Harvey v. Hunt , 119 Mass. 279 ( 1876 )

Devens, J.

The presiding judge did not assume, as the plaintiff contends, but submitted to the jury the question whether the signature of the plaintiff to the composition deed was obtained by payment to him in full of his debt in cash, and by the note in suit. If this question was answered affirmatively, they were directed that they would be warranted in finding that the note was without consideration, while they were cautiously instructed that if there was no relation between the plaintiff’s signing the composition deed and the giving the note declared on, and that if this was an independent contract for the payment of the defendant’s debt to the plaintiff, irrespective of any promise to sign the same and of the act of signing, the note was for a good consideration.

There was evidence of the previous oral agreement by the plaintiff to take thirty-five per cent, of his debt, and of the subsequent deposit by him of his claim with the attorney, and of the payment of fifty per cent, cash, and the delivery of the note in suit by the defendant, induced by fear of an attachment, and of the subsequent signature of the composition deed by the plaintiff. This sufficiently connected the execution of the deed with the making of the note, and while there was no direct evidence of any understanding or agreement between the parties that when it was so made the deed should be executed, these circumstances, if they were proved, justified the jury in finding its existence.

Upon these facts the instructions were also correct. The payment of money by a debtor to some of his creditors in order to induce them to execute a deed of composition is a fraud upon all othei creditors who sign it, as they become parties upon the understanding that all are to receive the same amount, and are influenced each by the other to believe that the composition is a fair and just one. A private arrangement by which the influence of one as expressed by his signature, is bought by promises of advantage peculiar to himself, operates to deceive all others. No contract therefore to pay money, or to do any other valuable thing on such consideration, can be enforced, and however formal the instrument may be by which it is expressed, paroi evidence is always admissible to show the fraud and thus avoid it. Case v. Gerrish, 15 Pick. 49. Ramsdell v Edgarton, 8 Met. 227. Lothrop v. King, 8 Cush. 382. Partridge v. Messer, 14 Gray 180.

Nor had the instrument become void when the plaintiff signed it. Even if those who had signed it previously to May 14 would have been entitled to be released from it, if they so demanded, because of the failure to pay upon that day, it was entirely competent for them to waive this provision, and, as they received the thirty-five per cent, provided for by it, it must be deemed it was waived, as this would operate to reaffirm their signatures. While as to those who signed after May 14, who were apparently the larger number as shown by their signatures after that of the plaintiff, such signatures would clearly indicate a waiver of payment on that day.

Although the deed was not signed by all, but only by “ substantially all ” the creditors, this cannot make the consideration of this note good. Its validity is to be tested by the object with which the contract was entered into, and not by the number of persons actually deceived by means of it. Gibbs v. Smith, 115 Mass. 592. Even if creditors might have been entitled, either because the payments were not made on May 14, or because all had not signed the deed, to be released from the proposed composition, this would not affect the case. It is shown, however, that the deed was so largely signed that the composition was carried out; and the plaintiff’s signature, which was obtained by reason of the private advantage which he sought to secure by his secret agreement, was in fraud of the just rights of those who were afterwards induced either to enter into or to complete the transaction.

Without discussing each of the numerous rulings requested by plaintiff, many of which do not seem to have been called for by any facts which appear on the bill of exceptions, the considerations to which we have adverted require us to hold that no error was committed in either those given or in refusing those which were declined. Exceptions overruled.