Watson v. Silsby

• Decision Date: 19 May 1896
• Citation: 166 Mass. 57,43 N.E. 1117
• Parties: WATSON v. SILSBY, Deputy Sheriff (two cases).
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

166 Mass. 57

43 N.E. 1117

WATSON v. SILSBY, Deputy Sheriff (two cases).

Supreme Judicial Court of Massachusetts, Suffolk.

May 19, 1896

COUNSEL

Alfred Hemenway, Charles W. Bartlett, and D.F. Kimball, for plaintiff.

Robert M. Morse and Charles E. Hellier, for defendant.

OPINION

KNOWLTON J.

The property which the plaintiff seeks to recover in these actions was sold by him to Phelps & Lombard, whose title the defendant represents. The question presented at the trial was whether Phelps & Lombard bought the goods with an intention not to pay for them. The court ruled that there was no evidence in favor of the plaintiff to be submitted to the jury on this question, and directed a verdict for the defendant. The exception to this ruling presents the only question before us. It is a general rule of law, both in England and in this country, and it is well settled in this commonwealth, that one who buys goods with a preconceived intention not to pay for them is guilty of a fraud upon the vendor which makes the contract voidable at the vendor's election. Dow v. Sanborn, 3 Allen, 181; Kline v Baker, 99 Mass. 253; Rowley v. Bigelow, 12 Pick. 307-311; Benj. Sales (6th Am.Ed.) 388-443; Donaldson v. Farwell, 93 U.S. 633; Stewart v Emerson, 52 N.H. 301, and cases cited; Dalton v Thurston, 15 R.I. 418, 7 A. 112; Whitten v. Fitzwater, 129 N.Y. 626, 29 N.E. 298; Powell v. Bradlee, 9 Gill & J. 220; Talcott v. Henderson, 31 Ohio St. 162-165. In Dow v. Sanborn, ubi supra, Mr. Justice Hoar says: "In such a case the fraudulent party pretends to be a purchaser when he is not, but is in fact attempting to obtain possession of the property of another dishonestly, with a view to deprive him of it without consideration. So far as the buyer is concerned, the whole sale is a mere fiction and delusion, imposed upon the seller to induce him to part with the possession. If it be said that a mere intention does not constitute a fraud, the answer is that the purchase with such a fraudulent intention is a fraudulent act. In its moral quality it is hard to distinguish it from larceny." On the other hand, it is generally held that mere insolvency of the buyer, with a probability that he will not be able to pay for the property, although known to him and not disclosed to the seller, will not defeat the contract, if the purchase is made with a hope to be able to pay, and with an intention to pay, if possible. Com. v. Eastman, 1 Cush. 189; Morrill v. Blackman, 42 Conn. 324; Dalton v. Thurston, 15 R.I. 418, 7 A. 112; Talcott v. Henderson, 31 Ohio St. 162; Garbutt v. Bank, 22 Wis. 368; Kelsey v. Harrison, 29 Kan. 143. The ability of purchasers to pay for goods bought on credit is often a matter of great uncertainty, and in the absence of any other fraudulent conduct it would be too strict a rule to hold one guilty of fraud for buying without the present means to pay, if he has a hope and a purpose to pay, if possible, in the future. But one is presumed to intend the ordinary and natural consequences of his act, and a purchase of property without any reasonable expectation of paying for it may be evidence of an intention to obtain it without paying for it at any time. A purchase with such a preconceived intention is a fraudulent act.

The precise question before us is whether the bill of exceptions shows any evidence of a fraudulent purchase. An important part of the testimony introduced by the plaintiff came from Phelps, of the firm of Phelps & Lombard, who bought the goods; and it may be assumed that, if the jury believed all of his testimony, they would be obliged to find that, when his firm obtained the goods, they had no intention to avoid paying for them, but expected to pay if they were able to go on with their business, and expected to go on with the business long enough at least to enable them to pay the plaintiff's notes as they became due. But the jury might believe a part of the testimony of the witness and disbelieve other parts of it. The evidence tended to show that Phelps & Lombard had been deeply insolvent for a long time. Nearly a year before the last purchase from the plaintiff they had told their creditors Richardson &amp Dennie that they must fail, and that they owed about $125,000, and had assets amounting to only about $30,000 or $40,000. They then owed Richardson & Dennie about $40,000. Under some arrangement with Richardson & Dennie, they continued business without disclosing their condition to their other creditors. Richardson & Dennie helped them to carry on the business by buying goods for them and helping them to credit. Before their failure Richardson & Dennie held their accommodation paper to the amount of between $80,000 and $90,000, a very large increase over the amount held when the...