Stewart v. Levy

By the Court, Rhodes, J. : The evidence clearly tended to prove that one of the defendants, Levy, who made the purchase, was guilty of fraud in contracting the debt; and the verdict ought not to be set aside as to him, on the ground that it is not sustained by the evidence.

There was no error in refusing to give the first instruction requested by the defendants. If they, or either of them, fraudulently intended to procure the goods without payment, the fraud was consummated when the possession of the goods was obtained without making payment on delivery, or on call, according to the terms of sale. The debt was then fraudulently contracted. A payment made after that time, though it might satisfy the debt for the price of the goods, would not remove the taint of fraud from the transaction by which the goods were obtained. A personal demand before bringing suit was, therefore, unnecessary.

The third instruction asked by the defendants should have been given. It is as follows: “If the jury shall find from the evidence that the fraud, if any, was committed by the defendant Levy, and not. by the defendant Glass, they must acquit the defendant Glass of the charge of fraud.” All the partners will be bound by the fraud of one of the partners in contracts relating to the partnership made with innocent third parties. That is to say, all are responsible for the injury occasioned by the fraud, and are liable to an action brought upon the contract, or for the recovery of the property fraudulently obtained, whether they were cognizant of the fraud or not. The rule is the same as it is in respect to the responsibility of the principal for the fraud of his agent, while acting within the scope of his authority; and, indeed, a partner becomes liable for the fraud of his co-partner, because of the relation each bears to the other of agent in the partnership business. But such responsibility is essentially different from a liability to a judgment for fraud, upon an issue joined as in this case. The fraud upon which, the [166]judgment proceeds is actual, intentional fraud, and implies moral turpitude. It needs no argument to prove that one partner cannot be adjudged to be guilty of a fraud of that character, committed without his knowledge or assent, and which he neither assents to nor ratifies by adopting the act of his copartner, with knowledge of his fraud. We need not review the authorities cited by counsel, for it will be conceded that if the partner adopts or acquiesces in the fraud of his copartner, or retains the fruits of the transaction with a'knowledge »f the fraud, he also is guilty of the fraud. The instruction does not question this position, but it takes the ground that Glass, if he did not commit the fraud, must be acquitted, though his partner might be guilty—that he should not be adjudged guilty because of the guilt of his partner. If intentional and actual fraud must be shown in order to sustain the issue on the part of the party alleging the fraud, and if “fraud is an offense involving moral turpitude, and is followed by imprisonment, not merely .as a means of enforcing payment, but also as a punishment,” (Davis v. Robinson, 10 Cal. 411,) we have no hesitation in saying that the reasoning of the majority of the Court in Townsend v. Bogart, 11 Abb. 355, to sustain the position that if one party is guilty of fraud, all the parties are in judgment of law guilty, and that the acquiescence of all in the fraud of one is presumable from the existence of the partnership, does not meet with our approbation.