
    White & Cushing vs. Dodds.
    Where F., in September and November, I860, purchased goods of W. & 0. amounting to nearly $1000, representing, at the time, that his stock of goods was worth some $16,000 or $17,000, and that his debts amounted to only $6000 or $7000, and that there was no foundation for the reports unfavorable to his solvency; and on the 26th of November, 1860, a few days after the purchase of the second bill of goods, he made a general assignment of his property to D. in trust to pay his debts; the inventory attached to the assignment showing assets to the amount of $17,522.44, and liabilities to the amount of $28,531.92; Reid that these facts presented a very clear case of fraud in obtaining the goods, and a consequent right in W. & 0. to disaffirm the contract.
    As against the original wrongdoer, where goods have been obtained, under a contract of sale, by means of fraudulent representations, no form of words, on the part of the vendor, declaring disaffirmance of the contract, is necessary; nor is any act of his affirmance required, beyond the decisive one of claiming or seizing the property by his own act, or the process of the law.
    Neither is any thing more necessary, to manifest a disaffirmance, as against the assignee of the purchaser, under an assignment in trust for the benefit of creditors. Miller, J. dissented.
    And where a demand of the property is made, of the assignee, in whose possession the same is, it is not necessary to accompany or precede the demand by a declaration or disaffirmance of the contract, and a statement that such disaffirmance is on the ground of fraud perpetrated by the assignor, in making the original purchase. Miller, J. dissented.
    The possession of the assignee, being peacefully and innocently acquired, from the apparent owner, may be regarded as so far lawful that a demand should be made, of him, to deliver it up, before he can be subjected to an action; but the vendor, claiming the goods as the true owner, is not bound to disclose the source, or the particulars, of his title.
    If a person obtains goods by fraud, the act is wrongful, and confers no title. No notice to the offender is necessary, and no demand need be made, on him. Per Hogeboom, J.
    A vendor need not restore the note given for the purchase money of goods, before bringing an action to recover the possession of the goods on the ground of fraud in the sale. It is sufficient if he restores it at the trial; or stipulates to cancel and give it up; or produces and cancels it, or delivers it to the clerk, on the argument at bar.
    MOTION for a new- trial, on exceptions ordered to be heard in the first instance at a general term. The action was commenced on the 4th day of December, 1860, to recover the possession of personal property from the defendant .which it was alleged had been sold to his assignor, Charles Ferguson, through his fraud. It was tried at the Albany circuit in Hay, 1862. The evidence showed that on the 15th day of September, 1860, Charles Ferguson, the defendant’s assignor, purchased of the plaintiffs, a firm doing business in Boston, in upholstery and carriage trimming, a bill of goods amounting to $815.11, for which he gave his promissory notes to the plaintiffs, payable in eight months from date; and on the 10th day of November, following, a like bill of goods amounting to $122. When the bill of $815.11 was purchased, by Ferguson, he said, in answer to inquiries made by Caldwell, the plaintiff’s agent, that his stock amounted to sixteen or seventeen thousand dollars, and that he owed only from five to six thousand dollars; and that in consequence of these representations the goods were sold. He made like representations on the 10th of November, when he obtained the last bill of goods. Ferguson made a general assignment of his property to the defendant Dodds, in trust for creditors ; and the case showed that his assets were $17,522.44, and his liabilities $28,531.92; and that on the 15th day of September his liabilities were $25,000. The representations of Ferguson were alleged to be false, throughout. Upon the trial the plaintiffs proved by Theodore Caldwell, their agent, that
    
      he heard of Ferguson’s assignment a day or two after it was made; that he came to Albany, and called on Dodds at the rooms formerly occupied by Ferguson; that he saw some of the goods, and demanded them of Dodds. He testified on this point as follows: “I think I heard of Ferguson’s assignment the next day after it was made. I came on within two hours after I heard of it, and called on Mr. Dodds. I asked him how the matter was. He said he could not tell much about it, and handed me the assignment; and said that would show me how the thing stood, better than he could tell. I looked at the assignment. When I demanded the goods of Dodds he claimed them, as assignee of Ferguson.” On his cross-examination, this witness stated: “I have been in business for these parties two years and four months. I traveled all over the northern country. My business rvas to exhibit samples and solicit orders. I made no memorandum of what Ferguson said. I did not get out or ship the hill of goods. I saw some of the goods in the store. I know the mark. I-had sold Ferguson two bills previous to this one; March 26,1860, of $243.15, the other April 3, 1860, $65.97. I did not inquire of him as to his circumstances when I sold him these bills; both sales were on six months’ credit. A note at six months was given for the $815.11 purchase, dated October 27, 1860, and due in April, 1861. The note was transferred to John White, the plaintiff. He is now the owner of the note. Ho note was given for purchase of $122. A check was sent me to take up the $815.11 note. I took up the note, when here before it was due, to save protest.” The witness was not cross-examined as to the details of his conversation with Dodds.
    The defendant moved for a nonsuit, upon the ground, among others, that no disaffirmance of the sale, by the plaintiffs, or on their behalf, was proven. The motion was denied, and the defendant excepted. The plaintiffs tendered a written stipulation by which they agreed that the note for $815.11, given by Ferguson, for the goods, and then in their possession, past due, should be cancelled and given up.
    The testimony being closed, the defendant’s counsel requested his honor to charge the jury that there was no evidence whatever that, up to the time of the commencement of this suit, the defendant had been informed that the plaintiff claimed to disaffirm these sales, or that any pretense was made to him that the goods had been obtained by Ferguson fraudulently. That the assignee, therefore, was right in claiming the goods under the assignment, when they were demanded of him by Caldwell, and the plaintiffs were not entitled to recover. The court declined so to charge, and the defendant’s counsel duly excepted; and instead thereof, the court charged that it was for the jury to say, from the conversation given in,evidence between Caldwell and Dodds, at the time the demand was made, together with other evidence in the case, whether the demand was made on the ground that the goods were, fraudulently obtained by Ferguson; that there had been no cross-examination of the witness upon that point, or motion for a nonsuit on that ground, made by the defendant’s counsel; and that it was for them to say, under all the circumstances, whether they were satisfied, from the evidence, that the witness Caldwell demanded the goods because of the alleged fraud of Ferguson in obtaining them; and if they were not so satisfied,' the defendant was entitled to their verdict; to which the defendant’s counsel excepted. The defendant’s counsel asked his honor further to charge the jury that the plaintiffs could not recover, it being shown that the plaintiffs did or said nothing disaffirming the sale, before the commencement of the suit, besides merely making a demand of Dodds; which the court declined to do, and the defendant’s counsel excepted. His honor charged the jury, that the demand itself, accompanied with the evidence of the circumstances and conversation under which it took place, in the absence of any cross-examination on that point, or motion for a nonsuit on that ground, was sufficient evidence for their consideration on the question of disaffirmance of the contracts of sale; to which the defendant’s counsel excepted. His honor further charged the jury, as to the necessity of surrendering and cancelling the note, that it was immaterial whether the note was negotiated or not, inasmuch as it belonged to the plaintiffs before the trial and is now in their possession; the cancellation of it now is sufficient; to which the defendant’s counsel excepted. His honor further charged the jury, that it was not absolutely necessary that the notes should be produced and canceled on the trial, nor need it be shown that the plaintiffs had, before suit or before the trial, offered to surrender the note to Ferguson or Dodds; the act of disaffirming the contract, accompanied with the stipulation given in evidence to cancel and not enforce the notes, was sufficient evidence of such cancellation, for the purposes of this trial, to protect the defendant; to which the defendant’s counsel excepted.
    The jury rendered a verdict in favor of the plaintiffs and against the defendant, for $42 damages, and assessed the value of the property at $500; whereupon the judge ordered a stay of proceedings, and that the exceptions be heard in the first instance at general term.
    
      Ira Shafer, for the plaintiffs.
    
      Henry Smith, for the defendant.
   Hogeboom, J.

Being unable to concur in the result to which my brother Miller has arrived in this case, or in the course of reasoning which led to it, I proceed to state briefly my own views. Several questions present themselves for examination. -

1. Was a disaffirmance of the contract in this case necessary to entitle the plaintiffs to recover; and if so, in what way must that disaffirmance he made and shown ?

2. Was such disaffirmance in fact made, and was it justified by the facts of the case ?

3. Was a demand of the goods necessary before bringing suit, and in what form was it necessary to be made ?

4. Was such demand in fact made ?

5. Were the defendant’s objections to evidence properly overruled ?

6. Was the charge of the judge exceptionable ?

. The action, as appears from the complaint, is replevin, for goods wrongfully detained. The answer is a general denial, and a denial of the wrongful detention. It is obvious from the evidence that the action was founded upon a supposed right to disaffirm, for fraud, the contract of sale of the goods, made between the plaintiffs and Charles “Ferguson, who was afterwards the assignor of the goods to the defendant, under a general assignment for the payment of his debts. As both of the sales from the plaintiffs to Ferguson were upon a credit of six months, neither of which had expired before the commencement of the action, and as, furthermore, the suit was brought to recover the goods, instead of the price of them, it is plain that the plaintiffs in bringing the suit proceeded in disaffirmance of the contract of sale, and were bound to show a justifiable reason for repudiating the contract, before they could recover in the action. This reason was found, as they allege, in the false and fraudulent representation of Ferguson as to his property and pecuniary responsibility, which furnished the inducement to the sale of the goods. The question of fraud was submitted to the jury, and their verdict establishing the existence of it, is not impugned. It appears to have been very satisfactorily proved.

The plaintiff sold two bills of goods to Ferguson, in the fall of 1860, amounting to nearly $1000, upon his representation that his stock of goods was worth some $16,000 or $17,000, and that his debts amounted to only $6000 or $7000. This was at the time of the sale of the first bill of goods, in September, 1860. On the purchase of the second. "bill, on the 9th or 10th of November, 1860, he represented that he was worth as much or more than he was in September, and owed less; and that there was no foundation for the reports unfavorable to his solvency. On the strength of these representations, which were well calculated to inspire confidence, the plaintiffs’ agent sold him the goods.

I see no plausible ground for the objection to the questions put to him, whether he relied on these statements of Ferguson, in making the sale of the goods. They are the ordinary questions put to witnesses in order to show the obtaining of. goods by false pretenses.

On the 26th of November, 1860, Ferguson, as an insolvent debtor, made a general assignment of his property to the defendant Dodds, in. trust to pay his debts, and the title thus acquired was the only one under which the defendant claimed any right to hold the goods. The inventory attached to the assignment showed assets to the amount of $17,522.44, and liabilities to the amount of $28,531.92—a deficit, therefore, of more than $10,000 to pay debts, and an amount of indebtedness exceeding by more than $20,000 that stated to the agent of the plaintiffs. It presented, therefore, a very clear case of fraud, and a consequent right to disaffirm the contract.

I apprehend no particular form, nor any form, of words is necessary to give effect to the act of disaffirmance. It is an act performed by the disaffirming party, and it is effectually performed by asserting or enforcing title to the property previously agreed to be sold. If a person obtains possession of goods by fraud, the act is wrongful, and confers no title. No notice is necessary to the offender, ami no demand, need be made on him. If a trespasser takes your property he acquires no right thereby, and you are not required to disaffirm his possession, otherwise than by retaking the property by your own act, or by process of law. If a person takes your property by your consent, by contract, or by license, he has a lawful possession. If obtained by license, his possession may be terminated by the simple act of demand, which ends the lawfulness of his possession. If obtained under the semblance of a contract which is void for fraud, then the consent has been extorted, or obtained by deception, and it is no consent. No distinct act of disaffirmance, beyond claiming the property, has ever been held to be necessary. This is as against the original wrongdoer. (See Roth v. Palmer, 27 Barb. 654.) There is another principle, it is true, which, in case any money or property has been received under the contract, requires that before the disaffirmance can become effectual the money or property thus received must be restored; because a party can not both repudiate a contract and at the same time insist on retaining its fruits or benefits. This raised the question whether the note received from Ferguson had to be restored before bringing suit, or whether it was sufficient to restore it at the trial, or give a stipulation equivalent to such restoration at the latter period, the note being accidentally absent, followed up by the production and a cancellation of the note, or its delivery to the clerk for the benefit of the defendant, or Ferguson, on the argument at bar, which was done in this case.

I think, under the adjudged cases, the latter course was all sufficient. The maker of the note is effectually protected, and that is enough. The only other object of surrendering it before suit brought would be to make the act of disaffirmance emphatic and unquestionable; and this has been repeatedly held to be well enough accomplished by its production and delivery at the trial. (See Nichols v. Pinner, 18 N. Y. Rep. 295, 312; Nichols v. Michael, 23 id. 264, 272, 273; Fraschieris v. Henriques, 36 Barb. 276; Roth v. Palmer, 27 id. 654, and cases there cited; Stevens v. Hyde, 32 id. 171.)

As against the original wrongdoer, then, no form of words declaring the act of disaffirmance is necessary; nor any act of disaffirmance, beyond the decisive one of claiming or seizing the property by the act of the party or the process of law. Nor, I apprehend, is any thing more necessary under this head, as against the general aassignee of the wrongdoer. I do not speak now of the question of demand of the property which may be claimed to be necessary, because the property is in possession of a person acquiring such possession peaceably by manual delivery from the wrongdoer and apparent owner. I do not deem it necessary to discuss this question, because the evidence is full that the property was demanded of the defendant before suit brought.

The question is, was it necessary, as against such assignee having no better title than the original wrongdoer, to accompany or precede that demand by a declaration of disaffirmance of the contract, and that such disaffirmance was on the ground of fraud perpetrated by the assignor .in making the original purchase? I know of no such rule of law. The assignee is not a purchaser for a valuable consideration. He stands in the shoes of his assignor, with no better title than him, and is in no respect in any better position, except it may be, that his possession, being peacefully and innocently acquired from the apparent owner, may be regarded as so far lawful that a demand should be made of him to deliver it up before he be subjected to an action. It may be convenient that he should be, as he generally is, distinctly apprised that the ground of the demand is the failure of his assignor to acquire title by reason of fraud in the purchase of the goods. But I am not aware of any legal obligation resting on the true owner of the goods to disclose the source or the particulars of his title. This is, as in other cases, developed at the trial. The possessor of the goods is supposed to know whether his title is good or not, and he complies with the demand of the claimant or refuses it accordingly. The claimant of the goods stands upon his title, and enforces or relinquishes bis demand according to his convictions of the validity of that title. I am aware that some dicta in the opinion of Justice Smith in the case of Bliss v. Cottle, (32 Barb. 322,) tend to support the proposition that in addition to a distinct demand of the property, there must be also an explicit assertion that the claimant’s title is founded upon the fact of fraud perpetrated in the purchase of the goods; but there was nothing in the case requiring an adjudication upon that point, nor is it warranted, I think, by any thing contained in the elaborate opinion of the same judge in the case of Stevens v. Hyde, (32 Barb. 171.) Be that as it may, I think there was sufficient evidence for the consideration of the jury whether the ground of the plaintiffs’ claim to the property, to wit, on account of fraud in the purchase by Ferguson, was not intelligibly communicated by the plaintiffs’ agent to Dodds the defendant. The case, we must assume, was properly opened to the jury at the trial, stating that the plaintiffs’ claim rested on the ground of fraud vitiating Ferguson’s purchase of the goods. Caldwell, the plaintiffs’ agent, testified to the purchase, and the representations made by Ferguson; to his demand of the goods of the defendant in the rooms formerly occupied by Ferguson; to Dodds’ refusal to give them up; and to their subsequent replevy by the sheriff; and that the demand was made after the assignment. He further says, “I think I heard of Ferguson’s assignment the next day after it was made, and came on within two hours after I heard of it, and called on Mr. Dodds. I ashed Mm how the matter was. He said he couldn’t tell much about it, and handed me the assignment, and said that would show me how the thing stood better than he could tell. I looked at the assignment. When I demanded the goods of Dodds he claimed them as assignee of Ferguson.” The plaintiffs having read the assignment, rested their case on that and on the evidence of Caldwell. The defendant did not cross-examine the witness as to the details of the conversation with.Dodds, nor move for a non-suit on the ground that the plaintiffs had not claimed, in talking with Dodds, to disaffirm on the ground of fraud, but on the ground that no disaffirmance of the sale was proven to have been made by the plaintiffs or on their behalf.

Dodds was not sworn as a witness for the defense, and the only witness sworn was Ferguson, who contradicted Caldwell in some material particulars as to the nature of the interview between them on the purchase of the goods, but said nothing as to what transpired at the time of the demand. Nothing was suggested as to the absence of any evidence showing the grounds of disaffirmance of the contract, until after the testimony was closed and the judge had charged, or was about to charge the jury.

The fact that this alleged omission in the evidence was not alluded to until it was too late to correct it; that the ground of claim of title to the goods was fully developed by the evidence, and could not have been unknown to Dodds; that the plaintiffs claimed title immediately after the assignment, and long before the expiration of the term of credit, which term of credit is presumed to have been known to the defendant; that this claim was made to Dodds himself; that Caldwell asked Dodds “how the matter was,” which, in the absence of any explanation, is probably a brief way of stating the substance of a conversation between Caldwell and Dodds about the goods, their sale, the terms of sale, the sudden and unlocked for assignment importing insolvency, and the reason of such assignment; the facts that the goods demanded were those “ originally sold ;” the presentation by Dodds of the assignment, and his declaration virtually that that was the only explanation he could make of the transaction; the demand of the goods notwithstanding such assignment ; the refusal to deliver; the absence of any cross-examination or motion to nonsuit on this ground ; the apparently studious omission to allude to this point until after the testipiony was closed; lead my mind to the conclusion that Dodds well understood the ground of the plaintiffs’ claim of title to the goods; that it was equally well understood at the trial, and that it would be giving effect to merely captious objections to the evidence to award a new trial upon the ground that the foundation of the plaintiffs’ alleged title to the property was not fairly disclosed to the defendant, or that he acted in any degree in ignorance of the nature of the plaintiffs' claim when he refused to deliver to them the goods, on their demand.

The other points involved are sufficiently discussed in what has already heen said; and on the whole case I am of opinion that none of the exceptions are well taken; that a new trial should be denied; and that the plaintiffs should have judgment on the verdict.

Gould, J. I should affirm, on the ground that notwithstanding the charge seemed to concede the contrary, a mere demand was all that was required, when it was made of the assignee of the fraudulent purchaser.

Miller, J.

(dissenting.) The first and most important question arising in this case is, whether the plaintiffs proved ón the trial a disaffirmance of the sale, before suit brought. The point was distinctly presented on the motion for a non-suit, and in the requests to the judge to charge the jury, and in the charge itself.

The goods being in the possession of an assignee, who was not a party to the original contract and had no notice of it, I am inclined to the opinion that a demand was necessary to entitle the plaintiffs to recover. (Bliss v. Cottle, 32 Barb. 325.)

There was some evidence to show that a demand had actually been made, and the judge in his charge assumed that it had been, leaving it for the jury to determine, from the evidence, whether the goods were demanded because of the alleged fraud in obtaining them.

The plaintiffs, claiming to rescind the contracts for fraud, I think were also bound to inform the defendant of the grounds upon which this claim was based. A party, upon discovering the fraud, may rescind the contract and recover what he" has advanced, provided he does so at the earliest moment that he has knowledge of the fraud, and returns what he has received upon it. (Masson v. Bovet, 1 Denio, 69. 2 Parsons on Cont. 278.) How could a contract be rescinded for fraud without a statement, at the time of the rescission, that it was made upon that ground? When property is claimed of a third party who has no knowledge of the original contract, because the sale was fraudulent, the innocent holder has certainly-a right to know upon what ground he is called upon to surrender it, so that he may determine whether to give it up on demand, or to keep it. It is not sufficient for the claimant to make a simple demand of the goods, but it is absolutely necessary that he should go further and state specifically his disaffirmance of the contract. There must be an explicit assertion of his claim that the goods were obtained by fraud. (Bliss v. Cottle, 32 Barb. 325.) I understand that the judge held substantially in accordance with the general principles I have stated. His instructions to the jury, however, assume that as there had been no cross-examination upon the point whether the goods had been obtained fraudulently, nor a motion for a nonsuit upon that ground, it was for them to say whether they were satisfied that the demand was made for this reason. He also held that there was sufficient evidence for their consideration, on the question of the disaffirmance of the contract of sale.

In order to determine whether the ruling of the judge, in refusing the motion for a nonsuit, and in his charge, was erroneous, it becomes important to inquire, in the first place, what the evidence was on the point referred to. The agent of the plaintiffs swore upon the trial that soon after the assignment to the defendant, he called upon the defendant and asked him how the matter was. The defendant replied he could not tell how it was, or much about it, and handed the assignment to the agent, saying that would show how the thing stood better than he could tell. The agent then looked at it, and demanded the goods. The defendant claimed them as assignee of Ferguson. There is nothing in the evidence to show that the agent, at the time, informed the defendant that the goods belonged to the plaintiffs, or that the plaintiffs asked to disaffirm, the sales upon the ground that they were fraudulent. Nor do I think that any such inference can fairly be drawn from the conversation testified to. There was no allegation of fraud, by the agent, and his testimony simply establishes a demand of certain goods, without any evidence whatever to show that they were the goods sold by the plaintiffs to the defendant's assignor. Even admitting that the evidence establishes a demand of this identical property, yet it utterly fails to show a disaffirmance' of the sales, or any statement of the grounds upon which the plaintiffs claimed to rescind the contracts, unless the demand itself may be considered as a disaffirmance. It is not claimed that it is. But it is said, there was no cross-examination of the witness, or motion for a nonsuit upon that ground. The question whether a cross-examination was essential must depend upon the fact whether there was any evidence whatever upon the subject. I think I have shown there was none to show a disaffirmance, or a statement that the party claimed that the contracts were fraudulent. Under these circumstances no foundation was laid for a cross-examination, and I do not think the party was bound to cross-examine upon a fact not proved, or to be prejudiced before the jury for a failure to do so. As to the motion for a nonsuit, it was distinctly made on the ground that there was no disaffirmance of the sales proven. Unless the demand was a rescission of the contract, then the ground stated was sufficiently distinct. I think that it embraced all the evidence necessary to make out a disaffirmance, in the absence of any proof but a demand, and covered the point now raised. The party was not required, as the evidence stood, to be more specific. As considerable stress is laid upon the fact that there was a demand proven, it may be worthy of notice that the rescission or disaffirmance should precede a demand of property; (see 32 Barb. 328 before cited;) and nothing of the kind is shown by, or can be inferred from, the testimony in the case. .

The judge, in his charge, speaks of the demand itself^ accompanied with the evidence of the circumstances and conversation, under which it took place, as a matter to be considered by the jury. What circumstances were disclosed which could have any bearing upon the question ? There is simply the naked fact of an application of the agent, to the defendant, to know how the matter stood, without any disclosure of the circumstances attending the transaction, or any evidence that he had any knowledge upon that subject. The conversation itself has no distinct reference to a disaffirmance of the contracts, or to any alleged fraud, and there appears to be nothing, either in the circumstances or the conversation, from .which the jury were authorized to infer a disaffirmance.

[Albany General Teem,

September 7, 1863.

It is said that the case was litigated upon other grounds than the point now discussed, and therefore it is not available. The point now urged was distinctly taken on the trial, and I do not discover that it was waived.

Upon a careful examination of the subject, I am of opinion that the judge erred in his ruling on the motion for a nonsuit; in his refusal to charge; and in his charge upon the question I have discussed.

If I am correct in the conclusion at which I have arrived, a new trial must be granted; and it is unnecessary to examine the other questions raised.

Hew trial denied,

Gould, Sogeboom and Miller, Justices.]  