Hall v. Merrill — 18 N.Y. Super. Ct. 266

Majority

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Hall, Plaintiff and Respondent, v. Merrill, Defendant and Appellant.

Headnote

' 1. An unconditional agreement between an insolvent debtor and part of his creditors to accept his notes for a designated portion of the amount he owes to them severally, in satisfaction of the whole, is obligatory upon such creditors.

2. The relinquishment of a part of their demands by those signing the agreement, and the surrender of their right to enforce them in full, is a sufficient consideration to uphold it.

3. Such an agreement implies, though it does not in terms contain, a promise of each of the creditors signing it to and with every other of such creditors to accept the composition stipulated for, and to abstain from all efforts to collect more.

4. Where such an agreement bears date December 15th, 185V, and provides that the notes to be accepted in satisfaction shall be for equal amounts at six, nine and twelve months, from January 1st, 1858, it is not indispensable to the continuing validity of the agreement, that such notes be delivered or tendered on said first day of January. If no demand of them be made, they must be tendered within a reasonable time.

(Before Hoffman, Woodruff and Moncrief, J. J.)

Heard, May 12th;

decided, July 28th, 1859.

This is an appeal by the defendant from a judgment entered against him for the sum of $690.81. The case was tried before Mr. Justice Slossou, without a jury, on the 15th of November, 1858.

The complaint states the sale and delivery of goods by the plaintiff to the defendant on credit, at various times, and in various parcels, between the 11th day of April, 1857, and the 26th day of March, 1858, amounting in the aggregate to the sum of $577.82, for which sum, with interest on the amounts respectively, as the several periods of credit expired, judgment was prayed. All the sales; except one for $5.25, were made before the 26th of October, 1857. This one was made on the 26th of March, 1858.

The answer first denies every allegation of the complaint except as therein “ admitted or avoided.”

It then alleges, that on the 15th day of December, 1857, the plaintiff executed and delivered, together with other creditors of the defendant, a certain instrument in writing, (called in the state

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ment of facts found, a release,) under his hand and seal of which instrument and the signature of the plaintiff the following is a copy:

“ Whereas, in consequence of sundry losses and misfortunes, Benjamin B. Merrill has become unable to pay his debts in full, we, the undersigned, in consideration of one dollar to us in hand paid, receipt of which is hereby acknowledged, agree to receive, in full payment and settlement of our respective claims against him, his three notes for equal amounts at six, nine and twelve months from January 1, 1858, at forty cents on the dollar.

“ In witness whereof, we have hereunto set our hands and seals this 15th day of December, 1857.

“ Elizur Hall, [l. s.] ”

The answer then alleges the execution by the defendant of three promissory notes, each for $78.18, at six, nine and twelve months respectively, dated the 1st of January, 1858, to the order of the plaintiff, the proffer of such notes to him on or about the 1st of February, 1858.

That these notes were given for the composition of the demands mentioned in the complaint, and that the action for the same-is thereby barred.

It then alleges, as a set-off as to the item of $5.25, a purchase of goods to the amount of $13.25, on the 26th of March, 1858, by the plaintiff from the defendant.

In another part of the answer it is averred that the instrument aforesaid was signed by the plaintiff and eleven other persons or firms, the creditors as aforesaid of said defendant, relying upon the good faith of both plaintiff and defendant in carrying out the terms of such agreement, as far as they were respectively concerned. It avers his readiness and willingness to carry out the agreement.

The answer seeks affirmative relief in the following manner: Wherefore, this defendant demands judgment against the plaintiff that the said agreement in writing be specifically performed; that the plaintiff be adjudged to receive the three notes in satisfaction of his claims, and the money upon such as have fallen due; that he be perpetually restrained from commencing any action upon such claims, or from assigning or disposing of the

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same, and that the defendant may have such further relief as the nature of the case may require.

The plaintiff, by way of reply to the counterclaim for equitable relief, denies each and every allegation in that part of the answer, except as thereafter admitted. He admitted the execu; tion of the composition deed, but sets up that he was induced to do so, by false and fraudulent representations of the defendant, as to his losses and insolvency; that the defendant engaged that all his creditors should sign the deed, and that it was to be of no effect without this was done; that none were to be paid over forty cents on the dollar; that all have not signed such deed, but on the contrary, a jiortion of them have refused to sign it, and some of them have been paid their demands in full, and that some who did sign, have, under promises to that effect, been paid their demands in full.

The only evidence given upon the trial was that of the plaintiff upon his own examination. He proved representations made by the defendant as to his situation, but gave no evidence tending to show any falsehood or fraud in them.

He testified that one or two other creditors had signed the composition deed before he. signed it himself; that the notes mentioned in the deed were to be delivered at least as early as the 1st of January; they were tendered about the middle of February, and that he refused to accept them, stating that his signature was procured through fraud.

The question was put to the witness by the Court, whether there was any, and if any, what, consideration for his signing the composition deed ?

An objection of the defendant’s counsel to the question was overruled, and an exception taken. The witness answered, there was none,t except his promise to give the notes.

The plaintiff having rested, and the defendant offering no testimony, the learned Judge found as follows:

“ 1st. That the release set forth in the pleadings was executed without any consideration moving from the defendant to the plaintiff, except the promise to give the notes referred to in the pleadings on the 1st of January, 1858.

“2d. That the release was signed by the plaintiff on or about the 15th December, 1857.

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“ 3d. That the said release was signed after two or three other creditors of the defendant had signed the said release.

“ 4th. That the defendant bought the goods at the times and for the prices charged in the complaint.

“ 5th. That the defendant tendered the notes to the plaintiff required by the release, on or about middle of February, 1858, and not before.

“ 6th. That when the first note became due the defendant tendered the plaintiff the amount of money due thereon, which the plaintiff offered to receive and apply on the general account, but not as a fulfillment of his, defendant’s, agreement, but which defendant refused to pay for that purpose or on that understanding.”

And the Court found as a conclusion of law upon the foregoing facts:

“ That the release is no bar to the plaintiff’s recovery herein— to which conclusion of law and ruling the defendant’s counsel then and there excepted, and the Court thereupon ordered a judgment for the plaintiff for the sum of $606.90, with the costs.”

From the judgment entered on this decision, the present appeal is taken.

E W. Dodge, for plaintiff, (appellant.)

I. The Court erred in receiving evidence of the want of consideration in the composition deed.

1. Because this was not an action upon a sealed instrument; nor,

2. Was there any set-off in the action founded upon the deed. (2 R. S., 406, [§ 77.])

The statute only applies to cases of an action upon a sealed instrument, and where a set-off is founded upon any sealed instrument. Therefore, we say the seal was conclusive evidence of a consideration in all other cases, as before this enactment.

II. The composition deed expressed a consideration which was sufficient, whether received or not for the reason that the plaintiff could recover it by action. ( 1 Sandf., 58 ; 2 id., 312.)

1. The grantor cannot contradict the acknowledgment of a consideration, for the purpose of defeating a conveyance, (in a case free from fraud.) ( 2 Hill, 554 ; 2 Denio, 336 .)

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2. A Court will not, as between the parties to a deed, permit proofs of non-payment of a nominal consideration for the purpose of destroying the deed. ( 2 Barb. Ch., 232 .)

III. This instrument, executed by the plaintiff and other creditors to the defendant, was a composition deed. It contains all the elements and requisites of such an instrument, the most important of which are:

1. An agreement between the creditors themselves ; and,

2. An agreement between the creditors and the debtor.

Again: It provides that each creditor shall receive the sum

or security which the deed stipulates to be paid or given, and no more; and,

That,, upon this consideration, the debtor shall be wholly discharged from all the debts then owing to the creditors who signed the deed. ( 4 Sandf., 83 , 84.)

IY. This deed was a bar to a recovery in this action, and the plaintiff should have been required to fulfill, on his part, and to receive the notes in full satisfaction of his claims.

Y. The notes were tendered to the plaintiff, which he refused to receive, and the money was tendered to the plaintiff on the note which first became due, which the plaintiff refused to receive; and as there was no time fixed in the deed when the notes were to be delivered, and being offered before the maturity of the first note, they were offered in time, and it should be so held.

Therefore, we say the Court erred in giving judgment for the plaintiffs, and a new trial should be granted.

0. L. Stewart, for respondent.

1. The judgment in this action is sustained by the evidence in the case, that the defendant was justly indebted to the plaintiff as charged in the complaint.

The Judge on the trial below found as one of his conclusions of fact in the case:

“ That the defendant bought the goods at the times, and for the prices charged in the complaint.”

This is not in any way disputed or denied by the defendant.

II. The written instrument set forth in the defendant’s answer is no bar to the plaintiff’s recovery in this action.

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1. It is without consideration, and is not therefore effectual as a defense. (Warren v. Skinner, 20 Conn. R., 559.)

2. The seal is not conclusive evidence of consideration.

The Revised Statutes, which treat of evidence, declare, that “ in every action upon a sealed instrument, and where a set-off is founded upon any sealed instrument, the seal thereof shall only be presumptive evidence of a sufficient consideration, which may be rebutted in the same manner and to the same extent as if such instrument were not sealed. (3 R. S., 691, 5th ed.; Russell v. Rogers, 15 Wend., 353 -359; Tallmadge v. Wallis, 25 Wend., 112 -115; Gilleland v. Failing, 5 Denio, 312 .)

3. The instrument in question is not a release in presentí, nor is it effectual as such. The most that can be claimed for it is, that it is an agreement to release, to take effect upon the giving and receiving of the notes therein mentioned; and, as that agreement was without consideration, it cannot be enforced against the plaintiff.

4. It is not a composition with all the- creditors of the defendant; therefore, it stands in the position of an accord simply, without satisfaction. Under the old.practice a plea of accord was not good as a bar to the action. Satisfaction must also have been averred and proven. So, under the present practice, an accord is no defense without satisfaction.

In Fellows v. Stevens, ( 24 Wend., 294 ,) it is held by the Court, Cowen, J., that, “ As between a debtor and creditor, an accord to accept a less- sum than the whole debt is no bar, though satisfaction is tendered; but, if the accord extend to all the creditors of the debtor, it is otherwise.”

In order to make an accord, with tender of satisfaction merely, a good defense, it must be averred and proven that the accord was in consideration of all the creditors coming into the agreement. In the present case, the instrument does not purport to-be between the debtor and all his creditors; and it is not so averred or stated in the answer, or shown in the proof; nor was such the fact.

In Brooklyn Bank v. De Grauw, ( 23 Wend., 341 ,) Chief Justice Nelson says: “An accord and tender of performance is no bar to an action. To render an accord a bar, it must be executed.”

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Judge BRONSON says, in Daniels v. Hollenbeck, ( 19 Wend., 408 ,) “ The very point of the plea being that the plaintiff accepted the thing in satisfaction.”

In Russell v. Lytle, ( 6 Wend., 391 ,) Judge Marcy held: “An accord must be executed. Readiness to perform is not sufficient.”

5. Even if the instrument was a perfectly good and binding .agreement against the plaintiff, at the time it was signed, he is completely discharged from any liability to perform and complete it, on account of the failure of the defendant to make and tender the notes at the time agreed upon.

The agreement was signed on or about the 15th day of December, 1857, and the notes were to be delivered on or before the 1st day of January, 1858. But they were not tendered to the plaintiff until the middle of February following. (Heathcote v. Crookshanks, 2 Term R., 24; Fellows v. Stevens, 24 Wend., 294 —see 302.)

Judge Oowen says: “ All the cases hold that if the terms of the composition agreement be not exactly followed out by at least a tender of the substituted securities at the very day, the creditor is remitted to his remedy for the whole original debt."

III. Even if the Justice below erred in admitting testimony to prove want of consideration for the instrument in question, still his judgment' should be sustained upon the entirely distinct ground set forth in the fifth subdivision of the second point. Whether there was or was not consideration for the instrument, becomes perfectly immaterial, when it is proven that the defendant failed to comply with the terms and intent of such instrument. The admission or rejection of testimony upon consideration can have no effect upon the distinct issue of performance.

IY. The question to which exception was taken, was put to the witness by the Court, and the answer called forth by it had already been previously given by the witness, in answer to a similar question put by the plaintiff’s counsel without objection; therefore, if the exception were, in the second instance, well taken, it constitutes no ground for interference with the judgment.

The subject of the nature and legal operation of composition deeds was considered much

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at length in the case of Renard v. Tuller, in January, 1859, before the General Term of this Court.^[1] The action was upon promissory notes given in the course of business, and the defense was a composition instrument as follows: “We, the undersigned creditors of the firm of Tuller, Hart & McCorkle in consideration of the sum of one dollar to each of us paid, agree to accept the sum of sixty cents on the dollar in their notes at six, nine and twelve months, from the 1st of February, 1857, without interest, in full satisfaction of our respective claims against said Tuller, Hart & McCorkle.

“ All claims to be put on the same basis, and considered as due on the 1st February, 1857, by allowing or deducting interest., and the original notes are to be held as collateral until the notes given in compromise are paid.” Dated 6th January, 1857.

Creditors to a considerable amount had signed before, and creditors to a large amount had signed after, the signature of the plaintiffs. The liabilities were about $225,000, and the whole amount of the demands of creditors who signed was $87,000.

It was held that there was nothing in the instrument or evidence to show that the signature of the plaintiffs was upon any condition that all should sign. And it was held that the composition instrument was a bar to the action. The basis of the doctrine is the relinquishment to the debtor, by others who sign, of a part of their claims, or the concession of some modification of the right to enforce them. This constituted the consideration. This existed without any clause of a mutual agreement between each other, as well as with the debtor, which was found in several of the cases. The implication of such a contract between themselves was raised, and was equivalent to its being expressed.

The English and American authorities were examined, and the result as stated by Baron Parke in Norman v. Thompson (4 Exch. R., 755,) was recognized. “An agreement by two or more of the creditors (unconditional) to enter into a composition is perfectly good and binding as to those parties, whether the others do so or not. The agreement by each individual to give up part of his claim is a sufficient consideration."

• In the present case it is not proven that more than two or three creditors signed the instrument at all. It is found by the

1 Bosw., 107. 35

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Judge that two or three signed before the plaintiff signed. It is not shown that any signed afterwards. It is true.that the answer states that the plaintiff and eleven other persons or firms, creditors of the defendants, signed the instrument. And to. the fourth clause of the answer which contains this averment, a reply was put in, although the answer was sworn to in July, 1858. . But, as before stated, this part of the answer is by way of counterclaim, asking for affirmative relief by compelling the plaintiff to take the notes in full discharge of his demand. The reply, however, denies every allegation in this part of the answer contained, except as thereafter admitted. I apprehend then that even assuming a reply was necessary, yet under the 153d section of the Code, the allegation as to the number of creditors who signed was put in issue. The general denial was sufficient. The release itself does not appear to have been given in evidence.

We think, however, that enough appears in the case to .bring it within the scope of the rule laid down in Renard v. Fuller, before referred to. We do not think it essential to prove that creditors subscribed a composition deed, or agreement, after the plaintiff in the action signed it, in order to give it validity. If so, it would not be binding upon the last signer, and its efficacy in each ease might depend upon parol testimony of the time of execution.- A legal presumption might well be allowed, in the absence of distinct proof, that the execution was cotemporaneous by all, under one general influence and one general consideration, although the location of names on the paper might indicate a signing one after another. But, in that view, proof of the actual time of execution, even if admissible, is unimportant.

The next question is, whether the fact of the non-delivery of the notes until the middle of February was such a breach of a condition of the composition deed as to exempt the plaintiff from its obligation.

The plaintiff was permitted to prove this fact, and, also, that the notes were to be delivered as early as the 1st of January, without objection.

The instrument itself only prescribes that the notes were to be at six, nine and twelve months from the 1st of January, 1858. No time for the delivery of the notes is expressed in it. The implication may be reasonable that the 1st of January was to be

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the period of delivering the notes; and their reception then may have been of moment for the business purposes of the plaintiff. Yet it is clearly not made a condition in the instrument;, and if no demand of the compromise notes was made by the creditor,, we think it a sufficient performance on the part of the debtor if he tendered the notes within a reasonable time.

It is, I apprehend, the rule that a debtor must strictly observe any conditions affixed by a creditor to his consent to a composition ; and, where the condition is expressed,, that a certain amount of claims should be signed off,, on the same terms, by a specified period, and it is not done, the creditor should be held not bound, although a short time may elapse after the day fixed before it was accomplished, and no-special injury was shown.

The cases referred to by Justice Cowen, in Fellows v. Stevens, ( 24 Wend., 302 ,) were of this character. The instruments of composition contained stipulations, or clauses, amounting to conditions precedent. See Oughton v. Trotter, (2 Nev. & Mann., 71,) where Littledale, J., takes the distinction above noticed, that, in common cases of agreements to take composition,, the debtor has a reasonable time to give the notes;: but, in that case, it was stipulated, they should be given in fourteen days.

I think there was error in the conclusion, of law of the learned Judge, in giving judgment for the amount of the original debt.

This view renders it unnecessary to consider the propriety of the question put by the Court.

There must be a new trial,, with costs to abide-the event.

Ordered accordingly^