Sylvester, Hilton & Co. v. Henrich
| Decision Date | 25 January 1895 |
| Citation | 61 N.W. 942,93 Iowa 489 |
| Parties | SYLVESTER, HILTON & COMPANY, Appellant, v. HENRICH & TOMLINSON, et al |
| Court | Iowa Supreme Court |
Appeal from Plymouth District Court.--HON. F. R. GAYNOR, Judge.
Suit in equity to reach certain property in the possession of the Le Mars National Bank, W. H. Dent, and G. C. Maclagan, and subject it to the payment of a judgment held by plaintiffs against defendants Henrich & Tomlinson (Henry Henrich and F M. Tomlinson). From a decree dismissing plaintiff's petition, they appeal.
Affirmed.
Park & Odell for appellants.
Argo McDuffie & Reichmann for appellees.
For some years prior to the fourth day of September, 1888, defendants Henry Henrich and F. M. Tomlinson were engaged in the retail dry goods and grocery business in the city of Le Mars, under the firm name of Henrich & Tomlinson. Plaintiffs are a wholesale dry goods firm doing business in the city of New York. About the month of August, 1888, Henry Henrich went to New York, and ordered a bill of goods of the plaintiffs. He referred the plaintiffs to the defendant Le Mars National Bank for information regarding his credit, and plaintiffs wrote to the bank the following letter: In reply to this plaintiffs received the following telegram: --followed by this letter: Plaintiffs thereupon shipped the goods ordered by Henrich, amounting to about one thousand two hundred dollars. This shipment was made about September 14, 1888. On or about September 24, 1888, the defendants Henrich & Tomlinson sold out their entire business in Le Mars, except book accounts and some goods in Chicago, to one Peter Branch, for the sum of about forty-six thousand dollars, and since this time the firm of Henrich & Tomlinson, and the individual members thereof, have been insolvent. At the time of the sale, the firm and Tomlinson were indebted to the Le Mars Bank in the sum of about thirty-six thousand dollars, and the bank accepted notes of Branch in that amount, which he made for the purchase price of the stock, in liquidation of its account against the firm of Henrich & Tomlinson and Tomlinson individually. Plaintiffs' bill not being paid, they obtained judgment against Henrich & Tomlinson for the amount thereof in the District Court of Plymouth county. This suit, originally in the nature of a creditors' bill, is to obtain satisfaction of the judgment from the defendant bank. The petition is in three counts. The first alleges, in substance, that the defendant bank received the notes from Branch well knowing that the firm of Henrich & Tomlinson was and is insolvent, and that it received them with intent to hinder, delay, and defraud the creditors of the firm of Henrich & Tomlinson. The second count is really a law action to recover damages from the bank for deceit and false and fraudulent representations in writing the letter above set out, in answer to plaintiffs' inquiries. The allegations, in substance, are that the statements contained in the letter were false, and known to be false, at the time the bank made them; that the officers of the bank well knew the firm of Henrich & Tomlinson was insolvent at the time the letter was written; that the said firm then owed the bank more than twenty-five thousand dollars; that the letter was written for the purpose of misleading and deceiving plaintiffs, and for the further purpose of aiding the said defendant firm in obtaining the goods, so as to add to and increase their assets, in order that the bank might profit thereby; that shortly after receiving the goods the defendant firm sold the goods to Branch, and that the bank received a large part of the proceeds thereof. In the third count the plaintiffs allege that in February, 1888, defendants, then being indebted to the bank, executed and delivered a chattel mortgage upon their personal property to the bank, and the bank in consideration thereof agreed to withhold the same from record; that the bank accepted the same with intent of secretly withholding the same from the records, and did withhold the same therefrom, thereby enabling the firm of Henrich & Tomlinson to continue business, and not impair their credit; that plaintiffs at the time they sold the goods had no knowledge or notice of the mortgage, and that believing in the truthfulness of the statements made by the firm, and the representations contained in the letter of the bank, they shipped the goods; that by reason of withholding the mortgage from record, and of the misrepresentations and acts of the defendant bank, the bank is estopped from asserting any right, claim, lien, or interest in or to the property of Henrich & Tomlinson prior to the claim or interest of plaintiffs. The defendants' answer was practically a general denial of each and every allegation and claim of the petition. The court dismissed the plaintiffs' petition, and they appeal.
We do not understand counsel for appellants to contend that there is evidence in support of the first count of the petition; so that no attention need be paid to it further than to say that, if counsel had so claimed, we see nothing in the record which would justify their position. The controlling questions in the case relate to the second and third counts. The second count, although presenting a law action for fraud and deceit, was introduced into this suit without objection, and we first look to the law applicable to the issues presented. Ever since the case of Pasley v. Freeman, 3 Term. R. 51, decided in 1789, it has been held that an action lies for a false recommendation as to the credit of one person, by which another sustains damage, if such recommendation be made with intent to deceive and defraud such other; and the false representation may consist in the suppression of the truth as well as in the assertion of a falsehood; and the action lies in either case if the intent to deceive exists, and is the cause of the suppression of the truth or the assertion of the falsehood. Upton v. Vail, 6 Johns. 181; Allen v. Addington, 7 Wend. 9; Addington v. Allen, 11 Wend. 374. To maintain an action for such deceit, the plaintiff must prove actual fraud, or an intention to defraud him, by false representations. Deceit is the gist of the action; and, though the advice given be rash and indiscreet, yet, if there is no ground to infer an intent to deceive, it will not support the action. Avery v. Chapman, 62 Iowa 144, 17 N.W. 454; Young v. Covell, 8 Johns. 23; Upton v. Vail, supra; Holmes v. Clark, 10 Iowa 423; McKown v. Furgason, 47 Iowa 636; Marsh v. Falker, 40 N.Y. 562.
With these rules for our guide, we turn, then, to...
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