KRIPPENDORF V. HYDE.
Indianapolis and Chicago were sold and turned over to him. It is to be noted that no appraisement was had, and that, without see lng the goods, Krippendorf agreed, upon the statements of Frey & Maag, to take them in full discharge of his demand. It appears, too, that these loans of money were made in most instances, if not always, by check or draft, sent by mail from Cincinnati, where Krip. pendorf resided, to Indianapolis j and it is shown that notes, checks, and drafts were frequently sent in that way by him to them, and by them to him, during the period of the transactions in question j and yet not a letter or line of correspondence, though called for, is in evidence. Krippendorf's testimony is that there was no ence j his explanation being that none was necessary, because of Frey's frequent visits to him at Cincinnati. Maag, I believe, says he did not preserve letters. It is impossible to believe that all these checks and drafts, covering large sums of money, went by mail, unaccompanied by any communication or statement which, if. produced, would show the real character and purpose of the several transactions j and for this and other reaSOllS there must arise doubts on the subject of which the respondents may fairly claim the benefit. But waiving this consideration, and conceding the facts in this reElpect to be as alleged, the if Krippenmerits of the case are not essentially different j dorf gave credit to Frey & Maag, as asserted, he did it under cirwhich compel an inference of bad faith, or conscious disregard on his part of the rights of others, which, under the .circumstances, he was bOUlld to respect. It is a familiar and salutary rule which holds men responsib e for the natural and reasonable consequences of their acts and conduct as if the particulal' consequences which do follow had been intended j Rnd that Frey & Maag and Krippendorf must all have known that the proposed scheme of business necessarily involved heavy purchases on credit, when credit was not merited, and could not be had of prudent merchants possessed of knowledge of the facts, is quite apparent j and that by making these loans he was contributing directly to the establishment and maintenance of this credit Krippendorf must have understood. The loans were asked, as he himself bas testified, for the purpose of paying mercantile bills, and correspond quite nearly in amount with the aggregate of the sums paid upon such demands by Frey & Maag during the period in which the loans were made, and during which the respondents gave to Frey & Maag credit for goods. This fact, however, does not necessarily corroborate the testimony that the loans were made to the extent stated, because there is wanting a satisfactory account of the amount and disposition of the proceeds of sales made during lhe time the business had been going. I do not doubt, as in Smith v. Craft, 17 Fed. Rep. 705, I held, that a preference of one creditor over others is not invalid because given
in pursuance of an agreement therefor made when the credit was given, if the agreement be made under circumstances consistent with good faith; and so, too, as I had occasion to say in Lippincott v. Shaw Oarriage Co., 25 Fed. Rep. 590, one may give aid and credit to an embarrassed person, firm, or company, for the honest purpose of helping over difficulties reasonably supposed to be not insuperable, and yet be entitled, in case of disaster, to receive a preference in respect to the credit so extended. But this plainly was not such a case. On the contrary, Krippendorf, when, by his indorsement at Chicago, he added to the debt without corresponding increase of the assets of an already insolvent firm, and thereby placed its business llpon an enlarged plan, which at once required, and to the commercial world seemed to justify, heavier purchases than would otherwise have been necessary, and when in April he made the first loan of money to Frey & l\faag, could not reasonably have anticipated an honest and successful outcome of the scheme which he then undertook to assist; and clear as the probability-not to say certaintyof failure was in the beginning, it became more and more evident with each successive call upon him for additional aid. Recognizing that he was not blameless in this respect, the master has reported "that the conduct of Krippendorf was not as prudent as it should have been," and counsel have suggested that this alone is enough to require a reversal of the master's finding. But, be that as it may, I am of opinion, without going further into details of the evidence, that Krippendori's conduct was so far implicated with that of Frey & Maag in the project and prosecution of their business, that by means ofhis frequent interviews with Frey, who was his brother-in-law, and otherwise, he was all the time possessed of such intimate knowledge of their affairs, prospects, and purposes, and that he had of them such secret and confidential assurances of protection in respect to his own demands, as to discredit the assertion of good faith and innocence on his part. As against the respondents a gross fraud was designed and executed, of which, to all appearance, he was the principal and final beneficiary; and to permit him to retain his ill-gotten advantage, besides lending judicial sanction to the particular transaction, would tend to establish a pernicious and dangerous precedent, inconsistent with the good faith and confidence which are essential to the right conduct of commercial affairs. But, according to the report"It may also be said that the eastern creditors of the firm were equally foolish. Frey & :Maag were under suspicion all the time by such of the eastern creditors as have given testimony in this case. They were plied with questions at Indianapolis and in Boston as to their standing, and treated as if they were under suspIcion. It might fairly be said that the merchants-the jobbers and manufacturers in the East-who sold Frey & Maag so many goods I)n credit,did as much to give them their commercial standing as :Mr. Krippendorf, who was quietly advancing them money. It would be very natural for merchants in Boston, or manufacturers and jobbers in Boston and New
York, who saw reputable business housE'S selling goods without reservation to Frey & Maag, to suppose that they were abundantly able to carry on their business successfully. and pay their creditors."
On this view, if it be a fair one, there ought to be discrimination in respect to these merchants, not overturning in the same boat the innocent and the guilty. But the propositions quoted do not, I think, present a logical or just view of the case. The right to give credit in commercial transactions is sanctioned by both law and custom; and, if business is not to degenerate into robbery, the basis of credit must be the honesty and good faith of dealers. For the upbuilding of false and undeserved credit, just blame can attach only to those who knowingly, or with culpable carelessness, in some way aid the imposture. Whatever were the reasons upon which they acted at the time, it is now certain that the respondents did no injustice to Frey & Maag by suspecting their trustworthiness, and by plying them with questions. Neither did they part with their goods to them until their suspicions were overcome by false representations of fact, made potent and effective, as may well be' inferred, by the prompt payments which Frey & Maag were wont to make of bills for earlier purchases, which, if their own testimony be accepted, they could not have met so promptly but for Krippendorf's opportune loans; and these, as we have seen, he made with knowledge, or under circumstances equivalent to knowledge, on his part, that he was aiding a failing business, whose losses to a large extent he must finally bear, unless, according to the assurance given him in the beginning, they could be shifted to other shoulders. It may be true, as the report says, that Krippendorf was "busy with his own affairs;" but it belonged to his own affairs to know into whose hands he was intrusting nearly one-third of his considerable fortnne, and it is not to be believed that he acted in so important a matter with a careless, but innocent, inattention; especially after the warning which came from the refusal of his own business partner to share in the risk of extending time on a credit theretofore given to Maag, or to him and Frey, when comparati vely a small sum only was involved. It may be, too, that Krippendorf did not know "the extent of Frey & Maag's misfortunes in the tobacco business," nor "the extent to which they were buying goods on credit;" but he was cognizant of quite enongh of thesfl matters to have awakened to distrust and inquiry anyone who was both prudent and honest, and consequently enough, notwithstanding "the lavish manner in which he gave them his money and the credit of his name," to cast discredit on his assertion of "faith in the ability of both Frey and Maag as business men." If it can be be. lieved that he looked for a successful outcome of their bnsiness, or had I1ny faith in them, beyond a reliance on their promised fidelity to him, it was an excuseless trust against which his own intelligence ought to have warned him at every step. He cannot, therefore, be permitted to divert the consequences from himself to others whom his conduct
has contributed so directly to injure, whether the part which he played was one of perfidy or folly. The bill is without equity, and should be dismissed. So ordered.
w: D. South Oarolina.
September 30, 1886.)
WITNESSES - DEFENDANT UNDER INDICTMENT WITNESS IN ANOTHER CASEMn,EAGE AND WITNESS FEES.
A defendant in attendance upon court under indictment, under recogni· zance, who is also under recognizance as witness for the United States in another case, is entitled to his mileage and witness fees for attendance in the latter case.
Stokes d; Irvine, for J. L. Addis.
SIMONTON, J. Addis has been in attendance at this term of the conrt, a defendant under indictment, under recognizance. He was also under recognizance as a witness for the United States in a prosecution against another person. Is he entitled to the fees and mileage as a witness? There seems to have been some doubt on this point. The question now comes up on a rule against the clerk. Section 848 of the Revised Statutes allows the per diem and mileage to all witnesses, without qualification, except that, if the witness is subpamaed in more than one case, he gets mileage for one case, and not more than one per diem allowance during his attendance on the court. Sections 849, 850, qualify the words of section 848 with respect to officers of the conrt, and with respect to clerks and other officers of the United States. These get no per diem or mileage as witnesses when called by the government. None others are excepted. Expressio un'ius, etc. Clerks of the court, and the other officers and employes of the United States, are paid for theil' services. Their whole time belongs to the government. When absent from their posts, in attendance on the courts, their pay goes on; and, being thus paid, they can be used by the government without further compensation. Defendants attending court in their own behalf owe no special duties to the government. They are in attendance or they absent them'selves at their own peril. When they are called to the assist· ance of the United States in its case against another perf:<on, they are not performing a public duty which every citizen should perform at his own cost. They are disoharging a service for which the law provides a specifio and fixed compensation. It is said that the mileage and per diem of a witness are intended to reimburse him for the expense to which he has been put in obey-