Court Opinion

ID: 6581817
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:38:54.589727+00
Date Added: 2024-06-11T15:57:18.863256
License: Public Domain

Loomis, J.
We have experienced considerable difficulty in determining the legality of the claim in suit, owing to the uncertainty that exists as to its precise nature and foundation. The argument in its support, ingenious and able though it was, left us still in doubt whether the claim of the appellee was to be predicated upon the last transaction between the parties, namely, the written guaranty of the testator appended to the note of Henry W. Goodwin, or upon the verbal promise by the testator to the appellee, made five or six years before, that he would pay in full Mr. Brainard’s claim against Henry W. Goodwin if the *474former would, with the other creditors of the latter, sign a compromise agreement accepting forty cents on the dollar in full satisfaction, or upon the first verbal promise of the testator, made still earlier, to save the appellee harmless if he would indorse the notes of Henry W. Goodwin.
Without stopping to determine at present which of these diverse foundations should be selected, we will briefly examine each, for, if it shall be found that neither can furnish validity to the contract, the claim must be disallowed. We will discuss the questions in the inverse order from that given above.
1. Was the verbal promise of James M. Goodwin to save Mr. Brainard harmless if he would indorse the notes of Henry W. Goodwin, valid ?
The answer will depend upon another question, namely, was James M. Goodwin to be the principal debtor, primarily liable upon his own obligation, or was he undertaking to •secure the performance by Henry W. Goodwin of his promissory notes to Mr. Brainard ? If the former is the true construction, then the promise was not within the statute of frauds; but if we adopt the latter view, it was within the statute, and, not being in writing, was void.
If we look first only at the form of the promise as found by the court, that if Brainard would indorse the notes of Henry W. Goodwin for his benefit the testator “ would save him harmless from any loss by reason of such indorsements,” it would seem pretty clear that the parties meant simply that the testator would reimburse Brainard for such sums as he might be compelled to pay as indorser by reason of the failure of Henry W. Goodwin as maker- to pay his notes when due. This manifestly would be, on the part of the testator, a promise collateral to the liability of Henry W. Goodwin and therefore within the statute requiring it to be in writing. We reach this result, considering the promise divorced from the other circumstances. If now we take the latter also into consideration, we find the three parties concerned all concurring in such a construction of the transaction. The appellee from the first consistently and *475persistently has followed Henry W. Goodwin and his estate with this claim, never once resorting to James.M. Goodwin during his life, nor against his estate till many years after his decease, when every other resource had failed, and then the claim as presented was on a collateral undertaking b3 the testator in the form of a guaranty, which we will further discuss in another connection. The conclusion is irresistible that the first promise was within the statute of frauds, and therefore of no validit3.
But it has been suggested, in behalf of the appellee, that only James M. Goodwin could take advantage of the statute and that he could waive its benefit. The proposition needs qualification. True it is that while living he alone could take advantage of the fact that the agreement was not in writing, and also it could have been waived by him; but only in a particular mode; that is to.say, had he been sued on the agreement, inasmuch as a compliance with the statute need not have been alleged in the complaint, there were under the rules of pleading and evidence divers ways of excusing the non-production of a written agreement. He might have suffered a default, or directly admitted the agreement, or it might have been admitted indirectly by pleading a tender, or under the general issue by failing to object to parol evidence and by omitting to call the attention of the court to the insufficiency of the evidence. 1 Swift’s Digest, Revised Ed., 260; Martin v. Sweet, 66 N. York, 206. But the testator was never sued upon the agreement and had no opportunity to waive the objection, and when he died the right to insist upon a compliance with the statute did not die with him, but the agreement was left just as it was when made, with all its infirmities unhealed, of which the representatives and devisees of the deceased may now take advantage with the same effect and success as he might have done while living.
It was further suggested during the argument, that even if the agreement was within the statute, still it had the effect to impose on the promiser a moral obligation to indemnify Brainard, which would carry sufficient vitality *476into the subsequent promises to support them by way of furnishing a consideration. We might accept this idea if a moral obligation resting merely in the forum of conscience was identical with that moral obligation which in the law furnishes a sufficient consideration for a subsequent promise ; but the two things are not identical, for it is well settled now that the latter can include only those cases in which there has been a legal right which has become devoid of a legal remedy. 1 Smith’s Leading Cases, 268; Cook v. Bradley, 7 Conn., 63; North v. Forest, 16 Conn., 405.
Our conclusion is that the first transaction was not binding as an agreement and that it furnished no good consideration for the subsequent promises.
2. Was the verbal promise of James M. Goodwin valid, to pay Brainard in full if he would, with other creditors of Henry W. Goodwin, sign a composition agreement to accept a specified sum in discharge of the claim ?
A creditor who unites with others in such an agreement cannot at the same time be permitted to secure to himself secret advantages which the other creditors do not enjoy, because thereby, in effect, he falsely represents that he comes in under the same terms with the others while in reality he is getting more. No contract therefore, verbal or written, by the debtor or a third person, to pay money or do any other valuable thing on such a consideration, can be enforced. 1 Parsons on Bills, 216; Harvey v. Hunt, 119 Mass., 283; Yeomans v. Chatterton, 9 Johns., 295; Breck v. Cole, 4 Sandf., 79; Babcock v. Dill, 43 Barb., 577, 585; Bastian v. Dreyer, 7 Misso. App., 332; Pinneo v. Higgins, 12 Abb. Pr. (N. Y.), 334; Feldman v. Gamble, 26 N. Jer. Eq., 494; Knight v. Hunt, 5 Bing., 432. We have confined our citations mostly to cases where agreements with third parties were held void.
The view we have taken above renders unnecessary a discussion of the question whether the promise under consideration was an original one, not within the statute of frauds, as claimed by the appellee, or a collateral promise, within the statute, as claimed by the appellants. The form *477of the promise by itself considered favors the first view, while the subsequent acts and conduct of the three parties, all recognizing Henry W. Goodwin as principal debtor and James M. as mere guarantor, favor the latter claim.
3. We proceed next to consider the only remaining question—whether the estate of James M. Goodwin is liable upon his written guaranty of the note of Henry W. Goodwin.
This note and guaranty, though executed several years subsequently to the verbal promise we have just been considering, were in fact given for the sole purpose of securing the performance of that promise; for the finding of the court is explicit that “Brainard signed the compromise papers on the promise of the testator that if he would sign the discharge the balance due him should be paid; and the note was given pursuant to that arrangement.” And in another connection it is found that the consideration of the note guaranteed was substantially the balance of the old claim.
It would seem, therefore, that in legal contemplation the last transaction is to be regarded as contemporaneous with the preceding one; the years intervening have no more significance than if they were only minutes; in short, the two transactions became in law one and the same; both were based on one and the same illegal consideration and were permeated with the same fraud.
But the counsel for the appellee makes a very ingenious argument to extricate Henry W. Goodwin from all participation in the fraud and to divorce the note wholly from the fraudulent arrangement concerning the composition, in order to make the act of giving the note appear as if prompted solely by a conscientious desire to pay the balance of his debt, though fairly and legally discharged; and the following citation was made from the case of Stafford v. Bacon, 1 Hill (N. Y.), 532, as if it fitly characterized the act:—“ When a debtor is voluntarily and fairly discharged by his creditors, it must be left to his option whether he *478will pay. Being an honest man and becoming able, payment would be a matter of course.”
We most heartily commend this principle, but regret that we cannot so interpret the act in question. The discharge was not a fair and voluntary one, but it was purchased with the promise of a peculiar advantage to Brainard alone. The giving of the note was not the exercise of a mere option to pay a discharged debt, but was constrained by the previous agreement between the father of the debtor and the creditor. The only foundation for the argument we are considering is found in the last paragraph of the finding. After stating the arrangement for compromise and the fact that the note was given pursuant to it, the court adds:—“The testator in that matter acted in the interest of Henry W. Goodwin as well as in his own, but I do not find that he acted as his agent, or that Henry W. Goodwin in any manner made such an agreement until at or about the time he signed said note in 1867 or 1868.”
It will be noticed that this is cautiously worded; it amounts only to a statement that no finding is made as to Henry W. Goodwin’s participation in the composition arrangement prior to 1867 or 1868. Both Henry W. and James .M. Goodwin having deceased before the hearing, direct evidence could not easily be obtained. But the finding does contain a clear implication that when Henry W. Goodwin gave the note he did know all about the arrangement made by his father (the testator) in his behalf and gave the note in fulfillment of the plan and purpose previously formed. The act of Henry W. Goodwin has no likeness at all to that assumed in the argument.
But we may -well forbear further discussion of this point, for the character of the note and the act of Henry W. Goodwin in giving it was determined by this court when the same parties of record were last before it. Clement's Appeal from Probate, 49 Conn., 519. Carpenter, J., in. giving the opinion of the court in that case, says, (p. 582 ) : —“ The executor was a creditor and signed'the composition agreement. Afterwards this note was given for the balance *479of that indebtedness to Mr. Brainard. Had it been given pursuant to an express or implied agreement with the debtor it would have been void. But it is claimed that Mr. Brainard signed the agreement at the request of the testator and upon a promise by him that the balance of his claim should be paid. We have no occasion now to inquire whether Mr. Brainard could have enforced that promise against the testator, as he has not attempted to do so. Practically he treated it as made for and in behalf of H. W» Goodwin and took the note of the latter in fulfillment of that promise. We must regard it, therefore, as a transaction with Henry W. Goodwin, and contrary to the rule of law which forbids one- creditor under similar circumstances from contracting for a private advantage not accorded to the other creditors. The note, therefore, was not collectible.”
But in endeavoring to show the true position of Henry W. Goodwin, we should not lose sight of the more important fact that the guaranty in suit given by the testator to the appellee is the direct fruit of the illegal promise made by the former to the latter to procure his signature to the composition deed, and whatever we may think of Henry W. Goodwin’s participation we must on principle deny the right to enforce this security. The authorities previously cited (to which many more might be added) clearly show that when a claimant is induced to sign compromise papers by an agreement with a third party to pay or secure the balance, such agreement in whatever form it is made is utterly void.
But the counsel for the appellee makes another distinction in order to deliver this case from the principle of those authorities, which it is claimed apply only to new securities where the third party was not previously holden, and in support of the distinction the note to the case of Lewis v. Jones, 4 Barn. & Cress., 506, is cited, which is as follows:— “ There is another large class of cases in which it has been held that a person joining other creditors in compounding with a debtor, or signing a bankrupt’s certificate, cannot *480lawfully stipulate for any benefit to himself beyond that which the other creditors receive ; whether that benefit be given by the debtor himself or any third person for his relief. Smith v. Bromley, 2 Doug., 695 ; Cecil v. Plaistow, 1 Anstr., 202; Cockshott v. Bennett, 2 T. R., 763; Jackson v. Lomas, 4 T. R., 166; Feise v. Randall, 6 T. R., 146; Jackman v. Mitchell, 13 Ves., 581; Leicester v. Rose, 4 East, 372; Welles v. Girling, 1 B. & B., 447; Jackson v. Davison, 4 B. & A., 691. But all those decisions related to new securities given as a consideration for signing the composition deed or certificate, and proceeded on the ground that the advantage gained by the -particular creditor was a fraud upon the others, and they do not appear applicable to securities existing before the negotiations for a composition. See Thomas v. Courtnay, 1 B. & A., 1.” Were there occasion to adopt and apply such a distinction we might suggest some qualifications as to the duty and rights of the composition creditor in such case. But assuming the principle to be entirely correct as stated, it will suffice for the purposes of this case to say that the facts do not bring the case within the distinction relied upon. The securities in question were new and the direct product of the illegal agreement, and, as we have shown, there was no previous legal liability of any kind which could have been enforced against the testator.
The legal principles that govern guaranties suggest several other objections to a recovery in this case, but upon the view we have taken they are not necessary to a decision of the case, and we leave them out of the discussion.
We advise the Superior Court to reverse the decree of the court of probate allowing the note for $2,375.61 and interest, contained in the account of the executor.
In this ooinion the other judges concurred.