Rogers v. Mercantile Adjuster Pub. Co.

• Decision Date: 27 March 1906
• Citation: 93 S.W. 328,118 Mo. App. 1
• Parties: ROGERS et al. v. MERCANTILE ADJUSTER PUB. CO. et al.
• Court: Missouri Court of Appeals

93 S.W. 328

118 Mo. App. 1

ROGERS et al. v. MERCANTILE ADJUSTER PUB. CO. et al.

St. Louis Court of Appeals. Missouri.

March 27, 1906.

Rehearing Denied April 10, 1906.

1. BILLS AND NOTES—CONSIDERATION—FRAUD —EVIDENCE.

Plaintiff sold a publication to T. in consideration of $5,000, to be paid in monthly installments of $100 each. After certain payments were made T. complained of misrepresentations concerning contracts for advertising, etc., but did not make any claim of fraud, and after suit had been brought for unpaid purchase price against T. it was settled by complainants deducting $400 from the amount due and dismissing the suit at their cost, whereupon T. conveyed the publication to defendant corporation, engaged in a similar business, of which T. was president, and the corporation executed the notes sued on to plaintiff, which were received in full settlement of T.'s obligation. Held, that such facts were insufficient to show fraud or want of consideration for the note sued on.

2. SAME—RESCISSION—RETURN OF PROPERTY.

Where defendant received a conveyance of a publication in consideration of notes sued on, executed to plaintiff, it could not allege a partial failure of consideration for the notes as a defense without offering to rescind the contract and tendering back what had been received, under Rev. St. 1899, § 645, providing that, when a written contract for payment of money is the foundation of an action or defense, the proper party may prove failure of consideration in whole or in part.

Appeal from St. Louis Circuit Court; Daniel D. Fisher, Judge.

Action by Harper N. Rogers and others against the Mercantile Adjuster Publishing Company and others. From a judgment for plaintiffs, defendants appeal. Affirmed.

This action is on 33 promissory notes of $100 each, all dated October 25, 1899, executed by the Mercantile Adjuster Publishing Company, as maker, and indorsed by Gerrit H. Ten Broek, one of the appellants, who was the payee. The Mercantile Adjuster Publishing Company, which we shall designate as the "Adjuster Company," is a corporation of which Ten Broek was president and a minority stockholder and had been for about 14 years at the time the notes in suit were given. They were indorsed and transferred by Ten Broek to plaintiffs before maturity. The defense to the action is that the execution, indorsement, and delivery of the notes were induced by fraudulent representations made by plaintiffs concerning the consideration for which they were given, and that there has been a partial failure of the consideration. Plaintiffs Harper Rogers and Arthur H. Carleton in 1898 and prior thereto were partners engaged in the furniture and carpet business at Sandy Hill, in the state of New York. The firm had come into the ownership of a monthly journal published in the city of New York and known as the "Lawyer & Credit Man," a paper circulated principally among wholesale houses, bankers and attorneys at law and dependent for support on their patronage. Rogers and Carleton took over the paper from a debtor of theirs early in 1898 to secure payment of a demand against said debtor. They desired to dispose of it at once, as they were unfamiliar with the publishing business. The Adjuster Company, of which Ten Broek was president, published a monthly journal in St. Louis similar to the Lawyer & Credit Man. Ten Broek's attention was attracted to the latter publication, and he began a negotiation looking to its purchase. The parties met in New York City in July, 1898, discussed the proposition, and finally a sale of the journal was made to Ten Broek by the plaintiffs for $5,000, payable in monthly installments of $100. The sale occurred August 29, 1898, and included the journal itself and all plaintiffs' right, title, and interest in it, its name, good will, accounts, and bills receivable. The bill of sale provided that Ten Broek should remit to plaintiffs $100 each month for 50 months. If he failed to pay one or more installments of the purchase price, plaintiffs were given the right, on 10 days' notice, to declare the sale canceled and void, and thereupon the property sold was to be redelivered to them and the notes previously paid by Ten Broek to be forfeited as liquidated damages. Ten Broek made two payments on the purchase price, leaving his indebtedness $4,800. In a letter dated October 15, 1898, he asked for an extension of time on the installment then due, and plaintiffs by a letter written November 22d granted the extension and asked that he remit by December 1st the three installments which would be past due by that date. In his letter requesting the extension Ten Broek declared that the Lawyer & Credit Man had turned out to be the worst disappointment he had ever known, and he seriously contemplated writing plaintiffs that he would abandon the whole enterprise. He said that of the $4,000 bills receivable, represented to him to be collectible, he had been able to collect only $200, and had been put to an outlay of $1,000 in running the paper. Instead of declaring an abandonment of the enterprise, he requested indulgence in paying the matured installments of the purchase price. That letter contained, among other things, this statement: "The only reason I made the contract with you was that I supposed I could realize at least $4,000 out of the accounts. I now know I will not get one-fourth of that sum out of them." On November 28, 1898, Ten Broek wrote plaintiffs, complaining that he had been compelled to cancel 1,700 of the contracts with the paper because the other parties to the contracts were either dead or had repudiated their obligations. On January 21, 1899, Ten Broek remitted plaintiffs a check for $100, and said he thought that thereafter he would be able to make his payments regularly. In this letter he said he wanted to realize for the plaintiffs what was due them as originally contemplated, but, if he had known the condition of affairs when the contract was made, he should not have entered into it under any circumstances. Plaintiffs, in 1899, instituted an action against Ten Broek in a New York court, he having made only 2 payments, to recover 10 installments of the purchase price then past due. This action drew from him a letter to Rogers in which he said that, if the suit against him progressed, his defense would be, as indicated in his letter, that misrepresentations had been made to him "as to the amount of live contracts on the books of the Lawyer & Credit Man" at the time it was turned over to him. He further stated that he did not for a moment believe Rogers had been intentionally guilty of misrepresentation, but the fact remained that in the statement on which the paper was purchased contracts were represented to be in force with parties who had been dead some time and with others who repudiated their agreements. A man by the name of Guimond had been conducting the paper for plaintiffs prior to the sale to Ten Broek and was retained after the purchase of the paper to continue the management. Guimond was familiar with the assets of the paper and plaintiffs were not, and it was Guimond who made whatever representations were made to Ten Broek prior to the latter's purchase of the Lawyer & Credit Man. Now, in the letter last mentioned, Ten Broek, besides acquitting Rogers of any willful misrepresentations, said he did not believe Guimond had willfully misrepresented the condition of affairs, but that any mistakes made in stating the facts were probably due to the fact that the books in the office of the Lawyer & Credit Man had not been kept properly. In this letter Ten Broek said that under these circumstances, in the answer he would file to the petition in the suit plaintiffs had brought, he would offer to return the Lawyer & Credit Man and demand of them the return of all money he had paid and damages for the money he had disbursed as expenses in printing the paper. He further stated that he had been consulting with the stockholders of the Adjuster Company about consolidating its paper, the Adjuster, with the Lawyer & Credit Man, and thought he could make plaintiffs a proposition which would meet with their approval. He asked that one of them come to New York and discuss a setttlement with him. The result of that letter was that Rogers and his attorney met Ten Broek in New York about October 1, 1899, for the purpose of settling the controversy then pending. Ten Broek contended that he had only been able to collect $700 out of about $3,300 or $4,000 of accounts which Guimond had represented to be good, and that he expected the accounts to reimburse him for most of the purchase money, and as the paper had been a failure he did not want anything more to do with it. Considerable talk occurred, the outcome of which was that, by reason of Ten Broek's disappointment in collecting the bills receivable due the Lawyer & Credit Man, plaintiffs agreed to deduct $400 from the amount then owing, thus reducing Ten Broek's indebtedness to $4,400. The paper was to be turned over to the Adjuster Company, which should execute 44 notes of $100 each, payable to the order of Ten Broek, who should indorse them to plaintiffs, and the action then pending against him should be dismissed by plaintiffs, at their cost. Pursuant to this arrangement all the things agreed to be done were carried out. The Adjuster Company executed the 33 notes involved in this cause and 11 others, which were afterwards paid, payable to the order of Ten Broek, and he indorsed and delivered them to plaintiffs, who dismissed their action against him and paid the costs. In further execution of the agreement, Ten Broek on November 16, 1899, executed a bill of sale to the Adjuster Company, by which he sold and transferred to it the monthly publication known as the "Lawyer & Credit Man," and all his right, title, and interest in and to said publication, its name, good will, accounts, and bills receivable, and everything pertaining to and...