Ramsbottom v. Phelps

Hinman, J. On the trial of this cause in the superior court, the admissions of one of the members of the firm of John Ward & &i, whose estate had been assigned, were permitted to be proved, for the purpose of establishing the claim of the appellant; and also to rebut certain evidence tending to show, that the note, claimed to be due from said firm, was given without consideration, and was fraudulent and void against their other creditors: and the principal question in the case, is, whether this ruling was correct. The creditors, who defend against the claim, insist, that this is a controversy between them and the appellant; that the makers of the note are not parties to the record, and have no legal interest in the decision ; and that they are not so in privity with those of their creditors who are parties, as to make their admissions admissible. It is not, perhaps, very important, whether the insolvent debtors can, with strict propriety, be said to be parties here, or not; or even, whether they have any interest in the decision of the case ; still these questions have been argued as if the case depended upon them ; and as they seem to us to involve less difficulty than has been supposed, we will express our opinion upon them. In one sense, these persons are not parties to this proceeding; they do not appear to defend against the claim, and they are not named in the record as parties. They are, therefore, parties only in the sense that persons in interest, or who may be interested, rnay be said to be parties ; in the sense that their creditors — those of them [283] who do not appear to defend against the claim — are parties. But that they might appear, does not seem to admit of any doubt. They are obviously interested, or maybe, in the decision of the cause. If the claim is unjust — if there was no consideration for the note — -they are interested against its allowance ; because, if there should be any surplus of the assigned estate, it would belong to them, and the allowance of this note would reduce it; and if there should be no surplus, they are still interested in paying as large a dividend on their honest debts as possible; because, whatever is not paid by their estate, will remain a debt against them individually. Unless, then, the claim is of such a nature, as that it is valid against them, and invalid against their creditors, their interest is obvious. We are aware, that this is claimed ; but it was also claimed, on the trial below, that there was no consideration for the note ; and this defence the makers of it could set up. It is a defence too, which the admissions of the makers went to disprove; and until it is established, that the nature of the claim is such as the defendants would have it, the interest of the makers of the note in this decision remains. Again, the defendants assume throughout the whole argument, that the creditors of John Ward & Sons, who appear here, are the real parties, defending against this claim ; but there is a fallacy in this. Strictly speaking, the trustees are the more proper parties; and the creditors appear and defend under them. The claims of the appellant, and of the other creditors, are not adverse to each other; but they are mutual claims to be paid out of a common fund. The interest of each creditor may be adverse to the interests of any other creditor ; and in this case, it probably is so; because the fund is insufficient to pay them all; and this being*so, they have a right to appear. But this cannot alter the nature of the evidence by which each creditor may establish his claim. If it did, then the confessions of every creditor of these insolvent debtors would be evidence in favour of any other creditor. This surely would not be claimed. Debts against an assigned estate stand on the same footing as debts against a deceased person, whose estate is represented insolvent; and the admissions of the insolvent debtors are admissible, for the same reason, that the admissions of a deceased person, made while living, are admissible for the purpose of charging his [284] estate. We cannot doubt, that, upon this ground, the decision of the superior court was correct. The evidence was admissible, too, on other grounds. The admissions of persons not parties to the suit, are many times receivable in evidence. This arises, says Mr. Greenleaf, when the issue is substantially upon the mutual rights of such persons at a particular time ; in which case, the practice is to let in such evidence as would be admissible in an action between the parties themselves. The instances given by this author, in illustration of the rule, are, the debtor’s acknowledgment of a debt, in an action against a sheriff for an escape ; the admission of a joint liability, by a third person, in support of a plea in abatement, for the non-joinder of such person as a defendant in the suit; and the admission of a bankrupt, made before an act of bankruptcy, in proof of a petitioning credit- or’s debt. 1 Greenl. Ev. 221. s. 181. It is obvious, that the issue here was as to the mutual rights of Ramsbottom and John Ward & Sons, at, and before the assignment. If the note was valid, at the time it was given, and remained due at the time of the assignment, the appellant had a right to have it allowed. But if the admissions of the insolvents were not evidence, it is difficult to see how the claim could be established. The note itself is but little more than an admission ; it amounts to that, and to a promise to pay ; but the promise would be implied from the admission of the debt; and the fact that tips admission is in writing, does not vary the principle upon which it is admissible, for the purpose of proving the debt. It is, after all, but an acknowledgment of indebtedness by John Ward & Sons, and a promise to pay it ; and upon the principles upon which the counsel for the defendants proceed, we do nót see how it is admissible, any more than a verbal admission or acknowledgment of similar import. It is true, there entered into the enquiry, in this case, a question between the other creditors of the insolvents, and Ramsbottom; whether this was a debt which ought to be paid, if the estate should prove insufficient to pay all the bona fide debts of the insolvents ; but this cannot alter the rules of evidence, so as to preclude the admissions of the insolvents from being shown. If these admissions were fraudulently or collusively made, they ought not to have any weight with the jury; and if shown to be so, they would not have any. [285] Indeed, they might be made under such circumstances as to be evidence of collusion, rather than of the validity of claim; and if so, the appellees would have the benefit of it, with the jury: at all events, the weight to be given them, was for the jury to determine. We do not think they could have been excluded. Again, where a party, by succession of title, is so far in privity with another, that the acts of that other would have affected his interest, then the admissions of such person, during the time when his acts would have affected the party’s interest, are admissible against him. It is upon this principle, that the declarations of a former proprietor of real estate, made during the time of his interest, and while he was occupying, are admissible against those claiming under him. Demting v. Carrington, 12 Conn. R. 1. The principle applies also to the admissions of a deceased person, which are admissible against his executor or administrator, and to assignees of choses in action, as well as to purchasers or successors to property, except indeed in the case of negotiable paper, taken in the regular course of business, where the indorsee does not claim in privity with or under the indorser, but by a title paramount to him. Haddan v. Mills, 4 Car. & P. 486. (19 E. C. L. 487.) Norton v. Pettibone, 7 Conn. R. 319. Enos v. Tuttle, 3 Conn. R. 247. Bateman v, Bailey, 5 Term R. 512. Cow. & Hill’s notes to Phil. Ev. 644. It has been seen, that the issue in this case was as to the mutual rights of Ramsbottom and John Ward & Sons, at and before the time of the assignment; the rights of the appellant being the same now that Ramsbottom then possessed, except that the other creditors can set up collusion between the insolvents and Ramsbottom. It follows, therefore, that the declarations of John Ward and his partners, are admissible against them, and in favour of the appellant, upon the ground that the trustees, the real parties here, succeed to the same rights and liabilities, so far as the assigned estate is concerned, as John Ward & Sons possessed and were subject to, at the time of the assignment. We have no doubt, that upon these grounds, the evidence in this case was properly received, by the superior court. This opinion is strengthened and confirmed, by the practice in England, of admitting the confessions of a bankrupt, in [286] or<^er to c^arge his estate. In Bateman v. Bailey, 5 Term 512. Lord Kenyon treats this as the settled rule ; and it , , -T , . is so laid down, m Stephens iv. P. 1630. A similar practice prevails in Massachusetts, under their statute, authorizing creditors, in certain cases, to come in and defend suits, commenced against their debtors. In these cases, the creditors can make the same defence that the appellees were permitted to make in this case. In addition to all the defences which their debtors can make, the creditors can also set up the claim that the debt is collusive and fraudulent. It is the settled rule and practice there, in such cases, to receive the confessions of the defendants in those suits, as evidence for the plaintiff. Strong v. Wheeler, 5 Pick. 411. Lambert v. Craig, 12 Pick. 199. Carter v, Gregory, 8 Pick. 165. The declarations of the members of the firm of John Ward 6 Sons, in their own favour, were offered to be proved, by the defendants, and were excluded by the court. This ruling is so obviously correct, that counsel havé not pressed the point here. I There was no error in either of the decisions of the superior court ; and a new trial is not advised. In this opinion the other Judges concurred, except Ells-worth, J., who gave no opinion, having been of counsel ⅛ the cause. New trial not to be granted.