Joseph Clarke and Richard Briscoe, Appellants v. William White, Appellee

Decision Date01 January 1838
Citation37 U.S. 178,9 L.Ed. 1046,12 Pet. 178
PartiesJOSEPH S. CLARKE AND RICHARD S. BRISCOE, APPELLANTS v. WILLIAM G. W. WHITE, APPELLEE
CourtU.S. Supreme Court

ON appeal from the circuit court of the United States, for the county of Washington, in the District of Columbia.

In the circuit court, the appellee, William G. W. White, filed a bill against the appellants, charging, that on the 2d of July, 1832, the complainant passed to the defendants, Clarke and Briscoe, his twenty-six promissory notes of that date, each for the sum of two hundred and seventy-four dollars and sixty-seven cents, payable monthly, from sixteen to forty-four months, making the sum of seven thousand one hundred and forty-one dollars and forty-two cents; three of which said notes were subsequently passed by said defendants to Clagett and Washington. That on the 30th December, 1833, he entered into an agreement with the said Clarke and Briscoe, to anticipate the period of credit on the said notes, and to pay the said sum of seven thousand one hundred and forty-one dollars and forty-two cents, in goods and merchandise, at seventy cents in the dollar, on the price the said goods were marked to have cost; that the said Clarke and Briscoe agreed to receive the said goods and merchandise, on the terms aforesaid, in full payment of the said sum of money, and to deliver up the said notes then in their possession; and speedily to take up such of the said notes as had been negotiated, and to deliver the whole to the complainant, that they might be cancelled. The complainant states that he fulfilled his part of the agreement in every particular; that he delivered to said Clarke and Briscoe, and they received goods and merchandise according to the terms of the said contract, to the full amount agreed to be delivered, save a fraction of one dollar and forty-one cents, which was subsequently tendered and refused; but that the said Clarke and Briscoe, having obtained possession of the said goods, retain the said notes, and refuse to perform their part of the said agreement. The complainant, in a supplemental bill, states that Clagett and Washington, to whom three of the said notes had been passed by the defendants, after the date of the said agreement, instituted suits against the complainant, on the said three notes, in the circuit court of the District of Columbia; and that by judgment of the said court, the complainant has been obliged to pay, and had paid to the said Clagett and Washington, the sum of one thousand and eighty-three dollars and fifty-five cents. The complainant prays, that Clarke and Briscoe may be, by decree, ordered to bring into court the said unpaid notes to be cancelled; and to pay to the complainant the said sum of one thousand and eighty-three dollars and fifty-five cents, so paid to Clagett and Washington; and for general relief.

The answer of the defendants, the appellants, admits that the complainant gave the several promissory notes mentioned in the bill, and that three of the same were passed to Clagett and Washington, as stated; and they say the consideration for the notes, was the sale of a large invoice of goods, made about the time of the dates of the notes, or shortly before; that the terms and conditions of such sale were, that the complainant should punctually take up and pay the notes, as the same should respectively fall due; and, in consideration of the complainant's solemn verbal pledge and assurance, that such notes should be so punctually taken up and paid; and upon the faith and confidence of such pledge and assurance, the defendants agreed to deduct five per cent. from the amount of said invoice, and accordingly from the aggregate amount, for which the complainant passed his notes, on account of said sale. The defendants deny that they did make the agreement with complainant, respecting the compromise of their claim against the complainant, and the cancelling of the notes, in the terms and upon the conditions set forth in the bill; but they admit and aver, that, about the time mentioned in the bill, in consequence of hearing the complainant had failed in business, and was compromising with his creditors, a conversation and arrangement did take place between the defendant, Clarke, and the complainant; in which the defendant asked him upon what terms the complainant would settle the whole claim of the defendants; not merely on what terms he would settle the amount of the notes; upon which complainant offered to settle it at sixty cents in the dollar, and pay in goods. Clarke answered, that he understood the complainant had compromised with other of his creditors at seventy cents in the dollar; and hoped the complainant would not think of putting off the defendants with less; and the complainant at length agreed to pay the defendants, in goods, the whole amount of their claim, at the rate of seventy cents in the dollar, and pay the balance, viz. thirty per cent., when he was able: but insisted that they should take the goods in masses, without selection, as they lay upon the shelves; which was finally agreed to by defendant, Clarke: nor was it till after the arrangement had been so agreed on between themselves, that any thing was said between them, about the defendants' getting up and cancelling the complainant's notes: but, afterwards, they admit a conversation on that subject did ensue between defendant, Clarke, and the complainant, in which it was understood and arranged between them, that, upon the settlement of the defendants' whole claim, by paying the same in goods, at the rate of seventy cents in the dollar, the defendants should get in and cancel said notes; not upon the settlement, in that mode, of the amount of the notes merely: such was not the understanding of the parties, at least not of either of the defendants; but the true amount of their just claim against the complainant; the amount understood by defendant, Clarke, at the time, was not the aggregate amount of the notes merely, but of the original invoice; in liquidation of the amount of which, with a deduction of five per cent., the notes had been given: and, inasmuch as that deduction had been allowed, upon the faith and confidence alone of the complainant's pledge and assurance to pay the notes punctually, as aforesaid; and, as he had totally failed to comply with said pledge and assurance, the defendants considered that in equity, indeed in strict justice, they were entitled to the amount of the invoice, without such deduction.

The answer of the defendants further states, that the complainant has not, to the time of filing the answer, complied substantially or otherwise with the terms of the compromise, in the sense in which it was properly understood and agreed upon, so as to entitle him at any time to call in the notes given for the goods delivered to him; that the notes were to be delivered to him, on the entire settlement of the claims of the respondents on him, he not having delivered goods to the respondents to the amount of the bill, and he having refused to deliver the goods to the respondents, without the said deduction. That the goods delivered to the respondents were the residue or remains of the goods originally sold to the complainant, after he had enjoyed the use and profit of them, as a part of his assortment of goods, for eighteen months; and if the compromise had been carried fully into effect, it would have been a most hard and disadvantageous one to the respondents. The compromise was not binding on the respondents, in consequence of the gross frauds and impositions practised by the complainant upon the respondents, and his other creditors, in order to alarm them into compromises of their debts with him, as with a merchant debtor, who has been subjected by the casualties of trade to failure; that the whole matter of the pretended failure of the complainant, was a deliberate, artful and fraudulent scheme, device and contrivance of the complainant to alarm and force his creditors into compromises; while he had, in part, ample means to pay off all his debts, and have a surplus on hand; that with these ample means, he proclaimed his insolvency, and was thus enabled to make advantageous compromises with his creditors, according to the circumstances of his creditors, and the state of their fears. That preparatory to this scheme of fraudulent failure, and during the very season, and shortly before it was proclaimed, he had made unusually large purchases on credit, and had so increased his stock of goods much beyond its usual amount; and, just after he had completed this fraudulent accumulation of stock, he gave out his failure in business and insolvency, and set on foot his plan of fraudulent compromises. It was under the greatest pressure of this alarm, and whilst it was fraudulently used by complainant to practise upon the fears of his creditors, that the defendants were fraudulently and deceitfully drawn by him into such agreement, for a compromise, as they have stated and admitted.

The answer further states, that it is the belief of the defendants, that the complainant had for some time meditated the frauds perpetrated by him; and that before he purchased the goods from the defendants, some time about the 9th of July, 1832, he caused to be entered in the land records of this county, a fraudulent deed, settling valuable property on his family, which had been executed in the month of January preceding; and in the meantime kept secret. This deed conveys the property described in it to a trustee, for the children of the complainant, all minors, and in extreme youth; and was not recorded until within one day of the six months allowed by the law of the District of Columbia, had nearly expired.

To the answer of the defendants, a general replication was filed, and the parties went on to take depositions to maintain or deny the allegations in the pleadings. No evidence was given to sustain the assertion in the answer, that the...

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