Kahn v. Gumberts
| Decision Date | 24 November 1857 |
| Parties | Kahn v. Gumberts |
| Court | Indiana Supreme Court |
fro the Vanderburgh Court of Common Pleas.
The judgment is affirmed, with 5 per cent. damages and costs.
James G. Jones and James Blythe, for appellant [1].
Conrad Baker, for appellee [2].
The appellee, who was the plaintiff, brought an action against Kahn, upon a promissory note for the payment of 478 dollars. The note was payable to Kahn, Reindskopf & Co., and by them assigned to the plaintiff.
The answer to the complaint is substantially a follows: Kahn being indebted and unable to pay, proposed to his creditors at Cincinnati, including the payees of the note in suit, a compromise. Thereupon, the creditors appointed a committee to visit Evansville, where Kahn resided, to examine into his business. Having made such examination, the committee entered into a written agreement with Kahn, whereby he agreed to pay 50 per cent. on the demands against him, part in cash, and the residue at four and eight months, with security. This agreement was to be submitted to the creditors for approval or rejection. And being reported to them, they gave their assent to it in writing, and transmitted such written assent to one Jaques, their agent at Evansville, with instructions to settle with Kahn according to the terms of the agreement. Kahn, pursuant to the settlement, paid Jaques, the agent, 12 and one half per cent. upon 50 per cent. of the note sued on and for the residue, gave his notes, with security, at four and eight months. After this, Gumberts, the assignee and plaintiff, was notified that the money and notes so paid and given, were in the hands of Jaques, subject to his, plaintiff's order, and, for himself, he then agreed to the settlement, and promised to take said money and notes.
The plaintiff replied, admitting the facts stated in the answer, and setting up new matter in avoidance. The reply avers that the assent of Kahn, Reindskopf & Co., to the arrangement to take 50 per cent. on their claim, was given upon the condition that all the other creditors of Kahn should come into the same arrangement, and take the same per centum. That when they assented to the agreement, the firm of R. W. Boothe & Co., of Cincinnati, was a creditor of Kahn, and that he, Kahn, procured them, Boothe & Co., to sign the aforesaid written assent, by fraud, by paying them more than 50 per cent. on their claim, in fraud of the rights of the other creditors, and without their consent or knowledge.
The defendant demurred to the reply; but his demurrer was overruled. Proper issues being made, the case was submitted to a jury, who found specially as follows:
1. That the firm of R. W. Boothe & Co. was a creditor of the defendant when Kahn, Reindskopf & Co. assented to the agreement of compromise.
2. That the defendant did pay R. W. Boothe & Co. 100 dollars in money, and a gold watch worth 100 dollars, in consideration of their assent to the agreement.
3. That the money and watch so paid, exceeded in value 50 per cent. on the claim of Boothe & Co. against the defendant; and that the same was paid without the consent or knowledge of the other creditors.
The jury also found a general verdict in favor of the plaintiff for the amount of the note and interest. Motion for a new trial denied, and judgment on the verdict.
It has been repeatedly decided that, if a creditor who signs a composition deed, and thereby induces other creditors to sign it, makes a private bargain with the debtor, the effect of which is to place himself in a better situation than the other creditors, he thereby commits a fraud upon them, and the bargain is void. Lewis v. Jones, 4 B. & C. 506, 511; Burrill on Assignments, 136. Mr. Story says that, "such secret bargains are not only deemed incapable of being enforced or confirmed, but money paid under them is recoverable back, having been obtained against the clear principles of public policy." 1 Story Eq. Jur. p. 372, sec. 379. But the question to settle in this case is, does such bargain render the composition itself void, so as to enable a creditor who signed it in good faith to recover on his original demand.
In transactions between a debtor and his creditors which result in a deed of composition, the utmost good faith is required. The debtor professes to deal upon equal terms with all...
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