Singer Mfg. Co. v. Summers

• Decision Date: 21 November 1906
• Citation: 55 S.E. 522,143 N.C. 102
• Parties: SINGER MFG. CO. v. SUMMERS et al.
• Court: North Carolina Supreme Court

55 S.E. 522

143 N.C. 102

SINGER MFG. CO. v. SUMMERS et al.

Supreme Court of North Carolina

November 21, 1906

Appeal from Superior Court, Guilford County; Ferguson, Judge.

Action by the Singer Manufacturing Company against G. A. Summers and others. From a judgment in favor of plaintiff against defendant Summers and in favor of the other defendants plaintiff appeals. Reversed.

One whose property has been obtained from him by actionable fraud may follow and recover it from the wrongdoer, or from any one to whom the property has been transferred otherwise than in good faith and for valuable consideration, so long as the owner can identify or trace it, and the principal is applicable not only to specific property, but to money and choses in action and their proceeds.

From the facts, as stated in the record, it appears that, on May 17, 1904, G. A. Summers, then acting as agent of the plaintiff company, deposited in the City National Bank of Greensboro a sum of money belonging to the plaintiff company amounting to $1,396.89; that this deposit was made in his own name, and, on the 18th of May, 1904, the said Summers, adding other money to this, obtained a cashier's check from the defendant bank for the sum of $1,824, and that this was done by Summers with intent to embezzle and misappropriate the plaintiff's money so deposited; that on May 23, 1906, the plaintiff indorsed this check to F. D. Fuller, residing in Sylvatus, Va., the consideration claimed being a debt of $328 then due by Summers to Fuller, the remainder of the purchase money being paid in cash. There were circumstances from which the plaintiff claimed that the purchase of this check on the part of Fuller was neither in good faith nor for value. The defendant denied the fraud, claiming that the check was negotiated in good faith, and the defendant Fuller was a holder of the same in due course. There were facts which showed that Summers was insolvent and that Fuller resided in the state of Virginia. The cause was submitted to the jury on the following issues: (1) Did the defendant Summers embezzle and fraudulently misappropriate $1,396.99 of the moneys of the plaintiff company and fraudulently use the same in the purchase of a cashier's check of May 18, 1904, issued by the National Bank of Greensboro at $1,823? (2) Did the defendant F. D. Fuller, at the time he took the check have knowledge of that fraud and take the check in bad faith? At the request of the defendant, the court, among other things on the second issue charged the jury as follows: "The burden of proof is upon the plaintiff to show that Fuller had knowledge of the fraud alleged and took the check in bad faith or without value, and, if the plaintiff fails to satisfy the jury by the greater weight of evidence, they should find the issue in favor of the defendant Fuller, and answer the issue, "No." The court, in the body of the charge, in substance, repeated this position, and the plaintiff excepted. The jury, under the charge of the court and on the testimony, answered the first issue, "Yes," and the second issue, "No." On the verdict, there was judgment for the defendant, and plaintiff excepted and appealed.

King & Kimball, for appellant.

John A. Barringer and W. P. Bynum, Jr., for appellee.

HOKE J. (after stating the case).

It is well established that when a man's property has been obtained from him by actionable fraud or covin, the owner can follow and recover it from the wrongdoer as long as he can identify or trace it, and the right attaches, not only as to the wrongdoer himself, but to any one to whom the property has been transferred otherwise than in good faith and for valuable consideration. Edwards v. Culberson, 111 N.C. 342, 16 S.E. 233, 18 L. R. A. 204, citing Pomeroy's Eq. Jurisprudence, as follows: "In general, whenever the legal title to property, real or personal, had been obtained through actual fraud, *** or through any other circumstances which render it unconscientious for the holder of the legal title to retain and enjoy the beneficial interest, equity imposes a constructive trust on the property thus acquired in favor of the one who is truly and equitably entitled to the same, although he may never perhaps have had any legal estate therein, and a court of equity has jurisdiction to reach the property, either in the hands of the original wrongdoer, or in the hands of any subsequent holder, until a purchaser in good faith and without notice, acquires a higher right and takes the property relieved from the trust." See, also Wilson v. Scott, 3 Lans. (N. Y.) 308. The principle applies, not only to specific property, but to money and choses in action. It is said by Lord Mansfield in the case of Clark v. Shee and another, Firts Cowper's Reports, p. 200: "Where money or notes are paid bona fide upon a valuable consideration they shall never be brought back by the true owner, but where they come mala fide into a person's hands, they are in the nature of specific property, and if their identity can be traced and ascertained the party has the right to recover." And as said by Andrews, Judge, in Newton v. Porter, 69 N.Y. 133, 25 Am. Rep. 152: "It is immaterial in what way the change has been made-- whether money has been laid out in land or land laid out in money--or how the legal title to the converted property may be placed, equity only stops the pursuit when the means of ascertainment fails, or the rights of bona fide purchasers for value,...