Case Name: Moses D. Hyams vs. E. L. Levy
Court: South Carolina Court of Errors
Jurisdiction: South Carolina
Decision Date: 1843-05
Citations: 1 Speers 368
Docket Number: 
Parties: Moses D. Hyams vs. E. L. Levy.
Judges: Richardson, O’Neale, Evans, and Warddaw, JJ., concurred.
Reporter: South Carolina Law Reports
Volume: 28
Pages: 368–378

Head Matter:
Moses D. Hyams vs. E. L. Levy.
X. A verbal agreement, which is executory, between a debtor and his creditor, that the latter shall accept the note of the former, secured by the endorsement of a third person, for two-thirds of his debt, in satisfaction of the whole, to which arrangement the party so endorsing assents, is not obligatory.
2. Such agreement, unless there be either a benefit to the plaintiff, or a loss to the defendant, so as to constitute a foundation for a new consideration, is imdu.ni pactmn.. (1)
(1) Vide, Binton vs. Brockwell, 8 East, 308; Fitch vs. Sutton, 5 ib. 230; Watkinson vs. Inglesby Stokes, 5 J. R. 386:
In the City Court of Charleston. Tried before his Honor, Judge King, January Termf 1843.
This was an action to recover the amount of a note, $634 54-100, dated 12th February, 1842, at sixty days, protested for non-payment, 16th April, 1842. Note admitted.
James Chapman, sworn — Early in March, 1842, Levy, •finding himself in difficulty, called a meeting of his creditors ; witness met Hyams and D. C. Levy, (the brother of ■defendant,) opposite to D. C. Levy’s ; the creditors met at •the store of Blum & Cobia; D. C. Levy urged Hyams, (the plaintiff,) to go; he seemed unwilling, but said whatever they did, he would accede to; he did go, and looked into the affairs; he did say, distinctly, that he would da what the others did; this was five minutes befoi'e the meeting; I considered Hyams bound; I understood the arrangement was to be between Levy and all the creditors, I do not think that the creditors would have agreed to it, had not all been bound ; Hyams, neither by word nor deed, appeared to dissent; D. C. Levy agreed to the proposition, (which was, to take the notes of E, L. Levy, endorsed by his brother, D. C. Levy,for 66 2-3per cent, in full;) when I (the witness) heard that Hyams had refused .to accept, I went with a friend, Mr. Tupper, to Hyams’s; he said he would think of it, but that he was after another person than E. L. Levy ; I thought the offer a good one, and accepted it; all were to have the same proportion.
Cross-examined — This was in the forenoon; D. C. Levy and Hyams were standing, when witness met them; Hyams said, whatever the others will do, i will do; D. C. Levy invited Hyams to go, and he went to the meeting; he did not say he would sign off after he had examined the accounts; in a few days after, all the other creditors signed off; there was no particular time allowed ; I considered the thing as closed, as soon as all had signed off except Hyams; had he said he would not sign off, I would not have signed off; I think I would have refused to sign, if Hyams had said he would not; I do not know what I would have done; I probably would have signed, even if Hyams had said he would not; I had passed my word to sign ; he always refused to sign, but he told me he would never trouble E. L. Levy; he looked to D. C. Levy; the note came from a sale of molasses ; Hyams not being paid by D. C. Levy, made Levy the more able to pay others; witness would have taken the note, (the compromise;) I should have thought it a deception on the other creditors to have paid one more than another ; I concluded that Hyams would be bound by our conversation; had I found fraud, I would not have signed off; Hyams never intimated that there was any thing unfair in Levy’s statement.
Henry Cobia, sworn. — We agreed to accept 66 2-3 per cent, with D. C. Levy’s security ; the meeting was called at witness’s counting-house ; I agreed to consult.the creditors ; I saw D. C. Levy, and he said he would give his endorsement, if all the creditors agreed to it; Hyams said, whatever the rest do, I shall do ; it was put if we should accept of it; most agreed to it; Hyams said he would think of it; (this was after the meeting, or at it; no agreement then drawn;) his (Hyams’s) conduct shewed some indecision ; he had told me whatever others do, I will do ; it was the inducement held out, that all would sign, that D. C. Levy consented to endorse, and when Hyams refused, we were afraid that it would be blown up ; I should not have backed out; I had given my word that I would sign.
Cross-examined. — It depended a good deal upon Mr. Hyams, that the others would sign off; he said he would think of it, and I thought he was wavering; he afterwards refused to sign; several liad signed when I next saw Hyams; I met Hyams on the Bay, and I said, will you sign that pa* per? he said, have they all signed? I said no, Mr. Tup* per has not signed; he then said, when Mr. Tapper has signed, bring it to me; I then thought he would sign; he afterwards refused; he did not doubt E. L. Levy’s honesty, but thought, unless D. C. Levy endorsed for him, he would be unable to pay it; Hyams never expressed any dissatisfaction with the papers; he has since spoken well of E. L. Levy; before this conversation, he had never said he would not sign.
Mr. Twpper, sworn — I did not charge my memory, but I am under the impression he (Hyams,) said he would do what the rest did; I delayed until I could see my father ; I saw him, and spoke about it; I saw him, (Hyams,) and spoke to him about signing ; he said, have you signed 'l I will wait until you sign; I was under the impression that he would sign.
Cross-examined. — The meeting with Hyams was in the street; when he did not sign, Chapman and I went to him, and he declined; I did not see D. C. Levy ; I met Chapman, and he and I went to Hyams: my impression was, it was necessary to get Mr. Hyams to sign it; D. C. Levy had acted up to his contract; I thought it a very favorable arrangement.
Isaac Mordecai, sworn. — I called on Mr. Hyams, to ask him to keep his promise; he told me, that under the circumstances in which he had made the promise, he was not bound to keep it; after the suit was commenced,I think he said he had taken an oath not to come in.
Cross-examined:■ — I called at the request of D. C. Levy; I went to Hyams’s, thinking him acting badly; he went in and looked at the papers, and he then took into consideration the nature of the debt, and he determined not to come in ; he said they are not to break up their arrangement for the amount of my debt; I have never seen the papers ; I do not recollect when this was; Hyams thought his debt was different from the others; when he saw the papers, he said he altered his mind; he never said he saw any thing wrong in the statements submitted ; he wanted to get off.
John E. Cay, sworn. — He was present at the meeting of the creditors; the day of the meeting I met Hyams; we went up stairs together -; I called on Hyams to sign off; I signed off; I did not delay my signing on account of Hy sms’s not signing; I was satisfied every thing was right; never saw a fairer statement.
Here were introduced Levy’s letter to Hyams, of 16th April, 1842; Hyams’s to Levy, of the same day.
Woolf Barnet, sworn. — Has stayed with Hyams more than a year; I was informed of the arrangement made at the meeting of the creditors ; Mr. Hyams gave me a letter, and read it to me, and I carried it to D. C. Levy; I do not recollect the month; think it was March; I was only to deliver it, D. C. Levy called about this business; the reply was in D. C. Levy’s hand-writing; I ivas not authorized to say any thing to D. C. Levy.
Mr. Philips, sworn. — I was present at the meeting of the creditors; Hyams was sitting there ; he looked sullen, and .almost instantly went down; he heard Mordecai’s statement, which was very satisfactory.
The evidence here closed. The counsel for the plaintiff and defendant addressed the jury.
The court submitted the case on the evidence to the jury, and told them that it was their province, on the facts before them, to find whether there was or not fraud in the conduct of the plaintiff; that if they believed that the defendant, E. L. Levy, had been induced to surrender his property on the concurrence of the plaintiff with the other creditors, to accept of a compromise, and give the defendant a discharge, the plaintiff would not be entitled to recover the whole amount of his note; that there was no evidence before them to shew that the property of the defendant had been exhausted by the compromise, but that the case was one rather of fact than of law.
The jury found for the defendant.
A motion was now made for a new trial, on the following grounds:
1. Because, if the plaintiff promised to execute a release upon the payment of a part of his debt, there was no consideration for the promise, and it was a nudum pactum.
2. Because the assertion, that he would do as the rest of the creditors would do, was a loose observation, which he corrected, by expressing his dissatisfaction as soon as he had seen the papers, and heard the statement made on the part of the defendant.
3. Because, before the-agreement on the part of D. C. Levy and the creditors was-finally closed, the plaintiff expressly stated his determination not to sign the release, but to hold the defendant for the whole amount of his debt.
4. Because the creditors were not prejudiced by the plaintiff’s refusal to sign off.
5. Because the defendant sustained no injury from the loose declaration made by the plaintiff, that he would act as the rest of the creditors would do.
6. Because, if the defendant was entitled to any thing, from the face of the note, he could only be entitled to the difference which he had paid the other creditors. In other words, if entitled to any discount whatsoever, he ought not to have been allowed more than 33 1-3 per cent, by the verdict.
7. Because the verdict was, in other respects, contrary to law and evidence,
Phillips, for the motion,
said there was no consideration between D. C. and E. L. Levy. Any promise without consideration is nudum pactum. Chitty on Contracts, 26 ; 2 Blackstone’s Com. 445; 5 J. R. 272; 10 J. R. 246. Nor was there any consideration for Hyams’s promise to accept less. Cited 3 Pensylvania Rep. 282; 3 Pickering, 207; 16 J. R. 281, 283 ; 2 ib. 448 ; 17 ib. 169; 1 Strange, 425.
Mr. P. contended that Hyams did not persuade the other creditors to accept of any composition; but even if he had, and had then refused himself, wpuld it deprive him of his whole debt 1 He denied that plaintiff had so-committed a fraud, and insisted that when Levy endorsed, he knew that Hyams would not sign off. Cited 1 Nott and McCord, 112; 1 Evans’ Pothier, 21; 3 Term Rep. 653 ; Dudley’s Rep. 50. There was no consideration moving from Levy to Hyams, or from D. C. Levy to Hyams. The case from 1 Esp. 235, was a nisi prius decision, and has no application to this case. Cited 2 Durnford and East, 24 ; 2 Bay, 520, as to fraud presumed by the jury without proof.
Moise, contra.
The first ground made in the brief is, that the promise pf Hyams to do what the other creditors did, was not binding, inasmuch as it was without consideration.
To this we reply, that the promise of Hyams was one of the inducements of the other creditors to come into the arrangement, which being beneficial to both the creditors as well as Levy, constituted a sufficient consideration for the promise.
In support of this position, I refer the court to the following cases. Wilson and Clements, 3 Mass. Rep. 1. “A promise deliberately made, although without consideration, if it shall induce a third person, from the confidence he reposed in it, to part with his property, is binding.”
In Hamaker vs. Eberly, 2 Bin. Rep. 509, it is said, that “ to make a consideration sufficient in law, for supporting an assumpsit, there must be some benefit arising to the defendant, or some injury or loss to the plaintiff.”
So, too, in Meacham and McKie, 1 Hill’s Law Rep. p. 374, Mr. Justice O’Neall, who delivered the opinion of the court, uses the following language: “ It is sufficient that a slight benefit be conferred by the plaintiff on the defendant, or a third person; or even if the plaintiff sustains the least injury, inconvenience or detriment, or subjects himself to any obligation, without benefitting the defendant or any other person.”
And in Hawkes and Sanders, Cooper, p. 290, referred to in McMorris and Herndon, 2 Bailey, 56, Lord Mansfield said, “ Where a man is under amoral obligation, which no court of law or equity can enforce, and promises, the honesty and rectitude of the thing is a consideration.”
And Chancellor Kent, in his Commentaries, at p. 389, says, that “ a creditor, who does not agree with the other creditors to a composition, is not bound; but if he does consent, an agreement in derogation of the composition is' fraudulent, in respect to the other creditors, and void. The composition binds him to good faith.”
The 2d ground is, “ that the promise of Hyams toas a loose observation, ichich he afterwards corrected•”
The evidence tells a different story. It proves, beyond doubt, that he made no assertion to contradict his first promise, “ to do what the others did but, on the contrary, held out this impression until he had secured, as he supposed, the entire arrangement with all.
What is the evidence of Tupper 1 And what was the language of the plaintiff to Mordecai'?
The 3d ground is answered by the observations on the 2d.
The 4th, 5th, and 6th grounds may be considered as one, and amount to this, “ that the creditors were not prejudiced by Hyams’s refusal to sign; that the defendant sustained no injury, and that if he was entitled to any thing, it could only be the difference between what was paid to the other creditors and what Hyams now claims.”
But the question, whether or not the creditors are prejudiced, depends upon the result of the present action. If Hyams recovers his demand, will he not receive more than the other creditors *? and that, too, for attempting to defraud them'? And if he recovers two-thirds of his debt, will not the defendant be compelled to surrender- his body to satisfy the verdict'? and is this no injury to him'?
In the case of Butler and Rhodes, 1 Esp. Rep. 236, it is said that when a creditor agrees to take a composition from his debtor, on the'faith of which the debtor executes a deed of assignment of all his property to a trustee, for the benefit of his creditors, such creditor shall not be allowed, by refusing to execute such deed, to sue his debtor for the whole of his demand. In this case, Lord Kenyon said that the principle upon which the action could not be maintained, was, that in consequence of this act of the plaintiff, the defendant had parted with all his property, and the other creditors had been induced to execute the deed, which is unquestionably a fraud upon them. He therefore directed the jury to find for the defendant.
So, too, in the case of Wood and Roberts, 2 Starkie’s Rep. p, 368, it is laid down that if one creditor, by undertaking to discharge his debtor, induce another creditor to discharge that debtor, or receiving a composition for his debt, he cannot afterwards recover from that debtor.

Opinion:
Curia, per
Butler, J..
The verdict of the jury must be regarded as having been given in reference to the facts before them, and should not be construed so as to conclude the legal rights of the parties which may exist indepen dently of it. The main question of fact involved in the controversy was this; did the plaintiff agree with the defendant and his creditors, and with D. C. Levy, to sign a composition paper or agreement, by which he consented to give up one-third of his demand, and to take the note of defendant, with D. C. Levy as security, for the other two-thirds ; and which, when taken, was to be regarded as Ml satisfaction for the whole demand! We must conclude from the verdict, that he did so ; and that, in consequence of such an-understanding, the other creditors signed off, as it is termed, and did accept, in satisfaction of their whole demand, the defendant's note, with D. C. Levy as security, for two-thirds of the amount. It was not pretended that plaintiff had either received any thing'in fact, or that he had signed any paper which would operate as a release of his debt, or any part of it. Nor was there any evidence that defendant had parted with any of his property, either to any of the parties to the deed, or to his brother, who was to stand as his endorser. So far as this court can perceive, the extent of plaintiff's undertaking was to give up a part of his demand, upon an executory verbal promise that D. C. Levy would stand security for the balance. And the question is now, what shall be the effect of such an agreement! Shall it operate as an absolute discharge of the original consideration! If so, the verdict may be sustained. In finding for the defendant, the jury have decided, as far as they could, that the original cause of action was discharged, and that plaintiff must rely altogether on his ex-ecutory agreement for the satisfaction of his debt; that is, he must look to D. C. Levy and the defendant for 66 2-3 per cent, instead of holding the defendant liable alone, on the whole demand. When the proposition is reduced to its simplest form, it is an executory agreement to take a part of a debt, in satisfaction of the whole. Had he actually accepted the part which it was stipulated he should receive, he might have been barred from demanding the balance. To this extent the case of Aiken and Price would go; Dudley, 50; where it was held that an acceptance of a part of a demand from trustees of a debtor, to whom funds had been assigned for the payment of all who should come in under the deed of assignment, would be a discharge of the balance of the demand. Judge Earle, who delivered the judgment of the court, said he regarded it as an executed agreement, so soon as the plaintiff had accepted his proportion under the assignment; and that such acceptance would operate as a sufficient discharge of the defendant from the original demand ; but that an ex-ecutory promise to accept a part, and relinquish the residue, would not have the same effect. And why would it not be so ¶ The answer is at once suggested, and is well given in the case of Heathcoat vs. Crookshanks, 2 T. R. 24. That was an action of assumpsit for £18 14, and it was pleaded specially, that on a composition among the creditors of the defendant, the plaintiff, as one of them, undertook to accept £5 5, in lieu of the whole debt, which the defendant had afterwards tendered. On demurrer, the plea was held ill; that there was accord without satisfaction, and therefore, that such a promise is nudum pactum, and not binding, for want of consideration, unless executed. Nor do I think the case mainly relied on by defendant's counsel, that of Butler vs. Rhodes, 2 Esp. R. 235, is irreconcileable with the law as thus ruled. This was a case in which the plaintiff endeavored to collect his whole demand, after he had acquiesced in a composition deed, and after the defendant had parted with all his effects to trustees, for the benefit of his creditors. It appeared that defendant had parted with his property mainly at the instance of plaintiff; in consequence of which, all the other creditors consented to come in and accept their proportions under the deed. The plaintiff, however, notwithstanding his assent, refused to sign the deed, and brought his action to recover the whole of his original demand. Lord Kenyon ruled that the action could not be maintained, on the principle that, in consequence of this act of plaintiff's, the defendant had parted with all his property, and the other creditors had been induced to execute ,the deed; that this was putting the defendant in a very awkward situation, as, by assigning all his property, he was committing an act of bankruptcy; and that, therefore, the plaintiff would not be permitted to recede from a composition to which he had assented. He therefore directed the jury to find for the defendant; the result of which decision was- not to deprive the plaintiff of every part of his demand, but to compel him to comply with the obligations of good faith, by taking his stipulated proportion under the deed. And this accords well with what Duller, J., says in the case of Heathcoat vs. Crookshanks: " If the debtor had assigned over all his effects to a trustee, in order to make an equal distribution among all his creditors, that would have been a good consideration in law for the promise." As no such thing appeared in that case, it cannot be distinguished from the one which we are now considering, in which there is not even an allegation that defendant lias parted with any of his property, or in any wise been placed in a different situation from what he was before tiie supposed- undertaking of plaintiff. The other creditors of the present defendant, Levy, did not come in under a composition deed, and take their proportion of specific funds set apart by him in the hands of a trustee; but they signed off' their whole demands against their original debtor, and took, in lieu thereof, his note, with.security, for two-thirds: in other words, in consideration of the defendant's securing to them two-thirds of their debt, they released the residue. How does it appear then, that the present plaintiff has been benefitted, or that the defendant has suffered loss 1 one of which must have occurred, to be the foundation of a new consideration. There is no specific fund in the hands of a responsible third person, to which the plaintiff' can resort for the payment of any part of his debt. If trustees had been appointed under a deed of composition and assignment, and who had received funds from the defendant for his creditors, they would be bound to be answerable to those creditors who should come in: The deed and funds in their hands would create a legal obligation on their part, not to be evaded or frustrated at the option of any one. But suppose the plaintiff fails in this action, how is he to get redress'? It surely cannot be pretended that he has forfeited all right to recover from some one some portion of his debt; and if the original demand is discharged, there is an end of that. In that event, he must avail himself of the only other source of satisfaction which has been suggested, to wit: the executory promise of defendant and D. (J. Levy, that they would give their note for two-thirds of his debt; for which pro mise D. C. Levy might well say there was no legal consideration on his part. So far as the court is informed, it was a gratuitous undertaking by him, to incur an obligation on his brother's account. His promise, at most, was to pay the debt of another, was without consideration, and not in writing. Nor did it impose any obligation on plaintiff to accept it in satisfaction of his debt; no more so than it would have been to accept the promise of defendant himself, that he would pay a part in discharge of the whole. An agreement with a third party cannot be stronger than if it had been made with the defendant himself. All contracts, to be binding, should be mutually obligatory in their creation ; and as it seems to me that neither party was bound by the alleged agreement, they must stand on their rights under their original contract; unless, indeed, it should appear on a subsequent trial that plaintiff' has acquired an undue advantage by fraudulent management. As we do not feel ourselves at liberty to come to such a conclusion, we grant the motion for a new trial.
Richardson, O'Neale, Evans, and Warddaw, JJ., concurred.