Cheveront v. Textor

• Decision Date: 12 March 1880
• Citation: 53 Md. 295
• Parties: WILLIAM H. CHEVERONT and Chapman J. Stuart, Trading as Cheveront & Co. v. ANTON TEXTOR.
• Court: Maryland Court of Appeals

53 Md. 295

WILLIAM H. CHEVERONT and Chapman J. Stuart, Trading as Cheveront & Co. v. ANTON TEXTOR.

Court of Appeals of Maryland

March 12, 1880

Appeal from the Circuit Court for Howard County.

This suit was instituted in the Superior Court of Baltimore City and removed to the Circuit Court for Howard County for trial upon the suggestion and affidavit of the defendant, and there tried.

The case is stated in the opinion of the court.

Exceptions.--At the trial, after the rejection by the court below of the offer of the testimony set out in the opinion. The plaintiffs offered the following prayer:

That if the jury find from the evidence, that the plaintiffs and their assignors, were creditors of the defendant; and also find the assignments to the plaintiffs, of the claims of Lewin & Co., and O'Neal, Cheveront & Company; and that the plaintiffs and their said assignors, were induced to enter into the settlement of June 9th, 1876, with the defendant, by reason of the statement made to them, by the defendant, of the condition of his affairs, in the letter of the 27th of May, 1876, read in evidence; and that they made the said settlement on the faith of said statement, believing the same to be a true and fair statement; and if they further find that the said statement was substantially, untrue, and was made by the defendant with intent to deceive the plaintiffs, and their said assignors, and to induce them to make said settlement, then the plaintiffs are entitled to recover so much of said claims so settled as remained unpaid and due at the time this suit was brought, with interest thereon--the finding of interest, however, being in the discretion of the jury.

And the defendant offered the two following prayers:

1. That fraud is odious in contemplation of law, and not to be presumed, and the burden of proof is on the plaintiffs to overcome such legal presumption by evidence satisfactory to the jury.

2. If the jury shall find from the evidence, that the defendant was indebted to the plaintiffs and their assignors, in the amount testified to by the witness Cheveront, and afterwards the said plaintiffs and their assignors, and other creditors of the defendant, by their attorneys, together with the defendant and Henry Smith, signed the agreement dated June 9th, 1876, offered in evidence, and shall further find that the defendant and the said Henry Smith complied with the terms of said agreement, by the payment of the one-fourth cash, and the endorsement and delivery of the promissory notes as therein provided, to the plaintiffs or their assignors, or that they accepted an equivalent in cash, in lieu thereof, as testified to by said plaintiff, then the plaintiffs cannot recover, unless the jury further find that the defendant falsely and fraudulently represented to the plaintiffs, and their assignors, the amount of his assets to be materially smaller than they really were, with intent to deceive said creditors, and to induce said creditors to enter into said agreement, and by means of such misrepresentations induced said creditors to enter into said agreement; and that said creditors relied upon such representations in entering upon said agreement, and believed them to be true; and that if said fraud had not been practiced, the said contract could not have been executed; and that they had not the means of ascertaining their falsehood.

The court granted the plaintiffs' prayer, and granted the defendant's first prayer and rejected his second, and in lieu of the second, the court gave the following instruction to the jury:

If the jury shall find from the evidence, that the defendant was indebted to the plaintiffs, and their assignors, in the amount testified to by the witness Cheveront, and afterwards the said plaintiffs, and their assignors, and other creditors of the defendant, by their attorneys, together with the defendant and Henry Smith, signed the agreement, dated June 9th, 1876, offered in evidence; and shall further find that the defendant and the said Henry Smith complied with the terms of said agreement, by payment of the one-fourth cash and the endorsement and delivery of the promissory notes as therein provided, to the plaintiffs and their assignors, or that they accepted an equivalent in cash, in lieu thereof, as testified to by said plaintiffs, then the plaintiffs cannot recover; unless the jury further find that the defendant falsely and fraudulently represented to the plaintiffs, and their assignors, the amount of his assets to be materially smaller than they really were, with intent to deceive said creditors, and to induce said creditors to enter into said agreement, and by means of such misrepresentations induced said creditors to enter into said agreement, and that said creditors relied upon such representations in entering upon said agreement, and believed them to be true, and that if said fraud had not been practiced, the said contract would not have been executed.

The plaintiffs excepted, and the verdict and judgment being for the defendant, the plaintiffs appealed.

The cause was argued before BARTOL, C.J., ALVEY, ROBINSON and IRVING, JJ.

A H. Robertson and Charles Marshall, for the appellants.

We maintain that the judgment recovered by Shaeffer & Bonafield was conclusive as to the obligation of the agreement of June 9th, upon the plaintiffs.

The agreement of June 9th, 1876, on its face is not an agreement with each creditor separately, but is expressly an agreement with all the defendant's creditors.

The replication alleges that in the case in the United States Circuit Court, Shaeffer & Bonafield had successfully assailed the agreement for "the said fraud of the defendant practiced upon said Shaeffer & Bonafield, and the other creditors of the defendant who accepted the same."

Now the effect of the judgment in the United States Court was to declare Shaeffer & Bonafield to be discharged from the agreement of creditors of June 9th, and enable them to recover in full. That agreement, which was a single agreement on the part of all the creditors on the one side and the defendant on the other, was conclusively declared not to be binding on one of the creditors, because his acceptance of its terms had been procured by fraud. It might be that the judgment would not preclude the defendant in this case from denying that the acceptance of the agreement by the plaintiffs had been procured by fraud; but that is not the issue made by the demurrer.

The question is, whether any one of the creditors who became a party to that agreement is bound by it, if it be not binding upon all by reason of the acceptance of it by one or more having been obtained by fraud?

They all unite in an agreement to take less than the amount due them, but all are to be paid alike. The defendant deceives one of the number, and procures him to unite with the others by fraud, upon the discovery of which, that creditor is released from the contract, and allowed to recover his whole debt. The other creditors, however, who became parties to the agreement with the creditors so discharged, and whose agreement to accept its terms was a joint, and not a joint and several agreement, we contend, must be released also by the release of their cocontractor.

We submit that the fact that the acceptance of the agreement of June 9th, 1876, by Shaeffer & Bonafield had been procured by fraud, operates per se to render the agreement fraudulent as to the other creditors who accepted that agreement as joint contractors with Shaeffer & Bonafield, and estopped the defendant from setting up the agreement against the other creditors. 1 Addison on Contracts, secs. 264, 380; Boyd v. Hind, 1 H. & N 938; Higgins v. Pitt, 4 Exch. 312; Leicester v. Rose, 4 East, 372; Smith v. Stone, 4 G. & J. 311; Gardner v. Lewis, 7 Gill, 391, 400.

The next exception arises from the rejection by the court of the evidence offered by the plaintiffs.

The plaintiffs had offered proof tending to show that the agreement of June 9th, 1876, had been procured by the fraudulent representation made by the defendant to his creditors of his condition. The defendant had undertaken to prove that the creditors had compromised with him without being influenced at all by misrepresentations of his condition, and that he had made no false representations. The plaintiffs offered to prove by the defendant himself that, after the decision of the suit of Schaeffer & Bonafield against him, the defendant had settled with some other creditors, who were parties to the agreement of June 9th, for the balance of their claims, in whole or in part, and that he had made settlements of that kind with creditors who had not sued him, and had offered to make such settlements. We submit that the evidence was clearly admissible.

The issue was as to fraud, and the evidence rejected bore not only directly on that question, but on the bona fides and sincerity of the defendant in testifying as he had done to the integrity and fairness of the agreement.

Had not the jury a right to have his acts, as well as his declarations, relating to this subject? Upon such an issue any evidence, however slight, is admissible. Davis v. Calvert, 5 G. & J. 269; Cook v. Cook, 43 Md. 522; Curtis v. Moore, 20 Md. 93; Marshall v. Haney, 4 Md. 498.

Henry E. Wootten and C. Dodd McFarland, for the appellee.

The demurrer to appellants' additional replication to appellee's third plea was properly sustained. The questions arising under the pleadings in this case were not res adjudicata. The case tried in the Circuit Court of the United States had no such effect. That suit was brought to recover a different debt; "a certain debt claimed to be due to them from the said defendant"--a different subject-matter. It was a suit...