Mills v. Carnly — 14 N.Y. Super. Ct. 159

Majority

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Wm. H. Mills v. Thomas Carnly, Sheriff.

Headnote

A debtor having sold and transferred property to his creditor in payment of a debt, such property cannot be seized on an execution against such debtor, merely because the debt so paid was usurious. After a voluntary payment of such a debt by the debtor, only the usurious excess can be recovered back, and that can only be done within a year after such payment, when the action is brought by such debtor or his personal representatives.

A power of attorney which, by its terms, authorizes the attorney “ to buy and sell real estate and personal property, and to collect rents, money, and debts, and to do every act and thing necessarily pertaining thereto,” and given as the principal was about to leave the State temporarily, and accompanied with a deposit, by the principal, of $1,800 in money with the agent, does not authorize the agent to purchase a Merchant Tailor’s establishment, and give promissory notes, in the name of the principal, for the contract price.

Accordingly, when such an agent, assuming to act in the name of his principal, made such a purchase, amounting to $4,123.16, and took a transfer of the property to his principal, and paid for it by cancelling a debt for $966, which the vendor owed to such agent, and by giving four notes for $189.29 each, in the name of his principal, at 3, 6, 9, and 12 months, the agent b.eing irresponsible, and not informing his principal of the fact of such purchase, and subsequently the property was seized on an execution against such vendor, and a suit was brought by such agent, in the name of his principal, against the Sheriff, for such taking of tire property, and the Judge at the trial charged the Jury that, the agent had authority, under such a power, to make such a purchase, and to agree to pay the contract price in instalments, and therefore could give notes in the name of his principal, and that such notes would be valid, and that, in so far as the validity of the transfer depended Upon the fact of there being a sufficient consideration to uphold it, the consideration in this case was sufficient, held, that the charge was erroneous, and that, on such a state of facts, there was no sufficient consideration to uphold the sale, as against the creditors of the vendor; and that the notes given by the attorney were not obligatory upon his principal.

On the facts of this case, as established by the evidence given at the trial, it was

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also held, that the inference, that the purchase and sale were made, and immediately followed by an assignment, by the vendor, of all his property to such agent, with a view and with the intent, by means thereof, to effect a favorable compromise with the creditors of such vendor, and to speculate, out of such a result; and that the jury would have so found but for the erroneous instruction as to the sufficiency of the consideration, was a just one.

Any evidence which is material to the issue, though given on the cross-examination of a witness, does not conclude the party cross-examining. The matters thus testified to are not to be treated as collateral matters, in respect to which a witness cannot be contradicted. It is error, to preclude a party from showing the truth of the case, in respect to such matters, notwithstanding the evidence sought to be contradicted was elicited by his cross-examination.

Judgment reversed, and new trial ordered.

(Before Dube, Bosworth, and Slossoh, J.J.)

Argued March 9th,

and decided April 25th, 1857.

This action comes before the Court upon an appeal by the defendant, from a judgment, entered on a verdict, rendered at a trial had before Mr. Justice Bosworth and a Jury, on the 10th of March, 1853.

The action was brought to recover the value of personal property, taken by the defendant from the possession of the plaintiff, as was alleged, on the 16th of June, 1852.

The defendant justified the taking, on the allegations that, at the time of such taking, he was a Sheriff, and the property then belonged to one Wm. McBryde, and that it was taken on executions against the latter, by the defendant, as such Sheriff.

The theory of the plaintiff’s right to recover, was, that one G. T. Terhune was the agent of the plaintiff, and, as such, had loaned money to McBryde, to the amount of $966, and, as such agent, bought the property in question on the 17th of May, 1851, from McBryde, and paid for it, to the amount of $966, by cam celling the debt for that amount, and by giving, as such agent, the plaintiff’s promissory notes for the balance of the contract price, at 3, 6, ,9, and 12 months.

The theory of the defence was, that Terhune had no authority, as agent of Mills, to make the purchase or give the notes, and that the purchase by him, and transfer of the goods to Mills, were made with intent to hinder, delay, and defraud the creditors of McBryde.

The power of attorney, from Mills to Terhune, was dated the 21st of April, 1851, and in terms authorized Terhune, “ to buy

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and sell real estate and personal property, and to collect rents, money, and debts, and to do every act and thing necessarily pertaining thereto,” and granted to the “ said attorney full power and authority to do and perform all and every act and thing whatsoever, requisite and necessary to be done in and about the premises, as fully, to all intents and purposes, as ” Mills “ could do, if personally present ”—

In April or May, 1851, Mills went to Europe, and left with Terhune $1,800, and, in the subsequent September, remitted to him £10: he left with him no other funds: this was the only purchase which Terhune made, as agent of Mills, and, down to the time of this trial, he had not advised Mills of this transaction: the latter was a man of property.

Terhune discounted notes for, and lent money to McBryde, not disclosing that he was not using his own money.

McBryde, who had a merchant tailor’s establishment, becoming embarrassed, sold to Mills, (Terhune making the purchase as Mills’s agent), his stock in trade, inventoried at $5,497xs/o, at a discount of 25 per cent, from that price. He transferred the property in satisfaction of his debt, for moneys loaned and advanced to him by Terhune being, $966.00

and for four notes, each being for the sum of $789.29— 3,157.16

$4,123.16

Each note was payable to the order of McBryde, and signed,

“Wm. H. Mills,

G. T. Terhune, Agent.”

Terhune took possession of the establishment upon purchasing the same, and commenced and continued the business in the name of Mills, until the property was seized and removed by the Sheriff.

McBryde, on the day of this sale, assigned all his property to Terhune, in trust for the benefit of his creditors. The assigned property consisted of his book accounts, and choses in action, and of these four notes.

The defendant offered to show that the loans made by Terhune to McBryde, and constituting, with interest, the debt of

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$966, were made at a usurious rate. The judge rejected the evidence, and the defendant excepted to the decision.

McBryde was examined on behalf of the defendant, and gave evidence tending to show that the sale to Mills, and the assignment to Terhune, were, in fact and in intent,- a single transaction, and were made to place his property beyond the reach of his creditors, and with a view, through Terhune, to compromise with them, on favorable terms. He swore that one Thomas Ball was, at that time, his partner in the business, and that the sale and assignment were made without the knowledge or consent of Ball.

The judge, against the objection and exception of the defendant, permitted Ball to testify that he was not a partner of McBryde, and that the latter and Terhune informed him of the sale, on the day it was made, and exhibited to him the bill of sale, when the three were together.

Evidence was given by the defendant to impeach, and by the plaintiff to show the good faith of the sale, and on the part of the defendant to establish that the sale and assignment were, in fact, dependent parts of one transaction, and on the part of the plaint tiff that they were in truth and in purpose disconnected and independent transactions.

The judge charged the jury, among other things, that so far as the result depended on the fact of a sufficient consideration, the debt of $966, if it existed, and the four notes were a good and sufficient consideration, if there was no intent to defraud.

That the power of attorney from Mills to Terhune, authorized the latter to make the purchase, and contract to pay, in instalments, which would bind Mills, and to give notes in the name of Mills, which would be valid and collectable of the latter.

To this part of the charge the defendant excepted.

C. O’ Conor and A. J. Vanderpoel, for appellant.

James T. Brady and L. B. Reed, Jr., for respondent.

McBryde having conveyed property to Mills, in satisfaction of the debt for $966, it cannot be seized by execution, at the suit of a creditor of McBryde, on the mere ground that such debt was infected with usury.— 2 Hill,

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522 , Dix v. Van Wyck, and cases there cited; Sands v. Church, 2 Seld. 347.

The borrower having paid the debt with usurious interest, only the usurious excess can be recovered back.

That maybe recovered by the borrower, or his personal representatives, within one year after such payment. If no such suit be brought within the year, the sum may be sued for and recovered within three years thereafter, by any overseer of the poor of the town, or any county superintendant of the poor of the county, in which the payment may have been made.—1 R. S. 772, §§ 3 & 4.

McBryde testified, that Francis Ball was his partner, and was not informed of the sale and assignment, and. continued under the impression that the business was going on for his benefit.

This was very material evidence upon the question of the intent of the parties to that transaction. Although the evidence was given on his cross-examination, that fact did not estop the plaintiff from proving, that Ball had no interest in the business, and knew of the sale at the time, and subsequently labored under an employment by Mills.

If that evidence was not responsive to questions put to him on his cross-examination, but was volunteered, I have no doubt it would have been error to exclude testimony showing it to be untrue. The evidence related to matters which were not collateral, but were pertinent to the issue. In respect to such matters, to exclude evidence that a witness has made statements in conflict with his testimony given at the trial, is an error, for which a new trial will be granted. His evidence may be contradicted by showing the facts to be different from what he testifies them to be.—Patchin v. The Astor Mutual Insurance Company, 3 Kern. 268.

The serious difficulties which the case presents, arise out of exceptions to the parts of the charge, relating to the sufficiency of the consideration, and the extent of the authority conferred on Terhune, by the power of attorney from Mills.

It is quite clear that the power did not authorize Terhune, to establish and prosecute the business of a merchant tailor, in the name, and at the risk of Mills, nor to purchase a subsisting establishment with a view to the continuance of the business.

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The purchase, in question, was one of that character, and immediately after it was made, Terhune commenced the prosecution of it as it had been previously conducted, and continued to so prosecute it, until it was broken Up by the Sheriff, except that he controlled it himself, and acted throughout in the name of Mills.

The property was purchased at the agreed price of $4123 For $j3157tV%- of this price, he gave negotiable notes in the name of Mills, without any authority for so doing, except such as the terms of the power of attorney confer.

If the notes are not obligatory upon Mills, then McBryde did not receive anything for the property, except a discharge from a debt amounting to $966.

The responsibility of Terhune does not appear to be such, that a sale to him, on credit, for Ms notes, of the same amounts and maturing at the same time would be upheld.

The better opinion would seem to be, that as a general rule, an agent, employed to make purchases for Ms principal, has no authority to bind him, by a negotiable promissory note, or bill of exchange, even though authorized to buy on credit.

On such contracts, the principal would be liable, to the vendors only: In an action by them, or their assignee of such a contract, the consideration would be open to inquiry; all the circumstances attending the sale might be shown; and all payments and offsets adjusted and enforced. Proof of all these matters would be excluded, in an action by a bona fide endorsee of a negotiable note, or acceptance.

The assumption and exercise of such a power is not necessary to enable Terhune to execute fully, the express powers conferred by the instrument which appointed Mm an agent.

Taber v. Cannon et al., 8 Met. 456 -458. Webber v. Williams College, 23d Pick. 302. Rossiter v. Rossiter, 8 Wend, 494 . Paige v. Stone, 10 Metc. 160 and 167-8-9. Parsons’ Mercantile Law, p. 142 and (n. 2.)

As to the power of an agent to bind Ms principal by a purchase made on credit, see Boston Iron Co. v. Hale, 8 N. H. 363 .

We do not intend to intimate, that when the agency by its terms relates to a business, which, in order to conduct it, as it is

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common to conduct such a business, requires authority to bind the principal by negotiable paper, an agent may not so bind the principal, even though the letter of attorney does not, in express terms, confer such a power.

But it is unnecessary to pass upon that question, because it is not before us. No such ground can be taken in this case.

It cannot be gathered from the power of attorney itself, or be seen from the light shed upon it by any cotemporaneous facts which have been proved, that the principal intended to do more than authorize the attorney to make purchases with the money intrusted to him, and to sell any property he might so purchase.

If Mills, when he left for Europe, was a large owner of real estate, he would probably be surprised, on his return, to learn that Terhune had sold and conveyed it, by virtue of this power of attorney.

Mills has not ratified this transaction. As the evidence stands, the only conclusion admissible is, that he had not even heard of it at the time of the trial.

We think there was no evidence of a consideration, under the peculiar facts and circumstances of this transaction, sufficient to uphold the sale, so far as its validity, and the good faith of the transaction depend on that fact alone.

The case is one, the leading features of which present strong badges of fraud. Terhune had no means with which to pay the notes, nor the power, as agent of Mills, to procure them. At the time of the trial, he had not advised Mills of the transaction. Three of the notes had then matured. Mills was not liable as maker of them, without having ratified and adopted the transaction, and that he had not been asked to do. Terhune had not sufficient pecuniary ability to enable him to pay the notes himself.

The facts tend very strongly to the conclusion, that the object was to obtain payment of the $966, and make a speculation, by vesting the title in Mills, and coercing a compromise with McBryde’s creditors, upon such terms, that profit, as well as the payment of the $966, might be secured.

Selling the goods, on a credit of three, six, nine, and twelve months, even if the notes were valid, was necessarily delaying the creditors of McBryde, until the maturity of the notes, unless

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the assignee should convert the notes into money by selling them. An assignment, with authority to sell on such terms of credit, would be void.

A sale upon such terms by an embarrassed debtor, with an understanding at the time, that the debtor should immediately assign the notes, rather than the goods sold, for the benefit of creditors, and that the purchaser should be the assignee, and a cotemporaneous execution of that understanding, would present a case falling within the mischief of the rule.

The assignment was not made to the nominal purchaser, it is true, but it was made to all that was visible of him, viz. his assumed agent in the purchase, and subsequent possession and disposition of the property bought.

The jury were charged, that “ if the sale and assignment were, in the intent and purpose of Terhune and McBryde, a single transaction, if the purpose was to keep the control and use of the goods while the four notes were maturing, and to postpone or interfere with the power of creditors, to coerce the conversion and application, to the payment of their debts, of the property for which the notes were given, then the sale was made with intent to hinder, delay, and defraud creditors, and was void, and entitles the defendant to your verdict.”

We cannot avoid thinking that, under this part of the charge, the jury would have found a verdict for the defendant, had they not been erroneously instructed in relation to the consideration paid for the goods, and the validity of the notes given by Terhune in the name of Mills.

The judgment appealed from must be reversed, and a new trial granted, with costs to abide the event.