Allen v. Addington

7 Wend. 9

• Court: New York Supreme Court
• Decided: May 15, 1831
• Status: Published

Opinion

By the Court,

Savage, Ch. J.

To aid in determining whether any cause of action is stated in this declaration, it will be useful to look at the cases which have been decided, and see what principles relating to this object have been settled. ppg first adjudged case upon this subject 5s Pasley v. Freeman, 3 T. R. 51, which was an action in the nature of a writ of deceit. After verdict, a motion was made in arrest; the third count was like the first in this declaration, which is conceded to be good in form and substance. The point decided in that case is, that a false affirmation, made by the defendant with intent to defraud the plaintiff, whereby the plaintiff sustains damages, is the ground of an action on the case, in the nature of a deceit. It is not necessary that the defendant should be benefited by the fraud, or that there be collusion between the defendant and the person benefited. The judges gave their opinions seriatim. Grose, justice, contended that the action could not be sustained; which he stated to be brought against the defendant for telling a lie respecting the credit of a third person, with intent to deceive, whereby the plaintiff was damnified. Buller, justice, says : “ I agree that an action cannot be supported for telling a bare naked lie,” which he defines to he saying a thing which is false, knowingly or not, without any design to injure or deceive any person ; but a deceit is more than a lie, on account of being connected with some dealing, and the injury which it is calculated to occasion to another person. Ashurst, justice, says : “ In order make it (a lie) actionable, it must be accompanied with the circumstances that the defendant, intending to deceive and defraud the plaintiff, did deceitfully encourage and persuaded him to do the act, and for that purpose made the false: affirmation, in consequence of which he did the act.” Lord Kenyon also concurred, and remarked, as to this particular point, that it was contended that the action could not be maintained for telling a naked lie; but that proposition is to be taken sub modo. If indeed no injury is occasioned by the lie', it is not actionable ; but if it be attended with damage, it then becomes the subject of an action. He emphasizes that the defendant fraudulently, and with design to deceive the plaintiffs, made the false information, by which the the plaintiffs sussustained damage: and concludes by saying that the action is maintainable, on the ground of deceit in the defendant, and injury and loss to the plaintiffs. This decision was made in .1789, and it seems that the principles upon .which an action of «deceit is founded had not before been applied to such a case, The case, however, seems to have been approved by the bar; for Lord Eldon informs us, in Evans v. Birknell, 6 Ves. 186, that though he doubted the principles of it, and when chief justice of the common pleas, offered counsel the privilege of making a special verdict, yet that offer was uniformly rejected. Such was the hostility of this learned judge to the principle of this case, that though he could not prevail on counsel to make a special verdict for the purpose of reviewing the principle, yet he took pains to impress upon the jury the danger of finding verdicts upon such principles, and so far succeeded that the plaintiffs in such actions seldom obtained verdicts before him. He speaks of this as of frequent occurrence. There must therefore have been many such actions brought, for Lord Eldon was only about two years chief justice of the common pleas, before his appointment to the office of lord chancellor; and he took occasion as soon as he left the common pleas, before a term had intervened, to repudiate the doctrine of that case. This was in July, 1801. In November of the same year the case of Haycraft v. Creasy, 2 East, 92, came on in the king’s bench. The declaration charged the representations to be false, fraudulent and deceitful. On the trial before Lord Kenyon the representations were proved, but it was shewn to the jury that the defendant was the dupe of the artifices of the person he had recommended, and strong evidence to shew that there had been no fraud on the part of the defendant. After a verdict in favor of the plaintiff, a motion was made for a new trial, on the ground that there was no fraud or deceit in the defendant, but that he in fact believed the representations he made to be true; and that without fraud the action was not maintainable, though the representation turned out to be false. Before the decision of this case, changes had taken place on the bench; Mr. Justice Buffer had been transferred to the common pleas, and Lawrence, justice, in that court took the place of Buffer. Ashurst, justice, had resigned, and Le Blanc was appointed in his place. Lord Kenyon and Mr. Justice Grose remained, and they retained the same opposite opinions which they had expressed in Pasly v. Freeman. Lord Kenyon seemed inclined to go farther, and held it fraudulent in the defendant to assert positively of his own knowledge, that which he did not know to be true—the solvency of Miss Robertson, the person credited upon the defendant’s recovamendation. Grose, justice, admitted the authority of Pasley v. Freeman, although he could not understand the principle Up0n which it was decided, but held that as fraud was the foundation of the action, and as there was no evidence that the defendant meant to assert a falsehood, and thereby mislead the plaintiff, there was no fraud in the transaction. Lawrence and Le Blanc concurred with Grose, justice, that there was no fraud in the defendant’s representations, and that to support the action, the representation must be made malo animo. The doctrine established by these cases is, that in order to subject a defendant to damages for a false representation as to the credit of a third person, the representation must not only be false, but fraudulent, with intent to deceive.

In Scott v. Lara, Peake’s cases, 226, at nisi prius, Lord Kenyon decided that to subject the defendant to an action by the plaintiff, the defendant must make the communication for the purpose of imposing upon the plaintiff, and that the plaintiff relying upon the information so received, sustained an injury.

In Eyre v. Durnsford, 1 East, 327, it was held that a person inquired of as to the circumstances of another, is not bound to give any answer; but if he answers the inquiry, he is bound' in justice and common honesty, to give a fair representation of what he knows. Fraud may consist in the suppression of the truth, as well as in the assertion of a falsehood; and the action lies m either case, if the intention to deceive exists, and is the cause of the suppression of the truth, or the assertion of the falsehood. And in Burton v. Loyd, 3 Esp. R. 207, Lord Kenyon said the action was founded on all the moral rules which ought to govern society ; that when a character was asked of any man in trade, to whom the party inquiring was about to give credit, all the circumstances within the person’s knowledge ought to be stated, and the party left to judge for himself, whether he would give credit or not. In Hamar v. Alexander, 5 Bos. & Pul. 241, it appeared that the false representation was made with a view to obtain goods upon credit, and that they might he consigned to a house in which the defendant was connected. Sir J. Mansfield thought it a case Upon which an action should be maintained, if Pasley v. Freeman had never been decided. This was the case of gross fraud.

The first case in this court was that of Ward v. Center, 3 Johns. R. 271. There the defendant had said to the plaintiff’s clerk that one Brown was a responsible man, worth $5000 ; that he had been punctual in his payments as far as he, the defendant, had had dealings with him. On this recommendation the clerk sold the goods to Brown. The defendant did not communicate the fact that he had a bond and warrant to confess judgment for upwards of $2000. It was proved that judgment was entered on this warrant a few days after the sale of the goods, an execution issued, and the goods levied on and sold. Before the goods were sold, the plaintiff stated to the defendant that he had falsely recommended Brown, and offered to take back the goods, which was refused. After a verdict for the plaintiff, a motion was made for new trial, on the ground that the verdict was against evidence. Van Ness, justice, seems to doubt as to the correctness of the case of Pasley v. Freeman; but the motion was denied, on the ground that the defendant did not communicate the fact of his having a bond and warrant to confess judgment. Spencer, justice, expressed himself satisfied with the verdict. The case of Upton v. Vail, 6 Johns. R. 181, brought before the court directly the question whether the action would lie. In that case Upton, the defendant in the court below, had a judgment bond against one Broyrn, and went with him to Vail, to whom he recommended him to be as good as any man for the amount sold to him; about two weeks after, Upton issued an execution, and sold all Brown’s property, and among the rest the property purchased of Vail. A recovery was had by Vail against Upton in the court below, and that judgment was affirmed in this court. Kent, Ch. J. delivered the opinion of the court, and after referring to the English cases, expresses his decided approbation of the principle on which the action is sustained, and adds: “ But independent of the English cases, I place my opinion upon the broad doctrine that fraud and damage coup, led together will sustain an action. But the simple fact of misrepresentation, unconnected with fraudulent design, is not sufficient. 8 Johns. R. 25. In Gallager v. Brunel, 6 Cowen, general principles on which this class of cases rest are recognized. Mr. Justice Woodworth cites, with approNation the language of Lord Erskine, in 13 Vesey, 131, that there must be knowledge at the time of the falsity of the affirmation ; that is the sound principle. It must therefore be considered settled, both in England and in this state, that an action lies for a false recommendation of a third person, by which the plaintiff sustains damage, provided such recommendation be made with an intention to deceive and defraud the plaintiff. Such information must be communicated to the plaintiff, and must be relied on, and cause the damage. The false representation may consist in the suppression of the truth, as well as in the assertion of a falsehood. From many of the cases it seems a communication to the clerk or agent of the plaintiff is the same as if directly made to the plaintiff in person. It is not essential that the person making the false affirmation is to be benefited by the fraud. Nor is it neceesary that the intention should exist, to defraud the plaintiff in particular. If a person intending to defraud somebody gives a general recommendation of credit to an insolvent person, any one who sustains damage by, reason of such recommendation, is entitled to an action for such damage, grounded upon the fraud. This is upon the same principle as the case of the squib, 2 Black. 892, which having passed throug several hands before the plaintiff lost his eye, yét he sustained an action against' the person who first put it .in motion. Within these principles it seems to me that all the counts are good. It becomes necessary, therefore, to inquire whether the facts pro- ■ ved support the declaration, or either count in it, and render the defendant liable for the damage which the plaintiff has sustained.

The evidence in support of the allegations in the declaration consists of the letter, and the circumstances which shew the fraudulent intention. So far as the letter purports to state facts it is not denied but what they are truly stated; the fact that the defendant had purchased Baker’s beef, was true; the fact that Baker had been a merchant some years at Aurora» was also true, though his mercantile business had not been very extensive, nor of long duration; the fact that he had bought his goods at Buffalo, Utica and elsewhere, was also true ; the fraud, if any, consisted in suppressing facts which were material to be communicated to a person about to sell ... goods to B. on credit, or to any one who was to give him assistance in buying goods. The fact that the writer of the letter had three judgments against Baker was not communicated, though they may perhaps be excused on the ground that these judgments were nearly or quite satisfied by the beef which was purchased of him ; the fact that Baker was indebted in a large amount for the goods which he had previously purchased was not communicated; the fact that Baker never had any capital except what the defendant had furnished, and kept constantly covered by securities which would take preference of other creditors, was not mentioned ; the fact that Baker was his nephew is not communicated—he calls him an acquaintance ; the fact that so embarrassed were the circumstances of Baker, that difficulty was anticipated in his passage through Albany with his goods from New-York ; and above all, the knowledge which the defendant seems to have had that Baker must fail. He of course would not communicate the fact that Baker went to New-York by his, the defendant’s, advice, to purchase all the goods he could on credit, because he might as well fail for something as nothing, and because in that way the defendant expected to get his pay, and that Baker would still have enough left with which to compromise with his creditors. Independent of the testimony of the three witnesses who proved the declaration of the defendant in this particular, there were material facts suppressed in the letter to Wilson. Had Wilson, instead of the plaintiff, sold the goods to Baker, the letter, with the explanatory circumstances, would have placed his right to recover against the defendant beyond all doubt. It must be conceded, therefore, that there was fraud enough in the defendant’s representations to subject him to an action. It is true that the defandant says not one word about buying on credit, and the letter may admit of two constructions : When he asks Wilson to aid Baker “ in the way of buying,” it may be said that it was expected Wilson would advise Baker what goods to purchase, but that, WiB son coifld not do ; he was not as good a judge on that subject as Baker. Wilson dealt in provisions; Baker wanted dly goods and groceries. The aid, then, must have been either to iriform. Baker .Where goods could be purchased, or to facilitate the purchase itself. A mtm with money in his pocket would need ho aid in the city of New-York to find the goods he wanted; but if his object Was to purchase on credit,' then aid was very important. Baker was aware of this,for he procured letters of recommendation from Mr! Hickcok; but if he speaks the truth, he took none from his uncle, the man who had set him up and sustained him in business. He even says he did.not know the contents of the, letter to Wilson; if this is so, that fáct may raise a Suspicion that such ignorance was intentional. Baker stands in a suspicious situatioú; it is in evidence that he made false statements to Havens ; and when his testimony is contradicted by others, he ought hot to be believed, and probably was not believed by the jury. He swears that the letter was not delivered to Wilson till after the purchase was complete, and the goods delivered. Havens ahd Wilson both contradict him in this respect.- Havens says he had tWo conversations with Wilson, when the letter Wak mentionedthese conversations took place in conse- . qu6núé of a reference by Baker to Wilson and Wilson knew nothing of Baker but from the letter. It would have been idle, and not only so, but suspicious, to make a reference to a man who had no mentis of giving a recommendation. Theré can be no doubt that the letter was delivered before the reference Was made. In view of all these facts" and circumstances, I think the jury were justified in finding that there was fraud enough in the defendant to make him liable to an action. But itis also necessary to inquire whether the plaintiffhas sustained an injury by means of that fraud. On that point, Havens, the plaintiff’s clerk, swears that he would not have sold Baker the goods but for the recommendation of Wilson ; yet he never saw the letter, and he or the plaintiff did see Hickcox’s letter. He states that Baker’s telling him that he had beef homing had considerable influence, but he did not inquire of Wilson how that fact was; ánd had he read the letter he would have seen that the beef was Addington’s, and that Baker had not told the truth. The jury believed that the credit was given upon the strength of this recommendation, and it can hardly be doubted but the letter was written with an intention that Wilson should procure credit for Baker for the goods which he should purchase. The subsequent conduct of the defendant in aiding Baker through Albany by advancing money, and his subsequent levy on the goods and sale, and putting Baker again in possession as his agent, leave little doubt that the effect was such as the cause was intended to produce. My conclusion on the whole case is, that the evidence was sufficient to justify a verdict on the ground of fraud in the defendant, and damages to the plaintiff caused by that fraud.

The judge in his charge stated that the facts set forth in the letter were true; but that this action was founded on a fraudulent concealment of other facts, and a fraudulent intent to enable Baker to obtain goods. That the defendant was liable for Wilson’s recommendations, which were given for want of correct information. In this I think the judge was correct. If the defendant meant any thing by his letter, it was to enable Wilson to aid Baker in procuring goods on credit; he was bound, therefore, to give him all the information, which would enable him to judge whether Baker could be safely trusted. He knew that Wilson had no goods to sell, such as Baker wanted ; he therefore vitually constituted Wilson his agent to give to others the information contained in the letter, as embracing all the facts which ought to be communicated to a merchant about to sell goods to Baker on credit. In my opinion the judge was correct, too, in telling the jury that though other recommendations had influence on the plaintiff’s mind, yet if the recommendation of the defendant through Wilson was that which procured the credit, the plaintiff was entitled to recover.

I am inclined to think the doctrine of stoppage in transitu has nothing to do with this case; but as the plaintiff’s right of recovery is sustained upon other grounds, what was said on that subject did not prejudice the defendant. The ground assumed by the judge in answer to the application of the defendant’s counsel, is the doctrine sustained by all the cases—that a false representation with a fraudulent intent is enough, when it appears that the plaintiff relied on that representation, and was deceived by it. The rule of damages laid down to the jury is not objectionable. It is not the value of the goods only that a jury are authorized to give in a case like this f damages are given, as well to compensate the plaintiff, as to punish the fraud of the defendant. I cannot say that the damages in this case are excessive. On the whole, therefore, I am of opinion that a new trial should be denied.