Bates v. Rosenberg

PER CURIAM. This is an action upon a note given by a debtor and his wife to induce plaintiffs to sign a composition agreement with his other creditors, by which each accepted 50 per cent, of his claim in payment of his claim, and not to prosecute him for a fraudulent representation to them, made before the failure, for the purpose of Inducing them to give him credit. Plaintiffs have been paid their 50 per cent. This is one of two notes given to make their share 100 per cent. The main question litigated was whether the agreement for the ■extra 50 per cent, was known to the other creditors. If not, it is not disputed that the notes are void. Hanover National Bank v. Blake, 142 N. Y. 404, 37 N. E. 519, 27 L. R. A. 33, 40 Am. St. Rep. 607, and cases cited. Two of the creditors testify that they knew nothing of the preference to plaintiffs. The debtor’s attorney testifies that it was kept quiet in the meetings of creditors, which were all held in the office ■of one Silberberg, who had been selected by all of them as their attorney. Pie is the only opposing witness, and his testimony is, discredited by a petition which he admits having personally verified and presented to the United States District Court for the purpose of securing a dismissal of pending bankrupt proceedings against the debtor, in which he set out a list of the creditors, including these plaintiffs, and swore that each had accepted 35 per cent, in cash and 15 per cent, in notes ■“in full satisfaction of their respective debts.” This was a fraud upon the court. In view of the matters aforesaid, and of his attempt to lead the present trial court to believe that the note in suit might be ■one of those mentioned in the petition, we think that credence should not have been given to his testimony as against that of defendant’s witnesses. [337] Plaintiffs argue that, as Silberberg was attorney for the other creditors, as well as themselves, all are affected by his knowledge of the preference being given, whether actually they know it or not, and although they might have repudiated the whole settlement, as one of them here testified that he would have done. But a principal is not affected with the knowledge of an agent that the latter is dealing with his property rights for the benefit and advantage of persons opposed in interest. Benedict v. Arnoux, 154 N. Y. 715, 728, 49 N. E. 326; Brooklyn Distilling Co. v. Standard Distilling Co., 120 App. Div. 237, 105 N. Y. Supp. 264; Id., 193 N. Y. 551, 554-555, 86 N. E. 564. It is unnecessary to consider the other objections made to the note, the evidence as to which is not complete. Judgment reversed, and new trial ordered, with costs to appellant to abide the event.