Gordon v. Stubbs

— 627 — The opinion of the Court was delivered by Todd, J. This suit is brought by the legal representative of the Succession of Wm. R. Gordon, deceased, to recover of the defendant $24,652 07, with interest. The cause of action set forth is substantially as follows: It is alleged that Gordon, at the time of his death, which occurred on the 15th February, 1880, was a creditor of the North Louisiana and Texas Railroad Company for $67,520 07, for which he held the notes of the company. That in a suit in the Federal Court, entitled Henry R. Jackson vs. The Vicksburg, Shreveport and Texas Railroad Company, a judgment had been rendered in favor of the first-named company for $365,000 and interest. That this judgment and certain bonds of the N. L. & T. R. R. Co. had been transferred to the defendant and Geo. C. Waddell in satisfaction of the debts of that company, which they claimed to hold and control. That the defendant, Stubbs, had received the amount of said judgment and had retained out of it the amount that was due Gordon by the company, claiming at the time that he had had an agreement with him (Gordon) respecting the same. That the defendant, after Gordon’s death, paid the plaintiff $43,000 in cash, but declined to make any further payment. It is charged that the representations of the defendant respecting the alleged agreement with Gordon were fraudulent, and the sum claimed and for which judgment is asked is the difference between the amount paid and the amount of Gordon’s claim against the company. The defendant, after a general denial, averred, in substance, that Gordon had agreed to sell him his claim against the railroad company for $45,000 if he (defendant) could accomplish a certain result, by which it was believed that an apprehended event and complication could be avoided, the happening of which might cause an irreparable loss to the creditors of the company. (This is set forth at length in the answer and will be more fully explained hereafter.) That the desired result was accomplished, and that very soon thereafter he (defendant) paid over to plaintiff (Gordon having died) the said sum of $45,000 — $43,000 in cash and the balance in accounts for sums paid for Gordon. That for this payment plaintiff had given her receipt. There were two trials by jury. In the first, a verdict was given against the defendant for $9121 66. A new trial was granted, and at this next trial there was a verdict against the defendant for $475; and from the judgment thereon this appeal was taken by the plaintiff. — 628 — It is necessary for a full understanding of the issues in the case and of the several questions relating to this controversy, that we should give' a brief relation of the facts out of which the same has grown. In 1866, an association of individuals was formed for the purpose of purchasing the Vicksburg, Shreveport & Texas Railroad, to be sold under a proceeding to foreclose one of the first mortgages on the ro'ad. Win. R. Gordon and the defendant, Stubbs, were both members of this association. The road was purchased and the association was after-wards incorporated under the name of the North Louisiana and Texas Railroad Company, with John P. Ludeling as president. Suit was soon after instituted by the bondholders of the old company to annul the sale mentioned, and after a protracted litigation, in 1874 a decree was rendered by the Supreme Court of the United States annulling the sale and restoring the title to the road to the Vicksburg, Shreveport and Teaxs Railroad Company. Upon further proceedings in the case, the decree was so modified as to allow the purchasers at the sale thus annulled to make proof of the improvements or better-ments made upon the road subsequently to their purchase, which bet-terments were finally fixed by a decree at $365,000. This judgment for betterments was afterwards seized by a creditor of the North Louisiana and Texas Railroad Company, and third oppositions were filed by other creditors claiming privileges; and a suit instituted by the State in which the president of the company was enjoined from disposing of said judgment or the funds realized from its execution, the State claiming judgment for $1,120,000, with privilege upon the proceeds of the sale. In December, 1879, the road was sold in accordance with the decree, and by the terms of the sale the purchasers were required to pay $60,-000 in cash, to assume the payment of the judgment for betterments, to be paid into Court by the first of the following March ; and the balance of the price also to be paid in cash, unless the mortgage creditors were the purchasers. On the 12th of February, 1880, a receipt was given by J. T. Ludeling, president of the N. L. & T. R. R. Co., to F. P. Stubbs, defendant, acknowledging payment and satisfaction in full of this judgment for betterment rendered!in the case mentioned. This receipt was not predicated upon an actual payment in cash of the judgment in question, but was executed for the purpose of enabling the defendant, Stubbs, on the faith of it, to obtain money sufficient to pay off all the creditors of the company. The amount of this judgment was $365,000, as stated. The amount of the debts against the company exceeded — 629 — $400,000. The principal and largest creditors were Ludeling, Stubbs, Waddell and Gordon. The plan of settling tlie judgment was for the defendant, Stubbs, with the co-operation of Waddell, to buy up the claims of all the creditors of the road to whom the money realized from the execution of the judgment would have to be paid, and to tender these claims in satisfaction of the judgment. It was termed an advance payment or settlement, and by means of the understanding had between Stubbs and Ludeling, the president of the company, and the receipt or acquittance given, an arrangement was effected by which a member of the new company which had bought the road in the December preceding and had assumed the payment of this judgment, advanced to Stubbs the money to take up the claims against the company, and by presenting them as representing so much money and having them thus recognized, effected the advance settlement agreed on. This plan of settlement, it was believed, would avoid the effect of the injunction by the State referred to, the object of which, as stated, was to reach the fund to be realized from the payment of the judgment and appropriate it to the claim of the State against the company in the pending suit. The notes representing Gordon’s claim against the company were, all except one, in the hands of Ludeling at the time of this settlement-Stubbs, in paying Ludeling’s claim and others controlled by Ludeling, declined to pay Gorden’s, stating to Ludeling at the time that he had had an understanding with Gordon about the settlement of his claim, and gave his obligation to make this settlement to the satisfaction of Gordon on his return to Monroe — the parties being then in New Orleans. Stubbs left for Monroe immediately after the occurrences stated, and before his arrival there learned that Gordon had died on the 15th of February, being the day of his (Stubbs’) departure from New Orleans. In a few days thereafter, Stubbs obtained from Yicksburg the remaining note of Gordon against Jthe company, where it had been pledged, and paid over to the plaintiff as his legal representative, $43,000 in cash, accounted for $2000 more by tendering receipts for amount paid to redeem the note in pledge mentioned, a receipt of Ludeling for amount paid him on account for Gordon, and his (Stubbs’) receipt for amount of Gordon’s assessment for the fee in the State case referred to j and took plaintiff’s receipt for $45,000, the amount which he stated he was to pay Gordon under his agreement with Mm. The terms of the receipt did not, however, conclude all demand on account of such claim. Then followed this suit, which, as we have stated, is to recover the difference between the cash paid to the plaintiff and the full amount of Gordon’s claim against the company. — 630 — From, the statement made of the facts bearing on the controversy, it can be seen that it is narrowed down to the single issue whether there was such an agreement between the defendant Stubbs and Gordon as enabled the former to become the owner of the latter’s claim against the railroad, upon the payment of $45,000. That is partially an issue of fact, over which a vigorous and protracted contest has been made and a large amount of testimony, and conflicting testimony, taken, to the discussion of which we will now address ourselves. After the judgment of the Supreme Court of the United States annulling the sale of the railroad, and the subsequent proceeding taken by the State and the creditors of the company to reach and appropriate the funds to be derived from the judgment for betterments, great depression existed among the members of the company, and alarm lest thp fund should deprive them of any benefit therefrom and prevent its being made available to satisfy their several claims against the company. It was generally conceded that, unless some expedient was found to avoid the effect of these measures, the result feared would inevitably follow. It is certain that both Gordon and the defendane, Stubbs, shared this apprehension and realized fully the precarious condition of their claims. This was the situation of affairs when the idea of this advance settlement of the judgment was suggested, and the defendant undertook to consummate it in the manner stated by controlling the claims against the company, and finally succeeded in doing so, as stated. Stubbs testifies that pending this situation of affairs, Gordon proposed to him in these words: “Arrange to secure the advance payment of the money for the judgment lien, and all my claims will be yours if the $45,000 is paid me before the 1st of March.” His testimony is corroborated by Geo. C. Waddell, who states that he was present on two occasions when such a proposition-was made — once in Monroe and again in New Orleans — and that subsequently, on his return from the latter city, Gordon joined him on the train, spoke of the proposition he had made to Stubbs, and was urgent that Stubbs and himself (Waddell) should proceed to carry but the arrangements necessary to secure the advance payment contemplated. Their testimony is corroborated by McGuire, the treasurer of the company, who stated that upon reporting to Gordon that Stubbs had said that he could get Ms claim for $40,000, the former replied that Stubbs had his figures — $45,000. By Shelton, who states that he was present at part of a conversation between Gordon and — 631 — Stubbs, in Monroe, at which the former stated “that he was perfectly willing to take $45,000 for his share.” By Ray, who testified that he heard Gordon say to Judge Baker “that he would take $45,000 for his claim,” and “wipe his hands of the whole thing,” and at the same time express his disappointment at the result of the litigation about the road. It is urged by counsel for plaintiff that all this evidence is but evidence of the declarations of a deceased person and, therefore, inadmis sible j and if admissible at all, is to be regarded as the -weakest kind of evidence. If received solely as the declarations of a deceased person they would not be inadmissible, although they would, under a well-known rule of law, be considered the weakest kind of evidence, but there is no legal principle which would absolutely exclude them. With respect, however, to the testimony of Stubbs, part of Waddell’s and Shelton’s, the rule invoked does not apply. It was certainly competent to make such an agreement as the one in question, verbally; and if thus made, it could only be proved by parol, unless subsequently acknowledged in writing. Those who were present at such agreement, and saw and heard the parties making it, are not to.be classed as witnesses who merely testify as to admissions of one or both of the parties respecting the contract subsequently to the making of it. The distinction is obvious and well recognized. The one proves the contract or agreement — the fact of the making of it — the other the simple acknowledgment that it had been made. The effect of this evidence is, however, sought to be destroyed by proof of the acts and declarations of the deceased opposed to the theory of the defense, as presented by the pleadings and evidence. Apart of this evidence was objected to and excluded, and we think properly. The counsel for plaintiff contends that these declarations thus rejected were upon the same footing as those offered by defendant and received. We do not think so. If Gordon were alive and had brought this shit, and the defendant had pleaded this same agreement to exonerate him from the liability charged, whilst he, defendant, might establish such agreement by parol and prove the admissions of Gordon in corroboration of it, it could hardly be pretended that Gordon would be entitled to prove declarations made by him in his own favor from time to time out of the presence of Stubbs, either denying the existence of the contract, or contradicting its terms, or exculpating himself from liability — 632 — under it. Tlie rule is not varied by the fact of Gordon’s death. His legal representative suing occupies the same position and is subject to the same rule. The testimony on this point, not excluded, is of a negative character, and designed to prove a state of fact opposed to the verity of the statements of defendant’s witnesses, as by showing the silence of Gordon to those to whom he would most likely have spoken on the subject, and thereby induce the conclusion that no such agreement was ever made. That it was not told by Gordon to Judge Ludeling, who was his friend and confidential adviser and had in his possession Gordon’s notes against the company, might seem strange except for the fact sworn to by 'Stubbs, that for reasons unnecessary here to mention, Gordon had pledged himself not to speak of the understanding between them to Ludeling. We do not think this opposing evidence is sufficient to overthrow the positive sworn statements of the defendant and Waddell to the existence of this agreement, and the testimony of the other witnesses referred to corroborating them. The next matter urged in rebuttal of defendant’s proof on this point, is the letter of Stubbs to McGuire, of the 11th of February, 1880. This letter of itself, standing alone and unexplained, does at first blush seem inconsistent and in conflict with the statements of defendant touching the alleged agreement; but as explained by his testimony and viewed with reference to the “situation ” of affairs at the time it was written, we cannot give to it the importance and effect contended for by counsel. Gordon’s proposition to Stubbs, as stated, was that Stubbs -was to secure the advance payment of the judgment for betterments, or judgment lien as it was termed, and if $45,000 was paid him by Stubbs by the 1st of March, the claims were to be his — Stubbs’. It is very evident from the circumstances then existing that it was well known or believed by both parties that Stubbs would only be able to pay this $45,000 rf he could effect this advance payment of the judgment, and he had until the 1st of March to do this and to pay the amount stated to Gordon. Whether he could make the contemplated arrangement was then involved in the greatest uncertainty, and whilst this uncertainty continued he could not tell whether he would be able to raise the required amount or not. At the time he wrote the letter to McGuire, this uncertainty had not been removed. He tried to get the money from Richardson and failed, and tried to procure from Ludeling a partial acquittance of the judgment to the extent of his own claim and that of Waddell and had failed. He was satisfied that without an — 633 — entire acquittance of the judgment from Ludeling there was no prospect of raising the money, and he had no reason to believe, from his recent experience, that he could obtain the acquittance without an actual payment of the money. Under these circumstances, he sought to provide for a contingency that then seemed impending — of a failure to secure the advance payment and a failure to get the $45,000 to pay Gordon — and sought, in the event of such failure, to obtain the claims of the creditors on other and more favorable terms. This is the construction we place on the letter, under the explanation and evidence afforded by the record. And viewed in this light, it does not establish that Stubbs had abandoned his undertaking to procure the contemplated settlement, or that he had declined, in the event that that was still possible, to pay the $45,000. On the very next day Ludeling consented, contrary to Stubbs’ expectation, to give the acquittance and he (Stubbs) was thereby enabled to get the money and effect the advance settlement, and found himself in a position to comply with the terms of his agreement with G ordon before his letter referred to had reached him. When this was accomplished, we have seen that he left New Orleans prepared to pay the money to Gordon. That finding that he was dead, he paid the money to his legal representative, making, with the receipts and accounts delivered, the sum agreed on — $45,000. It is, however, urged with great plausibility, that, even conceding the truth of the facts sworn to by defendant’s witnesses, no contract or agreement affecting in any manner defendant’s liability to Gordon’s succession was established. That Stubbs never accepted Gordon’s proposition, and that Gordon’s death under any view of the matter avoided the contract or rendered it incomplete and inoperative. From what we have already said on the subject of this agreement, it may be inferred that we do not so construe it. We understand the matter in this way: Gordon believed, as did Stubbs and other creditors of the N. L. & T. R. R. Co., that from the judicial proceedings directed against the sole asset of the company — this judgment for betterments — their claims were greatly jeopardized, and if not totally lost, great delay must ensue before anything ‘could be realized upon them; that their chances, in other words, were desperate unless the consequences of these measures then pending could in some way be avoided. Influenced by these fears, Gordon was anxious to have a settlement out of court, an anxiety which was shared by those having a common — 634 — interest with him. If effected at all, it had to be done before the 1st of March following, on which day the money had to be paid into court. Stubbs was trying to make arrangements to effect the settlement. Under the plan proposed and discussed by the interested parties, it could only be done by obtaining control of the claims of all the creditors against the road. The amount due the creditors exceeded the amount of the fund. It was essential to procure from the creditors abatements of their claims. Some were more willing than others to make concessions and it was necessary to know what each creditor would abate to arrange the basis of settlement. Gordon agreed to take $45,000 for his claim, if the settlement could be made. He conveyed to Stubbs absolutely and finally, not the claim, but the privilege or option of taking it for $45,000 before the 1st of March. The consideration was that Stubbs should at once proceed and endeavor to effect the settlement. He did make the effort and did effect the settlement, and his right to settle with Gordon on the terms agreed on — $45,000—was complete and absolute. The result of the efforts made and the settlement effected relieved Gordon from the impending or threatened total loss of his entire claim, and secured to him beyond contingency the $45,000. The contract or agreement was perfect and complete between the parties when-the understanding was had, that Stubbs was to give his time, labor and skill to accomplish the desired settlement, and Gordon consented that in the event of such a settlement Stubbs was to become the owner of his claim under the obligation to pay him therefor the price stated. There was no further acceptance on either side necessary to the completion of the contract. Gordon made the proposition to convey the claim in the contingency contemplated for a stated amount, Stubbs accepted then and there the proposition, agreed to labor to bring about the desired result, did give his efforts, skill and time to that end — which Gordon could have compelled him to do — and did accomplish the object in view, and thereby and thereupon did become the owner of the claim in question, subject to the payment of the sum agreed on. It is impossible to imagine after all this was done — after the consideration was performed and the settlement made that Gordon or his legal representative could withdraw from or repudiate the agreement— it was binding on both. The proposition of Gordon was not, as contended, a nudum paetum revocable at his will and pleasure or avoided by his death. It contemplated distinctly that Stubbs was to prosecute his efforts in bringing about the settlement and in procuring the neces — 635 — sary advances of money to carry out the same, and that he was to have the right to count upon this agreement with Gordon as a factor in his negotiations in determining his ability to carry through and regulate the terms which he could afford to make with the other creditors. These were valuable considerations, and when performed and fully executed upon the faith of Gordon’s agreement — never withdrawn up to the final execution of said considerations — there exists no principle of law or equity upon which either Gordon or his legal representative could thereafter recede from the contract and deprive Stubbs of the benefit thereof. In the case of Campbell vs. Lambert, recently decided but not yet reported, where we held an agreement to be a wudum pactwm for want of mutuality of engagement, we said: “ If the consideration upon which defendant’s promise was to take effect had been the doing of something by plaintiff involving labor or other value, and upon the faith of said promise and before its revelation the plaintiff had done the thing, different principles would apply not necessary to specify here.” The different principles referred to are thus expounded by Mr. Parsons in Ms work on contracts: “Where one promises to see another paid if he will sell goods to another person, * "* * the party making the promise is bound to nothing until the promisee within a reasonable time engages to do or else does, or begins to do, the thing which is the condition of the first promise. Until such engagement or such doing, the promisor may withdraw his promise, because there is no mutuality and, therefore, no consideration for it. * * * But if without any promise whatever the promisee, does the thing required, then the promisor is bound on another ground. The thing done is itself a sufficient and complete consideration, and the original promise to do something if the other party would do something is a continuing promise until that other party does the thing required of him” — that is, if not seasonably revoked. Parsons on Contracts, p. 450. This disposes of the question of wadirnn pactum. The French authorities and jurisprudence are to the same effect. La-romhiere, en 1 sur l’Art. 1138, No. 7; Laurent, Yol. 25, § 8, et seq; Mar-cadé, Vol. 6, p. 155, et seq; Mourlon, Vol. 3, § 488; Aubry and Rau, Vol. 4, p. 333; Troplong de la Vente, p. 122; Journal du Palais for 1877, p. 714; Id. 1872, p. 348; Id. 1869, p. 830; Id. 1866, p. 1020; Id. 1863, p. 92; Id. 1849, p. 393. — 636 — The only error in tlie verdict of the jury and judgment thereon is the small amount allowed the plaintiff. This was a palpable mistake, since the evidence leaves no doubt that the defendant was' under no obligation to pay more than $45,000, and this amount he did pay. It is, therefore, ordered, adjudged and decreed that the judgment of the lower court be annulled, avoided and reversed; and proceeding to render such judgment as should have been rendered, it is now ordered, adjudged and decreed that the demands of plaintiff be rejected at her costs in both courts.