Montgomery v. Bucyrus Machine Works - 92 U.S. 257 (1875)
U.S. Supreme Court
Montgomery v. Bucyrus Machine Works, 92 U.S. 257 (1875)
Montgomery v. Bucyrus Machine Works
92 U.S. 257
A., relying upon the representations of D. that the firm of B., C., and D., of which he was a member, was perfectly solvent and that B. was wealthy, sold it goods. D. having, without the knowledge of A., retired from the firm, an arrangement was entered into whereby the proceeds of the sale of such goods remaining in the hands of the agents of the firm of B., C., and D., were applied to discharge the debt due to A. and the unsold portion of such goods returned to him. A. at the time believed that B. and C. were insolvent, and they were within four months from such arrangement adjudged bankrupts. Held that the representations of D. were a fraud upon A. on account of which he could have rescinded the contract of sale and followed the goods wherever he could find them, and the goods not having lost their identity nor become part of the permanent stock of B. and C. upon which they obtained credit, their assignee cannot, in the absence of actual fraud in the arrangement for the payment of such proceeds, recover them in a suit against A.