Luehrmann v. St. Louis Furniture Co.

Rombauer, J., delivered the opinion of the court. The plaintiff sued the defendant on six promissory notes aggregating $1,852.86, and an open account of three' hundred dollars. The answer of the defendant admits' the original liability, but claims that the plaintiff had contracted and agreed with the defendant to take, in full accord and satisfaction of the debt, seventy-five cents on the dollar, in full paid certificates of stock of the defendiant company; that the defendant had tendered said stock to the plaintiff, but the plaintiff had refused to receive it, and subsequently seized all the stock of the defendant by attachment. That the stock which was thus agreed to be issued was now in the plaintiff ’ s possession, whereby said debt was fully discharged. The plaintiff replied to this answer stating: First. That the alleged contract or agreement was, by mutual consent, abandoned and rescinded before the stock mentioned was issued, or tendered to him, or attached by him. Second. That the agreement to take the stock was made by him on condition that the Rubleman Hardware Company, one of the defendant’s creditors, would take the stock of the defendant company at par, to an amount equal to its claim, and in full payment thereof, and would, also, release a mortgage which it held on the defendant’s property, and on further condition that the defendant would settle with its other creditors at fifty cents on the dollar. That these were conditions precedent and were not fulfilled by the defendant. Third. That the contract of accord and satisfaction relied on by the defendant, was brought about by the fraud, covin, and misrepresentations of the defendant, that its stock was — 501 — practically worthless, and that no tender of the stock was made to the defendant until after the institution of this suit, and that such tender was not made in good faith. Upon these pleadings the cause was tried and resulted in favor of the defendant. This was the second trial of the cause, and the second verdict in favor of the defendant, and in consequence the trial court refused to vacate the verdict on the ground that it was against the weight of the evidence. The defendant gave testimony to support the defence •and the plaintiff gave evidence in support of his reply tending to substantiate the facts avoiding such defence. On many points the testimony was irreconcilable. Concerning certain facts, however, there was no controversy. These facts, as fat as they have any bearing on the instructions complained of by the appellants, are: First. That the plaintiff executed the following agreement: “ St. Louis, May 29, 1882. “If creditors agree to take settlement of fifty per cent., offered by St. Louis Furniture Company, I agree to take seventy-five per cent, for my claim in paid up stock, provided Nubleman releases mortgage and takes the whole amount in stock at par. “C. P. Luehemann. “I also agree to the above. G-. H. Geeve.” Second. That afterwards at a creditors’ meeting, at which the plaintiff was .present, a paper was drawn up, wherein all creditors, with the exception of Luehrmann .and Gfreve, agreed to take thirty-seven and one-half cents on the dollar in full satisfaction of their claims, and Nu•bleman agreed to take his entire claim against the company in stock at par. In consideration of this composition, Nubleman who appears to have been the largest creditor of the company, agreed to guarantee the payment of these thirty-seven and one-half cents. The •composition paper drawn up gave to the signers an option to take either seventy-five cents in stock of the debtor •company or thirty-seven and one-half cents in cash, but — 502 — creditors signing all signified their intention to take the cash. Third. That Rubleman was ready and willing and. offered to the plaintiff to release the mortgage and did pay the sums which he had guaranteed to pay by the-composition agreement. Fourth. That two of the defendant’s creditors,whose claims aggregated S618.47, were paid in full. That they either were paid sixty-two and one-half per cent, of the-face of their claims before they signed, or signed it only upon an assurance that they would be paid in full. That the difference between thirty-seven and one-half and one hundred was paid to these two creditors, by friends of the debtor company, but whether paid with the defendant’s consent or not the testimony left in doubt. The statement of the uncontroverted testimony, as herein contained, is as favorable to the defendant as the testimony contained in the transcript will admit. It will thus be seen that the plaintiff’s prima faciecase was conceded, and the court so instructed the jury. It will be further seen that the defendant was entitled to-a verdict only by proof of a full compliance on its part with all the conditions which furnished the consideration of the plaintiff’s promise to take in full payment of his-claim seventy-five per cent, in full paid stock of the company. One of these conditions was that the defendant company would effect a valid composition with all its. creditors, excepting the plaintiff Rubleman and G-reve, at a figure not exceeding fifty per cent, of their claims. This, fact the court also recognized in its instructions, and in substance so instructed the jury. As to the fact, however, what circumstances would render the composition, between the defendant and its creditors invalid, the court,, in our opinion, clearly misdirected the jury. It is apparent that one of the main elements of the-plaintiff’s promise to take seventy-five per cent, in stock was the consideration of a valid composition with the defendant’s creditors. That stock, even if such composi — 503 — tion was effected, was presumably not worth more than fifty cents on the dollar, and if not effected was probably wholly worthless. On this branch of the case, the plaintiff requested the court to instruct the jury as follows : “7. The court instructs the jury that if they find from the evidence, that the signatures of Clarkson, Christopher &'Co., or Berthold and Jennings, were procured on the instrument introduced in evidence, on a secret agreement, that more than thirty-seven and one-half per cent, on their claims, both or either, should be paid, and that thereafter, and thereupon, either or both were thus paid in a sum exceeding thirty-seven and one-half per cent., and because thereof signed said instrument, and that said payments, both or either, were made by the defendant at its request, or to its use, and without the knowledge of the plaintiff,' then they will find for the plaintiff, and the burden of proof to show such knowledge by the plaintiff is upon the defendant.” This instruction, under the authority of The Bank of Commerce v. Hoeber (11 Mo. App. 478), the opinion in which case has been literally affirmed by the supreme court states a correct proposition of law. If anything it was more favorable to the defendant than the principles governing the law of compositions would warrant. The question raised by the instruction has been so fully and ably discussed in the exhaustive opinion of Judge Thompson in that case that a' réf erence to it is all that is deemed necessary to show that the instruction asked by the plaintiff should have been given. The court refused to give the instruction thus asked, but gave it in a modified form by inserting the words “with” and “with its .consent.” The jury were thus told by the court, in effect, that the secret agreement made with Clarkson, Christopher & Co., and Berthold and Jennings,- to pay them more than thirty-seven and one-half per cent, of their claims, as an inducement to make them join in the composition, would not vitiate the composition unless made “with, or on behalf of defendant and with its consent.” Such is not the law. — 504 — As the case has been, twice tried, with the same result, we are loth to disturb the judgment if it can be supported in conformity with any just rules of law. With that view we have examined the question carefully whether the ruling of the court on this instruction was necessarily prejudicial to the plaintiff. We are willing to concede that all that the plaintiff had a right to demand was that the defendant should not settle with its creditors, other than Nobleman, Grieve, and himself, on a basis in excess of fifty per cent, of their aggregate claims. We are further willing to concede that it was immaterial to the plaintiff whether the defendant paid to any of its creditors more than fifty per cent., provided the aggregate amount paid, or agreed to be paid by the defendant in full satisfaction of all its liabilities, except the three above named, did not exceed fifty per cent, of such liability, and provided, further, that by-such payment or agreement to pay, the defendant obtained a valid discharge. But conceding all this, the question still remains, that if the defendant, or any one to the defendant’s use, with or without its consent, paid more to any of its creditors, or agreed to pay more than thirty-seven and one-half per cent., to induce them to sign the composition agreement, the composition itself was voidable, not only as far as the plaintiff is concerned, but as far, also, as any other creditor -is concerned who had no knowledge of the secret agreement. If the composition was voidable as to all such creditors, their claims were never extinguished, whether they received thirty-seven and one-half per cent, or not. The defendant still remained liable to them for the balance of their claims, and the main consideration upon which the plaintiff himslf agreed to compound his own claim by taking seventy-five per cent, thereof, in full paid stock of the company, has failed. It follows, from the foregoing, that on any view of the case, the refusal of the plaintiff ’ s instruction, and the substitution of the instruction of the court in its stead, was necessarily prejudicial to the plaintiff. For this rea — 505 — son the judgment of the trial court must be reversed and the cause remanded. All the judges concurring, it is so ordered.