Case ID: mass_17/html/0178-02.html
Source: Caselaw Access Project
Author: {"author": "Parker, C., J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Calvin Martin, Administrator, &c., versus John B. Root and Another.
    
      A, being in failing circumstances, conveyed his estate to B and C, taking their promissory note for the value ; with intent to prevent the estate from attachment by his creditors, and to save it for the benefit of his family At the same time he transferred to them sundry securities for the payment of money with which they were to purchase in a previous encumbrance upon the estate; and gave them also his promise in writing, that the said note should never be collected. A died insolvent; and his administrator recovered judgment upon the note; although it was more than sufficient to discharge all claims upon his estate, and the surplus would go to the benefit of his family.
    This was an action of debt. The declaration contained four counts, as to all of which, except the second, the jury found their verdict for the defendants. In the second count, the plaintiff declares on a promissory note for 5072 dollars, 43 cents, dated March 4th, 1811, made payable by the defendants to Simon Lamed, the plaintiff’s intestate, in three years from the date.
    At the trial, which was had on the general issue at the last May term in this county, before Wilde, J., the signatures of the defendants were not controverted by Root; and Hunt, the other defendant, had been defaulted at a previous term.
    The defence made by Root was payment, or a discharge from Lamed; and to show such payment or discharge, he * read to the jury a paper signed by Lamed, of the [ * 223 ] same date with the note, in which he promised to save the said Root and Hunt harmless from the same, and that it should in no way or manner be collected to their injury.
    To explain the circumstances under which the said supposed discharge was given, and the intention of the parties in that transaction, the plaintiff offered to prove the confessions made by Hunt, the other defendant, as contained in a statement of facts made and signed by him. This evidence was objected to on the part of Root, principally on the ground that the plaintiff had no right to offer evidence tending to prove that the discharge was given with an intent to defraud the creditors of Lamed, and because Hunt, previous to making the confessions, had become insolvent, as was proved in the case. The objection was overruled by the judge, it being in evidence that Larned’s estate was insolvent, unless the plaintiff should recover in this action; and that this suit was prosecuted partly for the benefit of the creditors of the estate, although the whole debt claimed is not necessary for the payment of the debts of the intestate.
    The said confession of Hunt was to the following effect, viz., that at the time the note in question was made, Lamed applied to him and Root to purchase the estate on which Lamed then lived, and upon which the bank of Columbia had before extended an execution against Lamed on account of a debt due from the Berkshire bank, of which he had been a director. He, at the same time, delivered to them certain promissory notes of divers persons to the amount of the sum for which they gave their note. Among the notes thug delivered to them, was one for 1500 dollars, payable by Root him self to Lamed. Root and Hunt purchased the estate of the Columlia bank, giving their promissory notes for 5631 dollars, payable in one, two, and three years without interest. They then gave to Lamed their joint bond, conditioned to convey to him or his assigns the same estate, upon payment of the sum of [ * 224 ] 5072 dollars. *The object of the parties to this transaction was to save the property to Larned’s family, and to guard against attachments on account of the debts of the RerJcshire bank. Hunt took into his possession all the notes delivered by Lamed to him and Root, giving the latter a receipt and promise to account to him for a moiety of the proceeds when collected. The notes were all collected by Hunt, except that payable by Root, which he assigned to Whitwood Sf Swift, as collateral security to them as endorsers on a note for a house, of which Hunt was one, and on which Root had been sued, and judgment had been rendered against him by agreement for 1550 dollars. But on a fair adjustment, there will be due to Whitwood Sy Swift 100 or 200 dollars less than that judgment, which Root may avail himself of. Only 900 dollars have been paid by Hunt to the bank of Columbia. After Hunt perceived himself in failing circumstances, he made notes to Root and learned for the amount due from him to them respectively. Those which were payable to Lamed were endorsed to Root, and judgment had been recovered upon them, but was wholly unsatisfied; and Hunt’s property had been wholly taken by others of his creditors.
    The defendant then offered another paper, signed by Hunt at another time, in the form of an affidavit, which had been given by him at the request of the plaintiff, and used by the plaintiff in the trial of this action, or of another, between the same parties in the Court of Common Pleas. But this being the declaration of one of the defendants, the judge was of opinion that it could not by law be admitted in evidence, and it was rejected.
    It was contended on behalf of the defendant Root, that, at most, the note and discharge, taken in connection with Hunt’s declarations, amounted to no more than evidence of a trust and confidence reposed by Lamed in Root and Hunt; and that, upon this ground, Root could not be made responsible for more of the trust money than he had received, viz., one or two hundred dollars on [ * 225 ] his own note to Lamed; * and that he had acted with sufficient care in permitting Hunt, a practising lawyer, and the confidential friend of Lamed, to keep and collect the notes.
    On the whole evidence, the judge instructed the jury that, if they were satisfied the note was justly due, and had not been paid, and that the supposed discharge was made with an intent of both parties to conceal Lamed’s property from his creditors, and to prevent them from securing the same, for the purpose of obtaining payment of their demands against him; they should find for the plaintiff on the second count, the said supposed discharge being in such case void by law.
    The jury accordingly returned their verdict on that count, in favor of the plaintiff for the whole amount of the note. If the direction was wrong, and the Court should be of opinion that the plaintiff was not entitled, by law, to recover, the verdict was to be set aside, and the plaintiff to become nonsuit; otherwise, judgment was to be rendered according to the verdict; or the same might be altered, and the amount of the debt reduced, in case the Court should so direct.
    
      Jarvis, for the defendant.
    If this verdict is to stand, the defendant Root will be held to pay a great sum of money, for which he has never received the smallest consideration ; and this, in a considerable part, for the benefit of the family of the plaintiff’s intestate, although the whole originated in his fraudulent intention to evade the payment of money, for which the law had made him liable But we trust there are objections to the verdict, sufficient to induce, the Court to set it aside.
    The statement made by the defendant Hunt was improperly admitted in evidence. We do not deny that the declarations or confessions of a partner are generally admissible, as against his copartner. But this is true only so long as the copartnership exists . Bankruptcy or gross mismanagement operates the dissolution of a copartnership; and here, in addition to insolvency, is disclosed * as gross mismanagement and injurious conduct [ * 226 ] in Hunt, towards Root, as can be easily imagined. This written and precise statement is also very different from accidental oral confessions of a party in court, which might at the same time be explained or done away by other circumstances disclosed. But this declaration was ex parte, without notice to Root, and may have been procured by fraudulent means, out of his power to detect. These views are greatly corroborated by the fact that Hunt, after wards, and upon more deliberate recollection, gave an account, undei oath, differing materially from that which was read in evidence .
    The last fact goes strongly to show that the second statement should have been received to explain the former one. It was under oath, given at the plaintiff’s instance, and had been used by him in another trial. It must, therefore, be taken for true, as it relates to the plaintiff, who would be estopped to deny it. It may, indeed, be considered as his own confession. He has acknowledged the truth of it by producing it in evidence heretofore.
    It is respectfully suggested that the instruction to the jury that, if they found the discharge to be fraudulent, the plaintiff was entitled to a verdict, was not correct. The discharge was not fraudulent, inasmuch as it went to avoid the note, and left the defendants liable to Lamed’s creditors as his trustees. The fraud was in giving the note, and the attention of the jury should have been directed to that object.
    If the discharge was fraudulent, so was the note also, and consequently void. They were parts of the same transaction; and the remedy of the plaintiff was for the consideration. Then Moot, as trustee, would be answerable only for the money he had actually received .
    An administrator cannot take advantage of his intestate’s fraud for the benefit of creditors . Or, if this be not so, yet [ * 227 ] it is clearly wrong that he should do it further * than the amount of the claims on the estate shall justify; certainly not for the benefit of the heirs of the fraudulent party.
    If, then, the plaintiff is entitled to recover any thing in this action, the amount found by the verdict should be reduced to such a sum as shall equal the existing lawful claims against the estate of the intestate .
    
      Howe, for the plaintiff.
    
      
      
        Watson on Partnership, 280.
    
    
      
       3 Johns. 250, 252.—10 Johns. 66.—6 Johns. 267.—4 Mass. Rep. 357.
    
    
      
       4 Johns. 23.—Mad. Chanc. 119,121.—Cro. Car. 312.—3 -di/c. 584.—11 Vez. jun. 319
    
    
      
      
        Yelv. 196.—7 Johns. 161.—1 Salk. 318.
    
    
      
       Vide 1). E. 366.—3 Mass. Rep.iQ.
      
    
   Parker, C., J.,

delivered the opinion of the Court.

We are all satisfied that the declaration of Hunt, offered by the plaintiff, was rightly admitted. Hunt and Moot, being joint contractors, the confession of one operates upon both ; as in the case of the statute of limitations, a confession that payment has not been made; or, in the case of joint drawers or endorsers of promissory notes or bills of exchange, a confession of demand made, or notice given. It is the confession of a party.

The other statement of Hunt, made at a different time, was not legal evidence when offered by the defendant; for it was the declaration of a party in his own favor. If Hunt had been viewed in the light of a witness, it would have been competent to use subsequent declarations, to impeach prior ones. But here is a party; and it is as if the action had been tried against Hunt alone, in which case his own subsequent declaration could not be used tc impair the effect of a previous confession.

The plaintiff’s having used the second declaration in another trial, cannot oblige him to receive it now as evidence. Then, he used him as a witness, and was obliged to content himself with all he was willing to swear to. Here he has his confession, which he has a right to make use of against Hunt or his partner.

The objection to Hunt’s statement, that it is the confession of a partner after the copartnership, cannot prevail. For it is the confession of facts which took place before the dissolution; and it may be doubted whether the joint interest is dissolved, until the note is paid. Bankruptcy in England is widely different from a mere inability to pay one’s debts here.

*It was suggested that the statement of Hunt might f * 228 ] have been procured improperly, by surprise or collusion. This may be objected to all confessions and all evidence. The answer is, that if facts of the kind are proved, the effect of such evidence will be destroyed.

The direction of the judge to the jury, that if the discharge of the note was fraudulent, their verdict should be for the plaintiff, we think was entirely correct. For if that was fraudulent, it left the note good and valid. There was an adequate consideration for the note; no one can doubt Hunt’s liability upon it, and if he was liable, it follows that Root was equally so. For he voluntarily engaged himself with Hunt; and, indeed, the consideration came to him as much as to Hunt; and he would have had the benefit of it, but for his confidence in Hunt.

But it is said, that if it were fraudulent, this discharge cannot be avoided, so as to set up the note ; and this would be true if Lamed were living, and endeavoring to avail himself of the note. But his creditors may do it, and the administrator, who represents the creditors, may show the fraud to avoid the receipt. Assignees of a bankrupt might do it. If this were not so, it would be easy for men to provide for their families, to the prejudice of their creditors.

Nor does it make any difference, that less than the amount of the note is wanted for the creditors, and that the surplus will go to the heirs of the intestate. This is but an incident to the right of the administrator to recover for the use of the creditors.

The fifth section of the “ act regulating the descent and distribu tian of intestate estates,” provides for the recovery of real estate fraudulently conveyed, for the benefit of creditors. This is a necessary provision, because the intestate did not die seised; but no such provision is needful for the recovery of debts due to the intestate .

With respect to the position, that Root is to be considered as trustee, and, so, answerable only for what he has [ * 229 ] * actually received; we cannot view him in this light. He was indebted to the full amount of the note, equally with Hunt. The object of Lamed was to have the security of Root. It was only through the consent of Root that Hunt had all the property; and if Root suffers from misplaced confidence in Hunt, it is to be lamented; but not to be remedied by us.

Judgment on the verdict 
      
      
        Stat. 1805, c. 90.