Wight v. Sampter

Mr. Justice Magruder

delivered the opinion of the Court:

On December 26,1885, appellants were bona fide creditors of Beak & Bucher to the amount of $32,422.70, and, on that day, cancelled and discharged $25,000.00 of such indebtedness by receiving from Beak & Bucher an assignment of notes and hook accounts, amounting upon their face to something over $27,000.00, but not shown to have been actually worth more than $25,000.00, and upon which it is conceded that only $19,000.00 had been collected when the decree in this cause was entered. On the same day, appellees were bona fide creditors of Beak & Bucher to the amount of $7716.40, which indebtedness had been reduced, at the date of the said decree, to $4773.00, the latter amount being the sum, which appellants are ordered by the decree to pay to appellees.

The question presented for our determination is this: Did the appellants hold the notes and accounts assigned to them, or the proceeds of their collection, in trust for appellees upon such terms that they were bound, first to apply the same to the payment of the $4773.00 due to appellees, and the balance to the payment of the $32,422.70 due to themselves, or were appellants entitled to keep and apply the whole of such notes and accounts, or the proceeds thereof, upon their own indebtedness without paying anything to appellees ? The theory of the bill, and upon which the decree is based, is, that appellants occupied a trust relation towards appellees, and, by reason thereof, could not appropriate to their own use any of the notes and accounts of Beak & Bucher that might come into their hands, until they had first paid the claim of appellees against Beak & Bucher. We think that this theory was an erroneous one under the facts disclosed by the record.

On December 26, 1885, Henry Gr. Savage and Joseph Ullman were also bona fide creditors of Beak & Bucher. As a part of the arrangement, by which the notes and accounts were used to pay the sum of $25,000.00 to appellants, Beak & Bucher also made provision, by confessing judgments and suffering executions to be issued thereon, for the distribution of the proceeds of the sales of their stock in trade between Savage, Ullman and appellees, Savage to be first paid in full, and Ullman and appellees to be next paid pro rata. The distribution so provided for was carried out, and appelleesaccepted $3300.00 as their share of the proceeds of the stock sales. That part of the arrangement made by Beak & Bucher which disposed of the stock, is not interfered with by the decree, and the attack upon it was abandoned by the dismissal of the hill as to the parties interested in it.

The claim of the trust relation is based upon an agreement made between appellants and appellees on August 10, 1885. Before discussing this agreement it will he necessary to review the circumstances, out of which it grew, and which led up to. its execution.

Early in March, 1885, Beak & Bucher telegraphed to appellants at Boston and to appellees at New York to come to-Chicago, as they were in a failing condition and could not continue their business without help. They then owed appellants $25,000.00 for goods purchased, and appellees $15,000.00 for money borrowed. The wife of Michael Sampter was a sister of Amalie Beak’s husband and an aunt of Bucher’s wife. At Chicago on March 9 or 10, 1885, it was agreed between Michael Sampter, J. .F. Wight and Bucher, that appellants should advance to Beak & Bucher $15,000.00, and that appellees should advance to them $5000.00, and that appellants and appellees “would carry Beak & Bucher along in good shape,” and, in doing so, would act in unison and in good faith towards each other, putting their interests together and neither taking any advantage of the other. The advances were made as agreed during the following spring. On March 9, 1885, appellees held the judgment notes of Beak & Bucher for the $15,000.00 loaned fo them, and obtained other judgment notes for the subsequent advances. On March 14, 1885, Wight Brothers received from Beak & Bucher a judgment note fo'r $40,000.00 to cover the existing indebtedness of $25,000.00, and the advances of $15,000.00 afterwards made, but confiding in the integrity of Bucher, they left the $40,000.00 note in his possession with the understanding that he should have judgment entered upon it, in case financial disaster should suddenly come upon his firm.

Michael Sampter swears that it was agreed between Wight and himself in March, 1885, that the appellees should be preferred, and that their indebtedness should be paid first in case the advances of $20,000.00 should be insufficient to prevent the failure of Beak & Bucher. Wight and Bucher deny this. They both swear that nothing was said at the March interview about preferring the Sámpters in the event of a suspension. We think the weight of the evidence is against the existence of any agreement at that time for the preference of appellees.

During the spring of 1885, Arnold Sampter became informed of the fact, that Wight Brothers had left their judgment note for $40,000.00 in the hands of Beak & Bucher.

On August 10, 1885, Arnold Sampter was in Chicago. In the forenoon of that day he placed the judgment notes of appellees in the hands of his attorneys with directions to prepare the papers for the entry of judgment on that day. He went to Bucher and secured possession of the note for $40,000.00 belonging to appellants. He only obtained it by much persuasion and after repeated declinations on the part of Bucher. He says himself in his testimony: “I asked for it and insisted upon having it. I bulldozed him out of it; * *' * I thought I kind of had Mr. Wight when I had possession of that note.” In the afternoon of the same day he again went to Beak & Bucher and threatened to take judgment and close them out. He refused securities they offered him to prevent his doing so. He then went in company with Bucher to the Palmer House to see J. F. Wight, who was stopping there. Wight says: “Mr. Sampter informed me that he had instructions from his father (Michael) to enter up judgment notes immediately against Beak & Bucher, that the papers were all prepared to do it in ease it was necessary, and also that he had my judgment note.”

The 'evidence shows that Wight Brothers would have lost nearly all of their large claim of $40,000.00, if the stock of Beak & Bucher had been levied upon at that time. J. F. Wight was undoubtedly taken at a disadvantage. The papers were ready for the entry of judgment upon the Sampter notes. His own judgment note for $40,000.00 was beyond his control, in the hands of Sampter or Sampter’s attorneys. Under these circumstances Wight agreed that he would guarantee the payment of $10,000.00 of the indebtedness due from Beak & Bucher to the Samplers, and that, if judgment should be entered up in favor of the Samplers for the balance of such indebtedness, it should have priority over any judgment to he entered by Wight Brothers on their note. In consideration of this agreement, Arnold Sampter consented to refrain from taking the action, which he had threatened, and he and J. F. Wight and Bucher went on the evening of the same day to the office of Sampter’s attorneys to have the agreement reduced to writing.

On that evening the old judgment notes given by Beak & Bucher to appellees were cancelled and left with the attorneys. Five new notes of $2000.00 each, dated on different days in July and August 1885, and payable to the order of appellees in three months after date, were executed by Beak & Bucher and turned over to Sampter. The payment of these five notes was guaranteed by a separate written contract of guaranty dated August 10,1885, and signed by Wight Brothers and by J. Franklin Wight. A judgment note of same date, payable to the order of appellees, for $9706.40, being the balance due the Samplers over and above the guaranteed notes, was executed by Beak & Bucher. A judgment note for $10,000.00 was also made by them to appellants to secure them in case they should be obliged to pay the five guaranteed notes. The judgment note for $40,000.00, which had not left the hands of Arnold Sampter since he obtained it from Bucher, the judgment note for $9706.40, and that for $10,000.00, were put into the possession of the attorneys, and a letter of instructions was drawn up addressed to said attorneys, dated August 10, 1885, and signed by “M. Sampter Sons & Company” and “Wight Brothers.” This letter describes the three notes last named, recites that they are deposited with the attorneys, and contains the following language: “We * * * retain you as our attorneys in connection with the same. * * * We hereby jointly and severally instruct and direct you to take no action whatever on said notes, or any or either of them, and not to enter judgment thereon until instructed so to do by the said firm of Wight Brothers, or some member of said firm, or by the agent thereof,” etc.

The notes, the guarantee and the letter of directions constitute the contract of August IQ, 1885, as reduced to writing. The trust relation contended for is alleged to spring from this contract. In view of the manner, in which its execution by Wight Brothers was brought about, it is entitled to no other than a strict construction from a court of equity.

The letter of directions to the attorneys was signed by appellants and appellees, not by Beak & Bucher. It placed no restrictions upon the latter as to the mode, in which they should dispose of their assets, or provide for their creditors. It said nothing upon its face about the assignment of accounts or notes. If it imposed any obligation upon appellants to pay the claim of appellees out of such notes and accounts as Bea'k & Bucher might choose to turn over to them, such obligation was not expressly enjoined, but is mere matter of inference. Is it a fair and legitimate inference from the language of the letter, that appellants would receive no notes or accounts from their debtors except for the benefit of appellees ?

The letter directs the attorneys not to enter judgment either upon the note of $9706.40 belonging to appellees, or upon the note of $40,000.00 belonging to appellants, until they are instructed to do so by Wight Brothers. The only power conferred upon Wight Brothers by the letter is simply the power to instruct the attorneys when to enter judgment. As to what was to be done after the entry of judgment, in the way of preferring the claim of appellees over that of appellants and making it a prior lien upon the property of Beak & Bucher, these were matters to be looked after by the attorneys, and were not within the control of Wight Brothers.

It is a fact that appellants never did give any instructions to have judgment entered either upon their own note or upon that of appellees, but we see nothing in the evidence to show that they were, for that reason, guilty of any intentional wrong towards appellees. Beak & Bucher and their counselors, without the knowledge or aid of appellants, made preparation for confessing judgments in favor of Savage, Ullman, and Minehrod, the latter for the use of appellees, and then sent for Wight and forced him to take the notes and accounts or run the risk of getting nothing. Did appellants receive such notes and accounts affected with a trust in favor of appellees, because, without fault on their part, no instructions had been given to enter up judgments upon the notes mentioned in the letter of August 10, 1885? There was nothing in that letter, which prohibited Beak & Bucher from making a payment to Wight Brothers on December 26, 1885. They owed appellants a debt, and they had a right to pay that debt, in whole or in part, either with money, or with notes and accounts. Did not appellants have a corresponding right to accept such payment when offered?

As matter of fact, Beak & Bucher paid, to appellees $12,-000.00, and to appellants about $7000.00, between August 10 and December 26,1885. Appellees knew that Beak & Bucher were making payments of money to appellants from time to time in the summer and fall of 1885 and made no objection to such payments.

The evidence and the arguments of counsel show clearly, that the provision, which forbade the attorneys from entering judgment until instructed to do so by appellants, was inserted in the letter for the benefit of appellants. By guaranteeing $10,000.00 of the claim of appellees, appellants virtually increased their own claim against Beak & Bucher from $40,000.00 to $50,000.00. At the conference on the evening of August 10, J. F. Wight stated that the Sampters would have it in their power to enter up judgment on their note for $9706.40 and levy on the stock, and then hold appellants liable upon their guarantee for the.remaining $10,000.00 of the Sampter claim. It was to avoid the possibility of such a result as this, that Wight Brothers were given the privilege of saying when judgment should be entered.

The fact that the attorneys were to prefer the claim of appellees by making the judgment “a lien upon the property of Beak & Bucher” shows, that the stock alone, and not the notes and accounts, were in the contemplation of the parties when the letter was signed. The judgment could not be made a lien upon the accounts.

The only notes received by Wight Brothers were two notes of $2500.00 each given to Beak & Bucher by one Hecht for the purchase of the Milwaukee store. In regard to this store Arnold Sampter says in his testimony: “I believe that was ■ to be transferred over to Mr. Wight, as we did not want to have anything in that line of business on our hands and he was in the business.” If Wight Brothers were to have the store, it could make no difference that they received, in stead thereof, a part of the proceeds of the sale of the store.

Realizing the difficulty of so interpreting the written contract as to make the notes and accounts trust property thereunder, the appellees attempted to prove, that, on August 10, 1885, appellants made an oral agreement to pay the claim of the Samplers out of whatever accounts they might thereafter receive. If it were allowable to introduce testimony for such a purpose, it can not be said that the evidence, which was permitted to come in, establishes the existence of any such oral agreement as is contended for.

Bucher swears that no other agreement was made than that which was reduced to writing. J. F. Wight swears to the same thing, and furthermore says: “The subject of accounts was not brought up before us that night at all. * * * The question of the accounts being assigned for the benefit of M. Sampter Sons & Co. never came up—never was mentioned between us in all our conversations from beginning to end.” Arnold Sampter, when asked what was said about the assignment of the accounts, answers: “I can not exactly recollect how that was to be done. In ease any attachment was put upon the stock, .our claim was to come first.” A clerk of the attorneys who drew the letter was present on the night of August 10, and says : “I do not think I have stated that there was an agreement with reference to the book accounts. * * * It was contemplated at that time that the stock was all that was necessary to secure these claims.” One of the three attorneys, to whom the letter was addressed, says: “I do not recollect that any distinct proposition was made that the accounts should be assigned to Wight. It was not understood or spoken of that they should be assigned to Sampter. * * * I did not personally contemplate having anything to do with the accounts at the time that document was prepared.” There are only two other witnesses who testify upon this subject. Their evidence tends to support the theory of appellees, but we think it is overborne by the weight of the opposing testimony. One of these witnesses was not present at any of the interviews on August 10, but speaks of remarks made long after that date.

The evidence<also fails to show any oral agreement by Wight to assume the collection of the claim of appellees. The attorney last referred to says: “Neither Wight nor any one told me that he agreed to collect Sampler’s claim.”

But we are of the opinion that the testimony to show the oral agreement was not competent, under the rule that parol evidence is inadmissible to vary, alter, add to or contradict the terms of a written contract. The parties here undertook to put their engagement in writing, and it will be presumed that the writing expresses their whole engagement and the extent and manner of their undertaking. It has not been intended by any of the expressions or language made use of in this discussion to pass any opinion upon the validity or invalidity of the general method adopted by Beak & Bucher for providing for their creditors. This decision concerns only the relations between appellants and appellees.

The decree of the Circuit Court and the judgment of the Appellate Court are reversed, and the cause is remanded to the Circuit Court with directions to dismiss the bill.

Judgment reversed.

Mr. Justice Bailey, having heard this cause in the Appellate Court, took no part in its decision here.