Case ID: ny_14/html/0322-01.html
Source: Caselaw Access Project
Author: {"author": "Denio, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Durgin against Ireland and Pruden.
    An agreement by one of several creditors to compromise his claim for fifty cents on the dollar on condition that all the other creditors consent to take the same percentage on íhe debts due them, and a receipt by such creditoi showing payment of fifty per cent as a compromise and in full of the indebtedness, “provided all the other creditors accept the same for their demands,” do not work a satisfaction of his claim, if any of the other creditors refused to compromise and were paid their demands in full. The effect of the payment of fifty per cent was simply to discharge the debt pro tanto.
    
    The residue of the debt was still owing, and an action on the original contract was the proper remedy for its recovery. Per Denio, C. J.
    A claim for the residue of the debt is assignable; and a cotemporancous parol agreement, that the assignor and assignee are to share whatever the latter can collect on the claim, does not make the former a necessary party to the suit, where the assignment was a written one and absolute on its face.
    Such a parol agreement should not he received in evidence on the trial to vary the terms of the written assignment; and if it be, it is not error in the judge to disregard such illegal evidence, without any subsequent order to expunge it, in his final ruling which determined the verdict.
    An objection by the defendant, on the trial, that the claim for the residue of the original debt was not assignable, will not allow him to raise the question, on appeal to this court, whether the assignment, accompanied with the verbal agreement shown in this case, was void on the ground of maintenance.
    
      It seems, that illegal maintenance does not now exist in this state, except in the single case mentioned in the Revised Statutes.
    The action, in the superior court of the city of New-York, from the judgment of which court the appeal in this case was taken, was brought to recover the amount of a promissory note, made by the defendants and payable to Messrs. Anthony & Davis, for $534.23. The plaintiff claimed to be the assignee of Anthony & Davis. Besides the usual statements in an action on a note, the complaint set forth an attempt of the defendants to compromise the debt, by the payment by them to Anthony & Davis of fifty cents on the dollar of the amount of the note. It admitted the payment of that proportion of the debt, but averred that, by the agreement, such payment was to satisfy it only in case the other creditors of the defendants accepted the same proportion of their respective debts in full satisfaction of the same; and it alleged that one or more of "the other creditors of the makers refused to make the compromise, but on the contrary insisted upon and actually obtained the whole amount of their debts. The assignment from Anthony & Davis to the plaintiff was alleged to have been made after this attempt to compromise.
    The answer did not controvert the making of the note, but insisted upon the compromise. It also relied upon the transaction, referred to in the complaint, as a purchase of the note by Ireland, one of the defendants, from Anthony & Davis, for the fifty per cent admitted to have been paid, and it alleged that Anthony & Davis assigned the note to Ireland;, and, in answer to the plaintiff’s allegation that all the creditors had not accepted the compromise, the answer alleged that all had done so except one Robinson, and that his refusal to do so was known to Anthony & Davis when they entered into the compromise. The answer took issue upon the allegation that Anthony & Davis had assigned to the plaintiff.
    On the trial, the plaintiff proved the agreement between Ireland, one of the defendants, and Anthony & Davis, respecting the compromise, to be such as was stated in the complaint. He likewise proved the contents of a receipt given by the latter to Ireland on that occasion, by which they admitted the receipt of a sum equal to fifty per cent of the amount of the note, as a compromise, and to be in full of the indebtedness of Pruden & Ireland, the defendants, to Anthony & Davis, “provided all their other creditors accept the same for their demands.” When the payment was made and this receipt was given, Anthony & Davis gave up tl e note, with their name written upon the back of it, to the defendants. The plaintiff then proved and gave in evidence an absolute assignment of the note to himself, under seal, executed by the partners of the firm of Anthony & Davis, which was expressed to be in consideration of the sum of one dollar paid, and the fifty per cent which had been paid was mentioned In the instrument as a payment on account of the note. It was shown that two other creditors of Pruden & Ireland had not accepted the compromise, but had received the whole 'amount of their debts. When the plaintiff had rested, the defendants moved for a nonsuit, on the. ground that the claim was not assignable, and that the assignment was void for champerty and maintenance. The motion was denied and the defendants’ counsel excepted.
    The defendant called T. Anthony, one of the payees of the note, who swore that the arrangement between his firm and the plaintiff, at the time the assignment was executed, was, that the plaintiff should collect the money, if he could, of Ireland, and pay one-half of it to Anthony & Davis and retain the other half himself, and that the nominal consideration mentioned was not paid. This evidence was admitted against the objection of the plaintiff’s counsel, who insisted that the terms and effect of the instrument of assignment could not be controlled by parol evidence. He excepted, upon his objection being overruled. On cross-examination, the witness stated that the agreement just mentioned was made at the time of his execution of the assignment, and that he did not recollect that there was any such agreement in writing.
    The defendants’ counsel renewed the motion to dismiss the complaint, on the ground that the plaintiff could not maintain the action because of the interest of Anthony & Davis.
    The court directed a verdict for the plaintiff for the balance of the note, and the defendants’ counsel excepted Verdict and judgment for the plaintiff, which judgment was affirmed at a general term.
    
      W. Watson, for the appellants.
    
      D. Hawley, for the respondent.
   Denio, C. J.

The condition, upon which the payment of fifty per cent of the amount of the note was to operate as a satisfaction of the whole sum, was not performed. The payment was, by the agreement, to be a full satisfaction, provided all the other creditors agreed to a similar composition, but not otherwise. It was not pretended in the answer that ¿11 the creditors had agreed to accept the compromise, and the proof showed that there were several who claimed and received the full amount of their debts. The effect of the payment which was made upon the'note in question was simply to satisfy the demand pro tanto. The residue was still owing, and an action on the original contract was the proper remedy for its recovery.

The plaintiff’s counsel was right in his position, that the effect of the assignment could not be changed by parol evidence. According to the terms of that instrument, all the right,'interest and property of Anthony & Davis in the note were sold and transferred to the plaintiff. The parol evidence, if it was competent, showed that only a moiety of that interest was assigned, and that as to the other moiety an agency was created for the collection of the demand. ISTo principle of the law of evidence is more familiar than that parol proof cannot be admitted to contradict a deed or other written instrument. It was formerly supposed that a parol defeasance might be setup to control'the effect of a deed absolute on its face; but it has been settled, by a judgment of the late court for the correction of errors, that this cannot be done at law, or unless it be shown that fraud or mistake has intervened to produce an instrument which does not truly represent the contract between the parties. (Webb v. Rice, 6 Hill, 219; S. C. in Supreme Court, 1 id., 608, by Bronson, J.) It is true that a blank indorsement upon a note or bill of exchange does not preclude evidence that it was only intended to transfer the paper for the purpose of collection or in trust; but this is upon the ground that the written contract between the parties was left incomplete. (See the cases collected in Cowen & Hill’s Notes, 1473.) I do not see anything in the circumstances of this case to take it Out of the principle referred to. The parol evidence which was offered and received was therefore incompetent. But the judge must have subsequently rejected the evidence given by the witness Anthony, though it is not so stated in the case; for if that evidence were legitimately before the court,’ and if it might lawfully control the effect of the .assignment, then Anthony & Davis were necessary parties, and the plaintiff could not have recovered for not having joined them as plaintiffs in the action. The question then arises whether it was not the duty of the judge after receiving the evidence, there being no subsequent order to expunge it, to give effect to it in the ultimate disposition of the cause; and whether it was not error to disregard it in his final ruling which determined the verdict. In Meyers v. Betts (5 Denio, 81), a referee received in evidence the account books of the defendant upon insufficient preliminary evidence, but on taking time to deliberate, after the evidence was closed and the parties had gone away, he concluded to reject the books, and made a report in favor of the plaintiff'. The court held this to be erroneous, for, the judges said, it might be that the defendant would have given competent evidence but for the ruling by which his books were received. The principle thus decided certainly has some analogy to the question before the court, but it does not, in my opinion, govern it. If it had been conceded that a cotemporaneous parol agreement had been made to the effect proved by Anthony, it would still have been the duty of the court and jury to have given effect to the writing in opposition to the verbal contract, on the ground that, whatever the parties may have said, they had fixed upon the writing as the exponent of their views. So, although the judge erred in admitting the parol evidence, it was not necessary for him to commit the further error of giving to it a controlling effect over the writing, which still remained the only authentic evidence of the bargain. Besides, the parties were present when the charge was given which, in effect, disregarded the parol evidence, and the defendant, had he seen fit, could then have asked leave to give other evidence if he had any which was competent. But the witness proved, in effect, that there was no writing containing the agreement which he says was made by parol. The defendant could not, then, have been injured by the disposition which was made of the incompetent evidence which he was permitted to give.

The defence, that receiving the assignment of the demand under the agreement sworn to by Anthony, and commencing a suit thereon, were acts of maintenance, was not taken in the pleadings. Nor was the objection properly taken on the trial. When the plaintiff had given his testimony and had rested, the defendant moved for a dismissal of the complaint, on the ground that the demand was not one which was capable of being assigned. This seems to have been based on the idea that the action was brought to set aside the compromise, whereas in fact it was on the note and to recover the unpaid balance, on the well grounded assumption that it was unaffected by the alleged compromise. The defendant added to the ground of his motion that the assignment was void for champerty and maintenance. There was not, at that time, any pretence for that imputation, as nothing had been shown but the simple fact of an assignment by Anthony & Davis to the plaintiff. The motion was, therefore, properly overruled. After the defendant had given his evidence, consisting in part of the parol proof of the agreement to share in the fruits of the litigation, the defendants’ counsel, it is said, renewed the motion to dismiss the complaint, on the ground that the plaintiff could not maintain the suit because of the interest of Anthony & Davis. This would not suggest to the judge’s mind the difficulty now insisted on. The point of the objection, as stated, was, that Anthony & Davis were, on account of their interest, necessary parties to the action, and that the plaintiff could not recover on account of the existence of such interest. It was essential for the defendants’ counsel to raise the question before the circuit judge, whether an assignment, accompanied, with an agreement such as was shown to exist in this case, was not illegal and void, if he would avail himself of it upon an appeal. In determining a question of illegality in respect to the law of champerty, the facts could, no doubt, be shown by parol, though, as regards the strictly private rights of parties, parol evidence would not be admissible. I am of opinion, therefore, that the question whether the transfer was void on the ground mentioned does arise upon this appeal. It has been for a long time doubted whether the law of maintenance, except as defined by the Revised Statutes, which do not touch the present question, now exists in this state. (Small v. Mott, 22 Wend., 403; S. C., 20 id., 212.) The question has been presented to the court directly at the present term of the court in the case of Sedgwick v. Stanton, and we have held that illegal maintenance does not now exist except in the single case mentioned in the Revised Statutes.

The judgment appealed from should be affirmed.

Judgment affirmed.