Ditton v. Purcell
| Decision Date | 26 July 1911 |
| Parties | DITTON v. PURCELL. |
| Court | North Dakota Supreme Court |
DITTON
v.
PURCELL.
Supreme Court of North Dakota.
July 26, 1911.
A purchase of personal property with the undisclosed intent to not pay the purchase price is a fraud upon the seller, for which he may within a reasonable time rescind the sale, and retake possession of the property sold.
The giving of a false and fraudulent check in payment of the purchase price of personal property, with the intent that, after obtaining possession of the property by such means, the notes of the seller barred from collection by bankruptcy would be offset against the purchase price without the consent of the seller, or a discount from the purchase price forced in settlement, is a fraud on the seller, for which he may rescind the sale and recover his property.
Such a fraudulent sale passes to the defrauding purchaser a title voidable at the option of the seller if rescinded with reasonable promptness after discovery of the fraud.
A bona fide purchaser of personal property from such fraudulent original purchaser may secure perfect title to the property so purchased. But, his vendor's fraudulent acquisition of the property being once established, the burden is on the subpurchaser to prove his good-faith purchase without knowledge of fraud or acts imputing notice sufficient to put the subpurchaser on inquiry as to the fraud of his vendor, otherwise he takes no title superior to that possessed by his vendor, a voidable one at the option of the original seller. After proof of the fraud of the buyer in the original sale, the burden is not on the seller to further prove the weakness of the subvendee's title by showing his fraudulent purchase or his purchase with notice of his vendor's fraud.
Where trial is had and judgment entered on findings sufficient to sustain such judgment, this court will not on appeal review the sufficiency of the pleadings unchallenged in the court below, when such defects could have been remedied by amendment had suitable objection been made at the trial.
Where a sale was procured by fraud of a purchaser and the seller rescinded as to the purchaser the day after the sale, and gave notice to a subpurchaser of rescission of the contract and demanded return of the property a week later, he acted with reasonable diligence.
Appeal from District Court, Grand Forks County; Templeton, Judge.
Action by W. R. Ditton against Ed. Purcell. From a judgment for plaintiff, defendant appeals. Affirmed.
[132 N.W. 348]
Geo. A. Bangs, for appellant. Scott Rex, for respondent.
GOSS, J.
Defendant, Purcell, and one Murphy attended plaintiff's auction sale at which plaintiff's team was struck off to Murphy on his bid of $302. At the close of the sale, defendant and Murphy secured possession of the horses, and were about to drive away with the team without settling for it, when plaintiff again took possession of the horses. Plaintiff had some time previously gone through bankruptcy, and Murphy attended the sale, and bid in the horses, evidently intending to secure possession of them, and afterwards on settlement pay for them in whole or in part by turning in plaintiff's promissory notes, collection of which notes was barred by the bankruptcy proceedings. Plaintiff, anticipating this, told Murphy in defendant's hearing that: “You don't get those horses until you settle for them. Them old notes don't go at all. You have either got to pay the cash for the horses or put up gilt edged security.” Murphy then gave his check to plaintiff for the full amount of the purchase price, running to plaintiff as payee. Thereupon plaintiff delivered the horses to Murphy in Purcell's presence, and the two rode away, leading the horses behind, taking them to defendant's home. Purcell testifies that he surmised that Murphy had some of Ditton's old notes at the time the horses were taken from him and replaced in the barn before Murphy gave the check. Purcell had known Murphy 12 years. Murphy was working for one Bennett at the time. That night Purcell and his neighbor, Lundberg, had a talk about Murphy paying for the horses, in which Lundberg told Purcell that he “didn't see how Murphy could get out of paying for the team because he gave his check for it,” to which Purcell replied that “he didn't know whether it was a check, he thought it was only an order,” or that in substance. Lundberg immediately related this to one McGilliveray, who communicated the statement to plaintiff the morning after the sale. Plaintiff on the day after the sale presented the check to the bank, and payment was refused. The night of the sale Murphy had told the cashier of the bank not to send the check in until he, Murphy, got over, and the next morning Murphy came to Gilby, and was in the bank when the check was presented for payment and dishonored, following which an offer was made by Murphy and the banker to settle the matter if plaintiff would discount the price of the horses $75 or $100, which plaintiff refused to do. Murphy then attempted to turn in the old notes of respondent, barred by bankruptcy proceedings, but to this...
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