Fraschieris v. Henriques

When it is conceded, as it must be on authority, that no-tender or-' offer to surrender the promissory notes or other -negotiable paper is necessary before the commencement of. an action to recover the possession of goods fraudulently purchased, where the vendee only is liable thereonj and that the: production!of the paper at the trial-and there offering to surrender or cancel it is sufficient, it is difficult to find any sound reason in principle for holding that there is a necessity that the vendor ¡should have had the possession of the paperj or the -power -to surrender it-at the time the action was commenced. -

The. paper was worthless. The courts have arrived at the conclusion that a tender of such notes before action is not necessary, and that the production and surrender at the trial is sufficient to prevent-any damage„from resulting to -the vendee;

If the surrender at the trial is a sufficient protection where the‘vendor- had the.m'otes continuously-from the time the vendee delivered, them, it is- equally- sufficient, although at some period before the- trial- they were out of his possession.

• ■ The negotiation '.’iff the paper can-make no difference. The technical rule requiring a tender*' previous "to the action is abrogated

The principal question is, whether the vendee obtained the goods by fraud. He is a robber if he did, preying upon the honest. trader,. and not entitled to the benefit of any technical rules, rendering it unnecessarily difficult to commence or maintain' an action for the recovery of property which he has so-.fraudulently obtained.

- The vendee, will prevail, even where -he has purchased fraudulently, if .his notes be not surrendered at the trial. This rule will shield him from injustice, and that seems to me sufficient. ' .

The ground upon which the judge placed his decision, in the rule entered upon, the trial, renders the examination of other questions in the case unnecessary.

There should be' a new trial, with costs to abide the event.

*281Clebke, J. concurred.

(dissenting.) The question argued by the appellant’s counsel in this case is, whether a vendor who has sold goods and taken the note of the purchaser in payment can rescind the sale, if at the time of rescission the note is out of his possession, so that he cannot then deliver it, or whether a delivery at the trial is sufficient.

When the contract in this case was rescinded, the vendor had discounted the notes at a bank, and he neither had nor was entitled to have possession of them. The judge at the trial nonsuited the plaintiff, upon the ground that the notes had been negotiated and were outstanding at the time the contract was rescinded, and that the surrender of them at the trial was not sufficient. It must now be considered as settled law that where the vendor has the note of the purchaser he need not tender it to the debtor when he seeks to avoid a contract for fraud, but that it is sufficient to produce it on the trial to be returned or canceled.

But where it appears by the evidence that the note is at the time of rescission out of the possession of the vendor, and in the possession of a third person, a different question arises. It was very clear, under such circumstances, that the vendor seeking to obtain back the goods sold by him, could not place the purchaser in the condition he was at the time of the sale, if he had returned the goods. He would then have returned the property to the vendor, and he would have remained liable to the bank where the note was discounted, for the amount. Such cannot be the rule of law on this question. In the absence of any proof to the contrary, the possession of the note at the giving of it, and the possession at the trial, warrants the presumption that the note during the time that has elapsed since it was given has remained in the possession of the vendor. That presumption is destroyed, however, when proof is furnished that the note has been passed for value to a third person, and is at the time outstanding. The pur*282chaser, under such circumstances, could not with safety restore the property and leave his notes outstanding, and the vendor had no right, while holding the proceeds of the notes given for the property, to demand also the property itself and leave to the purchaser the risk of getting rid of his notes by the redemption of them from the bank at a future time. "We have been referred to an opinion of the learned justice before whom this case was tried, which was delivered by him in the general term in Pomeroy v. Fellows. This, at first, seems to be a contrary authority to the views expressed at the trial; but on examining that opinion I do not find that the same question arose. The evidence there was that at some time the notes had been discounted, and the point was whether "proof that the drafts had once been discounted destroyed the presumption of title which arose from possession of them at the trial. The court held that the possession of the paper was stronger evidence of title at the time than could be indulged from proof of a previous discount. There does not appear to have been any evidence as to where the drafts were at the time of rescinding the contract. The latter opinion does not furnish any ground for the supposed contradictions, as suggested by the remarks of the plaintiff’s counsel. This question was examined by Bbown, J. in The Matteawan Co. v. Bentley, (13 Barb. 641.) He says : “ These notes the plaintiff got discounted at the bank and appropriated to its own use the proceeds. The notes were not the property of the plaintiff at the time the action was commenced, but they were then in the hands of the bank, where they remained until they reached maturity,” &c. When the plaintiff demanded the property, no tender was made of money received at the time of sale, or offer to restore the notes. The plaintiff proceeded upon the idea of a right to affirm the contract so as to retain the money and the proceeds of the notes, and disaffirm it so far as to receive back the value of the property. This could not be done.

This rule, as applicable to an action upon the original con*283tract, differs from that in which the party seeks to rescind a contract performed. In the first case the tender of the note need not be made at any time before the trial, and if produced might, in the language of these cases, be in season. But in the other class of cases the seller must be in a condition to return what he has received when he proposes to rescind. If he cannot do it, then, his attempted rescission fails. The case of Nichols v. Michael (23 N. Y. Rep. 264) has also been cited by the appellants. Selden, J. in that case says : “ The negotiability of the notes in this case is of no importance so long as they have not been negotiated, nor do I think it would effect the rule if they had been, at some period, out of the hands of the plaintiff, provided the possession and exclusive interest was in them at the time of the trial.” As an expression of opinion from the learned justice, this would be entitled to great weight as far as it would be applicable. It can hardly be considered as authority in a case in which he says the notes were not negotiated, and where it appears by the opinion of James, J. a surrender of the notes was actually tendered, when the demand was made Nor would it be an authority in the present case, because in the case cited the evidence showed that the possession was in the plaintiff when he made the demand for a return of the property.

Ingraham, Leonard, and Clerke, Justices.]

The judgment should be rendered on the verdict, with costs.

New trial granted.