Opinion
Argued February 3, 1888
Decided March 20, 1888
George W. Ellis for appellants.
Henry D. Hotchkiss for respondent.
The evidence was not all one way, but upon the principal questions in the case was of such a character as to require from the referee a finding, first, as to the intent of Taussig Hammerschlag in obtaining the goods in question, whether the purchase was fraudulent or bona fides; and, second, whether, if a fraudulent purpose existed, Adams had knowledge of it, or whether he was a pledgee for value and in good faith. He did pass upon these questions, and with the approval of the General Term in favor of the plaintiff, we see no ground upon which we should interfere. Both the title of the original purchasers and the title and good faith of the plaintiff must be deemed established. There are, however, exceptions to evidence. While one F., a former bookkeeper of Taussig Hammerschlag, was on the stand, he was examined at great length by the defendants as to the account books of that firm and the entries therein. They consisted of the sales books, cash books, journal, ledger, bill book, receiving book, and they were all and separately offered by the defendants in evidence. They were objected to by the plaintiff's counsel "as incompetent and immaterial as against the plaintiff and upon the further ground that there is no evidence of the facts covered by the entries." The case states that the referee excluded the offered evidence upon the ground that the books were "hearsay testimony," and the defendant excepted. We think they were admissible to show the condition of the affairs of Taussig Hammerschlag, and their knowledge of that condition. As between them and the vendors, the sale, if obtained by fraud, was invalid, and bearing upon that question the evidence was clearly competent and material. Unless the plaintiff turned out to be a holder of the goods upon a present consideration in good faith and for value, such a transaction would be invalid also as against him. The facts found by the referee show that such was the plaintiff's position as to the $3,000, and no more. The other debt of $662.94 was contracted without reference to the security afforded by the goods in question, and for that the plaintiff cannot be considered a bona fide transferee or pledgee within the rule so as to enable him to hold the syrup against the original vendor, who was defrauded. That debt might have been paid from the proceeds of the other lot of syrup, but it was not. A different application was made. This appears from the complaint in this action and from the testimony of the plaintiff and the finding of the referee. On the 27th of August, 1883, the plaintiff applied upon the $3,000 loan the proceeds of the other parcel, or 130 barrels of syrup, amounting to $1,914.81, leaving due only at the date of the referee's report $1,176.45. This sum, with interest, the plaintiff can now recover, although the purchase by Taussig Hammerschlag was, in fact, fraudulent. The testimony offered and rejected might, if received, have led the referee to that conclusion. It would, however, affect only the amount of the precedent debt, and a just conclusion may be reached without a new trial, if the plaintiff remits so much of the recovery as exceeds the balance of the $3,000 loan. If that is done, the rejection of the evidence will have worked no harm to the defendants, and the error in excluding it will not require a reversal of the judgment. I have examined the other questions presented by the appellant, and find none which disclose error in the trial; but for the error above discussed the judgment should be reversed and a new trial granted, with costs to abide the event, unless within twenty days from the entry of this decision the plaintiff stipulates that the recovery for damages be reduced to the sum of $1,176.45, with interest thereon from December 16, 1884 (that being the date of the referee's report), in which case the judgment appealed from should be modified accordingly, and as modified, affirmed, without costs to either party in this court."
All concur.
Judgment accordingly.