Silberman v. Munroe

• Decision Date: 19 March 1895
• Court: Michigan Supreme Court
• Parties: SILBERMAN ET AL. v. MUNROE.

62 N.W. 555

104 Mich. 352

SILBERMAN ET AL. v. MUNROE.

Supreme Court of Michigan

March 19, 1895

Error to circuit court, Muskegon county; Fred J. Russell, Judge.

Action by Henry Silberman and another against Thomas Munroe. From a judgment for plaintiffs, defendant brings error. Affirmed.

John Vanderwerp (Smith, Nims, Hoyt & Erwin, of counsel), for appellant.

Brown &amp Lovelace, for appellees.

MONTGOMERY J.

This is an action of trover to recover the value of a quantity of scrap iron which came into the hands of defendant, as receiver of the Muskegon Iron & Steel Company, leave having been granted by the court to bring the suit. It appeared on the trial that the plaintiffs were dealers in scrap iron, and in June, 1893, sold and shipped to the iron and steel company three car loads of scrap iron, which were delivered to the company, respectively, June 10th, June 16th, and June 23d. On the 26th of June, a chattel mortgage covering the entire plant was given by the company, and on the 28th the company suspended business. On the 30th the defendant was appointed receiver. The plaintiffs subsequently demanded possession of the iron, claiming the right to rescind the sale on the ground that the purchase was made fraudulently; and this was based upon the claim that the company had made a false statement of its condition on the 25th of January, 1893 which formed the basis of credit, and that the purchase was made by the company knowing its insolvency and inability to pay for the property, and without any intent to pay for it. The return of the property being refused, this action was brought to recover its value. The plaintiffs recovered a verdict for the value of the property, and defendant brings error.

It is insisted that there was no sufficient evidence to justify the submission of the case to the jury. It appeared that the statement of the company made January 25, 1893, was made the basis of a report by the commercial agencies, which came to the notice of the plaintiffs and was relied upon. If the report was substantially untrue in fact the question is ruled by Emerson v. Spring Co. (Mich.) 58 N.W. 659. The January statement, which is required by section 4161b1 of 3 How. Ann. St., and the neglect to furnish which renders the directors of the corporation liable in certain cases to a penalty, and to the creditors of the corporation, was very clearly intended as a means of furnishing information to those dealing with the corporation; and when parties deal with the corporation upon the strength of such report, acquired through the usual channels, they have the right to rely upon the fairness and honesty of the statement. This statement showed that there was invested in real estate $201,675.68; personal estate $115,149.36; the amount of debts of the corporation, $160,260.91; and the credits of the corporation, $19,739.28. On the 28th of September, the defendant filed an inventory of the property which had come into his hands as receiver, showing an aggregate of real and personal property amounting to $78,502.16. In this...