Court Opinion

ID: 6422199
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:00:53.854111+00
Date Added: 2024-06-11T15:51:49.455604
License: Public Domain

C. Allen, J.
The agreement of compromise is no bar to the plaintiffs’ action, there being an express stipulation that it should not be binding unless signed by all the unsecured creditors. Turner v. Comer, 6 Gray, 530. There was nothing to show a waiver by the plaintiffs of this stipulation; and the defendant therefore acquired no rights under it. The plaintiffs did not agree to accept twenty per cent in full, unless all the unsecured creditors should sign the agreement; which they did not do. The plaintiffs’ conditional agreement to accept this percentage in full is therefore to be disregarded. In this respect, this case differs from Huckins v. Hunt, 138 Mass. 366. It is conceded on all hands that the note was fraudulent and void, *44and that no recovery can be had upon the second count. Fay v. Fay, 121 Mass. 561. Huckins v. Hunt, ubi supra. The defendant sets up its fraudulent character in defence, and, since it was clearly void, and since both parties so treat it, we must assume that the court also so treated it, and that the finding of the court for the plaintiffs was on the first count, which declared on the original indebtedness of the defendant to the plaintiffs. The question therefore is, whether the note, being thus void and avoided by the defendant, is nevertheless to be deemed a payment of the original debt.
Ordinarily, in Massachusetts, a note given for a simple contract debt is presumed to be taken in payment. The reason for this was thus given by Chief Justice Shaw: “It is founded on the consideration, that when a note is given for goods, even if it is not negotiated, it is equally convenient to the creditor (and generally more so) to sue on the note, as on the original consideration, and so there is no reason for considering the original simple contract as still subsisting and in force.” Curtis v. Hubbard., 9 Met. 322, 328. The giving of the note is simply giving a new promise in place of the old one. But in case the new promise is void, and is avoided by the promisor, then the creditor gets nothing at all for his debt. The defendant seeks in the same breath to say, that the plaintiffs get nothing and something ; that they did not get a new promise to be enforced, but got one sufficient to supersede the old promise. This cannot be, in a case where the defendant has repudiated, withdrawn, can-celled, and nullified the new promise. It is as if it had never been. The plaintiffs were barred by their participation in the fraud from recovering on the note itself; but the fraud does not affect the original debt. It was no part of the transaction on which the plaintiffs seek to recover, under their first count. The defendant cannot be allowed to escape payment of a debt originally just, by setting up an independent and subsequent fraudulent scheme, like that adopted in the present case, which he himself has set aside and avoided. This rule has been uniformly applied where the new note was void for usury. Johnson v. Johnson, 11 Mass. 359. Stebbins v. Smith, 4 Pick. 97. Ramsdell v. Soule, 12 Pick. 126. And it is a general rule, that where a debtor gives a new security which is void and avoided, *45the creditor may sue him on the original contract. Leonard v. Taunton Congregational Society, 2 Cush. 462. Turner v. Browne, 3 C. B. 157. For these reasons, in the opinion of the majority of the court, the entry must be,

Judgment for the plaintiffs affirmed.