Continental National Bank of Chicago v. McGeoch

Cassodat, O. J.

For years prior to June 16, 1883, the firm of McGeoch, Everingham & Co. conducted an extensive business as brokers and commission men on the Board of Trade in Chicago, and had a paid-in capital of $150,000, of which the senior member, Peter McGeoch, had contributed one half, and the other four members of the firm, who are named as defendants herein, but none of whom were served with the summons or appeared in this action, contributed the other half. During the time mentioned, Peter McGeoch resided in Milwaukee and conducted business there on his own account. Eor some time prior to the lard deal in question, Peter McGeoch and the defendant Wells had jointly conducted wheat and other deals, through the firm of Mc-Geoch, Everingham & Co. as their brokers and commission men, on the Board of Trade in Chicago, and, as a result of such deals, Peter McGeoch and Wells each had a large balance to his personal credit with the firm of McGeoch, Ever-ingham & Co.— the amount so to the credit of Wells being upwards of $200,000.

While things were in such condition, and about February, 1883, Peter McGeoch and Wells conceived the project of creating a corner in the Chicago market on lard, and for that purpose they jointly, through the firm of McGeoch, Everingham & Co., commenced and continued buying up the entire lard product of the Chicago market, and a great deal more, and in doing so entered into numerous contracts for the delivery of lard in June and July, 1883. The extent of such purchases, according to the testimony of McGeoch, exceeded 200,000 tierces, and the liabilities thereby incurred were several millions of dollars. None of such purchases or contracts were made in the name of McGeoch and Wells, but in the name of McGeoch, Everingham & Co., and appeared in their books under an account known as “ 41; ” and all warehouse receipts were taken in the name of McGeoch, Everingham & Go. In making such purchases, McGeoch, Everingham & Co. had borrowed from several banks, including the plaintiff bank, $3,900,000, and had secured the payment thereof to the respective banks by depositing, as collateral security therefor, warehouse receipts so taken by them. The loans so made by that firm from the plaintiff bank, and by it placed to the credit of that firm, aggregated $500,000, and the warehouse receipts so deposited by them with the plaintiff, as collateral security therefor, were for 15,000 tierces of cash lard; but, as indicated in the foregoing statement, each of the four notes held by the plaintiff was indorsed or signed by Wells and Peter McGeoch, respectively, so as to make them each personally liable to the plaintiff, under the law of Illinois, as makers or guarantors.

Unable to borrow more -money or longer conduct their business, the firm of McGeoch, Everingham & Oo. failed June 16, 1883. Prior to such failure, and pending the lard deal, and for the purpose of continuing the same, McGeoch and Wells had borrowed from banks on their own account, and sent to McGeoch, Everingham & Co., $950,000, of which amount Wells had contributed $675,000, and Peter McGeoch had personally contributed the balance. Thereupon, and on the same day, Henry Botsford, a creditor of McGeoch, Everingham & Oo., and one of the directors of the plaintiff bank, commenced a suit in equity in the superior court of Cook county, Illinois; and such proceedings were had therein that one John R. Bensley was appointed a receiver of all the property and assets of that firm. On June 18, 1883, Bensley qualified as such receiver, and at once took possession of such property and assets and the office of McGeoch, Everingham & Oo., and at once commenced investigating the affairs of the firm, and continued such investigation about a week before he could approximately ascertain the probable amount of the property and assets upon which he, as such receiver, could realize. After he had so ascertained, and consulted his attorney, he appears to have concluded, of his own volition, to interview the parties, with the view of obtaining a settlement. Through the' intervention of a Chicago member of the firm of McGeoch, Everingham & Co., he obtained an interview with Peter McGeoch and Wells at Milwaukee about June 25, 1883. Such meeting was not solicited by either McGeoch or Wells. He proposed that McGeoch and Wells should raise half a million dollars, and, if they would do so, he would undertake to clear the wreck, and, if possible, settle with the parties at fifty cents on the dollar. Finally he agreed that, if Mc-Geoch and Wells would promise to raise $450,000 in money promptly, he would undertake to effect a settlement and procure releases from all the creditors. Neither Wells nor Mc-Geoch submitted any proposition, and neither authorized him to make any statement on their behalf with respect to their financial condition.

The receiver thereupon returned to Chicago and commenced getting the data for a statement to be made to the creditors. He caused it to be announced upon the Board of Trade that there would be a meeting of the creditors of McGeoch, Everingham & Go. held in the call board of the Board of Trade on the afternoon of July 2, 1883. He attended and presided at that meeting. He read to the meeting a written statement he had previously prepared, to the effect that the affairs of the firm were vn great confusion; “ that the amount due the trade at the time of the failure was $1,803,384.58, deducting margins surrendered and to be surrendered to the members of the board, $1,194.911.21; . . . that the notes of the firm at the various banking institutions amount to $3,950,000, secured by the deposit of lard as collateral;” that as near as he could estimate the net proceeds of the lard would be $3,800,000, “ leaving a net deficit due the banks of $150,000, which, added to the amount to the members of the board, leaves their unsecured liabilities $1,344,911.21;” that he not taken the country accounts into consideration, as he assumed that the amount due from the country would provide for the indebtedness to the country; that he had in his possession cash and cash assets aggregating a trifle over $200,000 in value; that he had had an interview with McGeoch, his friends, and attorney, at Milwaukee; that he had finally, and after much hesitation on the part of McGeoch’s friends, received the promise of McGeocb that, if an entire settlement of the indebtedness of the firm could be made, he would “ raise $450,000 in cash immediately upon the acceptation of the compromise; ” that that would give the receiver $650,000, or nearly fifty cents on the dollar of the entire unsecured indebtedness; that the firm submitted aproposition to pay fifty per cent, in cash if all the creditors would sign the agreement; that such setr tlement would involve the necessity of dismissing all suits, attachments, and injunctions, in order to raise the money upon the property, but that the attachments on the real estate need not be released until they were ready to exchange the papers for the money; that he had secured the best proposition possible; that he was fully satisfied that, if the proposition was not accepted promptly, the creditors would never receive anything like the amount thus offered; that no compromise would be entered into that did not involve the acceptance by all the creditors; that Wells did not appear as a partner in the firm, and that his name did not appear upon the books, but it was conceded that he had some undefined interest with McGeoch, personally, in lard through the house; that Wells was reputed to be wealthy, but that he was seventy-five years old, and had heavy liabilities then due or. about to become due, to which he had pledged nearly all his available property; that he therewith submitted to them “ the proposition of McGeoch, Everingham & Co. in the above compromise ”»for their signature (which proposition is set out in full in the sixth finding of fact in the foregoing statement); that when all had signed he would use every possible effort to obtain the money promptly and make immediate distribution of the same; that, “ should the proposition fail of being accepted,” it was his “ candid judgment that the $450,000 promised” would “never be realized; ” and that the matter would “ onl/y terminate after long, vexatious, and fruitless litigation.”

Thereupon Alexander Geddes, O. D. Hammel, and O. J. Zinger were nominated by persons in the crowd to act as a committee on behalf of the creditors for the purpose of securing the signatures of the creditors of McGeoch, Evering-ham & Go. The receiver put the motion and it was carried, and that committee circulated such proposition of compromise. The same had been signed by nearly all the creditors of the firm represented on the Board of Trade on and prior to July 16, 1883. About that time McGeoch paid to the receiver $225,000, as promised, and about July 19, 1883, Wells paid the $225,000, as promised, and he and McGeoch, in consideration thereof, received from McGeoch, Everingham & Co. a full release and discharge from any and all liabilities. Up to that time the receiver had realized from the assets of McGeoch, Everingham & Co. about $300,000. The plaintiff signed the proposition of compromise July 20,1883, and appears to have been the last creditor to sign. Erom the time of such failure to the time of signing such compromise, five of the nine directors of the plaintiff bank were members of the Board of Trade, and the plaintiff’s cashier was on the Board nearly every day. The great bulk of the creditors were paid by the receiver, and gave him their release and discharge, on or about July 21, 1883. On July 28,1883, the plaintiff’s board of directors passed a resolution to accept the fifty cents on the dollar and release the firm of McGeoch, Everingham & Co. On August 25, 1883, the plaintiff sent to the receiver a statement purporting to give the amount it had realized on the sale of the lard held by it as collateral, from which it appeared that there was still due the plaintiff $51,833.94, and thereupon the receiver, in pursuance and in accordance with such proposition of compromise, paid to the plaintiff $25,916.97, and at the same time took and received from the plaintiff the receipt, satisfaction, and discharge set forth in full in the seventh finding of fact contained in the foregoing statement. The receivership proceedings were thereupon terminated, and the receiver discharged.

Ignoring such settlement, and nearly five years after it bad been made, the plaintiff commenced this action to recover the other fifty cents on the dollar of such alleged balance. McGeoch and Wells separately answered, setting up such compromise, satisfaction, and discharge in bar of the action, and also alleged, by way of equitable counterclaim, unnecessary delay and bad faith and want of ordinary care in the disposition of the lard held by the plaintiff as collateral security, and claiming that the notes sued upon were fully paid, and asking for an accounting. Under our statute the defensive portion of the answer pleading such discharge was deemed controverted by the plaintiff, as upon a direct denial or avoidance, as the case might require. K. S. sec. 2667; Leslie v. Keepers, 68 Wis. 123. The result was that, upon the trial, the plaintiff sought to avoid such discharge by claiming that its signature to the compromise and settlement, and to the receipt, satisfaction, ,and discharge, had been procured by fraud, without alleging any specific acts of fraud. The contention of the respective parties on the trial, as to such frauds, may be inferred from the nine questions submitted to the jury by the special verdict,— especially as neither party requested the submission of any additional questions.

1. One of the principal claims of fraud is the paying of the Union National Bank more than fifty cents on the dollar. By the fourth and fifth findings of the jury, it was, in effect, found that the plaintiff so signed on condition that the Union National Bank should sign and that that bank and all creditors should accept fifty cents on the dollar; but they also found that, before the plaintiff accepted the money and gave the release, it knew that the Union National Bank had been paid or secured in full by the committee named. This finding is challenged, but we all think it is sustained by the evidence. Error is assigned because the court admitted in evidence a copy of the Chicago Tribune of Sunday, July-27, 1883, giving an account of the payment of the Union National Bank’s claim having been secured in full by the committee mentioned giving their personal bond for the same. It is admitted that both the president and cashier of the plaintiff bank were accustomed to take and read the Chicago Tribune at that time, but there is no evidence that either of them read or received that particular Sunday issue. Under the repeated rulings of this court, we must hold that the article was admissible. Young v. Tibbitts, 32 Wis. 79; Gilchrist v. Brande, 58 Wis. 200. The fact that a majority of the plaintiff’s directors were members of the Board of Trade, that its cashier was frequently there, and the fact that such security in full of the Union National Bank became publicly and generally known on the Board of Trade and in the city, were circumstances admissible in evidence. 1 Greenl. Ev. § 138; Lovejoy v. Stafford, 93 U. S. 130. Thus, it is established as a verity in the case that the plaintiff, with full knowledge that payment to the Union National Bank had been secured in full by the committeee, accepted the $25,916.97 as a settlement, and executed and delivered the discharge in question, notwithstanding the condition it had exacted when it signed the consent to settle, as indicated. Nor do we think there was any error in charging the jury on the subject of notice, as to such preference, or as to the corner on lard. They were expressly told that the plaintiff was not chargeable with the knowledge of its directors acting as individuals, nor with the knowledge of the plaintiff’s officers having nothing to do with the compromise and settlement. The court merely allowed the jury to take into consideration the circumstances tending to prove knowledge on the part of the plaintiff, including the matters mentioned.

2. Another specific claim of fraud litigated before the jury was whether William Young & Co. were induced to sign the consent to settle by the promise of Peter McGeoch to pay them in full; but the jury found against the plaintiff by their sixth finding, as indicated, and the court,-by its twelfth finding, found, in effect, that no such promise was made.

3. The mere fact that Wells, on the day of the failure, June 16,1883, gave to. the National Bank of America certain collaterals to an indebtedness upon which he was personally liable, and that that bank thereafter voluntarily signed the consent to settle, and settled for fifty cents on the dollar, as found in the thirteenth finding, furnishes no ground for invalidating the settlement and discharge in question.

4. By the ninth, fourteenth, nineteenth, and twentieth findings, the court, among other things, found, in effect, that the receiver, Bensley, made no false or fraudulent statements or representations in respect to the assets or liabilities or the financial condition of said firm or of said Wells; that no fraud was used in the procurement of the signatures of the plaintiff to the composition agreement; that there was no fraud in the procurement from the plaintiff of the contract of settlement and release, dated August 25,1883; that Wells was not guilty of any fraud which, it is claimed, invalidated the composition; that the debt upon which this action was brought was fully and fairly compromised and released by the composition of July 2, 1883, and the contract of release of August 25, 1883, signed by the plaintiff. Certainly, as indicated, the statements made by Bensley to the Board of Trade were, in the main, general and not specific, and, from his known limited acquaintance with the affairs of the firm, must have been made and understood as a mere estimate or opinion,— especially as he had premised his statements with observations to the effect that he found the affairs of the firm in great confusion; that, as close as might then be estimated, he found things so and so; that the country accounts were not yet fully ascertained, but were assumed to be so and so; and other expressions. Mosher v. Post, 89 Wis. 602.

5. Such are all the claims of fraud, bearing upon the validity of the compromise and settlement, submitted to or' determined by the trial court or jury. Nevertheless, it is1 strenuously contended that such compromise and settlement; should be declared void and no bar to this action, by reason of evidence in the case to the effect that, July 19, 1883, Bens-ley, as receiver, gave a check payable to the order of Elower, Remy & Gregory, attorneys for George 0. Eldridge & Co., for $46,671.84, being one half of the indebtedness due them, and the same was placed to the credit of such attorneys in the First National Bank; that on the same day he gave another check payable to the order of Pool, Kent & Co. for $42,653.12, being one half of the indebtedness due them; that five or six days afterwards, Bensley, as such receiver, gave a check, payable to George 0. Eldridge & Co., or order, for $3,500, and another check payable to Pool, Kent & Co. for $3,500; that “the checks representing $3,500 each were given to these firms in payment for attorneys’ fees which they claimed- to have incurred in the attachment suitsthat had been commenced, and which they released upon condition¡ ” that he “ paid the $3,500 to each firm because ” he “ thought it was just and equitable, and that they should be recompensed for the expense already incurred, and, in general, to get along with the composition; ” that he paid such attorneys’ fees on his own judgment and not by the authority or direction of either Wells or McGeoch. It will be observed that, in submitting the proposition of McGeoch, Everingham & Co. to the Board of Trade, July 2, 1883, Bensley stated: “ This will involve the necessity of the dismissal of all suits, attachments, and inf mictions, in order that the money can be raised upon the property. The attachments on the real estate will not necessarily have to be released until we are ready to exchange the papers for the money.” And the written “ proposition of compromise ” of the firm, so submitted and signed by the creditors, was expressly “ in full settlement and liquidation of all unsecured claims, and the defi-eiencies upon all secured claims after applying the margins and collaterals up as security therefor.” Accordingly, the plaintiff received 100 cents on a dollar of its claims, to the amount of nearly $450,000, by virtue of the lard it held as collateral. But it is contended that it does not appear, from competent evidence, that the $3,500 so paid in each of the two cases mentioned, was received by the attorneys of said firms, respectively, as and for attorneys' fees, or to relieve any of the property of McGeoch, Everingham & Co. from such attachments; but, as indicated, the plaintiff proved that it was paid for that purpose, and there is no evidence to the contrary, nor that George C. Eldridge & Co. or P- sol, Kent & Co. received any more than fifty cents on the dollar. Besides, it does affirmatively appear that the attorneys of George C. Eldridge & Go. actually received, and placed to their credit in the bank, the whole amount intended for their client. A month after these' transactions, as we have already seen, the plaintiff, with full knowledge that payment had been secured in full to the Union National Bank, accepted payment and gave the discharge in accordance with the compromise, and thus, in the most emphatic way, condoned the supposed fraud. The discharge should not be set aside by reason of the payment of such attorneys’ fees. Cleaveland v. Richardson, 132 U. S. 318; Hanover Nat. Bank v. Blake, 142 N. Y. 404; Way v. Langley, 15 Ohio St. 392.

It is to be remembered that the burden of proving any and all fraudulent preferences was upon the plaintiff; that, if it relied upon those transactions or either of them, or any other transaction not named, to establish such preferences, fairness required that it should have apprised the defendants of the facts upon the trial, by at least requesting the court to submit the question of such preference to the jury, especially as the plaintiff’s pleadings fail to allege any fraud. Eor this court, in a complicated case like this, to review every claim of fraudulent preference, though not specifically presented to nor determined by the trial court or jury, would be to inaugurate a new departure in practice, which would not only be embarrassing and misleading to the bench and bar, but tend to defeat the ends of justice. And certainly such practice should not prevail, where, as here, there are general findings of the trial court, covering all similar questions, against the party asking for such review-This court has frequently held that the failure to request the submission of particular questions was a waiver of any objection on the ground of such failure. Schultz v. C., M. & St. P. R. Co. 48 Wis. 375; Hrouska v. Janke, 66 Wis. 252; Kenyon v. Kenyon, 72 Wis. 234; Wright v. Mulvaney, 78 Wis. 89. There is no pretense that the verdict and findings do not cover all the material controverted and issuable facts; but the claim is to the effect that, although the jury and court found there was no fraudulent preference as to any of the specific transactions determined, yet there were other transactions from which such preference might have been found had the same been submitted and determined.

6. We find no evidence in the record that Wells or Mc-Geoch, before or at the time of the settlement and discharge in question, had any knowledge or information that Bensley, or the committee, or anyone, gave or agreed or promised to give any more than fifty cents on the dollar on any unsecured indebtedness in favor of creditors represented upon the Board of Trade of the city of Chicago; much less, that they authorized or consented to such preference. But it is vigorously contended by the able counsel for the plaintiff that such authority, consent, or knowledge is unnecessary in order to avoid the settlement and discharge. This is put upon the broad ground that the transaction in question was, in legal contemplation, a composition with creditors, pure and simple. If such was the true nature of the transaction, then there is much force in the argument of counsel based upon such assumption. This makes it necessary to consider wbat is meant by such composition, and the elements entering into the same, and the principle upon which such composition is binding.

A composition is defined to be “ an agreement, made upon a sufficient consideration, between an insolvent or embarrassed debtor and his creditors, whereby the latter, for the sake of immediate payment, agree to accept a dividend less than the whole amount of their claims, to be distributed pro rata in discharge and satisfaction of the whole.” Black, Law Diet. See 3 Am. & Eng. Ency. of Law, 385. It is well settled, as stated by counsel for the plaintiff, that the payment of a part of an undisputed liquidated debt does not discharge the debt altogether, even where it is expressly received in satisfaction of it. Otto v. Klauber, 23 Wis. 471; Lathrop v. Knapp, 27 Wis. 225; Davenport v. First Cong. Society, 33 Wis. 387, 391; Lerdall v. Charter Oak L. Lns. Co. 51 Wis. 429. The reason for this rule is that the payment of a part of an admitted debt which the debtor is bound to pay is no consideration for relinquishing the balance of the debt, nor can it be a satisfaction to such creditor for the whole debt. Ibid.; Bishop, Insolvent Debtors, 589, § 480, and cases there cited.' It follows that there can be no binding composition of such a debt by such a debtor and a single creditor. Such is declared to be the general rule by the author last cited. “An apparent exception to. the general rule of law stated,” says the same learned author, “ is found in the ■case of a composition by a debtor with several or all of his ■creditors, by which they agree to accept less than their entire demand. Such an agreement, if entered into with the ■debtor by a number of creditors, each aeti/ag on the faith of the engagement of the others, will be binding upon them;/nr each, in that case, has the undertakings of the rest as a consid-erationfor his own u/ndertakingP Bishop, Insolvent Debtors, 591, § 481. To the same effect, 3 Am. & Eng. Ency. of Law, 386. This proposition is abundantly supported by cases there cited. Such a composition in such a case may be binding, even though resting in parol. Mellen v. Goldsmith, 47 Wis. 573; Good v. Cheesman, 2 Barn. & Adol. 328; Boyd v. Hind, 1 Hurl. & N. 947. These authorities are to the effect that the only consideration to make such a composition, in such a case, binding upon each creditor, is the undertaking ■of the other compounding creditors to give up a part of their claim. This court has frequently recognized the same principle. Lathrop v. Knapp, 27 Wis. 225; Davenport v. First Cong. Society, 33 Wis. 387; Mellen v. Goldsmith, 47 Wis. 573. Since, in such composition, the only beneficial consideration to any creditor to thus agree to give up and discharge a portion of his claim is a corresponding agreement on the part of the other creditors to give up and discharge a like proportion of their respective claims, it follows that any secret agreement by the debtor to pay some of-, such creditors more than others is a fraud upon such others, which enters into and forms a part of the only consideration upon which such composition is based, and hence necessarily avoids the same. But see Hanover Nat. Bank v. Blake, 142 N. Y. 404; S. C. 27 L. R. A. 33; Way v. Langley, 15 Ohio St. 392; Cleaveland v. Richardson, 132 U. S. 318.

While it is true, as indicated, that a debtor cannot, for want of consideration, make a binding composition with a •single creditor of an undisputed and liquidated debt, yet it does not follow that such composition must necessarily be made with all the creditors. “ An agreement, entered into between a debtor and any number of his creditors less than the whole number, to take a composition'for their debts, is binding upon those who enter into the agreement; but such an agreement, entered into between a debtor and a single creditor, is void for want of consideration.” 3 Am. & Eng. Ency. of Law, 389, and cases there cited. “ It seems to be fully settled by the authorities,” says Mr. Bishop, “ that a composition agreement between a debtor and a portion of his creditors is valid and binding. The consideration of the relinquishment of a part of their claim bj the others is sufficient to make the promise and discharge of each of those who join obligatory.” Bishop, Insolvent Debtors, 594, § 484, and cases there, cited. The agreement in question, therefore, even if we assume it to be nothing more than a composition, was not void merely because it was not signed by all the creditors. The proposition was only addressed, “To the Creditors of the Firm of McGeoch, Everingham & Co., Kep-resented upon the Board of Trade of the City of Chicago,” and it only purports to be an agreement between such of said creditors as were unsecured.

7. Before determining the precise nature of the agreement, it may be well to consider what additional fact or consideration is essential to convert what would otherwise be a mere composition, as indicated, into a compromise, settlement, or accord and satisfaction. These terms are well understood by the profession. A compromise is defined to be: “A settlement of differences by mutual concessions-” Cent. Diet. “ A mutual yielding of opposing claims; the surrender of some right or claimed right in consideration of a like surrender of some counterclaim.” Anderson, Law Diet. The dispute or opposing claims may arise from some uncertainty in regard to the facts or the law and the facts together. Black, Law Diet. A settlement may be made in the same way; and, even where there is no dispute or controversy, as by accounting together and striking a balance, or agreeing upon the amount to be paid upon an un-liquidated claim. Ibid.. “Accord and satisfaction is the substitution of another agreement between the parties in satisfaction of the former one, and an execution of the latter agreement,” and “ forms a complete bar to any further action on the original claim.” 1 Am. & Eng. Ency. of Law, 94. A settlement by the parties of their mutual accounts or dealings is conclusive, unless impeached for mutual mistake or the fraud of one of the parties; and proof of such mistake or fraud must be clear and convincing. Martin v. Beckwith, 4 Wis. 219; Wilson v. Runkel, 38 Wis. 532; Klauber v. Wright, 52 Wis. 313; Hoyt v. McLaughlin, 52 Wis. 280; Case v. Fish, 58 Wis. 108; Hawley v. Harran, 79 Wis. 381. “ An adjustment and compromise of a bona fide controversy as to matters which are fairly the subject of debate between the parties at the time of such compromise, each party acting with full knowledge of the facts, and no element of fraud or of serious or injurious mistake intervening, will always be upheld by the courts.” Kercheval v. Doty, 31 Wis. 476; Van Trott v. Wiese, 36 Wis. 439; Zimmer v. Becker, 66 Wis. 527; Woodford v. Marshall, 72 Wis. 132; Hennessy v. Bacon, 137 U. S. 78.

In Kercheval v. Doty, supra, Dixon, C. J., on page 487, quotes approvingly from standard authors, to the effect that a compromise of a doubtful right will not be opened or' rescinded, even when unequal or harsh in its operation, nor where the only consideration for the relinquishment of a valid claim on the one side is the abandonment of an invalid claim on the other side; that “ if it were necessary, in order to sustain an adjustment of conflicting claims, to determine their relative validity and value, no compromise would be possible, and the uncertainty, delay, and scandal would be incurred which such arrangements are usually designed to avoid; ” that “ compromises are to be favored, irrespectively of the nature of the controversy compromised; and that they cannot be set aside because the event shows all the gain to have been on one side and all the sacrifice on the other, if the parties have acted in good faith and with a belief of the actual existence of the rights which they have respectively waived or abandoned. Hence, when a compromise has been fairly effected, its validity will be independent of the merits of the controversy on which it is founded, and it cannot be reopened for the purpose or with the effect of reviving tbe dispute which it was meant to terminate.” A compromise of a doubtful claim is a good consideration for a promise to pay money, and it is no answer to an action •brought upon such promise to show that the claim was invalid. Griswold v. Wright, 61 Wis. 197, and cases there cited; Hewett v. Currier, 63 Wis. 394; Saxton v. McNair, 71 Wis. 459; Hennessy v. Bacon, 137 U. S. 78. “ The payment of a less sum than the demand is a satisfaction when the debt is unliquidated.” Bishop, Insolvent Debtors, 590, § 480, and numerous cases there cited. “ An agreement by a creditor with a third person to accept from him less than the demand against the debtor in satisfaction of it is valid and may be enforced,” and “ so the acceptance of a note of a third person for a less sum than the debt dire, in full payment, is a bar to an action to recover any portion of the debt beyond the sum secured by the note.” Ibid. See, also, Brooks v. White, 2 Met. 283; Guild v. Butler, 127 Mass. 386; Clark v. Abbott, 53 Minn. 88.

It may be said, in a general way, that where there is some new or independent consideration, or the creditor receives some additional benefit or legal possibility of benefit or advantage to which he would not have been entitled except for the new agreement, then the acceptance of a lesser sum in full payment of an admitted, liquidated debt will operate as an accord and satisfaction; and hence, in the absence of fraud or mutual mistake,.the same is conclusive upon the parties. Bishop, Insolvent Debtors, 591, § 480; Jaffray v. Davis, 124 N. Y. 164; Allison v. Abendroth, 108 N. Y. 472. In this last case, ANdkews, J., in effect said that, when the debtor enters into a new agreement with the creditor to do something which he was not bound to do by the original contract, the new agreement is a good accord and satisfaction if so agreed; and hence that the acceptance of the sole liability of one of two joint debtors or copartners in satisfaction of the joint or partnership debt is binding upon the parties. So it seems that where the mode or time of part payment is different from that provided for in the original ■contract, whereby a new benefit is or may be conferred or .a burden imposed, a new consideration arises out. of the transaction, which gives validity to the agreement of the creditor. Rose v. Hall, 26 Conn. 392; Jaffray v. Davis, 124 N. Y. 169; Schweider v. Lang, 29 Minn. 254; Boyd v. Moats, 75 Iowa, 151; Jaffray v. Crane, 50 Wis. 349.

8. The case at bar is complicated, but we are constrained to hold that the transaction in question was something more than a mere composition among creditors, and that it was, in legal effect, a compromise, settlement, and accord and .satisfaction, Avithin the principles stated, especially so far as Wells and Peter McGeoch are concerned. As already indi•cated, the immense indebtedness of McGeoch, Everingham .& Co. was largely incurred by the attempt of Wells and Peter McGeoch, through them, to corner the Chicago market in lard, and only failed for want of funds. This is, in ■effect, found by the trial court. The jury found that, at the time of discounting the notes in suit, the plaintiff knew that McGeoch, Everingham & Co. Avere so engaged in attempting to corner the Chicago lard market, but did not know that the loan made was needed and procured by them for that purpose. The illegality of such attempt to corner the market seems to be conceded, and in the records of this court in one case Avas fully demonstrated. Wells v. McGeoch, 11 Wis. 196. Such Avant of knowledge on the part of the plaintiff seems to have been regarded as essential to bar the defense of illegality upon the merits. To support the compromise, settlement, or accord and satisfaction, — whatever ft may be called,— it was only essential that there was ground for claiming in good faith .that the transaction was illegal; not that it was in fact illegal. The proposition was submitted to the creditors as a compromise and settlement, and the creditors were at the same time told by Bensley that, if they failed to accept the proposition of Wells and McGeoch to compromise and settle upon their contributing $450,000, then, in his judgment, they would never realize as much, and that the matter would “ only terminate after long, vexatious, and fruitless litigation.” Such statement manifestly referred to the validity of the claims of the respective creditors so represented on the Board of Trade. Of course, such creditors must have had some knowledge or belief as to the validity of their respective claims and hence the advisability of agreeing to such compromise. Since the validity of such claims was at least questionable, it constituted a good consideration for the accord and satisfaction or settlement.

There are other phases of this case which, of themselves, constitute such consideration. The compromise agreed to contemplated the doing of something by Wells and Peter Mc-Geoch which they were not bound to do by the original contract, and hence the new agreement, when executed, constituted a binding accord and satisfaction, under the authorities cited. True, McGeoch was a member of the firm of McGeoch, Everingham & Co., the ostensible principal debtors as to all liabilities covered by the compromise; but there is no pretense that Wells was a member of that firm or that he had any connection with them other than as indicated. He, manifestly, occupied the position of a third party to the transaction, and so did McGeoch, in the sense that a member of a firm does when he uses his own money or property by way of accord and satisfaction of his firm’s debts. True, Wells and McGeoch Avere, in one form or another, personally liable to the amount of several hundred thousand dollars (including the plaintiff’s claims) of the indebtedness of Mc-Geoch, Everingham & Go. covered by the compromise; but it is also true that such compromise covered other debts of that firm to the amount of nearly $400,000 for which Mc-Geoch AAras only liable as a member of that firm, and for which Wells was not liable in any way. Thus, it appears that more than one quarter of the $450,000 which Wells and Peter McGeoch personally contributed in equal amounts to effect that compromise was intended to be used, and tvas used, in settling claims for which McGeoch was only liable as a member of the firm of McGeoch, Everingham & Co. and for which Wells was not liable at all. Certainly, a compromise thus induced and secured should not be regarded void as against Wells and Peter McGeoch, who furnished most of the money to effect the same, and in the absence of any fraud or deceit on the part of either of them, and especially in a suit commenced nearly five years after the compromise.

9. The written proposition, acceptance, and discharge must be taken together in considering the true nature of the transaction. The proposition was for a “ compromise, to be received by each creditor in full settlement a/nd liquidation of all unsecured claims,” owned by those represented upon the Board of Trade in Chicago. The amount of each claim was to be “ settled and adjusted” by the receiver or arbitrators. The acceptance in writing of such proposition was on the same paper and immediately below the same, and was signed by the plaintiff and other creditors, and recited that they, as “ creditors of the firm of McGeoch, Everingham & Co., in consideration of the prompt settlement above proposed, and, to a/ooid litigation, hereby [thereby] accept the above settlement as aforesaid.” The discharge signed by the plaintiff acknowledges the receipt of $25,916.97 “as a full compromise and adjustment of the validity, and in final setilsment, satisfaction, a/nd discharge, of all claims and demands of the .undersigned against said firm and individuals.” These same writings have once been construed by this court in harmony with the construction now put upon them. Ball v. McGeoch, 81 Wis. 172, 173. Ve must hold that they constitute something more than a mere agreement among creditors to accept fifty per cent, of their respective admitted and liquidated claims, and that they are just what they purport to be; and upon this record they must be regarded as conclusive evidence of a compromise, settlement, and accord and satisfaction.

As to accord and satisfaction by part payment, see note to Fuller v. Kemp (1S8 N. Y. 281) in 20 L, R. A. 785. — Rep.

10. There is another feature of this case calling for brief consideration. The plaintiff disposed of the lard held by it as collateral, and stated to the receiver that the net proceeds thereof were $448,166.06. The compromise and settlement were for the balance, after applying such net proceeds. The jury found that the plaintiff did not dispose of the lard in good faith, nor in the exercise of ordinary care, and that in consequence thereof considerably less was realized upon such collaterals; and the court found that, if the plaintiff had disposed of the lard in good faith and in the exercise of ordinary care, it would have realized enough to have fully paid all of its claims. Whatever may be the merits or demerits of such findings, we are clearly of the opinion that the time and manner of disposing of such collaterals and the amount of the net proceeds realized thereon were covered by and included in the settlement, and the same is binding upon the defendants.

By the Gourt.— The judgment of the circuit court is affirmed.

WiNSLOw and Piottey, JJ"., dissent.