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Stafford v. Bacon

1 Hill & Den. 532 Court N.Y. Sup. Ct. English

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p. 532
Stafford vs. Bacon.

Headnote

If a debtor, through a wilful misrepresentation or suppression of material facts in respect to the state of his affairs, induces his creditor to accept the note of a third person for part of the demand, in full payment and discharge of the whole, the accord and satisfaction are void; and even the creditor’s release, obtained under such circumstances, may be set aside in equity.
Where a debt has been discharged by accord and satisfaction for less than its amount, there remains no such moral obligation to pay the balance as will support a subsequent promise to that effect.
Otherwise, of a discharge which is not the mere act of the party, but by operation, of law : e. g. an insolvent discharge.
Where the plaintiff relies on a subsequent promise to pay a debt previously
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discharged, he must declare upon or reply it specially; and cannot avail himself of it under general pleadings.
Even though a new trial is moved for upon a case, the grounds assumed on the argument should, in general, appear to have been distinctly mentioned to the judge at the trial.
A mere casual expression to a stranger of one’s intent to pay a debt discharged by operation of law, cannot be made available as a new promise to the creditor.
Otherwise, semble, where it is intended by the debtor that a promise by him to a stranger should be communicated to the creditor; for the latter may then adopt the act of the stranger receiving it, and thus make him an agent.
Quere, whether, the promise being to the son of the creditor, the jury may presume from this that the debtor intended it for the creditor.
Assumpsit, tried at the Albany circuit, June 17th, 1839, before Cushman, C. Judge. The declaration was general, for goods sold and delivered, money paid, &c. lent and advanced, &c. and money had and received, together with a'count upon an account stated. Plea, non-assumpsit, with notice of an accord and satisfaction.
The plaintiff proved an account'for goods sold to the defendant, which, together with interest, and over and above some credits, amounted to rising of $2479,19 on the 26th of May, 1829. On that day, as appeared by a crosá-examination of the plaintiff’s witnesses, the defendant having represented himself as in failing circumstances, and unable to pay more than six shillings and eight pence on the pound, a compromise was accordingly concluded between the parties, and the note of H. Horton & Co. for the proportion mentioned was received by the plaintiff in satisfaction and discharge of his whole demand. The evidence of the compromise was in writing, and the papers, including the plaintiff’s receipt, were produced and read in evidence.
The plaintiff insisted" at the trial, that the compromise was procured by fraudulent representations on the part of the defendant, in respect to the then state of his affairs; and considerable evidence was addressed to the jury on that question by both parties.
The plaintiff also relied on a promise by the defendant, made subsequent to the compromise. Job Stafford, the plaintiff’s spn, was the only witness who spoke to this part of the, case.' He testified, that, in 1825, he was a clerk of
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the plaintiff; that he knew of the compromise in 1829; that after the compromise, he and the defendant had a conversation, in which the latter told the witness, the plaintiff had acted very handsomely with'him (the defendant) in settling the demand in question; and he would pay the plaintiff the balance of the demand when he was able. Evidence was given tending to show, that at the time of the commencement of this suit, and before, the defendant was of sufficient ability to pay such balance.
On the plaintiff resting, the defendant’s counsel moved for a nonsuit, specifying the following among other grounds, viz: that the evidence relating to the promise of the defendant and his subsequent ability to pay, was inadmissible under the state of the pleadings, and should therefore be stricken from the pase or disregarded; and that there was no evidence for which the defendant ought to be put upon his defence on the ground of a subsequent promise. 'Also, that there was no sufficient evidence of the compromise having been fraudulently obtained, to put the defendant on his defence as to that part of the case.
The peveral points thus made were each overruled, and the motion for a nonsuit denied; whereupon the defendant’s coun - sel excepted.
After the testimony was closed on both sides, the defendant’s counsel insisted to the court and jury, that the defendant was entitled to a verdict for each and all the reasons mentioned in his application for a nonsuit; that the conversation sworn to by Job Stafford was not in law a valid or binding contract, or promise; that evidence to establish a subsequent promise was inadmissible under the pleadings; and that there was no sufficient evidence of the alleged fraud in obtaining the compromise.
The circuit judge charged the jury, that if, from the evidence, they believed the alleged compromise was obtained by the defendant’s fraud; or if they were satisfied by the proof that the defendant, after the' compromise, promised to pay the balance when he was able, and that at the time this suit was commenced he was thus able, then, in either case, they should find for the plaintiff.
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The jury having found a verdict for the plaintiff, the defendant now moved for a new trial on'a case.
A. Taber, for the defendant.
J. Lansing & M. T. Reynolds, for the plaintiff.

No dispute exists on the original account. The question of fraud in procuring the compromise was properly submitted to the jury; and were this the only point, their finding would not be disturbed. The duty of a debtor who comes for a discharge on part pajunent, is clear. If he wilfully misrepresent or suppress any material fact in the statement of his affairs, the accord and satisfaction are void; and even a sealed release would be set aside in equity. The cases on this point are cited in Carter v. Connell, ( 1 Whart. 392 ,) and the rule well expressed by Sergeant, J. at p. 397.

But, fraud out of the way, there is no doubt the original debt was discharged by the compromise and payment of six shillings and eight pence on the pound. The note of H. Horton & Co. was received expressly in satisfaction.

The answer set up by the plaintiff was, that the defendant had subsequently promised to pay when he was able.

This is resisted: 1. On the ground that the special promise was neither declared on nor replied; and 2. That it was void, for want of consideration.

The only ground on which the plaintiff could make the promise available, was the moral obligation to pay a debt clearly extinguished; and the point of pleading was entirely settled by this court in Depuy v. Swart, ( 3 Wend. 135 .) There, the defendant had been discharged under the two-third insolvent act. The plaintiff sued on a negotiable note given previous to the discharge, alleging also a new and absolute promise to the payee, who sold the note to the plaintiff. This court held that it was discharged; that the subsequent promise made a new contract on which the payee must declare specially or reply the new prom

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ise. The same thing was repeated in Moore v. Viele, ( 4 Wend. 420 ,) and Wait v. Morris, (6 id. 394.) A fortiori, when the promise is conditional. Penn v. Bennet, (4 Camp. 205,) is also in point. The plaintiff declared for goods sold, &c.; defence, a certificate under the bankrupt act; answer, a new promise. Lord Ellenborough told the jury expressly, that if they thought the new promise was conditional, the plaintiff could not recover, because he had not declared specially. Wait v. Morris was the case of a conditional promise, after an insolvent discharge. The plaintiff replied a subsequent ratification of the promises declared on, but omitted to state the condition; nor indeed, perhaps, .was even an absolute promise replied in due form. This court held a replication at least, essential; and granted a new trial with leave to amend.

I need not stop to show, that an accord and satisfaction is a still stronger case for the defendant. It is a conventional discharge, the same as a release or actual payment of the whole.

In the case at bar the point was distinctly made, fiat evidence of the subsequent promise was inadmissible under the pleadings. And yet the charge was, that a promise to pay on becoming able, and actual ability, would entitle the plaintiff to a verdict. Nearly the same point had been previously made on the motion to nonsuit.

The abstract question, whether moral obligation be predicable of a debt discharged by accord and satisfaction, does not seem to have been raised very distinctly at the trial. The point on the motion for a nonsuit was, “ There is no evidence for which the defendant ought to be put upon his defence on the ground of a subsequent promise.” And again, after the close of the evidence—“ the conversation sworn to by Job Stafford, was not in law a valid or binding contract or promise.” Job Stafford appears to be' the only witness who spoke to the promise. A motion was also made in the course of the trial to strike out that part of his testimony. The particular ground, viz. that the debt had been discharged, was not mentioned; and the alleged

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promise is now assailed for three reasons besides that, viz, 1. as varying the terms of the written compromise; 2. as being nudum pactum; 3. as not made either to the plaintiff or his agent. Strictly, all these grounds should have been mentioned at the trial. They would then have been distinctly seen, perhaps allowed, and the plaintiff’s counsel or the judge being made aware of the defects, farther evidence might have been given on that or on other branches of the case. All the four points now made, are, however, included in the general objection ; and, as I am of opinion that there must be a new trial on another ground, and the points were discussed on the argument, it may be useful to examine and dispose of them.

The first objection is obviously without any foundation in fact. The promise, so far from varying the terms of the written compromise, assumed its existence, and stipulated to pay the balance. The second—that the promise was nudum pac tum—is nearly identical with the objection that no moral obligation remained. That it was made neither to the plaintiff nor his agent is, I think, a fatal objection. A mere casual expression of intention to pay, made to a stranger after a man has been discharged, as an insolvent for instance, would clearly be unavailable in favor of the creditor. (Moore v. Viele, 4 Wend. 420 , 422.) In this case, it is said, if made to a third person it may be good. There is no doubt of that; for it may be intended that it should bé reported to the creditor; and he might, in such case, adopt the act of the stranger in receiving it, thus making him his agent. It is insisted that Job Stafford was clerk to the plaintiff, and in that sense his agent. But I cannot find proof that he was so when the promise was made, though there is evidence that he had been before, in 1825. Several years, however, had elapsed between that time and the period of the promise. His being -a son of the plaintiff was, it may be, a circumstance with the jury that the defendant intended his promise for the plaintiff, who, therefore- had a right- to adopt it. The promise was for his benefit; and he bringing his action upon it may, perhaps, by

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this act, have connected himself with it. Should the objection be. made on the new trial, there is by no means an impossibility • that it may be answered. But the law has stood ever since Weeks v. Tybald, (Noy’s Rep. 11,) that the communication of an intent to pay, made to a mere stranger, and not connected with the plaintiff by any matter before or after, is void. (Vid. Cole v. Cottingham, 8 Carr. & Payne, 75.)

Whether after the debt was discharged by an accord and satisfaction, there remained any moral obligation to pay the balance, will perhaps form the decisive question, at least in one branch of the canse. I think there did not. The strongest case for the plaintiff is that of an insolvent discharge under the two-third act, on the petition of the plaintiff. There it is held, enough remains to sustain a new promise. (McNair v. Gilbert, 3 Wend. 344 .) But this is a discharge by provision of positive law. Chitty says that “ in all the cases in which a moral obligation has been deemed a sufficient consideration for the defendant’s express promise, &c. nothing but" the provision of some, positive law had interposed to preclude a legal remedy, &c. until the defendant expressly promised.” (Chit, on Contr. 12, 13, Phil. ed. of 1834.) It is not necessary to go over the cases. Many are collected in a note to Edwards v. Davis, ( 16 John. Rep. 283 , 4,) in support of the proposition thus limited; and it had been before the publication of 16 John, adopted in substance by Spencer, J., in Smith v. Ware, ( 13 John. Rep. 257 , 259.) The propriety, indeed the necessity of such a limitation, is shown by Daggett, J. in Cook v. Bradley, ( 7 Conn. Rep. 57 ;) and he also contends, on a very full consideration of the cases down to 1828, that we are bound to it by legal authority. (Vid. also Mills v. Wyman, 3 Pick. 207 , and Eastwood v. Kenyon, 3 Perry Dav. 276.)

In the case at bar, the plaintiff had accepted the .commercial paper of a third person, expressly in satisfaction; and there seems also to have been a general compromise with creditors, in which he participated. He himself had

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virtually promised the defendant and the other creditors to consider the debt discharged. The moral obligation lies much on his side. I speak not of the alleged fraud in obtaining the receipt. If that exist, no doubt the defendant is liable; and had that alone been put to the jury, I could have felt no difficulty. There were circumstances of suspicion which called for explanation.. But looking at the form in which the case was put to the jury, they may have based themselves entirely on the promise and supposed moral obligation of the defendant. The case is the same in legal effect as if the debt had been released under seal, or paid in full. ,

When a debtor is voluntarily and fairly discharged by his creditors, it must be left to his option whether he will pay. Being an honest man and becoming able, payment would be a thing of course; but that is-a matter of mere imperfect obligation which the law can not act upon without going wide of its office, and, indeed, dismissing the rule which calls for a valuable consideration in any case. In one sense, a man is always under a moral obligation to fulfil a fair promise whether made on a.consideration or not; for instance, a promise of charity to a stranger. It would follow from the proposition in question as it is sometimes put, that, in the case supposed, a second promise might be sued upon, and the charity enforced-by execution.[1]

I am aware that the conclusion to which I have arrived is opposed by the decision in Willing v. Peters, ( 12 Serg. & Rawle, 177 ,) decided in 1824. That case was the same as the one before us. The court held the promise binding, and likenetj it to a promise by an insolvent discharged under the two-third act. That case, however, was questioned in the very court which decided it, and I think overturned, by the late case of Snevily v. Reed, ( 9 Watts, 396 , 401, A.

(a) (a) A merely moral or conscientious obligation, unconnected with any prior legal or equitable claim, will not support a promise. (Ehle v. Judson, 84 Wend, 97 , 99 per Bronson, J.)

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defendant from custody under a oa. sa., and he afterwards promised to pay the debt. Held, that no moral obligation remained, sufficient to sustain the promise.

My opinion is, that a new trial should be granted, the costs to abide the event.

New trial ordered.

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