Opinion
June 28, 1961
Appeal from the Chautauqua Trial Term.
Present — Williams, P.J., Bastow, Goldman, McClusky and Henry, JJ.
Judgment unanimously reversed on the law and the facts and a new trial granted, with costs to appellant to abide the event. Order denying defendant's motion, dated June 6, 1960, and entered October 7, 1960, unanimously affirmed, without costs. Memorandum: this is an appeal from a judgment dismissing the complaint in an action for fraud entered after a jury verdict of no cause of action. The checkbook stubs were admissible as an admission against interest. (20 Am. Jur., Evidence, § 1064, p. 913.) The certificates of protest were also admissible and constitute presumptive evidence of the contents. (Civ. Prac. Act, § 368.) The checkbook stubs reveal that the account was overdrawn from September 18. Josephine Campese avoided showing an overdraft by back entry of deposits on the checkbook stubs. On October 19, when the check stubs thus showed a balance, an overdraft in excess of $7,000 should have been shown. Even by Josephine Campese's method of entry of deposits, there was no balance after October 19; yet 16 checks were drawn thereafter aggregating $8,087.44, seven of which were cashed at appellant's store. It is the business of the drawer to know the state of his account. ( King v. Murphy, 151 N.Y.S. 476, 480.) One who draws and delivers a check with knowledge that the funds are insufficient commits actionable fraud. ( Lippman Packing Corp. v. Rose, 203 Misc. 1041, 1042.) Even when no oral representations are made, the act of drawing and delivering a check amounts to a representation that the drawer keeps an account with the drawee and that there are sufficient funds on deposit to meet it. ( Sieling v. Clark, 18 Misc. 464, 465; Fruchtbaum v. Schinasi, 147 N.Y.S. 401; Tompkins v. Rodenberger, 200 Misc. 915, 917; 2 Cooley, Torts [4th ed.], § 351, p. 560.) Subsequent withdrawal of the funds which defeats payment of a check is fraud on the holder. ( Sieling v. Clark, supra, p. 466.) The drawing of checks without funds to meet them, when unexplained, is a badge of fraud. ( Greenleaf v. Mumford, 19 Abb. Prac. 469; cf. Penal Law, § 1292-a.) The evidence presented by respondents' checkbook created an inference of fraud. Since respondents presented no evidence in rebuttal thereof, the verdict was against the weight of evidence. Fraud by one partner whereby money or property is gained by the partnership renders all partners civilly liable despite a discharge in bankruptcy. ( Griffin v. Bergeda, 152 Tenn. 512.) From the schedules in bankruptcy it appears that each of the respondents was the owner of a one-fourth interest in each of four farms. Each listed identical liabilities relating to the farms such as land rent, veterinary service, seed, gasoline, repairs and spraying of peas and assets of claims for sale of crops, milk, hay, trucking and plowing. All are readily identifiable as usual items of farm income and expense. Unexplained, these items evidence sharing of profits and losses as owners within the definition of section 10 Partnership of the Partnership Law. Any jury finding to the contrary was against the weight of evidence.