McGlynn v. Scott

• Decision Date: 19 February 1894
• Citation: 58 N.W. 460,4 N.D. 18
• Court: North Dakota Supreme Court

58 N.W. 460

4 N.D. 18

WM. C. MCGLYNN v. D. B. SCOTT

Supreme Court of North Dakota

February 19, 1894

Appeal from District Court, Dickey County; Lauder, J.

Action on a promissory note by William C. McGlynn against D. B Scott. Plaintiff had judgment, and defendant appeals.

Reversed.

Judgment of the District Court reversed, and a new trial ordered.

George W. Parks, for appellant.

F. S Parker, for respondent.

CORLISS J. WALLIN, J., concurs, BARTHOLOMEW, C. J., concurring in the result.

OPINION

CORLISS, J.

The plaintiff having recovered judgment against the defendant upon a promissory note, the defendant appeals. The judgment is based upon a verdict which the court directed the jury to find in favor of the plaintiff. One of the defenses to the note relied upon in the trial court was want of consideration. It is the only defense which merits our attention. The facts of this controversy are few and simple. Plaintiff and a man named Densmore were co-partners in the business of selling farm machinery. Some time in the month of August, 1890, a Mr. Thompson purchased a separator of the plaintiff McGlynn and Densmore. According to his testimony, he was to pay $ 550, and no more, for the machine laid down at Ellendale, N.D. When the machine arrived, Mr. Thompson, after assisting in removing it from the cars, went with McGlynn to the hotel in the village, and gave his promissory notes for the machine, and also a chattel mortgage to secure these notes. After this had been done, Mr. McGlynn, for the first time during the settlement, informed Mr. Thompson that he wanted Mr. Thompson to pay $ 41.50 freight. This Mr. Thompson refused to do, saying that he had nothing to do with the freight, and then the parties separated without further controversy about the matter. Mr. McGlynn does not appear to have urged his claim with much force after Mr. Thompson refused to recognize it. Subsequently, Scott, the defendant, who was in the employ of Thompson as foreman, came to the village, and, having hitched his team to the separator, started to take it away under instruction from Thompson. After proceeding a short distance, McGlynn overtook him, and, after getting on the machine, informed Scott that he could not take the machine until the freight was settled for; that he (Scott) was not man enough to take the machine unless the freight was settled for. Scott, evidently impressed with the truth of McGlynn's assertion of superior strength, yielded to the demand, and gave the note in suit for the alleged claim for freight, protesting, all the while, that he knew nothing about the matter; that there was nothing due from him to McGlynn; and that it was a matter for Mr. Thompson to settle. There are only two grounds on which this note can be sustained as being based upon a sufficient consideration. Scott himself owed no debt, and received no value on the execution and delivery of the note. But it was strenuously urged before us that there was a compromise of a disputed claim, and that for this compromise this note was given. In this connection, the counsel for respondent invokes a familiar rule of law. A compromise of a dispute between two persons constitutes a good consideration for the promise of either party to pay a sum of money as the result of that compromise. If there is a bona fide controversy, and the claim of the party to whom the promise to pay is given is not utterly without foundation, but is colorable, the promise to pay will not be defeated by showing that the claim was in fact a claim which could not have been sustained. But to make out a case of compromise, in order to furnish consideration for a promise which has no other consideration, two things are necessary. There must have been a bona fide controversy, and both parties must have intended to finally settle it by the agreement they enter into. Let us assume, at first, that there was such a controversy. The next inquiry is whether the parties intended to settle it forever when the note in question was given. It is clear that McGlynn did not intend that the question whether he was entitled to freight should be settled by Scott, who knew nothing of the transaction personally, and could not be in a position to determine the question of right between McGlynn and Thompson. That McGlynn did not regard the transaction as the compromise and final adjustment of his claim for the freight is apparent from his testimony before the justice of the peace when the case was originally tried in that court. It was tried in the District Court on appeal from the judgment of a justice of the peace. In the District Court McGlynn was not sworn as a witness. Before the justice of the peace he swore that there was no consideration for the note except the freight he claimed due. He thus distinctly repudiated the idea that the note was taken in way of compromise, or for any other consideration than his claim for the freight, resting his right to recover upon it solely on the validity of that claim. Nor is it possible to believe that Scott, who had no personal knowledge of the matter, would undertake to compromise this matter,--to settle this dispute. His testimony clearly shows that a final adjustment of the controversy was furthest from his thoughts. He says that he protested to McGlynn against being compelled to give his note to get the machine, and in the same breath informed McGlynn that there was nothing due from him, and that the matter was one for Thompson, and not for himself, to settle. What he gave his note for was to get or keep possession of the machine, which McGlynn was threatening to withhold or take from him by force. He had no purpose deliberately to compromise this disputed claim, of the validity of which he had no personal knowledge, and McGlynn understood that Scott was not compromising this dispute. He was content to stand on the validity of his claim for freight as a consideration for the note. Not only does the case fail to show that the parties intended to compromise this controversy, but it also fails to show that there was, in fact, any settlement of the dispute.

This point brings us to a consideration of the foundation of the validity of a promise which is the culmination of the settlement of a controversy. On what ground can such a promise be sustained? Surely not on the ground that a right has been surrendered, for the rule is well settled that where there is a bona fide controversy, and the claim settled is colorable, the consideration for the promise cannot be destroyed by showing that there was in fact no validity to the claim which was made. It would be illogical to assert that such a promise rests for its consideration upon a surrendered right, and at the same time preclude all inquiry into the question whether, as a matter of fact, a valuable right has been surrendered. The true consideration is the settlement. All litigation is injurious to society. A portion of human energy is absorbed by the friction of legal strife, and so much power is thus exhausted which might otherwise be diverted into other channels. Struggles for victory in the courts engender more or less enmity. Time is consumed, and money is expanded, which would, in the absence of such litigation, be employed for other purposes and in other ways. It is elementary that the courts look with the highest favor upon every honest adjustment of private differences. "With the courts of this country, the prevention of litigation is not only a sufficient, but a highly favored, consideration." 1 Pars. Cont. p. 438. To encourage the settlements by private agreement of controversies, and to discourage, as far as possible, a resort to the regular tribunals, the courts have resorted to this fiction; that the settlement of an honest dispute constitutes a good consideration for a promise to pay. As a matter of fact, there may be no consideration, so far as the parties themselves are concerned, and yet the compromise will be held to be sufficient to support the promise. The person to whom the promise is made may in fact never have had a legal claim. The person who makes it may never have owed a dollar. In such a case there is, in fact, no consideration between the parties. The promisor is not benefited, and the promisee is not injured, by the compromise. The reverse is the case. The promisee is benefitted, and the promisor is injured by it. Escaping the expense of litigation would not constitute a consideration sufficient to bind the promisor. Such a doctrine would support a promise to pay in order to avoid vexation and expense from suit upon a claim which the promisee knew was utterly without foundation, and which he had presented in bad faith.

A final analysis of the question brings one to the conclusion that the only consideration for the promise in such cases is the settlement, and that this is not a consideration between the parties themselves, within the ordinary rules regulating the sufficiency of consideration to support promises, but is a fiction resorted to by the law to sustain such compromises because public policy demands their encouragement. Of course cases may arise where other consideration to sustain the compromise may be shown; but most compromises have been upheld on no other ground than the single one of the settlement of an honest dispute, against the attempt which has been made, time and again, to show that the claim of the promisee was not valid. Said the court in DeMars v. Manufacturing Co., 37 Minn. 418, 35 N.W. 1: "The real conderation which each party receives under a compromise is not the sacrifice of the right, but the settlement of the dispute." In Kercheval v. Doty, 31 Wis. 476, 484, Chief Justice Dixon places the binding force of compromise upon the same ground. Speaking for the court, he sa...