Court Opinion

ID: 7286138
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:27:32.183966+00
Date Added: 2024-06-11T16:19:08.228359
License: Public Domain

The following dissenting opinion was read by
Elmer, J.
I am compelled to dissent from the opinion of the majority of the court. That the release which is sought to be avoided is sufficient in law to discharge the judgment and the collateral bond and mortgage held, when it was executed, by Stephen "W". Righter, the releasor, is not disputed. That Stephen must have understood that such would be its legal effect, appears to me unquestionable. It is expressly stated in the bill that he objected to it at the time as covering everything; but was answered, that it was no matter, as it would be given up to him as soon as the trial was over. There is, therefore,. *527not the slightest ground for the charge, that there was a mistake in point of fact. If it was true, which by no means appears, that he was mistaken as to its legal operation, and was ignorant that it discharged his claim on the bond and mortgage, he is entitled to no relief on that ground, it being his duty to inform himself, as he had ample opportunity to do. If, as the hill states and the facts of the case tend to show, he relied on the expectation that it would he given up as soon as the trial was over, he is precluded by his own showing from objecting to the consequences of his own folly. It was not and could not be denied, that if the release was intentionally executed in so broad a form as to discharge the mortgage debt, so as to enable Michael Righter to become a witness, with the understanding that it should he afterwards surrendered, this was a fraud upon the law, and the court will not lend its aid to relieve the party from the consequences of his own wrong doing.
But the ground most relied on for setting aside the release is, that it was procured by the fraudulent contrivance or concealment of Michael Righter, the respondent. If this charge is established, there can be no doubt of the power and duty of a court of equity to interfere, aiid prevent it from discharging an honest debt. In order to ascertain in what the fraud is alleged to have consisted, we must look to the hill of complaint, for the appellants must stand or fall by the case they have themselves presented. Much of the argument of their counsel went upon grounds not only not presented, hut upon such as are inconsistent with the case made.
■ The allegations of the bill are, not that Michael Righter was or claimed to be interested in the suit brought against Matthias Kitchel, in the name of Stephen W. Righter as the endorser of the drafts, and not that the object of the release w'as to discharge that interest; hut that he alleged the drafts were given for the payment of a debt, half of which was due to him, and that he was still entitled to *528half of whatever should be collected on them; and that Stephen "W\ Eighter was advised by his attorney, that it might become necessary upon the trial to call and examine Michael Eighter as a witness; and that, as his testimony might be objected to on the ground of his interest in the event of the suit, it was necessary and proper to ■execute a release to him. It is also averred that when the release was filled up, Stephen objected to it, as being too broad and general in its terms, as covering everything; whereupon Michael replied, that it was no matter, as the release should be given up to Stephen as soon as the trial was over. Also, that Michael Eighter well knew he had no interest in the suit, and that the attorney advised Stephen, it was right and safe for him to sign the release, and thereupon, and in consequence of such promise as aforesaid, (that is to give it up) he executed it, and it was delivered to Michael Eighter, who was sworn and examined as a witness in the cause. The bill also avers that Stephen W. Eighter never received any consideration for the release, not even the nominal sum of one dollar, mentioned therein, and that it was never his intention to release the judgment, and that Michael Eighter never asked him to do so,* or intimated to him, in any way, that he wished him to execute the said release for that purpose.
In response to these allegations, the answer of Michael Eighter states, that he was entitled to one half of whatever should be recovered on the drafts, and states how his interest arose. It states that, having this interest, his /intention was to appropriate the same towards the payment of his indebtedness to Stephen, and that he so informed him; that when he was informed the drafts were in the hands of Stephen, and it was intended to sue Kitchel on them, he expressed his disapprobation to Stephen, and the suit was brought without his approbation or consent; that the suits remained pending for about two years : and being asked by John S. Hager, the attorney for the plaintiff) what was his interest in the drafts, he in*529formed Mm; and that he would not be sworn on said trial as ta witness until lie had something to show for said drafts, and an equivalent for Ms interest therein; and the attorney told him it would be necessary he and Stephen should come down to his office before said trial, and make an arrangement of those matters; that within a few days Stephen came to him, and desired him to go to Morristown upon a day lie fixed; that he did go there on that day, and at the office of the attorney met Stephen, and in his presence told the attorney the circumstances relating to the drafts, and expressed his dissatisfaction with the suit against Kitchel, and fear that the amount thereof would be lost in that way, and declared that he would not consent to be sworn upon said trial, or have anything to do with said suit, unless his said interest in said drafts was divested, and the same accounted for to and settled with him by the said Stephen; and that the one equal half part of said drafts was nearly equal to the amount then owed by him to said Stephen, and that the attorney told Stephen it would, according to the agreement and the circumstances there stated, be proper and necessary for him to execute a release, and thereupon, the attorney filled up a printed release, and the same was executed by the said Stephen; that it was delivered and put into his pocket, and that in a few minutes afterwards, at the request of the attorney, he handed it back to him, to be returned in court, which was afterwards done. He denies that he ever promised to give it up as soon as the trial was over.
An attempt was made to disprove the answer, but it entirely failed. The weight of the evidence is, that Michael IJigliter was in justice entitled to one half of the drafts. It is not stated in the bill or answer, nor does it distinctly appear by the evidence, what was said by Michael liighter when he was sworn as a witness and produced the release in regard to his interest in the drafts. The only possible mode in which the release to him by *530Stephen could operate to discharge his interest in the event of the suit, was by his receiving it as an equivalent for that interest. Having done this, and been actually sworn, he was precluded from setting up that interest afterwards, whether he was in fact questioned as to his interest or not. Unless the release is allowed to operate in discharge of Stephen’s judgment against him, the result would be that he was entrapped into an act which cut him off from any right to what might be recovered of Kitchel, or of the other parties to the drafts, without any equivalent whatever. It is not necessary, however, to the validity of this release that a consideration should be shown. If it clearly appeared that there was none, that would no doubt be a strong reason for inferring a mistake of fraud. But all the circumstances combine to show that the very consideration the bill states was pretended and was false, in reality existed, and that Stephen W. Kighter, with full knowledge of the facts, or at least with ample opportunity to ascertain the facts and the law, and acting under the advice of his counsel, thought it a sufficient reason for signing and delivering a general release of all his claims against Michael, that Michael should consent to be a witness for him, and, if needful, declare himself to have no interest in the suit. Such a consideration is perfectly valid if the parties acted in good faith, and there is no evidence that Michael did not. It does not appear that he instigated the suit, or that he volunteered to be a witness. The contrary is distinctly averred, and there is nothing to disprove the answer in these particulars.
That Michael Kighter was afterwards willing to have a settlement of what his proper share of the money due on the drafts was, and pay Stephen the difference, the evidence shows, and he does not deny. But it is not pretended that this is a sufficient ground for interfering with the legal effect of the release. It is not alleged that there was any miscalculation or misapprehension as to the real amount due on the judgment. That it was highly impru*531dent in Stephen to execute such a release, now that the suit against Kitcliel has failed, is very obvious. But courts of equity cannot relieve parties from the unexpected consequences of their voluntary acts, unless it is made very satisfactorily to appear that they were the victims of a mistake they are not themselves accountable for, or of fraud on the part of those who claim against them. I am therefore of opinion that the release stands wholly unimpeached and in full force.
The appellants however insist, that being assignees for a valuable consideration without notice of the release, and having been induced to take the assignment by the acts and admissions of Michael Righter, he cannot in good faith set up the release, as against them, whatever maybe its effect as between him and Stephen W. Righter. An estoppel in pais is stated by Judge Carpenter, in the case of Den v. Baldwin, 1 Zab. 403, to be as follows: “ This equitable estoppel rests upon the principle, that when any one has done an act or made a statement which it would be fraud on his part to controvert or impair, and such act or statement has so influenced any one that it has been acted upon, the party making it will be estopped and cut off from the power of retraction. It must appear, first, that he has done some act or made some admission inconsistent with his claim; secondly, that the other party has acted upon such conduct or admission; and thirdly, that such party will be injured by allowing such conduct or admission to be withdrawn. It is intended that in good conscience and honest dealing he ought not to be permitted to gainsay them.” This statement of the doctrine may be accepted as correct; but it does not profess to contain all the explanations of which it is susceptible. In most cases, it will be important to inquire how or to whom the acts or admissions were made. The object is to prevent fraud. Unless, therefore, the acts or admissions were so made as to show a design to produce a false impression, or were of such a kind that such would be their *532natural result, there would he no fraud to prevent. No ease was produced, nor do I suppose one can be found, that goes farther than this. Where it is said the admissions must be acted on, it is meant, as the authorities relied on show, that they induced the other party to do what otherwise he would not have done.
It is to be noticed, in the first place, that the appellants are themselves chargeable with great negligence in not applying themselves, or by their agent, to Michael Bighter, and thus ascertaining whether he acknowledged the debt. Judgments and bonds and mortgages are always taken by an assignee, as they were bound to know, and as their counsel did know, subject to whatever defence the maker had as against the assignoi’. In this case they were about to accept the assignment of a judgment and collateral bond and mortgage payable on demand and more than seven years old. Had their agent applied to Michael, and he had stated to him that he held the release, and claimed that it discharged the debt, but nevertheless, inasmuch as the amount of his interest in the drafts was less than the amount due on the judgment, or for any other reason, he was willing to pay, and did pay the interest appearing to be due, to take a receipt for it as so much due, and allow such payment to be endorsed on the bond, it cannot be pretended the assignees would have stood in any better situation than Stephen did. Instead of applying directly to Michael, it appears the appellants thought proper to act upon the faith of the statements made by Stephen, and it is urged, that to the extent that Stephen’s statements were true they had a right to do so. But did Stephen tell them the whole truth ? If he did, he told them that he had previously placed the bond and mortgage in the hands of an attorney to collect the interest; that the attorney applied to Michael accordingly, and he produced the release as a complete discharge, and refused to pay, and thereupon the attorney handed them back to Stephen, and informed him of what had taken place. By making *533Stephen their agent, they became chargeable with all the knowledge he had.
Had. the appellants gone to Michael, and informed him that they proposed to'take the assignment, he would have been bound to disclose his real position. But he was not bound to inform Stephen of what he already knew, and cannot be charged with doing an act inconsistent with his claim because he said nothing then about the release. Unless the admission made to Stephen would enable him to enforce the judgment, it could place his assignees in no better position. The receipt drawn up by Michael and signed by Stephen was retained by Michael, and all that Stephen had to show to the counsel of the appellants was the memorandum “$>73.79, Rec’d Oct. 20, 1849,” which of itself indicated nothing, and was not an act on which the assignees had any right to rely or upon which they did rely. They did not take the securities upon the faith of this paper, but upon the faith of Stephen’s representations, which were only a part of the truth. There was, in my opinion, no act or admission made by Michael inconsistent with his claim to hold on to the release, and his willingness to settle with Stephen the difference between his interest in the drafts and the amount due on the judgment.
Equity, it was insisted, carries this species of estoppel further than courts of law, and we were referred to several cases contained in Batten on Specif. Per. 88. * The author states the principle to be deduced from them as follows: “ When a person has tacitly encouraged the act being done, or has consented to it, he shall not exercise his legal right in opposition to that consent.” That Michael Righter did not consent to an assignment he never heard of is clear. Bid he tacitly encourage it ? This, in the nature of things and according to the cases, he could only do by keeping back something he was bound to communicate. *534He did not do this, for Stephen ~W. Eighter, with whom alone he had intercourse, knew all about the release. The only act, then, that he can be charged with doing is the putting on paper the figures indicating the amount to be credited, which would not of itself induce any man of ordinary prudence to rely on the securities, and which could not of itself have influenced the appellants to do so.
But besides these considerations, it appears that the appellants were careful to take a covenant from Stephen W. Eighter, that he would guarantee the payment of the money, and pay all the costs of attempting to recover it in case of failure. It is not alleged in the bill, nor does it appear in the proofs, that Stephen is not perfectly able to fulfil these covenants. If he is, the appellants will not be injured by the release, and thus an essential fact necessary to estop Michael Eighter, is wanting.
It must be borne in mind, in applying the doctrine of equitable estoppels to this case, that it must be assumed that the release is a valid instrument, and fully bars the claim on the judgment and other securities, as against Stephen ~W. Eighter. The doubt about the original execution of the release, if doubt there be, can have no rightful influence upon the question, whether Michael Eighter is precluded by his subsequent conduct from setting it up against the assignees. Had it appeared beyond dispute that it was given for a full consideration, and that the consequence of avoiding it would be to take the money a second time out of Michael’s pocket, the estoppel would probably not have been insisted on, or if it had been would have found but little favor. And yet this is the aspect in which we are bound to look at this question. There can be no doubt that this doctrine, rightfully applied, is calculated to promote just and honest conduct, and that courts of equity and of law ought carefully to maintain it. But we are asked, in my judgment, to extend it beyond its just limits and beyond any precedent in England or America. I am not willing to do this for *535the sake of saving a case of seeming hardship. In my opinion the decree should be affirmed.
Decision reversed by the following vote:
For affirmance—Chiee Justice, Judges Elmer, Eisley, Veedbnburgh, Ogden.
For reversal—Judges Arrowsmith, Cornelison, Haines, Huyler, Potts, Eyerson, Valentine, Wills.

7 Law Lib., 69 Rep.