Babcock v. Dill

Morgan, J. In the view I take of this case, the charge of the judge was quite too favorable to the plaintiff The plaintiff must get rid of the compromise either upon the ground of fraud, or upon the ground of strict contract. The jury have negatived the allegations of fraud, and I see no reason to disturb their verdict upon any question of fact, which is material to the plaintiff’s case. Doubtless Robert L. Dill knew that the Yan Gaasbeck note was given to induce Horton to become a party to the compromise, before he paid it. The evidence plainly shows this ; but it does not show that he knew of it before the consummation of the agreement by Brunson & Robinson and others. His subsequent knowledge and payment of the note could not relate back to, and vitiate, the compromise. But I do not see any grounds disclosed upon the trial upon which the plaintiff can recover. To understand this case properly, it is necessary to revert to the condition of the parties at the time of the agreement by Samuel Dill to pay forty cents on a dollar of his son’s indebtedness. Robert L. Dill, his son, had been unfortunate in business, and it was doubtless the object of his father to extricate him from his difficulties and set him upon his feet again. He therefore agreed in writing that he would, within six months from the date thereof, pay to the creditors severally and respectively forty cents on a dollar of their respective demands; and the creditors on their part, who became parties to the agreement, severally agreed that on receiving such payment from Samuel Dill they would cancel and discharge such indebtedness, to .the full amount. [583] Then comes the clause that “this agreement is to he void and of no force and effect unless all the creditors of said Robert L. Dill become parties hereto upon the terms and upon the percentage aforesaid.” This clause, I think, was intended for the protection of Samuel Dill. The reason is obvious. Unless he could induce all the creditors to accept the forty cents, he would not have accomplished his object; and the old gentleman did not intend to pay any of his debts unless he could pay all of them, and thus relieve his son from further embarrassment. And I think the necessary import of the transaction is, that the money was to come from the old gentleman and not from his son. It was therefore a special contract between a third person and the creditors of the debtor to accept from him a certain sum in full of their demands. The creditors had no necessary connection with each other’, and could not say (as in the case cited where the debtor himself had compromised with his creditors) that the common fund had been diminished in consequence of his undertaking to pay one creditor more than, another; but they severally agreed to take the amount and cancel the debt. But the old gentleman’s engagement to pay any of them was conditional, that all should agree to it. What interest then had the creditors in that clause of the agreement ? They had no interest except to induce all the creditors to unite so as to make the contract binding on Samuel Dill. Robert L. Dill (the son) was not a party to the contract, although the undertaking of Samuel Dill was made for his benefit and to relieve him from his debts. I have some doubt, therefore, whether the clause in question was one of which the creditors could take advantage. At all events, they could not receive and retain the forty per cent and reject that part of the agreement which required them to cancel their debts. If they desired to raise the questions which the plaintiff now raises to avoid the contract, they should have returned the forty per cent to the old gentleman. If they discovered that they had been defrauded into the [584] agreement, and desired on that account to rescind, they could only do so by returning the. moneys which the old gentleman paid them to cancel their demands. It is no answer to say that the contract was for the benefit of Robert L. Dill, and that he ought to be held responsible for the balance of the demand. It.was also for the benefit of the creditors; and they must take the burden as well as the benefit of it. It would be an outrage upon the father to keep his money and refuse to discharge his son. The father had an interest in his ¡son.¡s welfare which furnished a highly meritorious consideration, for his engagement with the creditors to pay them the forty cents upon the dollar, upon their agreement to discharge his son from further liability. It is not the case of a stranger who officiously steps forward to pay a portion of another’s debt. And it is well settled that an agreement by the creditors with a third person to accept less than the demand, in satisfaction of it, is valid and may be enforced. (See Chitty on Cont. 641; Lewis v. Jones, 4 B. & C. 506; LePage v. McCrea, 1 Wend. 164, 172.) In Lewis v. Jones, (supra,) the father gave his own. note for his son’s debt for fifteen shillings in the pound, and was not privy to any misrepresentations relied upon to avoid the satisfaction. Holyroyd, J; said: “With respect to the effect of the.representations, if admissible, it may, suffice to say that the plaintiff should have returned the note if he intended to say that the agreement for composition was thereby rendered void.” So it was held in this court in Wells v. Munro, (not reported,) that where a creditor, under an assignment which is liable to be defeated for fraud, takes .a dividend under it he can not afterwards avoid it without at least restoring the dividend to the assignee. And the. general rule undoubtedly is, that a party to a .contract, who intends to avoid it on the ground of fraud, can not retain the fruits of it, but must rescind it in tota if. at all. (2 Parsons on Cont. 277.) It is unnecessary to decide what would be the effect of the transaction in case Samuel Dill had been a party to thei [585] alleged fraud relied upon to avoid the satisfaction of the plaintiff’s debt. The subsequent voluntary payment of more than forty cents on a dollar to another creditor would not avoid the satisfaction of the plaintiff’s debt. The note of Van G-aasbeck to pay Norton an additional sum given to induce him to sign the composition agreement was illegal and void. (4 Sandf. S. C. Rep. 79.) Norton was therefore bound by the composition agreement. There is no evidence that Samuel Dill, the father, was a party to any of the objectionble proceedings of his son or others to induce the creditors to sign it. But if this is not so, those who have subsequently received and retained the forty per cent can not now take the objection that there was some outside arrangement, between the debtor and some of the creditors, that the debtor would ultimately do better by them. [Onondaga General Term, April 4, 1865. ■ The motion for a new trial should be denied, and the judgment affirmed. Bacon and Foster, JJ. concurred. Mullin, J. dissented. Judgment affirmed. Mullin, Morgan, Bacon and Foster, Justices.]