Ayres v. French

41 Conn. 142

• Court: Supreme Court of Connecticut
• Decided: February 15, 1874
• Status: Published

Opinion

Park, C. J.

The objection taken to the sufficiency of the first count is founded upon the idea that trover will lie only for property that is tangible and that will admit of being taken into actual possession. This claim is undoubtedly supported by the older authorities. A majority of the court however are of opinion that at the present time, when the action of trover is diverted from its original object of recovering the value of goods lost by the plaintiff and found by the defendant, and all the allegations with respect to such loss and finding are merely fonnal and unmeaning, there is no good reason for keeping up a distinction that arose wholly from that original peculiarity of the action, and therefore hold that ti'over will lie for shares of stock as well as for other kinds of personal property. There is really no diffex’ence in any important respect between this and other kinds of personal propex-ty. A man purchases a share of stock and pays one hundred dollars for it. He afterwards pui-clxases a horse, and pays the same price. The one was bought in the market as readily as the other aixd can be sold and delivered as readily. The one can be pledged as collateral security as easily as the other; as easily attached to secure a debt; and its value as easily estimated. The one enriches a man as much as the other, and fills as importaxxt a place iix the inventory of his estate. It is considered personal property of as substantial value as the other, both in law and in the transactions of men. It is so regarded by our statutes. Gen. Statutes, tit. 7, secs. 250, 408, 452. It would be as great a moral wrong for a man to convert the one to his own use, when it was given in pledge, and the pm-poses for which it was given were satisfied, as it would be the other, and we think it ought to be as great a legal wrong. But it is said that, in order to maintain this action, a pax’ty must' have the right to the immediate actual possession of the thing for which he seeks in trover to recover the value. He must undoubtedly have the immediate right to the thing itself, or else he would xxot have the right to recover its value in presentí, any more than a man would have the x’ight to recover on a note which is not yet due. If he has not this right, the conversioxx of the thing has not yet done the plaintiff any hax-m. But what matters it whether or not the thing itself is capable of being taken in hand and carried away, so long as it is personal property of as substantial value as any other, and in no case can the thing itself be recovered in this form of action, but only its value. There was fox’ce in the claim originally, when trover was confined to property lost. From the nature of the action it could not then lie unless the property was tangible. The fiction of lost property is still retained in declarations of this kixxd, but the allegation has long since ceased to be substantial, and there is no longer any reason for requiring that the property should be tangible. The truth is that, when the allegation of lost property became a fiction by the extension of the action to cases not originally embraced within it, the courts carried the,original characteristics of the action along with it into its new relations, without stopping to enquire whether all of them were still important. This is the reason why authority can now be found in support of the necessity of a tangible character to the subjects of the action. But, for a long time this once essential requisite has been substantially disregarded in many cases. For many years it has been held that trover is the proper remedy to recover the value of things represented by valuable papers, such as certificates of stock, promissory notes, and other papers of value when unlawfully withheld. 1 Swift’s Digest, 534; Amory v. Flyn, 10 Johns., 102; Tucker v. Jewett, 32 Conn., 563. If a certificate of stock is unlawfully l'etained when demanded, what is presumed to have been converted ? The certificate has no intrinsic value disconnected from the stock it represents. No one would say that the paper alone had been converted—that the conversion of the paper constitute's the entire wrong. The real act done in such cases is precisely the same as that done here, no more, no less, and to say that trover will lie in one case and not in the other is to make a distinction where in reality there is no difference. Conversion is the gist of the action of trover. Everywhere it is so held. 1 Swift’s Digest, 533. The stock in both cases was convex'ted; axxd we tlxixxk that, in these days wheix the tendency of courts is to do away with technicalities not based upoxx reason, a technical distinction of this character should xxo longer be sustained.

Again, all the elementary books declare that trover lies to recover the value of goods and personal chattels whenever they have been unlawfully converted. Now it was liolden in the case of North v. Forest, 15 Conn., 400, that shares of stock were goods, wares and merchandise, within the provisions of the statute of frauds, which declares “ that no contract for the sale of any goods, wares and mex-chaixdise, for the price of thirty-five dollars or upwards, shall be allowed to be good, unless, &c.” The court say:—“ In consequence of the great increase of incorporations and the amount of capital invested in them,-, the stock of such companies has become a large and valuable portion of the personal estate of our citizens. Contracts for the sale of such property are almost daily made, and often to a very large amount. Such contracts fall clearly within the mischiefs which the legislature by the statute intended to remedy. There is as much danger of- fraud and perjury in the parol proof of such contracts as in any other.” And it might be added that the unlawful conversion of such property being as great a wrong as the like conversion of other kinds of personal property, the party who is guilty of it should be equally regarded as a wrong doer and treated accordingly.

The court in the case referred to show a disposition to treat shares of stock like other kinds of personal property; ánd certainly, if they are treated as goods, wares and merchandise, in order that fraud may be prevented, they should be treated as goods, wares and merchandise that wrong may be redressed. The doctrine of this case is sustained by the court in Massachusetts in the case of Tisdale v. Harris, 20 Pick., 9, and by recent cases in England. 3 Stark. Ev., 352.

But there are cases bearing directly upon this question. Maryland Fire Ins. Co. v. Dalrymple, 25 Maryl., 242; Cousland v. Davis, 4 Bosworth, 619; Freeman v. Harwood, 49 Maine, 195; Monk v. Graham, 8 Modern R., 9. These are all cases where stock had been given in pledge as collateral security, and the action of trover was sustained for the conversion of the same, without any suggestion being made to the contrary by court or counsel.

A majority of the court are of the opinion that the first count is sufficient.

In relation to the second count, we are all of the opinion that it is sufficient. The ground of complaint set forth in this count is the conversion of the property by the defendant. The remaining allegations contain merely a statement of the means employed by the defendant to obtain possession of the property, in order that he might carry into execution his preconceived intention to convert it to his own use. The count sets forth all the facts and circumstances with great particularity, hut the substance of it is that the defendant, knowing the pecuniary condition of the plaintiff, devised the scheme therein stated to obtain the stock of the plaintiff, and then convert it to his own use; which scheme was successfully carried out and the conversion accomplished. The count contains all the essential averments of an action of trover, aggravated by the deception used to obtain possession of the property. It states that the stock belonged to the plaintiff; that it was placed in the hands of the defendant as collateral security for certain endorsements made by the defendant for the benefit of the plaintiff; that the obligations on which the endorsements were made were paid and satisfied by the plaintiff, and the defendant had no longer a right to retain the stock; and that the stock was afterwards demanded, and the defendant refused to deliver it, and disposed of and converted the same to his own use. These allegations certainly are sufficient to sustain an action of tort, if we are right in the views'we have expressed in relation to the first count in this declaration.

But the defendant claims that nothing appears in this count but a breach of contract. Ho insists that to constitute fraud a party must make a false statement as to some material existing fact, knowing it to be false. This is not necessary in all cases of fraud. If a vendor intentionally conceals from the vendee a material latent defect in a horse which he is selling, and the sale is made; or if he should say that the horse was sound so far as he knew, when he knew him to be unsound, and the unsoundness consisted in a latent defect which impaired his value, he would be guilty of fraud. 1 Swift’s Digest, ■ 554. So if a man purchases goods with a preconceived design not to pay for them, he is likewise guilty of fraud. Reid v. Hutchinson, 3 Camp., 352; Noble v. Adams, 7 Taunt., 89; Bristol v. Wilsmore, 1 Barn. & Cress., 514; Killey v. Wilson, Ryan & Moody, 178; Hawse v. Crowe, id., 414; Ferguson v. Carrington, 9 Barn. & Cress., 59; Dow v. Sanborn, 3 Allen, 181; Hall v. Naylor, 18 N. York, 588.

It is alleged in this count that the defendant, in order to induce the plaintiff to give up his claim against the corporation and take stock in lieu thereof, informed the plaintiff that he would indorse his paper without further compensation and without security, intending at the same time not to do it, but to demand security when the time should come, in order to compel the plaintiff to put his stock into his hands; and intending further, when this should be done, to appropriate the stock to his own use. It is alleged that the defendant was successful in his scheme of depriving the plaintiff of his property and in converting the same. The contract is not set out as the basis of recovery, but as the means whereby the defendant accomplished his original purpose to convert» the property. It is the dishonesty in making the false promises in furtherance of his scheme of fraud, that is the basis of the action, in connection with the conversion of the property. The scheme had several progressive steps in the order of its accomplishment. First, the plaintiff was to be deprived of the means to meet his engagements. This was accomplished by the defendant pretending that if the plaintiff would give up his claim against the corporation and take stock in lieu thereof, he would indorse his paper to meet his engage, ments, without further compensation and without security. Secondly, the plaintiff was to be compelled to put his stock into the defendant’s hands. This was accomplished by the refusal of the defendant to indorse the plaintiff’s paper as he had agreed without security, and by his persuading him that the stock would be returned by the defendant when he should be saved harmless from his indorsements. Thirdly, the final consummation of the scheme, which was accomplished by the conversion of the property after the obligations were paid on which the indorsements were made. It would seem that if a man is guilty of fraud in the purchase of goods when he has a secret intention not to pay for them, much more is he guilty of fraud if, after he devises a scheme for getting possession of the property of another without buying it, and appropriating it to his own use, he goes deliberately at work to carry his scheme into execution by making promises with the intention at the time not to fulfill them, and breaks them as often as they are made in accordance with his original intention, and so goes on to the consummation of his plan. Where lies the fraud in buying goods with an intention not to pay for them ? It lies in the fact that the fraudulent purchaser gives the seller to understand that his intention is to pay for them. His deceit therefore is in his statement with regard to his intention. Here the defendant promised the plaintiff that lie would indorse his paper without further compensation and without security. It is charged that that promise was made with the intention not to fulfill it. The defendant further promised the plaintiff that the property should be returned when he was saved harmless from his indorsements. It is charged that that promise was made with no intention to keep it, but with the intention to convert the property to his own use. We have no hesitation in saying that an actionable fraud is charged in this count.

Yery little need be said in relation to the third count in this declaration, for, as we view it, a similar count has been sustained by this court in the recent case of Stevens v. Hurlburt Bank, 31 Conn., 147. All the difference in the two cases seems to be that in the case referred to the stock was pledged as collateral security, and here a transfer of it was obtained for a fraudulent purpose. But the property in reality belonged to the plaintiff, and when the object was accomplished for which it was transferred the plaintiff was entitled to its immediate return. It was his then absolutely, and the conversion of it by the defendant was as great a wrong as it would have been if the property had been pledged. But nothing further need be said of this distinction, as the defendant makes no point of it in his brief.

The gist of the action in this count, like the others, is the selling and disposing of the property belonging to the plaintiff, after the purpose for which it was placed in the defendant’s hands had been accomplished. The statement of duty is merely the statement of what was implied by law from the acts of the parties, and the statement of the agreement was made merely to show the relations of the parties and their rights to the property under the circumstances. We think this count likewise is sufficient.

We therefore advise the Superior Court that all three of the counts in this declaration are sufficient.

In this opinion Carpenter and Phelps, Js., concurred. Foster, J., dissented upon the first point, but concurred upon the others. Pardee, J., did not sit.