sion. June 9, 1891.)

(127 N. Y. 329)

SALE-EVIDENCE-REPLEVIN.

by statute, in order to entitle conveyances the conclusion reached in Wilder v. Butor mortgages or securities in the nature terfield, supra. The judgment should be of mortgages to be recorded, nor was it modified accordingly, and as modified afrecorded in the books required by the re- firmed, with costs to the plaintiff. All concording act to be kept for such purpose, cur. but instead it was filed and entered in a separate book, as required by statute, in the same manner in which judgments are entered of record. And in that which was HOTCHKIN V. THIRD NAT. BANK OF MALONE. done the county clerk did all that the stat- (Court of Appeals of New York, Second Diviute commanded him to do, and, in the absence of an acknowledgment, all that he was authorized to have done, had the su- FRAUDULENT REPRESENTATIONS-VALIDITY OF pervisor requested that it be recorded in the book in which mortgages, or securities in the nature of mortgages, are required to be recorded. But the statute does not seem to have contemplated that such a bond should be within the protection of the recording act. It does not refer to the act, require the bond to be acknowledged, nor make provision for recording it; but declares that a lien shall be created if the bond be "filed in the office of the county clerk, who shall make an entry thereof, in a book to be provided for the purpose, in the same manner in which judgments are entered of record." Since the execution of the bond the legislature has provided that such bonds shall be recorded, (chapter 372, Laws 1887), but such enactment, in so far as it may be said to indicate legislative construction of the statute before us, supports the view we have expressed.

Where a merchant represents himself as solvent, though he knows that he is insolvent, tains goods, which he subsequently pays for, and. and on the strength of such representations obseveral months after, buys more goods from the same person, but makes no further representations, and transfers the last goods bought to other creditors to secure precedent debts, the seller cannot recover them from the transferee on the ground that the sale was induced by fraudulent and false representations by the purchaser as to his credit; for, though the purchasgiven unrecorded bills of sale and chattel morter knew that he was insolvent, and had in fact gages on nearly all of his property, yet if, from all the circumstances of the purchase, it appears that the purchaser hoped to extricate himself from his embarrassments, and that he intended to pay for the goods, the sale was valsolvency, his suppression of that fact from the id, notwithstanding the facts of his known inseller, and his immediate transfer of the goods to secure other creditors. VANN, J., dissenting. Appeal from supreme court, general term, third department.

P. B. McLennan, for appellant. William P. Cantwell and John I. Gilbert, for respondent.

The question remaining is whether the decree was right, in so far as it adjudged that the subsequent grantee and mortgagee should be permitted to redeem within the period of time provided by statute for the redemption of lands sold under execution. The right in law to redeem lands from sale exists only when given by statute. BROWN, J. This action was brought to Our statutes provide for a redemption of recover the possession of a lot of top buglands sold under mortgages to the state, gies alleged to have been fraudulently ob(Rev. St. pt. 1, c. 9, tit. 6, § 14), or for tained from the plaintiff by one Lyman J. non-payment of taxes, (Id. pt. 1, c. 13, tit. Folsom in the months of October and No3, 93;) and from a sale under an ex-vember, 1886, and by said Folsom transecution, (Code Civil Proc. § 1446.) And ferred. to the defendant as security for courts of equity will decree that redemp- the payment of a precedent debt. The tion may be made in certain cases. Tag- plaintiff had judgment upon the referee's regart v. Wade, 1 N. Y. Supp. 900; Crane port for the possession of 39 of the bugv. McDonald, 2 N. Y. St. Rep. 150; Cas- gies. The order of the general term, which serly v. Witherbee, 119 N. Y. 522, 23 N. E. reversed the judgment, and from which this Rep. 1000. But in equity the general rule appeal is taken, was upon questions of fact is that, where all the parties are before and law. Hence both are open to our conthe court, and the rule is to be made pur- sideration. The complaint alleged that Folsuant to its decree, and by an officer ap- som obtained the property in question in pointed by it for the purpose, the right the months of October, November, and Deof redemption will not be allowed except cember, 1886; and with intent to defraud by command of the statute; and this case the plaintiff, and induce her to deliver said comes within that rule. The lien creat- property to him on credit, falsely and frauded by the filing and entry of the bond is ulently represented himself to be finana general lien, with no greater force and cially good and solvent, and worth the effect, as against prior unrecorded mort- sum of $15,000, and that the plaintiff begages, than that of a judgment. But it is lieving and relying upon such representanot a judgment lien, nor is it to be en- tions, and believing said Folsom to be solforced by sale under execution, as the stat- vent, was induced to deliver said properute provides a judgment lien shall be. The ty to him upon credit, and that said Folsection of the Code above referred to is som obtained the same with a preconceived not, therefore, applicable to the situation design and intent not to pay therefor. It presented, and, as there exists none of the further alleged that Folsom was insolequities requisite to bring this case with- vent at the time aforesaid, and knew himin the rule which has led courts of equity self to be so; that he had transferred and in certain cases to adjudge that a party delivered the property to the defendant as be permitted to redeem, the right of re- security for the payment of a precedent demption should not have been authorized debt; and that defendant was not a bona by this decree. This view accords with fide purchaser thereof. It further alleged

a demand for the possession of the prop-ty was obtained from the plaintiff by the erty, and an unlawful refusal and deten- false representations of Folsom, without tion thereof by defendant. The answer de- showing that in parting with the propernied any fraud upon the part of Folsom, ty the plaintiff was influenced by those repand alleged that defendant was a purchas-resentations; and, to show that, it must er in good faith of the property in ques- appear that she relied upon them in givtion. To substantiate the allegations of ing the credit upon the sale. Fraud withher complaint, the plaintiff proved by Al-out damage, or damage without fraud, fred J. Hotchkin, her husband, who was will not sustain an action for deceit; her agent and general business manager, and a false and fraudulent representation that on April 13, 1886, Folsom came to made by one party to induce a contract his office in Syracuse, and said he had entered into by another is not actionable, come to buy some carriages, if they could unless the party to whom it was made agree on price. There had been sales to believed the representation to be true, and Folsom prior to this date, but generally acted upon the faith of it to his damfor cash. The witness asked him if he age. Allen v. Addington, 7 Wend. 9; Oberwished to buy for cash, and he said, "No;" lander v. Spiess, 45 N. Y. 175; Lefler v. he wished to buy on time. The witness Field, 52 N. Y. 621; Taylor v. Guest, 58 then continued as follows: "I said: 'We N. Y. 266. The essential elements of an achave sold you before for cash, and not tion for false pretenses are representations, on time; how is your financial condition?' falsity, scienter, deception, and injury. He said: 'I am good for what I wish Arthur v. Griswold, 55 N. Y. 400. "In a leto buy. I am solvent, and am worth $15,- gal sense, a person is not damaged by a false 000.' I then asked him if he would wish representation by which he is not influto buy more than the number he had enced." Taylor v. Guest, supra. And in named; and he said: 'Not to-day, but Brackett v. Griswold, 112 N. Y. 454, 20 N. will want more later on;' that it was E. Rep. 376, it is said: "There must have early for him to buy buggies at that time. been false representations, known to be I then asked him if three or four months' such, calculated and intended to influence draft or note would be satisfactory; and the plaintiff, and in reliance upon which he he replied that it would; and I filled out in good faith parted with property." All an order, and he signed it." This is the these circumstances must be found to exonly evidence contained in the case of a ist, and the absence of any one of them representation made by Folsom as to his is fatal to a recovery. The judgment of financial condition which plaintiff claims the trial court cannot be upheld, therefore, influenced her in making the sale in ques- upon the findings in reference to the false tion. There was evidence that in Feb- representations of April 13th. There is not ruary, 1886, Folsom made some statements alone an absence of any finding that such as to his condition to one Wilder, a trav- representations were relied upon by plaintiff, eling salesman for the plaintiff; but it does or influenced her in making the October not appear that these statements were and November sales, but there is a total communicated to plaintiff or her husband, absence of any fact found by the referee and the referee specifically found that they connecting those sales in any way with were not relied upon in selling the prop- the representations made in April, and erty which is the subject of this action. there is nothing in the opinion of the refThe wagons that were purchased in April eree from which it can be inferred that were paid for, and between that date and he intended to decide that the October the month of October other sales were and November sales were induced by made by plaintiff to Folsom, some for the representations made in April. It becash, and one on a credit of three months, comes unnecessary, therefore, for us to which was also paid. The buggies which examine the evidence to determine whethwere transferred to the defendant were er the facts that those representations sold to Folsom in the months of October were made and were false were supportand November, and it is conceded that no ed by the weight of testimony; for we representations were made by Folsom at need not consider further a branch of the that time; and, if those sales were in-case which was rejected by the referee. duced by any statements as to his finan- The referee found, however, "that at the cial condition, they were those of April time Folsom purchased and received said 13th which I have quoted. But the ref- carriages he was insolvent, knew himself eree did not find that the sales of October and November were induced by the representations made in April. Nor did he find that plaintiff relied upon that representation in making those sales. The finding is "that upon the 13th day of April, 1886, said Folsom, for the purpose of obtaining carriages from the plaintiff at that time upon credit, and for the purpose of obtaining further credit, falsely represented himself as solvent, and worth fifteen thousand dollars." As has already been stated, carriages bought on April 13th were paid for, as were most of those purchased during the summer of 1886.

The title of the defendant could not be impeached on the ground that the proper

to be insolvent, fraudulently concealed his insolvency from the plaintiff, and must necessarily have known that he could not continue in business and pay for said property; that the said goods were purchased and received of the plaintiff by said Folsom fraudulently, with the preconceived design and intent not to pay for the same."

If a purchaser who is insolvent conceals that fact from the vendor for the purpose of defrauding him, and thus obtains goods without intending to pay for them, the title of the property is not changed, and it may be reclaimed by the vendor. Durell v. Haley, 1 Paige, 492; Ash v. Putnam, 1 Hill, 302; Ferguson v. Carrington, 9 Barn. & C. 59; Devoe v. Brandt, 53 N. Y. 462;

Wright v. Brown, 67 N. Y. 1. Therefore, ing, not growing. Mr. French, the cashier if the findings I have quoted are sustained of the People's Bank, testified that from by the weight of testimony, they will up- October 1, 1886, to January 1, 1887, Folhold the judgment of trial court. I shall som's indebtedness to that bank was reassume that Folsom was insolvent in Octo- duced $2,500; and Mr. Pease, the cashier ber, 1886, and must have known that fact; of the defendant bank, testified that shortbut I think the evidence does not support ly before his death Folsom reduced his inthe conclusion that he knew he could not debtedness in that bank. Notwithstanding continue in business and pay for the car- some losses, his financial condition in Janriages, and that he acquired the property uary, 1887, was better and stronger than with a preconceived design not to pay for in October, when the first lot of wagthe same. The reasons given for the con- ons in question were sold to him by the clusion of the learned referee are-First, plaintiff. It is also true that the buggies, Folsom's insolvency and large indebted soon after their receipt by Folsom, were ness; second, that he had mortgaged all by bill of sale transferred to the defendhis property to his numerous creditors, ant bank; but this transfer was not made which mortgages were not filed until after with any intent to cheat the plaintiff, his death, and that he had been sued, and or to dispose of the property for any a small judgment recovered against him; fraudulent purpose, but in aid and assistand, third, that all the carriages obtained ance of his business. As has already apfrom the plaintiff were almost immediate- peared, the bills of sale were not filed, and ly transferred to the defendant. I am un- the wagons remained in Folsom's possesable to perceive how the fact that the sion, to be sold in the usual course of busichattel mortgages and bills of sale were ness in the spring, when there was a marnot filed indicated a fraudulent intent on ket for them. The same may be said of Folsom's part in procuring the property the chattel mortgage to Adams & Martin, in question. The chattel mortgage to who were indorsers on an overdue promAdams for $6,000 was executed in Janu- issory note of $2,000 held by the People's ary, 1886; and the bill of sale to Shields & Bank. There is nothing in the general apShane, conveying personal property, notes, pearance of Folsom's business in the fall and accounts to an amount in excess of of 1886, as disclosed by the record, that $26,000, was executed in February of the indicates impending failure. No creditors same year. Neither was filed until aft- were pressing him, but all were lenient, er his death. If the securities, and the and apparently satisfied with the situation. fact that they were not filed, are indica- There was no market for his stock of tions of a fraudulent intent in the pur- wagons until spring, and apparently there chase of property by Folsom, that infer- was a reasonable hope and expectation ence would be as strong as to purchases of a profitable business at that time, and prior to October as after; and yet we find with the sale of his stock a reduction of that purchases made of the plaintiff in indebtedness and an improved financial conApril and throughout the summer were dition. He possessed the confidence of the paid for, and during the same period Fol- community in which he lived, conducted a som was actively engaged in business, buy- large business, kept a livery stable, and ing from other manufacturers, and not operated a stage line, and was in possesa single fraudulent act on his part prior sion of a large amount of property. He to the sales of plaintiff in October is prov- was the sheriff of the county, holding that en or suggested. The inference of fraud office for a second term, and in the enjoyfrom the giving and failing to file the ment of an annual income therefrom of at various chattel mortgages is greatly weak- least $3,500. It is important in looking ened, if not totally destroyed, when we at his business prospects and endeavoring find that Folsom to the day of his death to determine the probability of his paying was conducting his business in the usual for property bought in the fall of 1886 to way, dealing with many persons, with bear in mind that he died suddenly on no charge of fraud against him except the the 1st of March, 1887. It is not just, single one involved in this action. More- therefore, to look at the situation as it exover, I do not see how the failure to file isted after his death. The abrupt termithe chattel mortgages and bills of sale, or nation of his personal conduct of the busito take possession of the property, is to ness caused results not only unexpected, be regarded as Folsom's act. It is true, but which probably would not have ocin some instances he requested it; but curred if he had lived. The indebtedness the various mortgagees could at any time to plaintiff did not mature until June and have filed their securities, and their fail- July following. Before that time elapsed, ure to do so indicates a leniency on their the buggies would in all probability have part towards their debtor, born of their been sold, and the proceeds of the sales confidence in him and of his honesty in been available in his business. With his dealing. It is true that Folsom's indebt- death, there was nothing to do but settle edness was large, and especially so to the his estate, with the usual result of forced three banks at Malone; but none of his sales and liquidation, and rapid depreciacreditors were pressing him, and no suits tion of the value of his property. Many were pending against him, and no judg- a business man, if compelled to go into ment was recovered against him until after liquidation on a given day, would find the sales in question, and then only for the himself insolvent, whereas, if allowed to small sum of $190. That he had the con- close up his business in his own way, he fidence of his creditors is indicated by their would realize more than sufficient to pay leniency towards him, and their apparent his debts; and many men have bridged confidence in his business ability. But it over a worse situation than confronted appears that his indebtedness was decreas- Folsom in the fall of 1886. Every failure

the finding that Folsom, when he bought | enough to pay his debts; and as every the wagons, knew that he could not pay for them, and that he purchased them with a preconceived intent not to pay for them.

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