Bliss v. . Shwarts

Dwight, C. Hnless the settlement by the plaintiffs with the defendant can be shown to have been based on some sufficient consideration, the arrangement entered into by them was inoperative and void, and the defendant is still liable. This is an elementary rule of law, and is not denied by the defendant. (Bunge v. Hoop, 48 N. Y., 225, 228; Harrison v. Close, 2 J. R., 448 ; Cole v. Sackett, 1 Hill, 517.) The defendant, however, claims that the case is taken out of the general rule, for two reasons: First, because the arrangement between the plaintiffs and the defendant was part of a general scheme of compromise by the defendant with his creditors. Second, because the acceptance by Hopper (acting for the plaintiff) of the draft of Butler & Co. on Duncan & Sheiman, was sufficient evidence of a new consideration to uphold the transaction, even though the plaintiffs did not participate in the general plan of compromise. I. There is not sufficient evidence to show that the plaintiffs intended to unite with the other creditors in the general scheme of adjustment. It cannot be doubted that the plaintiffs had the absolute right to refuse to enter into any arrangement on the subject, and might insist upon the payment to them of the whole debt. The debtor must, accordingly, show by satisfactory evidence that the plaintiffs contemplated an arrangement whereby they should, for a valid consideration, receive less than their debt and discharge the residue. Instead of that, the testimony, so far as it goes, is adverse to the view *449 that they intended to unite with the other creditors. When Mr. Bliss, one of the plaintiffs, was approached in May, 1868, hy Mr. Olegg, acting for the defendant, and was told that a compromise had been or was about to he effected with all the other creditors for twenty-five cents on the dollar, and was asked if he, acting for his firm, would come in and compromise on the same basis, he replied that he would not then accept the said proposition. It would he too much to argue from the use of the word “ then,” that he made any implication that he would sign thereafter. The fair construction of his remarks, simply that he was not willing with his then existing views to concur with other creditors. At a later interview, he said to Mr. Olegg that the entire matter was in the hands of Mr. Hopper, who was then in Texas, and that whatever Hopper did in reference to compromising the claim would be satisfactory to him,, hut that he would make no settlement in Hew York city. This conversation having been telegraphed to Mr. Olegg’s partner, all future negotiations were transacted in Texas, between Mr. Hopper and the firm of Butler & Go. I see no reason for presuming that Hopper was acting to forward the general scheme of adjustment. If so, why should the scene of operations be transferred to Texas ? If the plan submitted in Hew York, was to he adopted hy the plaintiffs there was nothing to be done except to affix then* signatures to the agreement already drawn. The plaintiffs certainly misled no creditor in Hew York. Hone of them could have acted on the supposition that Mr. Bliss and his partners would co-operate with them. If these gentlemen had resolved, as they undoubtedly had a legal right to do, to remain unconnected with the general plan of compromise, how could they have pursued any different course of action from that which they adopted ? It should be added that Hopper did not even avail himself of the per centage assented to hy the other creditors, but exacted a larger sum. This he might legally insist upon, unless he acted fraudulently or clandestinely, so as to contravene a rule of public policy. But as he acted openly *450 and without any apparent intent to participate with other creditors, his conduct is some evidence that his arrangement was distinct from that of the others. In the absence of all evidence, it is not fair to presume that Hopper was practicing a fraud upon other creditors and securing secretly, and in opposition to the policy of the law, a larger per centage than others. Any such presumption is avoided, by giving the ordinary and natural construction to his acts, and those of the plaintiffs, which is, that they evince a design to make a distinct and separate negotiation with the defendant. On the whole, the defendant has not sufficiently established the proposition that the plaintiffs themselves personally, or through their agent, Hopper, participated in the plan of compromise, to induce us to overturn the conclusions of the judge at the Circuit. II. We have also reached the conclusion that the second point of the defendant is not well taken. The evidence is entirely clear that the payment to be made to the plaintiffs was to be in cash. It was then shown in evidence that to “ carry out this settlement ” Mr. Butler gave his draft on Duncan & Sherman, to Hopper, acting for the plaintiffs. Mr. Butler, in perfecting the transaction, was acting as agent for the defendant. Although some question was made upon this point at the trial, we think it sufficiently established by the evidence. "Under this state of facts, there was no new consideration advanced to the plaintiffs sufficient to constitute an accord and satisfaction. The draft must be regarded merely as a mode of paying the cash. It must be remembered that the defendant already owed all the money to the plaintiffs which they received. At the time of the receipt of the draft, the proposed compromise being void, the defendant must be regarded simply as paying to his creditors a portion of his indebtedness. The draft was presumptively but a means of payment. Suppose that Duncan & Sherman had failed as well as Butler before the payment of the draft, would the debt of the defendant have been discharged ? Clearly not. (Noel v. Murray, 13 N. Y., 167; Waydell v. Dun, 3 Den., 410, and *451 cases cited.) A very different question would have been presented if the agreement had been to take the draft of Mr. Butler in lieu of the plaintiffs’ claim. In that case, there would have been a sufficient consideration. But as the agreement was for cash, the act of carrying out that agreement by means of a draft was only a mode of paying the cash, or, in other words, discharging a portion of the defendant’s debt. This point is substantially decided in Bunge v. Koop (48 N. Y., 229). It was claimed, in that case, that as third persons had furnished the debtor with their checks to pay the amount of the invalid compromise, that this was a sufficient consideration to uphold it. The court said : “ It matters not that the $3,500 which the defendants received from then- friends was in the checks which they handed over to the plaintiffs. If the plaintiffs had agreed to receive the notes of a third party, or any specific personal property, in payment and satisfaction of their claim, it would have been fully paid and satisfied, no matter how small the value of the note or property was. But here the agreement, as alleged in the answer, and proved, was, that the defendant should pay the $3,500 in money, and this they undertook to do in the checks — they were paid and received as money.” If, in the case at bar, the defendant had been present when the cash was to be paid, and had handed over to the plaint ffs the draft of Mr. Butler, the case would have been closely analogous to that of Bunge v. Koop. The fact that Butler did the act, instead of the defendant, is not material. The substance of the transaction is the same. I do not regard it as material to inquire whose money was used to procure the draft. There was no bargain that Mr. Butler’s money should be used, or that his draft should be taken. That was but an incidental matter connected with the principal act, which was the payment of cash by the defendant. What disposes of the case is, that from whatever source the money was derived, no new consideration sprang up between the plaintiffs and the defendant to bring the original debt within the rules of an accord and satisfaction. *452 Some criticism, was made upon the conduct of the plaintiffs, on the view that, if this action was sustained, they had succeeded in perpetrating a fraud upon the defendant. This, however, is unwarranted. There is no frand in the case of which a court of justice can take cognizance, whatever may be thought of the morality of the transaction. The law, for general reasons, has made a consideration necessary to the validity of all such transactions as are now under discussion. If the application of that rule works a hardship in some instances, and is used by unscrupulous men for the purposes of deception, the remedy is with the legislature and not with the courts. Accordingly, such considerations can have no influence upon the decision of the present question. The General Term of the Supreme Court erred, accordingly, in reversing the judgments entered at the Circuit. Its order should he reversed, and that entered at the Circuit affirmed. ' All concur. Order reversed and judgment of trial court affirmed.