Meyer v. Barde

• Decision Date: 29 July 1924
• Citation: 112 Or. 197,228 P. 121
• Parties: MEYER v. BARDE ET AL.
• Court: Oregon Supreme Court

228 P. 121

112 Or. 197

MEYER v. BARDE ET AL.

Supreme Court of Oregon

July 29, 1924

Department 1.

Appeal from Circuit Court, Multnomah County; W. N. Gatens, Judge.

Action by F. L. Meyer against M Barde and another, partners under firm name of Barde & Levitt. Judgment for defendants, and plaintiff appeals. Reversed and remanded.

This is an action to recover on four promissory notes executed on October 27, 1912, by the defendants, M. Barde and Jacob Levitt, as copartners. The plaintiff is the present holder of the notes. Each note bears an indorsement crediting it with a payment made on April 24, 1915. The action was commenced on April 21, 1921.

The defendants plead the statute of limitations as a bar to the action. They contend that the payments credited on April 24 1915, were not voluntarily made, nor made by them, nor under their direction. If this contention should be sustained, the action is barred, for more than six years had elapsed upon each note between the time of the next preceding payment and the time when this action was commenced.

The defendants, by their answer, in brief, allege that in March 1915, D. C. Latourette, acting for and on behalf of the holders of the notes, endeavored to extort money from the defendant Levitt by claiming to have in his possession a false statement signed by Levitt, which, by Levitt's use of it in procuring credit, Latourette claimed constituted a criminal offense, and threatened to procure an indictment against him and to secure his conviction and imprisonment unless Levitt would turn over to the holders of the notes funds additional to those they had derived through the bankruptcy proceedings; that Latourette executed the threat by procuring an indictment against Levitt charging him with having obtained money under false pretenses; that Levitt fearing that he would be convicted, and acting under duress turned over to Latourette a house and lot and an insurance policy; that said transfer was not made voluntarily nor as a part payment upon the notes, but was made for the sole purpose of securing immunity from prosecution and in consideration of Latourette's promise not to prosecute if Levitt would submit to said extortion; that after said transfer Latourette procured the dismissal of the criminal action and failed and refused to further prosecute the same and that by reason thereof said transfer did not constitute a partial payment upon the notes and did not have the effect of tolling the statute, and because thereof plaintiff's right of action is barred.

For a second further answer and defense, defendants allege that the payment credited on the notes as of the date of April 24, 1915, consisted only of the turning over by Levitt and his wife to Latourette, as agent, for the holders of the notes, of the life insurance policy, of which she was the beneficiary, and the home they occupied, of which she was the sole owner; that the defendants had been adjudicated bankrupts, a trustee in bankruptcy appointed who was entitled to all of the assets of the bankrupts and of all property in which they had an interest; that Latourette procured the indictment, and that Mrs. Levitt turned over said property to him because of his threat to railroad Levitt to prison on the charge of having made a false statement of his assets and liabilities, and that in consideration of the turning over to him by Mrs. Levitt of the property, Latourette did procure the dismissal of the indictment.

These allegations and substantially all of the new matter in the answer were denied by the reply. The reply, in brief, alleges that Levitt did make a false statement and thereby procured a loan of money for which the notes were given; that the facts were presented to the grand jury, and that an indictment was returned, charging Levitt with the crime of having obtained the money represented by the notes under false pretenses; that on or about April 24, 1915, Levitt and his attorney represented to the holders of the notes that he had this life insurance policy and home which he would turn over to them for a credit upon the notes of the sum of $2,173; that the offer was accepted and the credits given; that the transfer was not made upon the consideration that the indictment should be dismissed or upon any consideration, except for credit to be applied on the notes; that the indictment, in fact, was not dismissed until two years thereafter. The reply also alleges that both defendants knew of the transfer and knew of the application of the sum for which the transfer was made as a payment upon the notes; that they never made any objection thereto; that in subsequent negotiations between them, the amounts so paid upon the notes were referred to, and calculations of the balance due upon the notes were made, upon the basis that said payments had been made and were valid, and that the transfer of the property and the application of the consideration agreed to be paid therefor as a part payment upon the notes had been ratified and adopted by the defendants.

The facts material to this controversy are: Prior to the execution of the notes sued on, the defendant Levitt, in order to procure from the holders thereof a loan of the amount represented by the notes, gave them a statement in writing of his assets and liabilities. This statement showed that he was solvent and had assets, the value of which was more than $15,000 in excess of his liabilities. Subsequently involuntary proceedings in bankruptcy were brought against the firm and the defendants individually in the federal court for the district of Oregon, and on March 7, 1913, they were each and all adjudged to be bankrupts. On his examination in said bankruptcy proceedings, the defendant Levitt testified that on the very day that he had made and presented said statement to the holders of the notes for the purpose of procuring the loan, he was insolvent, and his liabilities were far in excess of the value of his assets. It was found and determined in the bankruptcy proceedings that the aggregate debts and liabilities owed by the firm and the defendant partners individually were approximately $150,000, and that the entire assets were only sufficient to pay dividends thereon aggregating 30 per cent. thereof. The final dividend was paid on August 19, 1914, and the amounts thus paid constitute the only payments credited upon said notes except the disputed payment made on April 24, 1915. During the pendency of the bankruptcy proceedings the defendants offered a composition, but this composition was refused by the creditors of the bankrupts. It also appears that the federal court refused to grant a discharge in bankruptcy to the bankrupts or either of them.

The First National Bank of Oregon City was the holder of one of said notes, and Mr. D. C. Latourette was its president. Latourette knew that Levitt, on his examination in the federal court, had testified that he was insolvent at the time he made the statement that he was solvent in order to procure the loans for which the notes were given. After a discharge in bankruptcy had been refused by the federal court, Latourette called Levitt by telephone, and in the conversation then ensuing requested him to come to Oregon City and take up and pay the balance due upon the notes. In that conversation, according to Levitt's testimony although this is denied by Latourette, Latourette stated to Levitt that if he failed to take up and pay the notes he would have him indicted by the grand jury of Clackamas county for the crime of having obtained, under false pretenses, the money for which the notes were given. Levitt did not go to Oregon City and did not comply with Latourette's demand. Thereupon Latourette did lay the matter before the grand jury and did procure an indictment against Levitt, charging him with the crime of obtaining money under false pretenses. Levitt was then arrested by the proper officials, taken to Oregon City, and released on bail. Levitt thereupon employed in his defense Mr. Russell Giltner, a reputable attorney of Portland, Ore., who died before the commencement of this action. Giltner, on his own motion, went to Oregon City and there consulted with Latourette concerning said charge. The evidence does not disclose what took place between them, but subsequently, and on April 24, 1915, Giltner, accompanied by Levitt and Mrs. Sophie Levitt, defendant's wife, returned to the bank, and after consultation with Latourette delivered to him a deed executed jointly by Mr. and Mrs. Levitt, conveying to a grantee whose name is not disclosed, but for the benefit of the holders of the notes, a house and lot in Oregon City, which was at the time incumbered by a mortgage for $2,000 and liens for street assessments. They also jointly assigned and delivered a life insurance policy payable in the sum of $2,000, to Mrs. Levitt upon the death of her husband, in which policy Mrs. Levitt was named as the sole beneficiary. It is admitted that the policy, in terms, provided that Levitt might substitute another beneficiary for the one named in the policy. It appears from the testimony of the defendants that Levitt himself paid the premiums on said policy, and that the house and lot were purchased partly with Levitt's money and partly with money furnished by Mrs. Levitt. At the time said transfers were made, it was understood and agreed between Latourette and the Levitts that the consideration for said conveyance was the sum of $1,500 and for said assignment the sum of $673, and that these sums should be credited as a partial payment on the four notes in question. The aggregate of these two sums, amounting to $2,173, was applied in part payment of the four notes, as agreed upon, and credit therefor was indorsed upon the notes as of the date of ...