§ 888. No title passes.- No title passes out of the owner, and the person who so fraudulently obtains the goods can therefore convey none to any person, however innocent, and the owner may recover his goods not only from the wrongdoer himself, but even from a bona fide purchaser for value and without notice. There is no occasion for rescission of the sale, for there is no sale to rescind; the whole transaction is void ab initio. It is simply another phase of a subject already consideredthat of "Mistake "the mistake here being induced by the fraud of one of the parties to the transaction. § 889. Possession fraudulently obtained.- Questions may also arise where the parties have a sale in contemplation or process of negotiation, and the intended buyer, by fraudulent practices, obtains possession of the goods before the negotiations are completed or before the time has arrived at which, by the terms of the agreement, the title is to pass. No title could be acquired by such a transaction, nor, in the absence of anything to work an estoppel against the owner, could even a bona fide purchaser acquire title from the person so obtaining possession. § 890. Fraudulently disposing of goods conditionally delivered. As has been seen, goods may be delivered upon an executory contract of sale coupled with the condition that the title shall not pass until some precedent condition, such as payment, has been performed; and the condition is, by the weight of authority, effective against even a bona fide purchaser from the conditional vendee, unless the vendor has so clothed the 3 on Carriers (Mechem's ed.), § 345356. Compare with Samuel v. Cheney, 135 Mass. 278, 46 Am. R. 467; Edmunds v. Transportation Co., 135 Mass. 283, and cases there cited. Where, however, there is no fraud or misrepresentation, the fact that A, who has really sold goods to B, supposed that B was buying for C, 129 Mass. 383, 37 Am. R. 369. vendee with the evidences of title as to estop him from asserting title in himself.1 § 891. But, as distinguished from this conditional contract of sale, there may be a present and absolute sale accompanied with a conditional delivery, and in such case a bona fide purchaser from the vendee may acquire a good title even though the condition upon which the delivery depended has not been complied with. Thus in New York it is said that the cases there "establish that a condition that the title shall not pass until payment, when attached to a delivery upon an actual completed contract of sale, is available only as against the vendee and persons claiming under him, other than bona fide purchasers without notice." 2 § 892. Misrepresentations by buyer as to his solvency or ability to pay. One of the most common forms of practicing fraud upon the seller is that of procuring goods from him, upon credit, in reliance upon false representations made by the buyer as to his solvency, means or ability to pay. There can be no question, of course, that, in sales upon credit, a representation as to the buyer's solvency, means or ability to pay is a material one, and, if false, it must operate as a fraud upon the seller 1 Dows v. Kidder (1881), 84 N. Y. 121; Saltus v. Everett, 20 Wend. (N. Y.) 267, 32 Am. Dec. 541; Smith v. Lynes, 5 N. Y. 41; Paddon v. Taylor, 44 N. Y. 371; Comer v. Cunningham, 77 N. Y. 391, 33 Am. R. 626. 2 In Comer v. Cunningham, 77 N. Y. 391, 33 Am. R. 626, citing Smith v. Lynes, 5 N. Y. 41, and Rawls v. Deshler, 3 Keyes (N. Y.), 572. The court also said: "But after actual delivery, although as between the parties to the sale such delivery be conditional, a bona fide purchaser from the vendee obtains a perfect title (Smith v. Lynes, supra; Fleeman v. McKean, 25 Barb. (N. Y.) 474; Beavers v. Lane, 6 Duer (N. Y.), 238), though a volun tary assignee of the purchaser does not. Haggerty v. Palmer, 6 Johns. Ch. (N. Y.) 438." 3 Cary v. Hotailing (1841), 1 Hill (N. Y.), 311, 37 Am. Dec. 323; Ol ̄nsted v. Hotailing, 1 Hill, 317; Hughes v. Winship Machine Co., 78 Ga. 793, 4 S. E. R. 6; Richmond v. Mississippi Mills, 52 Ark. 30, 11 S. W. R. 960, 4 L. R. A. 413; Nichols v. Michael, 23 N. Y. 264, 80 Am. Dec. 259. "Insolvency does not mean inability to pay 'current demands as they mature,' but it means not having money, goods or estate sufficient to pay all debts." Noble v. Worthy, (Ind. Ter.), 45 S. W. R. 137. 4 McAleer v. Horsey, 35 Md. 439, who relies upon it to his injury, and will justify him in avoiding the sale. Neither can there be any question, in the ordinary case, that these are matters so peculiarly and necessarily within the buyer's own knowledge that he cannot well be innocently ignorant of them; 2 and that consequently a false representation, unqualifiedly made as of his own knowledge, must be deemed to have been knowingly and wilfully made; though there may, perhaps, be cases where such misrepresentation would be innocent.* § 893. The representation must, here as elsewhere, be a representation of fact and not a mere promise or expression of opinion. Here as elsewhere, also, the statement made may be 452; Gainesville Nat. Bank v. Bamberger, 77 Tex. 48, 19 Am. St. R. 738, 13 S. W. R. 959. 1 See the cases cited under the several notes to this section. See also Dinkler v. Potts, 90 Ga. 103, 15 S. E. R. 690; Boyd v. Shiffer, 156 Pa. St. 100, 27 Atl. R. 60; Work v. Jacobs, 35 Neb. 772, 53 N. W. R. 993; Wolf v. Lachman (Tex. Civ. App.), 20 S. W. R. 867; Wright v. Wright, 51 N. J. Eq. 475, 637, 26 Atl. R. 166; Morrow Shoe Mfg. Co. v. New England Shoe Co., 60 Fed. R. 341, 57 Fed. R. 685, 6 C. C. A. 508, 8 C. C. A. 652, 24 L. R. A. 417, 425; England v. Forbes, 7 Houst. (Del.) 301; Hudson v. Bauer Grocery Co., 105 Ala. 200, 16 S. R. 693; Oswego Starch Co. v. Lendrum, 57 Iowa, 573; Starr v. Stevenson, 91 Iowa, 684, 60 N. W. R. 217; Reid v. Cowduroy, 79 Iowa, 169, 44 N. W. R. 351, 18 Am. St. R. 359; Smith K. & F. Co. v. Smith, 166 Pa. St. 563, 31 Atl. R. 343; Wingate v. Buhler, 62 Mo. App. 418; Des Farges v. Pugh, 93 N. C. 31; WertheimerSwartz Shoe Co. v. Faris (Tenn.), 46 S. W. R. 336. 2 An active partner, who makes a representation concerning the finan cial standing of his firm, ought not 3 That such representations are 4 In Jaffray v. Moss (1889), 41 La. Ann. 548, 6 S. R. 520, it is said that a statement as to solvency must be wilfully false and not be merely an opinion as to it. 5 See People v. Healy, 128 Ill. 9, 15 Am. St. R. 90, 20 N. E. R. 692; Haenu v. Bleisch, 146 Ill. 262, 34 N. E. R. 153. 6 Representations as to value are usually matters of opinion. Ellis v. Andrews, 56 N. Y. 83, 15 Am. R. 379; Fairchild v. McMahon, 139 N. Y. 290. 34 N. E. R. 779, 36 Am. St. R. 701; Lynch v. Murphy, 171 Mass. 307, 50 N. E. R. 623; Evans v. Gerry, 174 Ill. 595, 51 N. E. R. 615. So of statements respecting the rendered false by the active concealment of a part of the truth as well as by the expression of that which is untrue; and a party who undertakes to make a statement respecting his solvency or ability to pay is bound to make a fair one or suffer the consequences of a fraudulent misrepresentation.1 $894. Representations to agents Commercial agencies."— It is not essential that the misrepresentation should have been made to the seller in person: it may be made to his agent, or to a third person with the intent and for the purpose of being communicated to the seller.2 The most common means of such communication, in modern times, is the so-called "commercial agency" whose business it is to collect information concerning the pecuniary standing of dealers and to furnish this information to its patrons. In obtaining such information, the "agency" may make independent investigation, or it may procure and report the statement of the dealer himself concerning his condition. It not infre value or sufficiency of a security. Deming v. Darling, 148 Mass. 504, 2 L. R. A. 743, 20 N. E. R. 107. So of statements that the party is doing " a nice business," that "everything was looking promising," etc. Wakefield Rattan Co. v. Tappan, 70 Hun (N. Y.), 405. So is a statement that "I can safely promise you that our dealings, if you wish to continue them, will be more satisfactory than last season." Syracuse Knitting Co. V. Blanchard, 69 N. H. 447, 43 Atl. R. 637. 1Thus where a person who desired credit was asked "how he stood," and correctly stated his means but said nothing about the fact that he owed two-thirds as much as he had, it was held fraudulent. Newell v. Randall (1884), 32 Minn. 171, 19 N. W. R. 972, 50 Am. R. 562. See also Jandt v. Potthast, 102 Iowa, 223,71 N. W. R. 216. So where the party stated that there were no mortgages on his stock, when he was then under a binding agreement to give one which he did not disclose, and stated that his stock was insured, but did not disclose that the insurance had been pledged, it was held fraudulent. Fechheimer v. Baum (1889), 37 Fed. R. 167, 2 L. R. A. 153. So where the buyer exhibited an invoice of the goods, but concealed a contemporaneous contract which provided that the buyer did not acquire title until a sum, equal to the value of the goods, was paid, it was held fraudulent. Nairn v. Ewalt, 51 Kan. 355, 32 Pac. R. 1110. But the mere fact that the buyer did not mention certain debts is not necessarily fraudulent, where they did not affect his solvency. Noble v. Worthy (Ind. Ter.), 45 S. W. R. 137. 2 Richmond v. Mississippi Mills, 52 Ark. 30, 11 S. W. R. 960. 4 L. R. A. 413; Moyer v. Lederer, 50 Ill. App. 94. quently resorts to both methods, and it will be obvious that important distinctions may result so far as the responsibility of the dealer for the statements of the agency is involved. § 895. The methods and purposes of these "agencies" are now so well known that courts take judicial notice of them, and it is entirely settled that a representation made by a dealer to such an agency or its representative, to be furnished by it to its patrons, is to be deemed to be a representation to any of such patrons to whom it is furnished and who may have occasion to act upon it.1 1In Genesee Savings Bank v. Michigan Barge Co. (1883), 52 Mich. 164, 169, 17 N. W. R. 790, 18 N. W. R. 206, it is said: "The business of these agencies is well known to the commercial community. Indeed it is said by Justice Rapallo in Eaton v. Avery, 83 N. Y. 31, 38 Am. R. 389, that "the business and office of these agencies are so well known, and have been so often the subject of discussion in adjudicated cases, that the courts can take judicial notice of them. Their business is to collect information as to the circumstances, standing and pecuniary ability of merchants and dealers throughout the country, and keep accounts thereof, so that the subscribers to the agency, when applied to by a customer to sell goods to him on credit, may, by resorting to the agency or the lists which it publishes, ascertain the standing and responsibility of the customer to whom it is proposed to extend credit. A person furnishing information to such an agency in relation to his own circumstances, means and pecuniary responsibility can have no other motive in so doing than to enable the agency to communicate such information to persons who may be interested in obtaining it, for their guidance in giving credit to the party; and if a merchant furmishes to such an agency a wilfully false statement of his circumstances or pecuniary ability, with intent to obtain a standing and credit to which he knows that he is not justly entitled, and thus to defraud whoever may resort to the agency, and, in reliance upon the false information there lodged, extend a credit to him, there is no reason why his liability to any party defrauded by those means should not be the same as if he had made the false representation directly to the party injured.' In these views of the learned judge we entirely concur. They are supported by Commonwealth v. Call, 21 Pick. (Mass.) 515, 32 Am. Dec. 284, and Commonwealth v. Harley, 7 Metc. (Mass.) 462. We think a person furnishing information to a commercial agency as to his means and pecuniary responsibility is to be presumed to have done so to enable the agency to communicate the same to persons interested for their guidance in giving credit to him, and so long as such intention exists, and the representa tions reach the persons for whom they were intended, it is immaterial whether they passed through a direct |