only authorities to which we have been referred wdiieh support the position of defendant’s counsel. It is certainly true as we have, shown, that the great weight of the authorities support the conclusion we have reached upon this branch of the case.
Reversed.