Jackson v. Hodges , 1866 Md. LEXIS 28 ( 1866 )

Bartol, J.,

delivered the opinion of this Court.

In the year 1855, the appellant, George Jackson,' being indebted to the appellees and others, in large sums, represented to his creditors that he was unable to pay more than fifty cents in the dollar of his debts, and proposed to them to accept that proposition in full satisfaction of their claims ; they confiding in his honesty, and relying upon his representations with regard to the value of his assets, accepted his proposition and received from him promissory notes endorsed by his brother, James .Jackson, payable on an average of twelve months, without interest, to the amount of fifty per centum of the sums respectively due them, and released and surrendered their claims.

Afterwards, a short time before the filing of the bill of complaint in this case, the appellees being informed that George Jackson, the appellant, had not truly represented his pecuniary condition, but had concealed and secreted a large amount of property for his own benefit, instituted this suit for the purpose of annulling and setting aside the settlement made in 1855, and subjecting the property of George Jackson to the payment of the balance of their claims.

The main allegation of the bill, upon which the appellees’ claim for relief depends, is that the settlement of 1855 was procured by fraud on the part of George Jackson. The fraud is alleged to consist in his falsely representing himself as unable to pay more than fifty per centum of his debts, when in fact he had property enough to pay them in full; and in his concealing from his creditors the real amount and value of his property, and thereby inducing them to accept the composition proposed.

As fraud is never presumed, but must be established by proof, it is our duty to examine the evidence contained in the record, and to determine whether in our opinion, it is sufficient to prove the fraud and deception charged in the bill of complaint.

It appears from the evidence, that in order to induce his creditors to accept the terms offered, George Jackson exhibited to them a statement of the amount of his debts, and the estimated amount or value of his property, consisting of his stock of goods on hand, and the debts due him considered as good. These statements are not produced, nor is there any very distinct evidence of the several amounts or estimates .contained in the statement.

It plainly appears from the testimony of Allen T. Lewis, one of the creditors, who was examined as a witness both for the complainants and the defendants, that the statement exhibited by George Jackson did not contain an invoice of his stock of goods, or specify in detail either the items of his property or a list of the sperate debts due him, but merely the aggregate amount of his liabilities, and two items showing the aggregate amount of his property and sperate debts.

There is no dispute about the amount of his liabilities ; by an agreement signed by the solicitors, they are admitted to have been in the aggregate $18,546 -16.

The witness, Allen T. Lewis, states that he made the calculation from the statement shown, and the result was that after paying fifty per cent, there, would be left to George Jackson a surplus or margin of $1,800 or $2,000, which he thought was “no more than lie was entitled to have for selling the goods, making the collections, and for the risk he would run, and including also a little margin to enable him to go on and continue business.” He also states that George Jackson represented that the statement “ embraced all his property except his household furniture, which he (witness) thought the creditors ought not to require of him.”

This evidence is conclusive to show that the whole amount of his property as represented to his creditors, was from $11,000 to $11,278. This is ascertained by adding $1,800 to .$2,000 to the sum of $9,273, the sum proposed to be paid to the creditors.

What was the whole value or amount of his assets at that time is not proved by direct evidence. But he concedes in bis answer that the estimate be then put upon his stock of goods was $13,000, (and that they were actually sold for more.) James Jackson, his brother, owed him $500 to $1,000. What other debts were due him is not shown. He owned two improved lots, one on Burén street, and one on Aisquith street, both of which, however, were encumbered with mortgages, and their value, if any, beyond the amount of the incumbrances, does not clearly appear. But estimating only the stock of goods on hand, and the debt then due him from James Jackson, it is clear that these items together exceed by the sum of $2,500 or $3,000, the whole amount represented by him on his statement, shown to the creditors to he the whole value of his property. In addition to this, the proof shows that within six months after he effected the composition with his creditor’s, he purchased a lot on Lee street for $2,000, and in little more than a year had advanced in cash for the improvement of the property on Howard street (leased by him and his brother James,) the additional sum of $5,500. And as no other explanation is afforded by the evidence, we are compelled to the conclusion that his property and effects at the time of the settlement greatly exceeded the amount represented by him to his creditors, and were sufficient to pay his debts in full. This is the irresistible conclusion from the evidence in the cause, independently of the positive testimony of James Jackson, of which we shall speak presently.

There are some other facts conclusively established by the proof, that are inconsistent with honesty, truth and fair dealing on the part of George Jackson, in procuring the settlement with his creditors.

He represented that his disasters in business had been occasioned by the protracted illness, of his wife, and the consequent large expenses incurred by him. The proof shows that her illness was of short duration ; and though he had the misfortune to lose her in-the spring of 1855, the evidence of Dr. Flemming, the family physician, shows that his medical bill did not exceed twenty dollars, and there is no evidence of any large losses or expenses incurred by him.

'His correspondence with his creditors in New York and Philadelphia, Messrs. Johns & Payne, Sharpless Brothers, Amer & Co., and Hammil, Wevil & Go., exhibited in the record, both in its tone and substance, shows a reckless disregard of truth and fair dealing on his part.

While, dictating to them his own terms in a most arbitrary way, he represents to them that his brother James, whom he offers as endorser on his notes, insists upon having the old notes surrendered before he is willing to" become his surety, when in fact, according to James’ testimony, he was not even consulted on the subject. He represents that his brother James is willing to discount the new notes at the rate of one per cent, a month, and in some .cases the new notes were actually shaved at that rate, not by his brother .James, but by himself; showing that he had at that time ready money on hand..

From these facts, combined with the evidence that within a brief period after his composition with his creditors, he was in possession of property of large value, amounting, according to his own statement made to Hayward, the Justice of the Peace, in 3859, to $15,000 or $20,000, as proved by the witness McCauley, in the absence of any satisfactory explanation of the way in which this property was acquired, are convincing proofs that the statement made to his creditors by George Jackson, upon which they relied,, and by which they were induced to enter into the composition with him, was grossly untrue and fraudulent.

If there were any doubts, however, on this subject, they would be removed by the positive evidence of -James Jackson, who testifies to the fraudulent purposes of George Jackson, and the deception practiced by him upon his creditors in procuring the settlement of 1855.

(Decided April 18th, 1866.)

If' the case of the complainants rested exclusively upon the testimony of this witness, unsupported by other proof, we should hesitate in affirming the decree of the Circuit Court. But that testimony is corroborated by other proof, and in those particulars in which it is not positively supported it seems to us to be consistent with the other evidence, and is therefore not to be absolutely rejected.

The result of a most careful examination of the whole case, has convinced us that the fraud charged in the bill has been established by the proof, and therefore that there is no error in the conclusion reached by the Circuit Court upon the facts of the case.

We are of opinion that the exceptions to the bill, on the ground of multifariousness, are not well taken, even if they had been made in time. •

We are also of opinion that the defence, under the statute of limitations, is not supported. In such case, according to all the authorities, the statute does not begin to run until the fraud has been discovered, or becomes known to the complainants, whiefcothe proof in this case shows was not until a few months before the filing of the bill. A decree will be signed affirming the decree of the Circuit Court, with costs, and remanding the cause for further proceedings.

Decree affirmed and cause remanded.