Court Opinion

ID: 5214151
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:19:12.001004+00
Date Added: 2024-06-11T08:27:24.941030
License: Public Domain

Scott, J. (dissenting):
Although a large amount of evidence was received in this case, much of which was irrelevant and some inadmissible, the principal facts upon which the rights of the parties depend are few and simple. In the spring of 1904 the firm of Irwin, Green & Co., of Chicago, a grain commission house, found itself insolvent and upon the verge of absolute failure. Its principal creditors were the defendants herein, the Bank of Montreal and a Mrs. Boot, of Chicago, to each of whom the firm owed many thousands of dollars, these debts being only partially secured by collateral. The firm had little or no tangible assets of value, but had a large earning capacity, its earned commissions in the previous year having amounted to upwards of $100,000. In the hope of averting absolute bank*562ruptcy an appeal was made to plaintiff’s decedent, William Duryea, who was the father-in-law of one of the members of the firm, to" extend finan eial assistance. He ■ agreed to do so, but required as a condition that each of the large creditors above mentioned should' ■sign an identical agreement.' That signed by the defendants read as follows:
“ Agreement made this First day of March,. A. D. 1904, between William Duryea, of the City, County and State-of Hew York, and the copartnership of Otto E. Lohrke & Co., doing business in Hew York and Chicago. •
■ ' “Whereas C. D. Irwin and A. W. Green, copartners doing business under the name of Irwin, Green & Co., in the City of Chicago, Cook County, Illinois, have applied to the said William Duryéa for money to be used to carry on their business; and
“Whereas the said William Duryea has agreed to advance ¡or loan tó said Irwin, Green & Co. such sum or sums of money -as he may deem necessary in the ordinary conduct of the grain and commission brokerage business how conducted by said Irwin, Green, & Co. in the City of Chicago, but, as a condition precedent to advancing or loaning such money or any part thereof, has requested that the firm of Otto E. Lohrke & Co. subject the payment of their cláim against said Irwin, Green & Co. to the repayment to said William Duryea of any moneys by him advanced under this agreement;
“ Now, therefore, it is agreed as follows :
“ 1. Said William Duryea, in consideration of the payment of the sum of One Dollar and the agreements hereinafter contained on the part of the firm of Otto E. Lohrke & Co., hereby agrees that he will from time to time as the conditions of the business may seem to him to require, loan or advance to said Irwin, Green & Co. isuch sum or sums of moneyas in his judgment may be reasonably required in the ordinary conduct of the business of said Irwin, Green & Co., except, however, for the claims against said Irwin, Green & Co., held by the Bank of Montreal of said City of Chicago, and said firm of Otto E. Lohrke & Co.
“ 2. Said Otto E. Lohrke & Co., in consideration of the sum of One Dollar in hand paid, and the. agreements herein contained on the part of said William Duryea, do hereby promise and agree to *563and with said William Duryea that said Otto E. Lohrke & Co. will at all times subject their claims against the firm Irwin, Green & Co. to the repayment by said Irwin, Green & Co. to said William Duryea of any and all moneys advanced or loaned by him to them after the date of this agreement, and it being understood and agreed that said William Duryea may make a similar agreement with the Bank of Montreal.
“ WM. DURYEA,
“ OTTO E. LOHRKE & CO.”
On the signing of these'agreements William Duryea advanced to the embarrassed firm $25,000, and in the following month advanced a further sum $5,000. The firm managed to struggle on until some time in 1905 when it ceased to do business and was dissolved. William Duryea was never repaid the amount of his advances. Very soon after Duryea had advanced the money to enable the firm to continue its business the defendants began to press the firm for payments on account of the debt which they had agreed to “ subject * * * to the repayment ” of the amounts advanced by Duryea, and so insistent did they become that between July 21 and December 31, 1904, the firm of Irwin, Green & Co. repaid to defendants on account of said indebtedness upwards of $20,000, which these plaintiffs now seek to recover. Out of these simple facts grew a somewhat complicated situation owing to the fact that by signing the foregoing agreement the defendants assumed relations between themselves and Duryea, which were quite independent of and quite different from their relations with the firm of Irwin, Green & Co. These latter relations remained precisely what they had been before, to wit, those of debtor and creditor. Defendants had not agreed to postpone the collection of their claim from the firm or to forego any remedies which were open to them to collect it. They were, therefore, entirely justified, as between themselves and the firm, in insist-; ing upon the payment of some part of their debt, and in accepting such payments as they could induce the firm to make. The only question is as to the nature of their obligation to Duryea, and their right, as against him, to retain the amounts collected from the firm. The agreement is not perhaps as precise and definite as it might have been, but I think that it is possible to discern its meaning and effect. In the first place we should consider the circumstances under which *564thé agreement was made for “ where a doubt exists as to the meaning of words resort may be had to the surrounding facts and circumstances to determine the meaning intended. * *' * In the construction of written contracts it is the duty of the court, as near as may be, to. place itself in the situation of the parties and from a consideration of the surrounding circumstances, the occasion and apparent object of the parties, to determine' the meaning and intent of the language employed.” (Gillet v. Bank of America, 160 N. Y. 549, 555.) The surrounding facts and circumstances have already been detailed. The firm of Irwin, Green & Co. was insolvent and in failing circumstances; it owed defendants and others large sums of money; it had practically no tangible assets, but did have a large earning' capacity; the only apparent chance for defendants to realize any part of their claim against the firm was that it should be enabled to continue in business so as to earn commissions ; in order to continue it was necessary that some one should advance a considerable sum of money; if money should be so advanced, there was at least a chance that in time defendants would realize all or some part, of their debt; if no money should be advanced and the firm was. compelled to stop, it was-certain that defendants would lose their whole claim. Duryea, and apparently only Duryea, was able and willing to make an advance of' money, but lie,, not unnaturally, desired that his advances, from which it was hoped that the defendants and other large creditors might ultimately reap an - advantage, should be a preferred claim upon the future resources of the firm as against the claims of defendants and the others. It was to effect this purpose that the agreement between Duryea and the defendants was made. . It recited the reason for making it,, and contained an agreement on Duryea’s part to make such advances “ as in his judgment may be reasonably required in the ordinary conduct of the business ” of the firm. The defendants on their part agreed that they “ will at all times subject their claims against the firm Irwin, Green & Go. to the repayment by the said Irwin, Green & Co. to said William Duryea of any and all moneys advanced or loaned by him to them after the date of- this agreement.” It is obvious that this was intended, as a subordination agreement whereby Duryea should be entitled to a preference over defendants in the payment of his claim. He was entitled to the payment of his claim in full *565before defendants, as between them and him, became entitled to any part of their claim, but, as already remarked, there was nothing in the agreement to prevent defendants from prosecuting their claim against the firm. If the defendants had forced the firm into bankruptcy, and there had been any assets, it-will not be disputed that, as between themselves, Duryea would have been entitled to be first paid, and if the money had come into defendants’ hands, Duryea would have had. an action over against them. So, if defendants had put their claim in judgment and had found assets to sell under execution, Duryea would still have been entitled to insist upon a preference in payment. But the agreement was not made with a view to the bankruptcy of the linn and the distribution of its assets. It was made with a view to the continuance of its business, so that commissions might be earned, and it is in this light that it must be construed. From this point of view I am unable to see why the same results do not flow from the collection of a part of defendants’ claim without suit that would have followed upon an enforced collection. The defendants may not have received the very same money that Duryea advanced to the firm, but at least they received part of the assets of the firm. Their agreement was that they would at all times, not at any particular time or for any specific period, subject their claims to the repayment of Duryea. I do not go so far as to say that .they were bound to refrain from collecting anything from the firm until Duryea was paid, but it seems, to me to be clear that whatever moneys they did collect remained subject to the repayment of Duryea. In accepting the payments from the firm the defendants took a chance that no doubt was worth taking. If the firm had been able to repay Duryea’s advances, defendants would have received a part of their debt, and to, this extent gained an advantage over other creditors. But if, as it turned out, the firm was never able to repay Duryea, the defendants’ claim still remained subject to the repayment of Duryea, and in so far as that claim had been collected by defendants the amount so collected still remained “subject * * * to the repayment” of Duryea’s claim. An action for money had and received will lie whenever the defendant has received money which in good.faith and equity should liave been paid to the plaintiff. Suchas it seems to me is the present case. In truth defendants will be no worse off if *566they are now obliged to repay this money than they would have been if they had never made the' agreement with Duryea,, for in that case he would have advanced no money and the firm would have failed. ' To require them to repay it is merely to require them to conform to the letter and spirit of their contract. That Duryea knew of the payments to defendant, if he did know of them, and made .no protest is no answer. He had no right to protest and was not called upon to do so. ' As between defendants and themselves the firm had the right to pay and defendants had the right to receive payment. Duryea was perfectly justified in assuming that defendants would observe their contract wijth him, and whenever the proper time came, if it ever came, would subject their claims and the proceeds thereof to the repayment of his advances. The court charged the jury that there was a question as to whether or not Mr. Duryea had “ forgiven this claim. I suppose that this means that he had released it. Whatever may have been meant, there was no such defense pleaded and no evidence of the fact. There is nothing in the suggestion that Duryea did not advance enough money to save the firm. The amount to be advanced was expressly left to his judgment, and the case -is not without suggestion that- the ultimate failure was due to causes other than the stoppage of Duryea’s advances. It seems to me that, upon the undisputed facts, the plaintiffs are entitled to recover. . -
• The judgment should, therefore, be reversed and a new trial granted.
Judgment modified as directed in opinion, and as modified affirmed, with costs to respondents; - order denying new trial affirmed. Order granting extra allowance reversed, without costs. Settle order on' notice.