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may have been made.184 And the rules and principles are the same whether the conspirator be an agent for the victim,185 or his attorney at law or in fact,186 or his trustee for the benefit of creditors, 137 or a person entitled to his implicit confidence on account of the relationship between them, as in the case of a husband or wife or a brother.138

Bribery of a public official to do an act which is illegal or contrary to his duty, for the purpose and with the effect of defrauding a third person, is a form of fraud which warrants the latter in rescinding any obligation into which he may have entered. Thus, a person who has obtained a patent to public lands by means of bribery and corruption of officers of the government, will not be permitted, when his claim is questioned in a court of equity, to derive any benefit thereby, but the patent will inure to the party entitled to recover the land.139 So a contract obtained by bribing those having control, for the purchase of state lands, is a fraud on the state, against public policy, and void, and the state may obtain its cancellation without returning or offering to return the money paid thereon.140 On similar principles, in an action against a board of county commissioners for an alleged breach of a contract, whereby they accepted plaintiff's bid for doing certain work for the county, it is a sufficient defense that plaintiff, by promises of reward, induced another person, who had intended to bid a less sum, not to make a bid.141

Perjury also always involves fraud, and hence, for instance, patents to public lands which are procured by the use of false affidavits or testimony before the officers of the

134 Billboard Pub. Co. v. McCarahan, 151 Ill. App. 227; Cogswell v. Mitts, 90 Mich. 353, 51 N. W. 514; Jones v. Steelman, 22 Wash. 636, 61 Pac. 764.

135 Mabry v. Randolph, 7 Cal. App. 421, 94 Pac. 403.

136 Bush v. Prescott & N. W. R. Co., 76 Ark. 497, 89 S. W. 86; Kilgore v. Norman (C. C.) 119 Fed. 1006.

137 Ames v. Witbeck, 179 Ill. 458, 53 N. E. 969.

138 Pribble v. Hall, 13 Bush (Ky.) 61; Lindley v. Kemp, 38 Ind. App. 355, 76 N. E. 798.

139 Phillips v. George, 17 Kan. 419; Lynch v. United States, 13 Okl. 142, 73 Pac. 1095.

140 State v. Cross, 38 Kan. 696, 17 Pac. 190.

141 Jennings County Com'rs v. Verbarg, 63 Ind. 107.

land department are fraudulent, and may be canceled for this reason at the suit of the United States.142

§ 31. Insolvency of Purchaser and Intent Not to Pay.If one who is insolvent purchases goods on credit from another, with an intention not to pay for them, or with no reasonable expectation of being able to pay, and induces the sale by false representations concerning his financial ability, upon which the seller relies, or else by fraudulently concealing his insolvent condition, which would have prevented the sale if it had been known to the seller, then, in either case, the seller has the right to rescind the sale and recover his goods, and this, notwithstanding the fact that they may have passed into the possession of a trustee in bankruptcy or insolvency,143 or he may even recover from

142 J. J. McCaskill Co. v. United States, 216 U. S. 504, 30 Sup. Ct. 386, 54 L. Ed. 590; Washington Securities Co. v. United States, 194 Fed. 59, 114 C. C. A. 79.

143 Donaldson v. Farwell, 93 U. S. 631, 23 L. Ed. 993; Montgomery v. Bucyrus Machine Works, 92 U. S. 257, 23 L. Ed. 656; Halsey v. Diamond Distilleries Co., 191 Fed. 498, 112 C. C. A. 142; Bloomingdale v. Empire Rubber Mfg. Co. (D. C.) 114 Fed. 1016; In re Patterson (D. C.) 125 Fed. 562; In re Salmon (D. C.) 145 Fed. 649; William Openhym & Sons v. Blake, 157 Fed. 536, 87 C. C. A. 122; Haywood Co. v. Pittsburgh Industrial Iron Works (D. C.) 163 Fed. 799; Davis v. Stewart (C. C.) 8 Fed. 803; McKensie v. Rothschild, 119 Ala. 419, 24 South. 716; Bugg v. WertheimerSchwartz Shoe Co., 64 Ark. 12, 40 S. W. 134; Freeman v. Topkis, 1 Marvel (Del.) 174, 40 Atl. 948; Hacker v. Munroe, 176 Ill. 384, 52 N. E. 12; Peninsular Stove Co. v. Ellis, 20 Ind. App. 491, 51 N. E. 105; Curme v. Rauh, 100 Ind. 247; P. Cox Shoe Mfg. Co. v. Adams, 105 Iowa, 402, 75 N. W. 316; Reager v. Kendall, 39 S. W. 257, 19 Ky. Law Rep. 27; Lowry v. Hitch's Assignee, 33 Ky. Law Rep. 573, 110 S. W. 833, 17 L. R. A. (N. S.) 1032; Skinner v. Michigan Hoop Co., 119 Mich. 467, 78 N. W. 547, 75 Am. St. Rep. 413; Gratton & Knight Mfg. Co. v. Troll, 77 Mo. App. 339; Stein v. Hill, 100 Mo. App. 38, 71 S. W. 1107; Stewart v. Emerson, 52 N. H. 301; Roth v. Palmer, 27 Barb. (N. Y.) 652; Ditton v. Purcell, 21 N. D. 648, 132 N. W. 347, 36 L. R. A. (N. S.) 149; Davis v. Cosel, 4 Pa. Super. Ct. 519; Richardson v. Vick, 125 Tenn. 532, 145 S. W. 174; Wertheimer-Schwartz Shoe Co. v. Faris (Tenn. Ch. App.) 46 S. W. 336; B. F. Avery & Sons v. Dickson (Tex. Civ. App.) 49 S. W. 662; Goodyear Rubber Co. v. Schreiber, 29 Wash. 94, 69 Pac. 648; German Nat. Bank v. Princeton State Bank, 128 Wis. 60, 107 N. W. 454, 6 L. R. A. (N. S.) 556, 8 Ann. Cas. 502; Ferguson v. Carrington, 9 Barn. & C. 59; In re K. Marks & Co., 218 Fed. 453, 134 C. C. A. 253; Scandinavian-American Trading Co. v. Skinner, 56 Ind. App. 520, 105 N. E. 784.

such trustee the proceeds of the sale of the goods to a third person, provided the money accruing from the sale of the particular goods can be distinguished from other funds in the hands of such trustee.144

While the general principle, as above stated, is abundantly well supported by the authorities, there is still much difference of opinion as to the details of the various elements which make up the general rule. In the first place, however, it is very nearly settled that the actual insolvency of the purchaser at the time of the sale is strictly essential to found a right of rescission,145 although some cases hold it sufficient to show that he was "in a failing condition" at the time,146 and others maintain that it is not necessary to show insolvency, if specific misrepresentations as to his debts and assets are brought home to him and are shown to have induced the sale. 147 And a sale to two persons jointly, who are not partners, cannot be rescinded by the seller upon the insolvency of one of the purchasers, but he must make an offer of performance if the other is solvent.148 Next, it is necessary that the fraudulent purchaser should. have distinctly known the fact of his own insolvency,149 and purchasers who merely have good reason to know or to believe that they are insolvent are not to be visited with the consequences of actual knowledge of that fact.150 It is likewise essential that the fact of the purchaser's insolvency should not have been known to the seller. The latter will have no right to rescind the sale and reclaim the goods if he delivered them with knowledge that the buyer

144 Gillespie v. J. C. Piles & Co., 178 Fed. 886, 102 C. C. A. 120, 44 L. R. A. (N. S.) 1; In re Weil (D. C.) 111 Fed. 897.

145 Pelham v. Chattahoochee Grocery Co., 146 Ala. 216, 41 South. 12, 8 L. R. A. (N. S.) 448, 119 Am. St. Rep. 19; In re Sol. Aarons & Co., 193 Fed. 646, 113 C. C. A. 514; Pratt v. S. Freeman & Sons Mfg. Co., 115 Wis. 648, 92 N. W 368; Landauer v. Espenhain, 95 Wis. 169, 70 N. W. 287. And see Loeschigk v. Peck, 3 Rob. (N. Y.) 700.

146 Pelham v. Chattahoochee Grocery Co., 146 Ala. 216, 41 South. 12, 8 L. R. A. (N. S.) 448, 119 Am. St. Rep. 19.

147 In re Bendall (D. C.) 183 Fed. 816.

148 Soloman v. Neidig, 1 Daly (N. Y.) 200.

149 Hartwell v. Receivers of Carlisle Mfg. Co., 17 Pa. Co. Ct. Rep.

150 Diggs v. Denny, 86 Md. 116, 37 Atl. 1037.

was in failing or precarious circumstances,151 or that he was heavily embarrassed and was carrying on his business only by the grace of his creditors, 152 or if the seller fairly understood the buyer's weak financial condition and situation,153 or did not take an offered security because he thought the purchaser was abundantly able to pay.154 As to the meaning of "insolvency," the common-law definition was that it was the condition of one who is not able to meet his debts as they mature in the ordinary course of business.155 But this definition has generally given way to that brought into force by the federal bankruptcy act, namely, that a person is insolvent when the aggregate of all his assets, if brought together and converted into cash, would. not be sufficient to pay off all his debts and liabilities.156

But the mere insolvency of a buyer of goods on credit does not, by itself alone, justify the seller in refusing to deliver or in rescinding the sale after delivery and reclaiming the goods, though the purchaser was aware of his own financial condition and omitted to disclose it, provided he had not at the time a fraudulent intention with respect to getting the goods without paying for them.157 And such.

151 In re Sweeney, 168 Fed. 612, 94 C. C. A. 90; Chase v. Miller, 90 Va. 323, 18 S. E. 277.

152 Hill Veneer Co. v. Monroe (C. C.) 189 Fed. 834.

158 In re Hess (D. C.) 138 Fed. 954.

154 Boone v. Collins, 43 Ga. 278.

155 Phelps, Dodge & Palmer Co. v. Samson, 113 Iowa, 145, 84 N. W. 1051.

156 Duncan v. Landis, 106 Fed. 839, 45 C. C. A. 666; In re Rome Planing Mill Co. (D. C.) 99 Fed. 937; Mackel v. Bartlett, 36 Mont. 7, 91 Pac. 1064; P. Cox Shoe Mfg. Co. v. Adams, 105 Iowa, 402, 75 N. W. 316; Mann v. Salsberg, 17 Pa. Super. Ct. 280; Noble v. Worthy, 1 Ind. T. 458, 45 S. W. 137. That a debtor's property is so situated that it cannot be reached by process of law and subjected, without his consent, to the payment of his debts, may constitute insolvency, within the meaning of the rule stated in the text. Pelham v. Chattahoochee Grocery Co., 156 Ala. 500, 47 South. 172. 157 Roberts Cotton Oil Co. v. F. E. Morse & Co., 97 Ark. 513, 135 S. W. 334; Freeman v. Topkis, 1 Marvel (Del.) 174, 40 Atl. 948; West v. Graff, 23 Ind. App. 410, 55 N. E. 506; Levi v. Bray, 12 Ind. App. 9, 39 N. E. 754; Holmes v. Henderson, 12 Ind. App. 698, 40 N. E. 151; J. J. Smith Lumber Co. v. Scott County Garbage Reducing & Fuel Co., 149 Iowa, 272, 128 N. W. 389, 30 L. R. A. (N. S.) 1184; Reid v. Lloyd, 67 Mo. App. 513; Pinckney v. Darling, 158 N. Y. 728, 53 N. E. 1130; Hirsch Lumber Co. v. Hubbell, 143 App.

known and undisclosed insolvency is not by itself sufficient evidence that the purchaser had no intention of paying for the property, so as to justify the avoidance of the sale by the vendor on this ground.158

In the next place, many of the cases apply the strict rule that the purchaser must have had an actual intention not to pay for the goods at the time he acquired them, that is, a positive and predetermined intention, entertained and acted upon at the time of making the purchase, never to pay for the goods.159 Hence the sale cannot be rescinded on this ground if the vendee can make it appear by satisfactory evidence that, at the time of buying the property, he had an honest intention of paying the price and reasonably thought he would be able to do so at the appointed time, even though he then knew himself to be insolvent and unable to pay,* 160 or even if the purchase was made with a hope that he would be able to pay and with an intention to

Div. 317, 128 N. Y. Supp. 85; Johnson v. Groff, 22 Pa. Super. Ct. 85; Paul v. Eurich, 3 Pa. Super. Ct. 299; Slayden-Kirksey Woolen Mills v. Weber, 46 Tex. Civ. App. 433, 102 S. W. 471; University of Virginia v. Snyder, 100 Va. 567, 42 S. E. 337.

158 Stein v. Hill, 100 Mo. App. 38, 71 S. W. 1107; German Nat. Bank v. Princeton State Bank, 128 Wis. 60, 107 N. W. 454, 6 L. R. A. (N. S.) 556, 8 Ann. Cas. 502. But see Gratton & Knight Mfg. Co. v. Troll, 77 Mo. App. 339, where it is said that insolvency, with the additional proof that the purchaser, at the time of the sale, knew his insolvency to be so gross and complete that he would not be able to pay for the goods, is tantamount to an intention not to pay for them.

159 In re Sol. Aarons & Co., 193 Fed. 646, 113 C. C. A. 514; In re Levi (D. C.) 148 Fed. 654; Catlin v. Warren, 16 Ill. App. 418; Houghtaling v. Hills, 59 Iowa, 287, 13 N. W. 305; Munzer v. Stern, 105 Mich. 523, 63 N. W. 513, 29 L. R. A. 859, 55 Am. St. Rep. 468; Syracuse Knitting Co. v. Blanchard, 69 N. H. 447, 43 Atl. 637; David Adler & Sons Clothing Co. v. Thorp, 102 Wis. 70, 78 N. W. 184.

160 Illinois Leather Co. v. Flynn, 108 Mich. 91, 65 N. W. 519; Wachtel v. Reichel, 19 Ohio Cir. Ct. R. 626; Cohn v. Broadhead, 51 Neb. 834, 71 N. W. 747; Rome Furniture & Lumber Co. v. Walling (Tenn. Ch. App.) 58 S. W. 1094. The fact that a vendee of goods bought on credit knew that he was unable to pay for the goods, when the same were ordered, is not equivalent to an intention not to pay for them. It is the knowledge that he will not be able to pay for them which constitutes the vitiating fraud which authorizes a rescission by the vendor. Reid v. Lloyd, 67 Mo. App. 513.

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