March 4, 1882.1
(Oi"tuit Court, D. Rhode Island.
DECEIT-RIGHT OF ACTION NOT ASSIGNABLE.
The right of action for damages for a deceit is not assignable, and does not pass to the assignee of the bankrupt
As a rule, only such actions are assignahle as survive the death of a person, and would go to his executor or administrator. Where there is nothing, such as would survive the death of a person, there is nothing c:tpable of being transferred.
3. CASE STATED-RIGHT OF ACTION.
Where the assignee of the purchaser from the assignees of a banll:rupt of all the assets of the bankrupt remaining in their hands, brings an action for pecuniary damages arising from alleged false representations made to the bankrupt and to his assigns through which certain first-mortgage railway bonds deposited as security for certain notes of one of the defendants were given up, held, that whatever right of action the bankrupt may have had, this those t:n action did not pass to his assignees, and therefore no right of action passed to the plaintiff.
Charles M. Barnes and Flyde, Dickerson If; Howe, for plaintiff. James Tellinghrtst, for defendants.
COLT, D. J. This is an action for deceit. The defendants have demurred to the declaration. The main question raised by the demurrer is whether an action of deceit is assignable. The facts alleged, so far as it is found necessary to state them, are as follows:
One Nathan Matthews, of Boston, was adjudicated a bankrupt upon petition filed August 30, 1878, and assignees were duly appointed. On December 19, 1879, the assignees sold all the assets of the bankrupt remaining in their hands, and all their rights of action against the defendants, to Benjamin F. Brooks; and on January 22, 1880, Edwin Tufts, the plaintiff, became the purchaser from Brooks. Among the assets of the bankrupt were claims to a large amoullt upon promissory notes made, in 1875, by Edward Matthews, of New York, one of the defendants. In February, 1877, an agreement was entered into by which Nathan Matthews was to surrender a large part of these notes, and discontinue proceedings in bankruptcy already commenced against Edward Matthews, in New York, upon certain terms, Which, however, were never carried out by Edward Matthews, though the proceedings in bankruptcy against him were withdrawn. At the same time, as a part of this agreement, there were deposited, as security for the payment of Edward's notes, until he should fulfil the terms of the agreement, and make the payments called for under it, with William H. Williams, of New York, 250 of the first-mortgage bonds of the Carolina Central Railway, each of the par value of $1,000. It is
alleged that representations were made by the defendants Edward Matthews and Virginia B. Matthews, at the time the bonds were deposited, that Edward was the owner, but that afterwards, and prior to October 1, 1879, false and fraudulent representations were made by them to Nathan Matthews, his aSSignees, and to Williams, that Virginia, and not Nathan, was the owner; and that, being deceived by these false statements, and by other false representations made by Edward respecting the value of the coupons due on said bonds, Nathan, with the assellt of his assignees and Williams, on OctolJer 1, 1879, entered into an agreement wUh Edward wherebJ' the bonds were surrendered to Virginia on the payment of a small part of their vaille. In consequence of this, Edward's notes were left unpaid, and the assignees greatly damaged. Tufts, as the purchaser from Brooks of all rights of action belonging to the assignees, now brings this suit for deceit in the matter of the surrender of these bonds, alleging damages to the amount of $300,000.
We do not see, under the authorities, how an action of this character can be transferred by assignI+lent; but, even if transferable, we very much doubt if the plaintiff could bring suit in his own name. It has been held that where the laws of a state do not permit the assignee of a chose in action to sue in his own name, a person who purchases such chose in action from the assignee in bankruptcy,cannot maintain an action thereon in his own name; and, further, that the lex fori governs the form of remedy. There the contract was made in New York, and suit was brought in Massachusetts. Leach T. Greene, 12 N. B. R. 376. But neither the common law nor the statutes of Rhode Island nor the bankrupt act seem to warrant us in balding this action assignable. As a rule, only such actions are assignable as survive the death of a person, and would go to his executor or administrator. Where there is nothing such as would' survive the death of a person, there is nothing capable of being transferred. Comegys v. Vasse, 1 Pet. 193, 213; Dillard v. Collins, 25 Gratt. 343. At common law, personal actions died with the person,-actio personalis moritur CUln and this has been construed tll mean all torts where the action is in form ex delicto for the recovery of damages, and the plea not guilty. 1 Saund. 216a, note 1; Henshaw v. Miller, 17 How. 212, 219. While the statute of 4 Edw. III. c. 7, by a liberal construction enlarged the number of actions which survived, it was never held to extend to actions of assault a:p.d battery, false imprisonment, slander, deceit, and the like. Williams, Ex'rs, (6th. Am. Ed.) 870, (793.) The number of actions which survive have been greatly increased by statute in most of the states. Under statutes quite similar to those
TUFTS V. MATTHEWS.
of Rhode Island, which provide for the survival of actions for dam.,' ages to the ,person, or real or personal estate, it has been decided that actions for deceit or fraud, for pecuniary d.amages, will not lie. The damage done. must be to some specific property of which. the person is the owner. It is not sufficient if the damage arises incidentally or collaterally. False representations by which one is induced to part. with property do not appear to come within the provisions of the statute. Read v. Hatch, 19 Pick. 47; Cutting v. Towe1', 14 Gray, 183; U. S. v. Daniel, 6 How. 11; Henshaw v. Miller, 17 How. 212. Section 5046 of the bankrupt act describes what property and rights pass to the assignee. The construction put upon the' words ..choses in action," there mentioned, excludes actions for personal tort such as the fraudulent and deceitful recommendation of a person as worthy of credit whereby goods were obtained, abuse of the garnishee process which injured the bankrupt's business, assault and battery, slander, and the like. In re Crockett, 2 N. B. R. 208; Noonan v. Orton, 12 N. B. R. 405; Dillard v. Collins, 25 Gratt. 343. The action before us is one for pecuniary damages arising from alleged false representations made to the bankrupt and to his assignees, through which the bonds deposited as security for the payment of the notes of one of the defendants were given up. So far as it may be contended that the plaintiff has succeeded to any right of action the bankrupt may have had, it ilil clear, we think, that this chose in action did not pass to the assignees, and therefore did not pass to him; and, so far as it may be claimed that this is a right of action that accrued to the assignee personally, we fail to discover any authority in the bankrupt act, or otherwise, for them to assign an action of this character. The right to complain of a fraud is not a merchantable commodity, say the court in De Hoghton v. Money, L. R. 2 Oh. App. 164. Here such right has not only been sold once, but the first purchaser sells it to a second, who then brings suit in his own name. Demurrer sustained.
See the right of action for fraud is not assignable. 44 Mich. 624; S. C. 7 N. W. Rep. 182.
Dickinson v. Beaver,
UNITED STATES V. CENTRAL NATIONAL BANK.
(District Oourt, 8. D. New York. 1.
February 3, 1882.)
BANKs-S'rATE TAXATION-RETURNS, WHAT DEDUCTIONS ALLOWED-" PROFITS" DEFINED.
In ascertaining the" amount of profits which have accrued or heen earned and received" by a bank, for which it was required to make returns by section 121 of the act of June 30, 1864, (13 St. at Large, 284,) embezzlements during the period covered hy the returns may be deducted. By "profits" is meant net profits after deducting expenses and losses from whatever sources connected with the business.
RETURNS OF PROFITS-DEDUCTION OF LOSSES BY EMBEZZLEMENT.
Where, for the years 1866, 1867, and 1868, the defendant, in making its returns, deducted the amounts paid by it for state taxes upon the value of the shares of capital stock, and required by the state law to be paid" out of its funds," and suit being now brought for a duty of 5 per cent. on the amount so paid by the bank on account of the state tax, on the ground that it was unlawfully deducted from the returns made, and it appeared that the amount of losses by embezzlement suffered by the bank during each year was greater than the amount so paid for taxes and deducted from the returns, and that such losses had not been deducted, because not discovered by the bank till after the returns made and its duties paid thereon, held, that its returns being in fact fully equal to all the bank's profit for those yearS,no further duty could be .recovered. 3.
JUDGMENT ON DEMURRER-GOING BACK TO FIRST FAULT.
Upon demurrer the whole record is presented, and judgment goes against the party in whose pleading there is found the first substantial ftlult.
4. PLEADING-INSUFFICIENT ALLEGATIONS IN OOMPLAIN'r. Where the complaint claimed duty for alleged insufficient return" for the year 1870, under section 121 above referred to, but did not state that the defendant had" neglected to or omitted to make a return of dividends or addi. tions to its surplus or contingent funds as often as once in six months," and, upon an answer claiming the right to deduct the state tax, as above stated, the plaintiff demurred to the defence for insufficiency in law, held, without passing upon this defence, that the complaint was insufficient, and judgment should be ordered for the defendant unless plaintiff amended as allowed.
Demurrer to an Answer. S. L. Woodford, Dist. Atty., and E. B. Hill, Asst., for the United States. Martin & Smith, for defendant. BROWN, D. J. This action was commenced on July 22, 1881, to recover the sum of $12,456.94 principal, beflides interest, for arrears of income tax alleged to be due from the defendant for the years 1866, 1867, 1868, and 1870, under sections 120 and 121 of the revenue act passed June 30, 1864, (13 St. at Large, c. J 73, p. 283.)