Opinion
06-16-1888
COLLINS v. COOLEY et al.
Carroll Robbins, for complainant, Elizabeth Collins. James Buchanan, for defendant Wentz. G. D. W. Vroom, for defendants Lockwood & Co. Edwin R. Walker, for defendants Harbison & Co.
Bill to foreclose a chattel mortgage.
Carroll Robbins, for complainant, Elizabeth Collins. James Buchanan, for defendant Wentz. G. D. W. Vroom, for defendants Lockwood & Co. Edwin R. Walker, for defendants Harbison & Co.
BIRD, V. C. This is a contest between certain chattel mortgagees and the vendor of a portion of the goods mortgaged. The defendants Harbison & Co. allege that Cooley, the mortgagor, obtained the goods involved, of them, by fraud, and that, as against the mortgagees, who hold the goods under mortgages given to secure moneys which had been previously loaned, they (Harbison & Co.) can hold them under their replevin. "Was any fraud perpetrated by Cooley at the time of the sale? This is the only question. Cooley had been in business in Brooklyn, and was about going to Hagerstown, Md., when he called on Harbison & Co. for additional credit, (having dealt with them for years on credit.) He selected about $1,300 of goods, and then Harbison called his attention to their long continued friendship and business intercourse, and also to the fact that his efforts in Brooklyn had not been a success, and said: "Now, I would like to know how you stand?" Whether, in his reply to this inquiry, Cooley said that he would take $13,000 or $14,000 worth of goods to Maryland, as he insists, or $18,000, as Harbison says, is not so material as another point raised by the inquiry. Cooley said his indebtedness was $4,000 to $5,000; but he says that, whatever the amount of the indebtedness which he named was, it did not include his individual indebtedness, but only his indebtedness on merchandise account. He makes a distinction. Now, at this very time, he was indebted to the chattel mortgagees, although they did not take their mortgages till long after, in the sum of $9,000 and over, for money borrowed. This money he had put in his business as a merchant, and had given the lender credit for it on his books. HA says he did not include the amount of this indebtedness in his statement to Harbison because the latter did not ask for it; and it is urged that he was not bound to disclose this fact. Surely, the complainant's counsel must be wrong in this. If one business man, a vendor, asks his vendee for a statement of his financial condition, or asks him how he stands, it cannot possibly be that he answers fairly and fully if he only speaks with reference to the businesshe proposes to promote by the particular purchase. This case shows that, if such partial statements were to be regarded as sufficient, most extraordinary wrongs would be inflicted on honest business men. I think Harbison was entitled to full disclosure of the situation, and that the concealment, by Cooley, of his indebtedness for money borrowed, was a fraud. It was his duty to tell the whole truth. See Bigelow, Fraud, 503, 504. The following cases aid in reaching a just conclusion: Stoutenburgh v. Konkle, 15 N. J. Eq. 33; Hicks v. Campbell, 19 N. J. Eq. 183; Ensign v. Hoffield, 4 Atl. Rep. 189; Robinson v. Levi, 81 Ala. 134, 1 South. Rep. 534; Doane v. Lockwood, 4 N. E. Rep. 500; Atwood v. Dearborn, 1 Allen, 483, 79 Amer. Dec. 755. The cases in which the right of the vendor to recover the goods because of fraud have been considered, together with the right to pursue them when the vendee has parted with them wholly or partially, all hold that he is entitled to them as against every one who is not a bona fide purchaser for value. See the cases above cited.
I find the value of the goods sold by the receiver, which had been replevied by Harbison & Co., is $499.79. This amount the receiver should pay to Harbison & Co., and also their costs, out of the funds in his hands. I will so advise.