592. Rescission by Seller Generally.-Where the buyer has been guilty of fraud, the seller, if he acts promptly on discovery of the fraud, and the property has not passed into the hands of a bona fide purchaser, may rescind the sale. And where one induces another to part with his property by a promise to pay cash for it on the same day, showing a check to inspire confidence in his promise, when he does not intend, at the time of making such representation, to pay for the property in money at any time, but intends, after thus getting possession, to credit its value on a claim held by him against the owner or one of the owners, the sale is fraudulent and voidable at the election of such owner, who may maintain detinue, and recover the specific property, or if it cannot be found, he may maintain trover for its wrongful conversion, consummated by a refusal to surrender it on demand." This right of the seller to recover the property does not proceed on the ground that the property in the goods does not pass by the sale, but that the dishonest buyer shall not hold it against the deceived seller.8 Until the sale is rescinded by the seller the title passes and remains in the buyer, and this is the basis for the protection given to a subsequent bona fide purchaser for value from the fraudulent buyer.10 The defrauded seller may without resorting to legal proceedings recapture the property if it can be done without a breach of the peace, and, as regards civil liability to the fraudulent buyer, may if he resists the recapture use the necessary force to overcome the resistance, the buyer in resisting the capture being regarded in law as the aggressor.11

593. Proof of Fraud Generally.-While it has been said that in order to set aside a sale for fraud, such a case must be made out as would authorize a jury to convict the purchaser of obtaining goods under false pretenses, 12 this is not the general rule.13 And while it has been held that though false representations to a commercial agency are not sufficient to support a charge of obtaining property by false pretenses, still such false representations are admissible in evidence

6. Rowley v. Bigelow, 12 Pick. (Mass.) 307, 23 Am. Dec. 607; Root v. French, 13 Wend. (N. Y.) 570, 28 Am. Dec. 482; Masson v. Bovet, 1 Denio (N. Y.) 69, 43 Am. Dec. 651; Griffen v. Chubb, 7 Tex. 603, 58 Am. Dec. 85; Wood v. Boynton, 64 Wis. 265, 25 N. W. 42, 54 Am. Rep. 610.

Note: 43 Am. Dec. 654.

7. Blake v. Blackley, 109 N. C. 257, 13 S. E. 786, 26 A. S. R. 566.

8. Hoffman V. Noble, 6 Metc. (Mass.) 68, 39 Am. Dec. 711.

9. Brown v. Pierce, 97 Mass. 46, 93 Am. Dec. 57.

10. See infra, par. 600.

11. Hodgden v. Hubbard, 18 Vt. 504, 46 Am. Dec. 167. See infra, par. 779, as to the general right of the seller under a conditional sale to recapture the property by force on default of the buyer. See ASSAULT AND BATTERY, vol. 2, pp. 560-561, as to the general right to recapture property without liability for assault.

12. Note: 27 Am. Dec. 90. 13. Cary v. Hotailing, 1 Hill (N. Y.) 311, 37 Am. Dec. 323. Note: 37 Am. Dec. 323. See supra, par. 581.

to show, in connection with other representations, made directly to the seller, fraud on the part of the buyer, of such a character that the seller may avoid the transaction.14 Ordinarily to prove the fact that false representations as to the financial condition of the buyer were in fact made, proof of the making of similar false representations to other persons to induce other sales is not admissible.15 Evidence, however, of false representations made to the clerk of the seller is admissible as a part of the res gestae, though not communicated to the seller until after the sale, where similar representations were immediately afterwards made by the buyer to the seller himself, to induce the sale.16 The fraudulent purpose and intent of the buyer not to pay for the goods purchased on credit can rarely be proved by direct evidence, such as declarations to that effect. It is usually established by circumstances from which a jury may infer the intent,17 and while a verdict that there was no intention on the part of the buyer to defraud will usually be upheld, still where it was clearly and palpably against the great preponderance of the evidence and contrary to the law on the established fact, a reviewing court has not hesitated to set it aside.18 The burden of proving fraud on the part of the buyer is, in the first instance, on the seller, whether the action for the recovery of the property is against the alleged fraudulent buyer or one claiming under him.19 A judgment recovered against the buyer for damages with respect to a part of the property, of which the seller could not regain the possession, is not evidence to prove that the sale was in fact induced by the fraud of such buyer in a replevin action instituted to recover possession of another part of the property theretofore levied on by attaching creditors of the alleged fraudulent buyer. 20 594. Proof of Buyer's Fraudulent Intent Generally.-Ordinarily the question as to whether there was in fact an intent on the part of the buyer not to pay is a question of fact and is not to be presumed as a matter of law from the fact of the buyer's insolvency.1 Still it has been held that the insolvency may be so flagrant as to be a con

14. Courtney V. William Knabe, etc., Mfg. Co., 97 Md. 499, 55 Atl. 614, 99 A. S. R. 456. As to the effect of misrepresentations to a commercial agency generally, see supra, par. 584. 15. Note: 37 Am. Dec. 328.

16. Thompson v. Rose, 16 Conn. 71, 41 Am. Dec. 121.

17. Bidault v. Wales, 19 Mo. 59 Am. Dec. 327.

Note: 18 A. S. R. 365.

18. Miller v. White, 46 W. Va.

33 S. E. 332, 76 A. S. R. 791.

36,

cery Co., 146 Ala. 216, 41 So. 12, 119 A. S. R. 19, 8 L.R.A. (N.S.) 448.

20. Hart v. Moulton, 104 Wis. 349, 80 N. W. 599, 76 A. S. R. 881.

1. Gillespie v. J. C. Piles, etc., Co., 178 Fed. 886, 102 C. C. A. 120, 44 L.R.A.(N.S.) 1; Gavin v. Armistead, 57 Ark. 574, 22 S. W. 431, 38 A. S. R. 262; Thompson v. Peck, 115 Md. 512, 18 N. E. 16, 1 L.R.A. 201; Bidault v. Wales, 19 Mo. 36, 59 Am. Dec. 327; 67, Bidault v. Wales, 20 Mo. 546, 64 Am. Dec. 205; Hall v. Naylor, 18 N. Y.

19. Pelham v. Chattahoochee Gro- 588, 75 Am. Dec. 269; Talcott v. Hen

trolling factor in determining the buyer's intent. The fact of insolvency and the buyer's failure to disclose it is some evidence of his intent not to pay, still such intent cannot be presumed or inferred from the fact that he was insolvent, when it appears that he carried on his business in a very slipshod manner, and testified that he was not aware of the fact that he was insolvent; and it has been held that the mere fact that a buyer subsequently executed chattel mortgages upon goods purchased, thereby giving certain creditors preference, or that he made an assignment for the benefit of creditors, will not warrant the inference of a design to obtain the goods without payment.5

595. Admissibility of Evidence to Prove Intent.-Quite a wide latitude is given to the admission of evidence to prove the fraudulent intent on the part of the buyer not to pay for the goods, and acts and declarations showing such a fraudulent purpose, if connected in point of time, are admissible as throwing light on his general object, though they do not relate to the property or transaction in question. Thus on the question whether a purchase was fraudulently made in anticipation of insolvency, evidence tending to show that the buyer fraudulently purchased other and similar goods about the same time may be admitted, having the tendency to show the fraudulent intent in the case under consideration.8 But such other transactions must be so near to the one in question in point of time and so like it in other relations that the same fraudulent motive may reasonably be imputed to all, and this evidence is admissible only to prove the quo animo.

derson, 31 Ohio St. 162, 27 Am. Rep. 501; German Nat. Bank v. Princeton State Bank, 128 Wis. 60, 107 N. W. 454, 8 Ann. Cas. 502, 6 L.R.A. (N.S.) 556.

Notes: 14 L.R.A. 265; 44 L.R.A. .(N.S.) 21; 8 Ann. Cas. 506.

2. Gillespie v. J. C. Piles, 178 Fed. 886, 102 C. C. A. 120, 44 L.R.A. (N.S.) 1; Belding Bros., etc., Co. v. Frankland, 8 Lea (Tenn.) 67, 41 Am. Rep. 630.

Note: 44 L.R.A. (N.S.) 21; 8 Ann. Cas. 506.

3. Dalton v. Thurston, 15 R. I. 418, 7 Atl. 112, 2 A. S. R. 905. See also Gavin v. Armistead, 57 Ark. 574, 22 S. W. 431, 38 A. S. R. 262.

18 N. E. 16. 1 L.R.A. 201.

6. Mackinley v. McGregor, 3 Whart. (Pa.) 369, 31 Am. Dec. 522.

Note: 44 L.R.A. (N.S.) 21 et seq.

7. Thompson v. Rose, 16 Conn. 71, 41 Am. Dec. 121; Jacobs v. Shorey, 48 N. H. 100, 97 Am. Dec. 586; Cary v. Hotailing, 1 Hill (N. Y.) 311, 37 Am. Dec. 323; Mackinley v. McGregor, 3 Whart. (Pa.) 369, 31 Am. Dec. 522; Miller v. White, 46 W. Va. 67, 33 S. E. 332, 76 A. S. R. 791.

Note: 37 Am. Dec. 328.

8. Rowley v. Bigelow, 12 Pick. (Mass.) 307, 23 Am. Dec. 607; Jordan v. Osgood, 109 Mass. 457, 12 Am. Rep. 731; Jacobs v. Shorey, 48 N. H. 100, 97 Am. Dec. 586; Hall v. Naylor,

Notes: 80 Am. Dec. 268; 8 Ann. 18 N. Y. 588, 75 Am. Dec. 269. Cas. 506.

Notes: 75 Am. Dec. 272; 44 L.R.A.

4. Dalton v. Thurston, 18 R. I. 418, (N.S.) 22.

7 Atl. 112, 2 A. S. R. 905.

9. Hall v. Naylor, 18 N. Y. 588, 75

5. Thompson v. Peck, 115 Ind. 512, Am. Dec. 269.

Proof of false representations to one firm to induce a sale by it affords no ground for the inference that like representations were made to induce another sale effected nearly contemporaneously.10 While the fraudulent intent must have existed when the property was bought, it may be established by proof of subsequent acts throwing light on the transaction.11 It may also be shown that the buyer purchased a quantity of goods inordinately large in proportion to his apparent means of payment or the credit given.12 It may also be shown that soon after the purchase, the buyer made resales at inadequate prices before expiration of the credit given; 18 and the fact that the buyer made secret and fraudulent transfers to his creditors generally or to favored creditors may be considered as bearing on his probable intent in the purchase in question.14 Evidence is not admissible that the buyer made false statements as to his pecuniary circumstances, with a different object from that of inducing a sale of goods, as, for instance, to induce a creditor to forbear pressing for payment of a demand not yet due.15

596. Against Whom Seller's Right of Rescission Enforceable Generally. The fact that the subject matter of a sale induced by the fraud of the buyer has passed into the hands of a third person or that a third person has acquired a lien thereon from or under such buyer does not preclude the seller from rescinding the sale and recovering the property if such third person is not entitled to protection as a bona fide purchaser for value.16 Where the seller of cloth for a billiard table is induced by the buyer's fraudulent representation of his ownership of a table to sell the cloth and tack it upon the table, the cloth being removable without injury to the table, he may rescind the sale and retake the cloth as against the owner of the table, as in such a case the cloth does not by accession become a part of and the property of the owner of the table.17 Any unreasonable delay on the part of the seller in the rescission of the sale will deprive him of the right to do so as against third persons claiming under the fraudulent buyer, for the reason that even as against the buyer the seller must properly exercise his right of rescission after discovery of the fraud.18

10. Note: 37 Am. Dec. 328.

15. Hall v. Naylor, 18 N. Y. 588,

11. Bidault v. Wales, 19 Mo. 36, 75 Am. Dec. 269. 59 Am. Dec. 327.

16. See cases cited in the paragraphs immediately following.

17. Perkins v. Bailey, 99 Mass. 61, 96 Am. Dec. 689. And see ACCESSION, vol. 1, p. 116 et seq.

18. Hoffman V. Noble, 6 Metc. (Mass.) 68, 39 Am. Dec. 711; Barnard v. Campbell, 58 N. Y. 73, 17 Am. Rep. 208. See infra, par. 610, as to the effect of laches or delay in exercising the right of rescission.

A donee is obviously not a purchaser for value and is not entitled to protection.19

597. Purchasers with Notice of Fraud.-The seller may avoid the sale as against third persons claiming under the fraudulent buyer with notice of the fraud.20 And this is true if notice of the fraud is acquired by a subsequent purchaser after his contract of purchase was made, but before payment of the price.1 So if a purchaser has sufficient notice of facts to put him on reasonable inquiry and fails to make inquiry, he will not be deemed a bona fide purchaser, but will be deemed to have taken with notice. This is in pursuance of the general rule that if in any purchase there be circumstances which, in the exercise of common reason and prudence, ought to put a man upon particular inquiry, he will be presumed to have made that inquiry and will be charged with notice of every fact which that inquiry would give him. Thus where the goods are placed by the fraudulent buyer in the hands of an auctioneer for sale, who makes advances on them, the latter is not entitled to protection as a bona fide purchaser if, at the time the goods were delivered to him, he had knowledge of circumstances calculated to put a man of ordinary prudence on inquiry as to whether the party who intrusted the goods to him was perpetrating a fraud in selling them by auction, and he failed to make the inquiry into the character of the transaction.

19. Baker v. Lever, 67 N. Y. 304, 182; Arnold v. Hageman, 45 N. J. Eq. 23 Am. Rep. 117. 186, 17 Atl. 93, 14 A. S. R. 712.

Notes: 25 Am. Dec. 613; 10 A. S. R. 381; 13 A. S. R. 257; 14 A. S. R. 725; 36 L.R.A. 161; 44 L.R.A. (N.S.) 2.

1. Arnold v. Hagerman, 45 N. J. Eq. 186, 17 Atl. 93, 14 A. S. R. 712. 2. Morrow Shoe Mfg. Co. v. New England Shoe Co., 57 Fed. 685, 6 C. C. A. 508, 24 L.R.A. 417; Higgins v. Lodge, 68 Md. 229, 11 Atl. 846, 6 A. S. R. 437; Lincoln v. Quynn, 68 Md. 299, 11 Atl. 848, 6 A. S. R. 446; Durell v. Haley, 1 Paige Ch. (N. Y.) 492, 19 Am. Dec. 444; Barnard v. Campbell, 58 N. Y. 73, 17 Am. Rep. 208.

20. Browning v. De Ford, 178 U. S. 196, 20 S. Ct. 876, 44 U. S. (L. ed.) 1033; Morrow Shoe Mfg. Co. v. New England Shoe Co., 57 Fed. 685, 18 U. S. App. 256, 6 C. C. A. 508, 24 L.R.A. 417; Pelham v. Chattahoochee Grocery Co., 146 Ala. 216, 41 So. 12, 119 A. S. R. 19, 8 L.R.A.(N.S.) 448; Benesch V. Waggner, 12 Colo. 534, 21 Pac. 706, 13 A. S. R. 254; Harris v. Alcock, 10 Gill & J. (Md.) 226, 32 Am. Dec. 158; Manning v. Albee, 14 Allen (Mass.) 7, 92 Am. Dec. 736; Hoffman v. Noble, 6 Metc. (Mass.) 68, 39 Am. Dec. 711; Rowley v. Bigelow, 12 Pick. (Mass.) 307, 23 Am. Dec. 607; Hiller v. Ellis, 72 Miss. 701, 18 So. 95, 41 L.R.A. 707; Johnson-Brinkman Commission Co. v. Missouri Pac. R. Co., 126 Mo. 344, 28 S. W. 870, 47 A. S. R. 675, 26 L.R.A. 840; Farley v. Lincoln, 51 N. H. 577, 12 Am. Rep. 417.

Notes: 25 Am. Dec. 613; 2 L.R.A.

155.

See NOTICE, vol. 20, p. 346 et seq. 3. Higgins v. Lodge, 68 Md. 229, 11 Atl. 846, 6 A. S. R. 437. See also Morrow Shoe Mfg. Co. v. New England Shoe Co., 57 Fed. 685, 18 U. S. App. 256, 6 C. C. A. 508, 24 L.R.A.