Ruggles, Nourse, Mason & Co. v. Swanwick & Duffy

By the Court — FlaNdeau, J. — The firm of Litchfield & Stombs sold a stock of goods to the Defendants, Swanwick & Duffy, for which the latter, gave their promissory notes for $3,300. The firm of Jewet & Eoot, creditors of Litchfield & Stombs, considering the sale of the goods fraudulent, had them attached in the hands of Swanwick & Duffy, which created litigation, and embarrassed Swanwick & Duffy in their business of selling the goods, and caused them damage. The firms of Farrar & Follet, Callendar, Flint & Co., and the Plaintiffs, were also creditors of Litchfield & Stombs, and were desirous of having the attachment removed and the debts of Litchfield & Stombs compromised and settled. With this view, Litchfield & Stombs, the Defendants, and the creditors of Litchfield & Stoml s, met in the town of Shakopee and made an arrangement in substance as follows : 1. Litchfield & Stombs turned over their assets to their creditors, consisting of the notes of Swanwick & Duffy, some other notes, and their book accounts. 2. r»he assets, it was discovered, would only pay a percentage of 76-100 upon the dollar of their debts. The three notes of Swanwick & Duffy to Litchfield and Stombs were delivered up and destroyed, and in lieu thereof Swanwick & Duffy made a note directly to Callendar, Flint & Co., for $2,192 78, the amount of their claim at 76 per cent.; and cue to Farrar & Follet, of $1,047 15, the amount of their claim at the same rate, payable at a future day, — Haggles, Nourse, Mason & Co., and Jewet & Boot taking for their share of the assets an assignment of the book accounts and some small notes against customers of Litchfield & '-bombs. 3. The Defendants, having sustained damage by reason of the attachment, were to be allowed what the book accounts realized beyond a certain sum, and twelve per cent, discount on all sums collected on them before a certain day. [531] 4. The negotiations for this settlement had been pending for about a week before it was consummated. At one stage of the negotiations the defendants had, in expectation of the book accounts being assigned to them, made out two promissory notes, one to Jewet & Root for $966 47, and the other to the Plaintiffs, being the one in contest in this action ; but the settlement took another turn, and the Plaintiffs and Jewett & Root took the book accounts as their portion, subject to the interest of the Defendants in the avails, as above stated ; and these notes were never delivered, except that they were left with the agents of the Plaintiffs as memoranda, indicating the amounts that were to be paid out of the avails of the book accounts, to the Plaintiffs and Jewet & Root, and the discounts to be paid to the Defendants, &c., and were to be given up at their due dates, without payment. One of them was so given up, but the other was given to the attorney for the Plaintiffs, who commenced suit upon it. The only writings connected with this settlement were two : 1. An assignment of the book accounts to Thomas J. Galbraith, written in the books, which recited that they were to be applied to the payment of the debts of Litchfield & Stombs, according to the conditions of a certain settlement heretofore made between the firm of Swanwick & Duffy, signed by Litchfield & Stombs, and consented to by Swan-wick & Duffy. The other writing is signed by Galbraith, in which he agrees to take the book accounts, &c., collect them, and appropriate the-proceeds to the payment, first, of the note made by the Defendants to Jewett & Root for $966 45 ; second, the note in suit here made to the Plaintiffs. Galbraith accepts the book accounts, &c., at the value of $1,586 88, “ which sum is allowed as a credit on the notes aforesaid in the order and in the amounts in which the same is collected, at the rate of twelve per cent, per annum discount on the time from which the money is received, until the due date 'of the notes.” That after these notes are paid, the balance is to be appropriated to the note of the Defendant, given to Parrar & Eollet for $1,047 15. This paper is consented to by Swanwick & Duffy and Litch-field & Stombs. [532] The Plaintiffs make a question on the authority of Galbraith, he having been appointed to represent the Plaintiffs by Mr. Brown, who was their attorney. But this question we think is settled by the act of the Plaintiffs in bringing suit upon the note left with him ; they ratify his acts by so doing. The Defendants set out in their answer all the facts above detailed, and were allowed to prove them under the objection that the settlement was reduced to writing. Both writings were afterwardss received in evidence, and the Court charged the j ury that if the parol testimony conflicted with the written, the latter must govern. The question is, whether the evidence offered by the Defendant to show that the notes were never in fact delivered, and that they had no consideration, was properly received. It will be observed that the only liabilities of the Defendants were their debt to Litchfield & Stombs of $3,300, and that they claimed damages of their creditors, which reduced it still lower. That when it was discovered that the assets of Litchfield & Stombs would only pay 16 per cent, on their debts, the Defendants took up their three notes then outstanding, and gave new notes to two of the creditors, Oallendar, Flint & Co., and Farrar & Follet, for the amount of their claims at 76 per cent., which both reached the sum of $3,239 93. This arrangement fully satisfied these two creditors, and at the same time amounted to within $60 07 of the sum the Defendants owed to Litchfield & Stombs. The other two creditors, Messrs. Jewet & Root and Ruggles, Nourse, Mason & Co, were then left to the book accounts for their pay, which 'they accepted. That part of the assets being worth, if all collected, $2,700, but being received at the. estimated value of $1,586 88. The claims of these two last creditors at 76 per cent, amounted to $1,553 10, as follows : That of Jewet & Root to $960 45, and that of Ruggles, Nourse, Mason & Co. to $592 65. There was no reason why the Defendants should assume these debts. They had already assumed the full amount of their liabilities within $60 07. The Defendants had previously made out their notes for the several amounts due to these two firms, on the supposition that they were to take the book accounts and assume the debts. [533] When, however, it was determined that the creditors should take the accounts themselves, in payment of their claims, and that the Defendants should be compensated for their damages, by receiving 12 per cent, discount on what should be collected before the claims of the creditors fell due, and all the surplus after they were paid, these notes, of course, were not delivered, but being for the exact amounts due each creditor, and also indicating the times when these demands fell due, they were allowed to remain with Mr. Galbraith as memoranda upon which to regulate the administration of the assets as they were converted into money. It may always be shown in defence to an action on a note? in the hands of original parties, that it never was perfected by delivery, or that there was no consideration moving between the parties to support it. It is equally well settled, that when any contract between parties is reduced to writing, it must be proven by the writings, and cannot be varied by any previous or cotemporaneous verbal agreements or understandings. The writings in this case do not pretend to record the whole transaction. They refer simply to that part of it which relates to the claims of Jewet & Root, Ruggles, Nourse, Mason & Go., and the damages of the Defendants from the attachment, and provide the means by which these claims were to be paid. The assignment in the books refers directly to the settlement of the parties out of which the assignment grew, and a part of which it is. The second paper, signed by Mr. Galbraith, is but part of the first. The one assigns, the other accepts the assignment, and provides for the disposition of the assigned property. They both fonn part of the whole transaction by which the estate of Litchfield & Stombs was distributed among their creditors, and cannot be resorted to intelligently for any purpose, without reference to the settlement which forms the basis upon which they were made. When the whole arrangement is placed before the Court it is quite easy to understand the meaning of the writings, and to give them their whole force and effect, at the same time allowing the truth to appear in relation to the origin and purpose of the note sued upon. The verbal testimony in no way contradicts or varies the writings; it simply furnishes the [534] whole of tbe transaction of which the writings form a part and are dependent upon for their meaning and just application. It shows these pretended notes, referred to in the writing, never had either consideration or delivery to support them as claims "against the Defendants; and also that the statement in the writing signed by Galbraith, in which he takes the books, notes, &c., at $1,586 88 was a payment and satisfaction, of the very debts for which these notes were originally drawn, at the time the Defendant proposed to assume the payment of them. Where there is a direct reference in a writing to a verbal -agreement, the latter may be proved, even though the effect of it be to add máterial terms and conditions to the writing. 2 Cow. and Hills' Notes to Phil. Ev., 519; Com'rs vs. McCalmont, 3 Pennsylvania R., 122; Couch vs. Meeker, 2 Conn. R., 305. The assignment to, and acceptance by Galbraith, are as one instrument; they refer to the settlement made concerning the payment of the debts of Litchfield & Stombs, and are conditioned upon it. Such settlement may therefore be proved with the writings. Again, “ when a writing evidently appears to express only some part of an agreement entered into between the parties, it seems it would be admissible to prove the other parts of the agreement on which it is silent. 2 Cow, and Hill's Notes to Phil. Ev., 598. The Plaintiffs allege in their complaint that the note was given for a debt due to the Plaintiffs. In their proof they show that it was for a debt due them from Litchfield & Stombs, which was in judgment. The Defendants having denied any consideration, and alleged payment, might show that the debt of Litchfield & Stombs was paid by the acceptance of the book accounts at the value stated in the writings. There was clearly no error in receiving the parol evidence, and the judgment is affirmed. The form of the verdict is unexceptionable. Comp. Stats., p. 561, seo. 35.