HENRY L. FARIS and Another, Plaintiffs and Appellants, v. WILLIAM H. PECK and RODERICK F. CLOW, Defendants and Respondents.
[Decided December 31, 1870.]
Where the action is one of a class in which the cause of action and the facts which authorize the arrest are the same, the court will not, ordinarily, try the merits upon a motion to vacate the arrest. The true rule is, that if the original affidavits make out a prima facie case against the defendant, of a cause of action authorizing an arrest, the court will not set aside the order, except where the proof adduced by the defendant is so clearly preponderating as to leave no reasonable doubt of his success upon the trial.
Where, in an action charging upon the defendants a conspiracy to defraud, and the evidence against one of them is altogether too slight to hold him to bail, and a verdict against him upon such evidence the court would be bound to set aside, he will be discharged.
But where as to the other defendant there can be no doubt from the evidence that he committed a great fraud, he will be held to bail
There being two persons of the same name, and one having received, through a mistake, a certificate of stock intended for and belonging to the other, and having transferred and sold the same as his own—held, he was liable for the fraud to any person injured thereby, although not the immediate party to whom the stock was transferred.
Before Barbour, C.J., Monell and Freedman, JJ.
The action was against the defendants to recover damages for a conspiracy to defraud the plaintiffs.
An order to arrest the defendants was granted, which upon motion was discharged at Special Term.
The plaintiffs appealed.
The facts disclosed by the affidavits upon which the order of arrest was granted and others read on the motion were as follows:
On the formation of the American Merchants’ Union Express Company, one William H. Peck, whose residence was unknown . to the company, but who resided at Laurens, Otsego county, in *690this State, became entitled to ninety shares of the capital stock of such company.
The scrip or certificate for such stock was made out and kept by the company in readiness for delivery to said Peck upon his calling for it.
Peck did not call, and a clerk of the company, who had charge of the matter, after waiting a long time, examined the New York City Directory, and finding therein the name of “ William H. Peck, 222 Washington street,” in said city, inclosed to such address the scrip for said ninety shares of stock, on the evening of the 1st of February, 1869, and sent the same by mail.
The defendant Peck received the letter and inclosure, and on the next day signed the usual power of attorney in blank, and sold and transferred the ninety shares to the defendant Clow. -
Clow afterwards negotiated the stock, through McIntyre, a broker, to the plaintiffs for a loan of two thousand dollars, delivering to them the same power of attorney in blank. -
In the mean time the true owner of the stock had called at the express company’s office for it, and the mistake was then discovered.
All efforts of the plaintiffs to get their money back failed, and the defendants were arrested on allegations of a conspiracy to defraud.
Mr. Moses Ely for appellants.
The order of arrest was erroneously set aside as matter of law, inasmuch as the facts constituting the cause of action and the facts authorizing the arrest are identical, and their truth will have to be passed upon by the jury on the trial of the cause; .therefore the court ought not, according to the well-settled practice and an unbroken series of authorities, to try the issues involved on a motion to vacate the order of arrest (Levis v. Noble, 15 Abb., 475; Barret v. Gracie, 34 Barb., 20; Frost v. McCarger, 14 How. Pr., 131; Ely v. Mumford, 47 Barb., 629; Merrill v. Heckscher, 50 Barb., 452; Nelson v. Blanchfield, 54 Barb., 630).
*691The right to arrest the defendants in this action is derived from its very nature, to wit: conspiracy to defraud and cheat the plaintiffs; and the whole tendency of the defendants’ affidavits is to show that no cause of action exists; and the judge at Special Term, by vacating the order of arrest, virtually tried the cause upon affidavits, which is not allowable (Solomon v. Waas, 2 Hilt., 179, and cases above cited).
There is no pretence on the part of the defendants, or either of them, that plaintiffs’ allegation that the stock was not intended for the defendant William H. Peck is not true; neither are the facts alleged in the original affidavits—in respect of the demand upon defendant Peck for a return of the scrip on the 3d of February, and his assertion then that it was at home and he would return it the next day, and that he failed to do so and purposely absented himself under pretence of a sudden call to Boston—controverted or denied. If the affidavits of defendants are true in this particular, Peck had already transferred the stock to Clow. His promise to McIntyre to cheat and defraud the plaintiffs, procured a loan of §2,000 dollars from them upon the security of said certificate, the par value of which was §100 a share, and the then actual value over $30 a share: that said certificate bore an indorsement of an assignment of said stock in due form, dated February 2d, 1869, executed by the defendant Peck to the defendant Glow, with power of attorney to him to convey the same to whomsoever he might please, and to substitute another for that purpose, and accompanying the same was an instrument of substitution, dated February 27th, 1870, duly executed by defendant Glow in blank as to the name of the substitute, authorizing the substitute to make any assignment of the same he might please. That said loan was made upon the faith of said stock.
The deposition and affidavits on which defendants rely simply allege, besides a general denial of fraud or conspiracy, that the defendant Peck, on the same day on which he received said certificate, for a good and valuable consideration, sold the same to defendant Glow, who, on the 27th day of February, hypothecated the same to William H. McIntyre for §1,800, which *692he received from said McIntyre, at the same time giving him a note for $2,000, for the payment of which said stock was intended as collateral security; and that on the same day said McIntyre hypothecated the same to the plaintiffs for $2,000, less his commissions.
Mr. A. K. Hadley for respondent Peck.
Mr. James Henderson for respondent Clow.
The justice who made the order appealed from had authority to do so.
It is not necessary that the order of arrest should be reviewed by the judge who granted it. Any other judge sitting at Special Term may review it (Knickerbocker Life Ins. Co. v. Ecclesine, 6 Abb. Pr., N. S., 9).
On such review a partial trial may be had for the purpose of ascertaining whether plaintiffs have made out a case (Corwin v. Freeland, 2 Seld., 565).
The plaintiffs have failed to make out a cause of arrest. The order of arrest herein was granted upon the affidavit of plaintiff, Faris, that the defendants, conspiring with one McIntyre, to cheat and defraud the plaintiffs, procured a loan from the plaintiffs.
The loan Was made to McIntyre personally, and, as he then alleged, for his own use.
Defendants liad nothing to do with the transaction. There is no pretence that either of defendants were present at the time of loan to McIntyre.
Plaintiffs did not know defendants until after they discovered that stock was not good. There is no evidence that McIntyre, at the time of obtaining the loan, professed to be acting for any 'one other than himself.
Defendant Clow’s promise (if any), to pay plaintiffs, was subsequent to the time of loan to McIntyre.
It was, in effect, a promise to pay the debt of another, and should be in writing (Statute of Frauds).
*693McIntyre, subsequent to the time of the loan, took from the defendant Clow his note, and gave him $1,800 therefor.
The only testimony tending to show that defendant Clow knew at the time of assigning the certificate, that Peck received the same through mistake, is the testimony of plaintiffs’ witness Clark, and this is only negative.
Clow purchased the certificate from Peck for a valuable consideration.
The allegations of collusion and fraud are wholly unsupported by the evidence; the only testimony on that point in the case positively denies the same.
The loan to McIntyre was usurious.
The plaintiffs loaned their own money, and gave McIntyre the sum of $2,000 less commissions on such loan.
Peck never, directly or indirectly, received or applied for any loan of anybody,- or knew of or authorized any such application.
Plaintiffs have failed to make out a case, and defendants were properly discharged (Hernandez v. Carnobelli, 10 How., 449; Mulry v. Collet, 3 Rob., 716).
By the Court:
Monell, J.
The action in this case is one of the class in which the cause of action and the facts which authorize the arrest are the same. In such actions the court will not, ordinarily, try the merits upon a motion to vacate the arrest.
The true rule is, or should be, that if the original affidavits make out a prima facie case against the defendant, of a cause of action authorizing an arrest, the court will not set aside the order, except where the proof adduced by the defendant is so clearly preponderating as to leave no reasonable doubt of his success upon the trial.
And another rule, I think, should be that when the court at Special Term shall have determined that there was or was not a clear weight of evidence in favor of the defendant, the court at General Term ought not to disturb such determination, applying *694.tb such decision the rule which governs the General Term upon findings of fact on the trial of an action.
Applying, then, these rules to the case before us, we should not disturb the decision below so far as it discharges- the defendant Glow from the arrest.
The evidence charging upon him any conspiracy to defraud is altogether too slight to hold him, and a verdict against him, upon such evidence, I think the court would be bound to set aside.
A very different case, however, is presented against the defendant Peck.
There cannot be a doubt that he committed a great fraud. He received the shares of stock through the mail,- and on the, same day' (for it was posted to him on the evening of the 1st, and transferred by him on the 2d) signed a power of attorney in blank, and sold the stock to Clow.
It would be in vain for him to assert his innocence in the transaction. Ho one would believe him; and his feeble attempt at justification, by swearing that he sold the stock to Glow, “ without any knowledge or intimation from any source whatever that the said certificate was not honafide his legitimate and lawful property,” adds to, rather than diminishes, the strength of the charge.
He Imew the stock was not his property, and instead of, like an honest man, endeavoring to ascertain and correct the mistake, he dishonestly forged the name of the true owner, and, with intent to deceive and defraud some one, sold and transferred the stock.
- Such a signing of the name of the true owner was a forgery (2 Pars. on Prom. Notes, 584; Graves v. Am. Ex. Bk., 17 N.Y.R., 205; People v. Krummer, 4 Park. Cr., 217.)
By means of which forgery, the defendant Peck has made himself liable, and the question is whether these plaintiffs can maintain the action.
There can be no doubt that Clow, who transferred the stock to the plaintiffs, is liable to them, upon his implied warranty of the genuineness of the transferrer’s signature to the power of attorney. This is upon the principle of implied guarantees in *695negotiating bills and notes. Nor can there be a doubt that Clow could recover from Peck for the fraud.
Why not, then, the plaintiffs? Peck intended to injure some one, and he did injure the plaintiffs; and having done a wrong, he should be held responsible for such wrong to any one who by means of it has been injured.
The principle which holds Peck is analogous to that which governs notes and bills, where a person paying value for a forged bill may recover from any party warranting the bill either expressly or by implication of law (2 Pars. on Prom. Notes, 601; Coggill v. Am. Ex. Bk., 1 N. Y. R., 113); or where the maker of a note puts it in circulation with a forged indorsement of the payee’s name, a bona fide holder may recover against the maker as upon a note payable to bearer (Foot v. Meacker, 3 Hill, So. Car., 227; and Riley’s Law Cases, 248).
There is another analogy in principle between Peck’s liability and the class of cases where consequential damages are recoverable for injuries arising, not immediately from the act, but in consequence of it, as where an obstruction is wilfully or wrongfully placed upon the highway, and a wayfarer falls upon it. There the injury being the consequence of the unlawful act, although not immediately arising from it, an action will lie against the wrong-doer.
So in this case the injury to the plaintiffs was in consequence of the unlawful act of Peck; and he who did the wrong must be held responsible for all injuries arising from it, whoever may be the injured person.
The complaint in the action is not before us, and we do not know what cause of action is stated, but I cannot see any difficulty, upon the facts, of sustaining an action against Peck for firaud and deceit, under the last paragraph in the fourth subdivision of section 179 of the Code, and in such an action he can be held to bail.
I am in favor, therefore, of affirming the order as to the defendant Clow and reversing it as to the defendant Peck.