Weed v. Bentley — 6 Hill & Den. 56

Majority

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Weed & Weed vs. Bentley.

Headnote

Where, on a composition between a debtor and creditor, they induced a third person to become surety for the payment of one half the debt, by representing to him that this was to be in foil of all demands, and the debtor, in pursuance of a previous arrangement of which the surety was unapprised, gave his own note for an additional sum; held, that the note having been given in fraud of the surety, the creditor could not enforce it.

Assumpsit, tried at the Clinton circuit in June 1839, before Willard, C. Judge. The action was brought to recover -against the defendant as endorser of a note for $500, dated May 21st, 1832, made by George W. Hicks; and also as maker of another note for $539,48, dated September 10th, 1832. The defence was as follows:

Previous to September, 1832, the defendant became embarrassed in his pecuniary affairs, and was indebted to the plaintiffs in a large amount, over and above his contingent liability on the Hicks note which did not fall due till the 24th of that month. A composition was arranged between the plaintiffs and the defendant, by which the defendant was to be discharged upon giving his notes signed by one Fouquet as surety, for ten shillings on the pound, and the note of $539,48 now sued upon ; the latter being for two shillings and six pence on the pound, in addition to the ten shillings. This arrangement was carried

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into effect on the 10th of September, 1832. Fouquet aided in negotiating it, but that part of it relating to the note for $539,48 was not communicated to him. On- the contrary, the plaintiffs and the defendant gave Fouquet to understand throughout, that the notes for ten shillings on the pound were to be in full of all demands then due from the defendant; and Fouquet testified that he would not have signed these notes had he been apprised of the arrangement in relation to the note for $539,48. The notes signed by Fouquet were duly paid as they became due. It was contended by the defendant that the plaintiffs could not enforce the note of $539,48, it having been given in fraud of Fouquet. A verdict was rendered in favor of the plaintiffs for the amount of both the notes sued upon, subject to the opinion of the supreme court.

G. M. Beckwith, for the defendant.

J. A. Spencer, for the plaintiffs.

The plaintiffs’ right of recovering upon the Hicks note is clear, and the only question properly arising in the case is, whether they can enforce the note_ given for $539,48. This was made by Bentley for the purpose of securing to the plaintiffs two shillings and six pence on the pound, over and above the amount for which the notes signed by Fouquet were executed. It is admitted that this note and the arrangement which led to the giving of it was kept a secret from Fouquet, who was induced to believe that the compromise had taken place for ten shillings on the pound, the 'amount which he secured. The taking of the note, under the circumstances, operated as a fraud upon Fouquet, and this constitutes a complete defence even as it respects Bentley. “It is clear,” said Ashurst J., in Jackson v. Duchaire, (3 T. R. 552,) “ both on the principles of law and equity, that Avhen any friend advances money to relieve another person from the pressure of his necessities, and the parties interested enter into a private agreement over and beyond that with

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which the- friend is acquainted, such agreement is void in law, as being a fraud on such friend.” The principle of the case is ■ directly against the right of the plaintiffs to recover on the note in question. A similar doctrine was laid down and applied in Steinman v. Magnus, (11 East, 390,) where the attempt to collect of the debtor the residue of the debt, beyond the amount compounded for and secured, was regarded as a fraud upon the sqrefy which constituted of itself a bar to the action. See also Cockshott v. Bennett, (2 T. R. 763.)

The plaintiffs are entitled to judgment on the Hicks note, but not on the other.

Ordered accordingly.