Opinion
Argued May 24, 1901
Decided June 11, 1901
Herman Aaron for appellant. Philip Carpenter for respondent.
The action is to recover the balance of a deposit in the defendant's bank to the credit of the firm of Crippen, Lawrence Co., of Denver, Colorado, September 18, 1893, on which day the firm made an assignment in insolvency. The bank on that date held the firm's note for $7,500, which would not become due until November following. The defense is that the bank loaned the amount of the note to the firm on the credit of its false and fraudulent statement to a mercantile agency as to its assets and liabilities, and, therefore, had the right to disaffirm and cancel the credit and set off the note against the deposit.
The trial court found that "Crippen, Lawrence Co., through whom the plaintiff claims by assignments, did, prior to the loan hereinafter mentioned, make a statement of their financial condition to a commercial agency, with the knowledge that the same would be used and relied upon by parties giving credit to said firm, and with the intent and purpose that it should be so used and relied upon. That said statement was false, misleading and fraudulent in material particulars.
"That prior to the time of the making of the assignment for the benefit of creditors by said firm, said firm procured from the defendant a loan of a sum exceeding the amount in controversy herein, and on which there was unpaid at the time of said assignment for the benefit of creditors a sum exceeding the said amount in controversy.
"That said loan was made by the defendant and subsequently extended by the said defendant upon the faith and reliance of the aforesaid statement made to the commercial agency."
Upon the facts found by the trial court, the judgment for the defendant was authorized. This judgment was reversed on the law, and not on the facts. No exceptions taken during the trial are brought to our notice. We cannot review the facts, and the only question of law for our consideration is whether the trial court found any fact material to the judgment for the defendant without any evidence tending to support it.
The statement referred to was dated June 1, 1891, and consisted of a table of assets amounting to $1,150,123.48, and a table of liabilities of the same amount. In the table of liabilities were these two items: "Capital stock paid in, $500,000. Undivided profits, $29,692.33."
The testimony of a member of the firm was to the effect that not to exceed $50,000 of capital stock was paid in in money, but that the balance was paid in out of subsequently accruing profits. But his evidence was to the effect that the profits consisted in second mortgages taken by the firm to secure commissions upon the loans made by the firm, which loans were secured by first mortgages, and that the first mortgages were in considerable numbers guaranteed by the firm and then sold to eastern investors, and that the second mortgages practically proved to be valueless.
The trial judge could find upon the evidence that the so-called profits of the firm were figures on paper, the chief value of which was to give a color to the truth of the firm's financial statement and enable it to borrow money. No amount of bookkeeping by the firm itself could make it true that the part of the capital which consisted of these so-called profits was paid in.
The trial court could also find that this statement was fraudulent, and, as it did its office in procuring credit with the defendant, the time which elapsed between the date of the statement and the date of the note does not seem to be important. The firm cannot be heard to say that its mischievous force was operative longer than it expected it to be.
The order of the Appellate Division should be reversed, and judgment of the trial court affirmed, with costs.
O'BRIEN, MARTIN, CULLEN and WERNER, JJ., concur; PARKER, Ch. J., not sitting; GRAY, J., not voting.
Ordered accordingly.