Petitioner now contends that the Court of Appeals was correct upon principle, and moreover, that if doubts exist they should be resolved in favor of its opinion. On the other hand, respondent maintains the questions involved are of general law and that the state court reached an unwarranted result not to be accepted here.

This court has many times considered how far federal tribunals, when undertaking to enforce laws of the States, should follow opinions of their courts. The authorities were reviewed, and rule announced in Burgess v. Seligman, 107 U. S. 20, 33, 34, 35, which declared that, as to doctrines of commercial law and general jurisprudence, the former exercise their own judgment, "But even in such cases, for the sake of harmony and to avoid confusion, the Federal courts will lean towards an agreement of views with the state courts if the question seems to them balanced with doubt." This has been often reaffirmed. Wilson v. Standefer, 184 U. S. 399, 412; Bienville Water Supply Co. v. Mobile, 186 U. S. 212, 220; Stanly County v. Coler, 190 U. S. 437, 444-445; Great Southern Hotel Co. v. Jones, 193 U. S. 532, 547; Tampa Water Works Co. v. Tampa, 199 U. S. 241, 243-244; Kuhn v. Fairmont Coal Co., 215 U. S. 349, 357-360, 361; Ennis Water Works v. City of Ennis, 233 U. S. 652, 657-658; Moore-Mansfield Co. v. Electrical Co., 234 U. S. 619, 625; Lankford v. Platte Iron Works Co., 235 U. S. 461, 474.

The conclusions of the Court of Appeals in Heckscher's Case are not in direct conflict with any declared views of this court, and some expressions in our former opinions tend to support them. Veazie v. Williams, 8 How. 134, 158; Andrews v. Hensler, 6 Wall. 254, 258; Neblett v. Macfarland, 92 U. S. 101, 103, 104-105.

Through misleading representations and suppression of facts, respondent induced syndicate subscribers to become parties to an agreement creating him their agent to acquire and deal with certain properties-a position

MCKENNA, DAY, and VAN DEVANTER, JJ., dissenting. 242 U. S.

of especial trust and confidence. His original undisclosed purpose was to obtain their money and appropriate it toward purchase of something partly owned by himself. Having led them to intrust their funds to his discretion, he carried out his preconceived plan, and as a part of it caused them to receive an equivalent amount of corporate stock. He now seeks to avoid a judgment, because his own actions have rendered it impossible for him to get back to the beginning point.

This was not a proceeding in equity addressed to the court's discretion, but a demand at law upon an agent for return of something improperly received and disposed of. The defrauded principals tendered back everything received by them-did all they could towards restoring original conditions. In such circumstances it is but just and right that any loss should fall on the unfaithful agent, not on his too-confiding principals. See Snow v. Alley, 144 Massachusetts, 546, 551; O'Shea v. Vaughn, 201 Massachusetts, 412; Bigelow on Fraud, 430–431; Wharton on Contracts, § 285.

We think, in Heckscher v. Edenborn, the Court of Appeals reached a result well supported both by reason and upon authority, and that the courts below should have followed it when undertaking to determine rights depending upon the laws of New York. The action of the Circuit Court of Appeals is accordingly reversed; and the judgment of the trial court is affirmed.

Reversed.

MR. JUSTICE MCKENNA, MR. JUSTICE DAY and MR. JUSTICE VAN DEVANTER dissent, being of opinion that the questions involved are of general, not local, law; that there has not been such restoration of the status quo as is essential to a recovery at law upon a rescission, and that upon the facts specially found by the referee the decision of the Circuit Court of Appeals was right.

242 U. S.

Opinion of the Court.

ALDER v. EDENBORN.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.

No. 9. Argued May 5, 1915; restored to docket for reargument April 3, 1916; reargued October 23, 1916.-Decided December 4, 1916.

Decided on authority of Sim v. Edenborn, ante, p. 131.

206 Fed. Rep. 275, reversed.

Mr. Theron G. Strong for petitioner.

Mr. Joseph W. Bailey, with whom Mr. Martin W. Littleton and Mr. Owen N. Brown were on the briefs, for respondent.

MR. JUSTICE MCREYNOLDS delivered the opinion of the court.

This cause is similar in all essential respects to Sim v. Edenborn, just decided. Accordingly, the Circuit Court of Appeals' action is reversed and the judgment of the trial court is affirmed.

Reversed.

MR. JUSTICE MCKENNA, MR. JUSTICE DAY and MR. JUSTICE VAN DEVANTER dissent.

Opinion of the Court.

242 U. S.

MCINTYRE v. KAVANAUGH.

ERROR TO THE SUPREME COURT OF THE STATE OF NEW YORK.

No. 88. Argued November 10, 1916.-Decided December 4, 1916.

Partners are individually responsible for torts committed by their firm while acting within the general scope of its business, whether they personally participate therein or not.

One who, being entrusted with the possession of corporate stocks as security for an indebtedness, deliberately sells them and appropriates the proceeds, in excess of the debt secured, without the knowledge or consent of their owner, is guilty of a "willful and malicious" injury to property within the meaning of § 17, clause 2, of the Bankruptcy Act, as amended by the Act of February 5, 1903, 32 Stat. 798, and, consequently, his liability is not released by a discharge in bankruptcy.

210 N. Y. 175, affirmed.

THE case is stated in the opinion.

Mr. Robert H. Patton for plaintiff in error.

Mr. Myer Nussbaum for defendant in error.

MR. JUSTICE MCREYNOLDS delivered the opinion of the court.

Plaintiff in error was a member of T. A. McIntyre and Company, engaged in business as brokers. During February, 1908, the partnership received certain stock certificates owned by defendant in error and undertook to hold them as security for his indebtedness amounting to less than one-sixth of their market value. Within a few weeks, without authority and without his knowledge, they sold the stocks and appropriated the avails to their

own use. Shortly thereafter both firm and its members were adjudged bankrupts. After his discharge in bankruptcy this suit was instituted against plaintiff in error seeking damages for the wrongful conversion. He set up his discharge and also personal ignorance of and nonparticipation in any tortious act.

The trial court held the liability was for wilful and malicious injury to property and expressly excluded from release by § 17 (2), Bankruptcy Act, as amended in 1903; and that the several partners were liable. A judgment for damages was affirmed by Appellate Division, 128 App. Div. 722, and Court of Appeals, 210 N. Y. 175.

That partners are individually responsible for torts by a firm when acting within the general scope of its business whether they personally participate therein or not we regard as entirely clear. Castle v. Bullard, 23 How. 172; Matter of Peck, 206 N. Y. 55. If under the circumstances here presented the firm inflicted a wilful and malicious injury to property, of course, plaintiff in error incurred liability for that character of wrong.

As originally enacted, § 17 of the Bankruptcy Act provided:

"A discharge in bankruptcy shall release a bankrupt from all his provable debts, except such as (2) are judgments in actions for frauds, or obtaining property by false pretenses or false representations, or for willful and malicious injuries to the person or property of another; (4) were created by his fraud, embezzlement, misappropriation, or defalcation while acting as an officer or in any fiduciary capacity."

This was amended by Act February 5, 1903, so as to read:

"A discharge in bankruptcy shall release a bankrupt from all his provable debts, except such as (2) are liabilities for obtaining property by false pretenses or false representations, or for willful and malicious injuries