September Term, 1863
Sidney S. Harris, for the plaintiffs.
E. More, for the defendants.
Crans could not have the benefits of the compromise and release without adopting all the representations that Hubbard made to the defendants in the negotiations for the same. The release was no better in his hands than if he had personally obtained it and made the same representations to the defendants to procure it that Hubbard made to them. ( Bennett v. Judson, 21 N.Y. Rep. 238; 23 Wend. 260; 1 Hill, 317.)
The referee found that Hubbard represented to the defendants that the farm in Pennsylvania, of which Crans owned one half, "was incumbered for more than it was worth," and that such representation "constituted an inducement to the defendants to sign the release." He also found that only $1672 was due upon the $5000 judgment, which was one of the liens on the farm; and his figures show that Crans' half of the farm was worth $2703 more than all the incumbrances on it at the time the compromise was effected; and that the value of the other real and personal property Crans then owned in Pennsylvania was $880. Crans retained all this property; and the defendants then supposed what property he had in Pennsylvania was incumbered for more than it was worth. He did not deal fairly with the defendants. I say this, because the misrepresentations which Hubbard made to the defendants are to be deemed his misrepresentations. The defendants only obtained about half of their debt by the compromise. Over $400 of the same remained unpaid. The defendants therefore had at least a doubtful claim against Crans for that sum, when he and Van Duzer gave them the four promissory notes in question, for $100 each. The referee therefore erred in holding that "there was no legal consideration" for either of such notes. It is well settled that the compromise of a doubtful claim is a good consideration for a promise to pay money; and that when an action is brought upon such a promise, it is no answer to show that the claim was not a valid one. ( Stewart v. Ahrenfeldt, 4 Denio, 189; Seaman v. Seaman, 12 Wend. 381; Russell v. Cook, 3 Hill, 504.)
It is not entirely certain that the defendants could not have avoided the compromise and release for the misrepresentations that constituted an inducement for them to become parties thereto, and recover their debt of Crans. Hence when Crans compromised the defendants' claim for the unpaid portion of such debt, and he and Van Duzer gave the notes in dispute therefor, they became legally liable for that portion of the debt included in the notes. (See Stafford v. Bacon, 1 Hill, 532.) The notes, therefore, were valid.
The appellants' counsel claims that the notes were valid, for the alleged reason that a promise by a debtor, after the execution of a voluntary release under seal by the creditor, at the debtor's request, to pay the balance of the debt, is founded on a sufficient consideration and is binding. He has submitted a very interesting brief in support of this proposition. There is considerable authority that sustains it. (See Willing v. Peters, 12 Serg. Rawle, 177; Comyn on Con. 4th Am. ed. p. 20; Downsend v. Hunt, 3 Croke's Rep. 408; Tuck v. Tooke, 12 Moore, 438; 4 Man. Ry. 393.) The authorities in this state and Massachusetts seem to be the other way, (see Stafford v. Bacon, 1 Hill, 532; S.C., 2 id. 353,) where it is stated that the opinion of NELSON, Ch. J., to the contrary, published in 25 Wendell, page 384, was delivered to the reporter by mistake. (See also Valentine v. Foster, 1 Metcalf, 520.) But the view I have taken of the case renders it unnecessary to express any opinion upon this question. (See Goulding v. Davidson, 26 N.Y. Rep. 604.)
The decision of the referee can not be sustained for any insufficiency in the answer. The complaint contains the allegation that the release was given by the defendants "with full knowledge of all the material facts affecting their rights." They denied this, and had the right to controvert the same. Besides, the parties litigated the case upon the merits, and it is too late for the plaintiffs to object to the sufficiency of the answer. (1 Kernan, 237; 3 id. 127; 18 N.Y. Rep. 585; 20 id. 355; Dauchy v. Tyler, 15 How. Rep. 399.)
There is nothing in the point made by the plaintiff's counsel that the defendants could not retain and enforce the notes without returning, or offering to return, the goods or money received by them under the compromise. Crans waived the right to require this, if he ever possessed it, when he settled with the defendants, and delivered to them the notes in question. He agreed, when he gave the notes, that they might retain whatever they had received or would receive under the compromise, and that he and Van Duzer would pay them $400 besides, according to the tenor and effect of the notes they gave therefor.
For the foregoing reasons I am of the opinion the judgment of the Supreme Court should be reversed, and a new trial granted, costs to abide the event.
DENIO, Ch. J. also delivered an opinion for reversal.
Judgment reversed, and a new trial ordered.