Peskin v. Phinney

WARNE, J. pro tem.

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This is an appeal from a money judgment in favor of plaintiff in an action arising out of fraud and deceit.

Plaintiff, doing business as Aetna Factors Company, is engaged in factoring accounts receivable. On March 4, 1954, the plaintiff made a contract with M. E. Wright Lumber Company to “buy at net face amount of invoices all accounts receivable created by its sales” of lumber. Defendant was

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one of the customers of M. E. Wright Lumber Company and also an employee and creditor of the lumber company as well. Before making the contract with M. E. Wright Lumber Company plaintiff investigated it as to its financial ability and reputation and found the same satisfactory. Defendant was also, in turn, investigated by plaintiff as to his financial standing and reputation and found satisfactory, and a line of credit was approved for defendant. Thereafter, commencing on or about March 8, 1954, and continuing through April 13, 1954, the M. E. Wright Lumber Company caused to be prepared certain fictitious invoices purporting to represent the sale of lumber to defendant and took these invoices, together with delivery tickets and shipping tickets forged by M. E. Wright, to the office of plaintiff and received payment at the agreed price. The lumber company represented that its accounts receivable were based upon lumber sold and delivered to various customers, including the defendant, and that invoices supporting such accounts receivable represented actual lumber sold and delivered. The defendant Imew of the above representations and conspired with M. E. Wright to defraud the plaintiff by acknowledging the validity of such invoices and representing to the plaintiff that such invoices represented lumber actually delivered.

Pursuant to the conspiracy between himself and the lumber company defendant paid some $64,000 worth of these fictitious accounts when the invoices were submitted to him by plaintiff. Furthermore, in response to a letter from plaintiff’s auditors, defendant acknowledged in writing the validity of the aforesaid accounts receivable and underlying invoices and his indebtedness thereon. This course of dealing induced plaintiff to raise defendant’s credit limit and to purchase still additional fictitious accounts receivable naming defendant as the customer who had supposedly purchased and received lumber. When defendant refused to make further payments of these accounts, plaintiff was left holding accounts and invoices with a total face value in the amount of $71,431.34.