King v. Hutchins

Money received on notes pledged to secure a claim, which afterwards passed into judgment, will be treated as having been applied in satisfaction of the judgment, and not as the foundation of an action on the part of the pledgor, subject to be reduced by the judgment as a set off. Interest should be cast on the notes so pledged, to the earliest day they can he shown to have been paid; also, upon the judgment to the same day; and upon the the excess of the former over the latter, the plaintiff is entitled to interest, to the rendition of his judgment. If one give his note to another and pay it, for the consideration, among other things, that the payee agrees to pay certain sums for the maker, the latter may, upon the neglect or refusal of the payee to pay such sums, treat the contract as rescinded, and recover back the amount, in an action for money had and received. And this he may do, although the payee have recovered a judgment upon the note so given, and satisfied the same by an execution. A receipt in the common form is an admission which is evidence against the party giving it, but it may be shown by him to be against the truth, and to have been given for a fraudulent purpose, in which both parties to it participated, in any action between such parties. Where the object of an action is to charge the defendant with moneys received by him, and the defence is to discharge him by showing the moneys to have been accounted for, the courts may appoint an auditor under the statute, authorizing such appointment in cases in which “ the investigation of accounts and examination of vouchers are necessary.” The auditor may cause either party before him to be examined touching the matter in controversy, and unless it appear that such examination has transcended the limits fixed by law, it forms no objection to the report. Depositions taken to be used on the trial of the case may be used at the hearing before the auditor. An initial letter, which is commonly inserted between the Christian and surname of a party, is no part of the name, and the omission of it is not a misnomer. The defendant being indebted to one P., who was indebted in a like amount to the plaintiff, the three agreed to apply what P. owed the plaintiff, to pay what the defendant owed P. Held, that the plaintiff could recover the amount of the defendant, in an action for money had and received.

Assumpsit. The action was commenced May 20,1848. The writ contains four counts — for money had and received, &c.; for goods sold and delivered, &c.; for work and labor, &e.; and for board and lodging, &c. The cause was submitted to an auditor, who reported a balance due to the plaintiff, subject to the opinion of the court, upon facts reported by the auditor, as follows: On the 27th of November, 1841, the plaintiff, Hiram King, gave his note to the defendant, Samuel Hutchins, for $545,09, payable on demand, with interest annually, which note he secured, at the time it was given, by a mortgage_ of personal property. On the 3d of January, 1842, the plaintiff gave the defendant another note for $1,224,42, payable on demand, with interest, to Hutchins & Buchannan, a firm in which the defendant was a partner. At the time this note was given, the plaintiff was much in debt, and has ever since been so. The note was made at the instance of Hutchins, and there were included in it, some notes which Hutchins & Buchannan held against the plaintiff, and also about a hundred dollars, or a little over, due from the plaintiff upon a note to Abel Underwood, Esq.; a hundred dollars and some interest due from the plaintiff upon a note to the Grafton Bank; a hundred dollars and some interest due from the plaintiff on a note to one Timothy Shedd; and about ninety dollars and some interest due from the plaintiff on a note to Ira Goodall, Esq. The signers, as sureties of the note to the bank, were called upon to pay it, and did pay it, long before the commencement of this suit, and the plaintiff paid them before the suit was commenced. At the time the $1,224,42 note was given, the plaintiff placed in the hands of the defendant four notes against Isaac F. Allen and Abiel Deming, amounting to $300, principal,-dated April 3d, 1841, and on interest from date, and also a receipt dated Nov. 26,1841, given to the plaintiff by said Underwood, for two notes against said Allen and Deming, for $100 each, dated April 3d, 1841, and on interest from their date, which two notes he had lodged with Underwood as collateral security for the debt to him, in-eluded in said $1,224,42 note; which notes and receipt, the plaintiff placed in the defendant’s hands as collateral security for said $1,224,42 note. All of said six notes against Allen and Beming were good, and were payable at various times within three or four years from their dates, and were all paid to the defendant before the commencement of this suit, but the times of payment did not more particularly appear. At the time these notes were placed in the defendant’s hands, (viz, January 3d, 1842,) it was agreed between the plaintiff and him, that the personal property mortgaged to secure the $545,09 note should be sold at auction by Hutch-ins, and the avails applied to pay the $545,09 note, and that the residue, if any, should be applied on the $1,224,42 note; that a suit should be commenced on the last mentioned note, and an equity of redemption in some real estate belonging to the plaintiff attached on the writ, and that Hutchins should pay the debts to Underwood, Grafton Bank, Sliedd and Goodall. One Jonathan B. Rowell was surety for King on the note to Mr. Goodall, and was sued thereon, and judgment recovered against him before the commencement of this suit. The suit was commenced and the equity of redemption attached on the 4th of January, 1842, and judgment was rendered at the February term, 1842, for $1,240,18, debt and cost, in favor of Hutchins & Buchannan against the plaintiff. The equity of redemption was sold on the execution, (issued upon said judgment,) on the first day of April, 1842, to the defendant, for $662,47, after deducting the fees upon the execution. The personal property mortgaged as aforesaid, was sold by the defendant at auction, on the 13th of January, 1842, for $685,21, besides paying the expenses of the sale, amounting to $5. This sum of $685,21, after making proper allowances for interest, paid the $545,09 note, and there remained to be applied on said judgment $136,94. This sum, with interest thereon to the date of the judgment, (February 12, 1842,) I consider applied as of February 12, 1842, in part payment of said judgment, according to the agreement of the parties. The $662,47, for which said equity was sold, I treat as applied in part satisfaction of the execution on the day of the sale, viz, April 1, 1842, and there remained due upon the judgment, (after applying the two sums aforesaid,) $449,30 unpaid, unless paid by the avails of the Allen and Deming notes. There never was any particular application of said notes in payment of the judgment, except such as results by operation of law, from the facts before stated. The note for $1,224,42 was payable, as before stated, to Hutchins & Buchannan, and the judgment was recovered in their name, and the Allen and Deming notes were placed in Hutchins’ hands as collateral security for the $1,224,42 note. If upon this state of facts the law would apply the Allen and Deming notes, when collected, in payment of the judgment, the judgment should be treated as paid, and should not be allowed as an offset, and in that case the balance only of the plaintiff’s first item, after deducting the balance of the judgment, should be allowed.- In that case I submit to the court the mode of computing interest upon the Allen and Deming notes, and also upon the $449,30 of the judgment remaining unpaid April 1, 1842, so as to find a just balance. In stating the account, I cast interest on said Allen and Deming notes from their date to the date of the writ, and on said sum of $449,30 from April 1,1842, to the date of the writ, and said $449,30, with interest so cast, constitutes the $614,20 allowed as an off set. On the 10th of April, 1848, Hutchins & Buchannan executed a written assignment of the balance of the judgment to Hutchins. The sum of about $100 and interest due Mh Underwood, and included in said $1,224,42 note, the defendant paid. The notes to the Grafton Bank, Shedd, and Goodall, he has not paid. The three last notes constitute the 15th, 16th and 17th items in my report, and are allowed. So late as the 1st of April, 1842, the transactions between the parties had been in good faith, and without any fraudulent intent on the part of the plaintiff. On that day, at the suggestion of the defendant, and with an intention to prevent the plaintiff’s creditors trusteeing the defendant, the plaintiff gave a receipt subjoined to a bill of the articles of personal property sold at said auction, as follows: “ Received pay for the above and foregoing sales of property, of Hutchins & Buehannan and Samuel Hutchins, by allowance on claims they hold against me, and also for four notes signed by Abiel Deming and Isaac F. Allen, dated April 3, 1841, said notes amounting in all, at the date of them, to three hundred dollars; also for a receipt I sold them against Abel Underwood, for notes I left with him as collateral security, in full. Hiram King. April 1, 1842.” King also made statements after said first day of April, 1842, designed by him to mislead his creditors, and to induce them to believe that the defendant had no property belonging to the plaintiff in his hands, and that he still owed the defendant more than he could pay. Such statements were made. to a deputy sheriff, who had an execution against the plaintiff, and was endeavoring to ascertain if he could not obtain payment of it from the defendant. There was no time agreed on within which the debts to the bank, Shedd, or Goodall, were to be paid. The $545,09 note, and the $1,224,42 note, were the only claims Hutchins and Hutchins & Buehannan had against the plaintiff on the 3d of January, 1842, and King has received nothing for the Allen and Deming notes, and the avails of the personal property, except in the application of them, as aforesaid, to said $545,09 note, and to the judgment, so far as the facts warrant an inference of such application. The plaintiff offered several depositions, and among them the deposition of J. B. Rowell, taken in the State of Illinois. The notice of the caption was served Nov. 5th, and the caption was Nov. 26th, 1849. The notice was of the taking at the dwelling house of Joseph Moore, Esq., and the taking was at the dwelling house of Joseph H. Moore, Esquire, and the defendant was not present at the taking. The defendant objected to all the depositions, on the ground that depositions could not be used before an auditor, and to the deposition of Rowell, on the ground that the notice was not sufficient, and on account of the variance between the notice and caption, as to the place of taking. The depositions were all read, but I find the evidence sufficient, independent of Rowell’s deposition, to prove the facts upon which that deposition has any bearing, and none of the depositions affect the items numbered in my report from 3 to 14 inclusive. The 14th item in the report accrued as follows: One Pennock owed the plaintiff $2,76, and the defendant owed Pennock that sum, and the parties applied what Pennock owed the plaintiff to satisfy Pennock’s claim against the defendant. The question is submitted to the court whether thisitem can be allowed under any count in the declaration. I. The plaintiff must recover the excess of the Allen and Deming notes over the balance of the judgment, unless precluded by the receipt of April 1, 1842. II. He is not thus precluded. For the receipt is but prima facie evidence of satisfaction, and the auditor finds against it. Morse v. Shattuck, 4 N. H. Rep. 229; Pritchard v. Brown, 4 N. H. Rep. 397; 1 Greenl. Ev. 353 and 246. It is not any better or stronger for being fraudulent against the plaintiff’s creditors. If such fraud have any effect between the parties to the contract thus fraudulent, it operates against him who sets up the contract, and so, of course, against the defendant, if the receipt be regarded as a contract. The maxim, in pari delicto, potior est conditio defendentis, defeats the claim of the party who seeks to enforce the illegal agreement, who is in this case the defendant. Wearse v. Pierce, 24 Pick. 141. And the receipt is not a contract, but merely a written admission made at the defendant’s suggestion, and he cannot insist upon it as an estoppel. Davis v. Saunders, 11 N. H. Rep. 259. III. There is not the slightest ground for holding that the plaintiff is barred of his claim by reason of his statements to the deputy sheriff. 1 Greenl. Ev. 236. IV. The plaintiff’s note of January 3, 1842, for the sums to be paid to Shedd, Goodall, and to the Grafton Bank, was, under the circumstances, equivalent to moneyWhitcomb v. Williams, 4 Pick. 228 5 Willie v. Green, 2 N. H. Rep. 333; 2 Greenl. Ev. 107. V. The plaintiff delivered to the defendant money, or its equivalent, to be paid to Shedd, Goodall,'and to the bank. The defendant unreasonably neglected to apply it, and is therefore liable in this suit. Snow v. Prescott, 12 N. H. Rep. 527; Fuller v. Little, 7 N. H. Rep. 345 ; Strong v. Bliss, 6 Met. 397; 2 Greenl. Ev. 187. VI. The deposition of Rowell was admissible. Rev. Stat. ch. 188, § 4 ; Act of December 26,1848; Peck v. Wilson, 14 N. H. Rep. 587; Kingsbury v. Smith, 13 N. H. Rep. 109. VIL The arrangement between the parties was as if Pennock had paid the defendant $2,76 to the plaintiff’s use. Hutchins v. Gilman, 9 N. H. Rep. 359; Heaton v. Angier, 7 N. H. Rep. 397, and cases cited under the 4th point. I. All the items of the plaintiff’s specifications excepting those from the 3d to the 14th, inclusive, were incompetent to be considered by the auditor, the defendant objecting, and should be disallowed. The consideration of them did not involve “ an investigation of accounts nor an examination of vouchers.” Rev. Stat. ch. 189, § 1 ; Ranlet v. Herren, recently decided in Grafton county, (not reported.) The plaintiff ought not to have been permitted to testify to these items as a witness in chief, though this objection we suppose to be included in the first, and implied by it. Stevens v. Hall, 6 N. H. Rep. 508; Mann v. Locke, 11 N. H. Rep. 246; Brewster v. Edgerly, 13 N. H. Rep. 275. This proceeding, like the taking of depositions, is by virtue of the statute solely, and the statute is to be construed strictly. II. The plaintiff’s depositions should not have been submitted to the auditor. The use of depositions before an auditor is not authorized by law; Rev. Stat. ch. 188, § 13, providing that depositions may be taken in civil cases, “ to be used on trial.” This was not a trial. The statute authorizing auditors contemplates no such proceeding. III. The deposition of Jonathan B. Rowell was inadmissible because the notice did not truly state the place of caption. It can make no difference, that the auditor, having considered this deposition, says he would have deemed the evidence sufficient to have warranted his findings without it, or that its contents did not affect certain items. IV. The plaintiff cannot recover the 15th, 16th, and 17th items, being the sums due to Goodall, Shedd, and the Grafton Bank — because, 1st — These sums were all included in the note from him to the defendant, for $1,224,42, on which a judgment was recovered, February 12,1842. They are res judicatce. The judgment is conclusive. The plaintiff is estopped from saying that all the sums included in that judgment are not due from him to the defendant. Tilton v. Gordon, 1 N. H. Rep. 33; Former v. Stewart, 2 N. H. Rep. 101; Smith v. Whitney, 11 Mass. Rep. 445. Of this judgment, made up in part of these sums, §614,20 Is still unpaid. The defendant should not be compelled to pay them until he has received the amount of the plaintiff. 2d — -The agreement between the parties in regard to these notes has been partially executed. The defendant has applied part of the fund to pay the note to Underwood. If the plaintiff is entitled to any remedy in this particular, it could be enforced only under a special count upon the contract. All the counts in this writ are general. 2 Greenl. Ev. 104, § 124, and cases there cited. 3d — No time was agreed within which they were to be paid. The plaintiff has not paid those debts. Goodall, Shedd, and the bank, should bring suits, if any body. 4th- — Because these and all other items of the plaintiff’s claim are affected by his fraudulent intent and practices disclosed in the report. V. The plaintiff can recover nothing covered by the contract evidenced by the receipt, given with the fraudulent intent and purpose found, by the report dated April 1, 1842. The defendant possesses the property, and must hold it as to the plaintiff, who will not be permitted thus to allege his own turpitude and take benefit. The defendant-sets it up as fair and bona fide, according to its terms, and-stands upon it. The plaintiff cannot impeach it by imprat»ingfraud. Goodwin v. Hubbard, 15 Mass. Rep. 212; Brinks, water v. Brinkwater, 4 Mass. Rep. 354 ; Judge Trowbridge’s Opinion, 3 Mass. Rep. 581; Divoll v. Leadbetter, 4 Pick. 219; Sumner v. Murphy, 2 Hill (S. C.) 488; Hendrick v. Mount, 2 South. 738, cited in 2 U. S. Dig. 455, §§ 151-5; Brewer v. Hindman, decided in Grafton county, December term, 1845-6 — not reported. The plaintiff has availed himself of this ground, used it against creditors, and derived benefit from it, as shown by.his transactions with the officer, D. Patterson, who was attempting to collect an execution against him. Money paid under a mistake of facts cannot be recovered back, where the plaintiff has derived a substantial benefit from the payment. 2 Greenl. Ev. 102, § 123. Much less can it be where there has been a fraud. He is estopped by his declarations and admissions to Patterson and others, from saying that anything was due him from the defendant, or that he had anything in the defendant’s hands. Nor will it avail the plaintiff to allege that there was no consideration for this contract. If there was none, it would not relieve him from the consequences of his fraud. Fraudulent contracts generally are without consideration. Being false; they can have no real consideration. The want of consideration is one of the elements of the fraudulent transaction. The law regarding them in this light will not interfere to aid either. Potior est conditio possidentis. But here there was in fact some consideration, apart from the effect of the fraud, and as between the parties, the law would in no case inquire into the adequacy of it. Osgood v. Franklin, 2 Johns. Ch. 122, 123 ; Hubbard v. Coolidge, 1 Met. 84-93 ; Allen Petitioner, 15 Mass. Pep. 58-65 ; Brewer v. Hyndman, already cited; Amherst Academy v. Cowls, 6 Pick. 427, 432. This fraudulent disposition of the plaintiff’s property was made before the suit was brought. It makes no difference whether it was made when the property was originally put into the defendant’s hands, or afterwards. It stands in the place of the first contract, whether we regard that as merged in this later one, or the first as rescinded, and the last substituted for it. That ceased when this was made. It carries with it all the incidents of a fraudulent contract. A contract originally fraudulent may be purged by matter ex post facto, and become valid, not only as to the parties, but as to third persons — creditors. Bank v. Haskins, 3 Met. 332; Harrison v. Phillips Academy, 12 Mass. Pep. 456. These relate to contracts concerning real estate. Thomas v. Goodwin, 12 Mass. Rep. 140; Hutchins v. Sprague Sp Tr., 4 N. H. Rep. 469, relating to personal property. A fortiori, it must be possible to convert an honest contract into a dishonest one as between the parties only. The receipt was evidence of a contract that the defendant would keep all the property named, as his own, from that time forth ; that it was all paid for. This was the bargain held out to defraud creditors. The plaintiff is bound by it, as between him and the defendant. The contract, in terms, covered the Allen and Dealing notes, which make the first item of the plaintiff’s claim, as well as the avails of the sale of property, which the report finds applied on the defendant’s judgments. It is apparent that it also covered the items 15,16, and 17, of the plaintiff’s claim, because these made a part of the $1,224,42 note, which the Allen and Deming notes had been given to secure. The note was sued by writ returnable February term, 1842, when judgment was rendered. This receipt was dated April 1,1842, soon after the rendition of judgment. The plaintiff’s statements to the deputy sheriff indicate that not only the items in question, but all his rights, credits and property in the defendant’s hands, were covered by this arrangement. If so, he should recover nothing. The plaintiff is estopped from setting up his own fraud to avoid this contract. Kimball v. Blaisdell, 5 N. H. Rep. 533; Somes v. Skinner, 3 Pick. 52. VI. The 14th, or Pennock item, cannot be recovered, because all the counts 'are general. The plaintiff should have had a special count to cover this. VII. The balance of the judgment was properly allowed in offset: 1st — Because it is a proper matter of set off. Hutchins v. Riddle, 12 N. H. Rep. 464; Tuttle v. Bebe, 8 Johns. 152; Barnet v. Barnet, 8 Pick. 342; Hathaway v. Russel, 16 Mass. Rep. 474, and eases there cited; Cambridge v. Whit-comb, 1 Chip. (Yt.) 180. “ Where the plaintiff procured insurance on a vessel owned by himself and another, and recovered of the insurers of a partial loss, it was held that the insurers were entitled to set off a former judgment against the plaintiff individually.” Hazelhurst v. Bayard, 3 Yeates, 152; cited in 3 17. S. Dig. 427, § 277. The statute of set off is an equitable statute, and is to be construed liberally. It has regard to the real and not merely the nominal parties. See 12 N. H. Rep. 464, already cited. 2 — Apart from the set off, the judgment ought to be allowed against these claims, because it shews such to have been the understanding and agreement. It was necessarily so from the origin and nature of the claims.