121 N.Y.S. 138 | N.Y. App. Div. | 1910
Lead Opinion
The firm of Irwin, Green & Co. was engaged in conducting a large grain and commission brokerage business at Chicago, in the State of Illinois, its commissions for the year 1903 being nearly $120,000. In the fall of that year it became financially embarrassed for various causes, and turned for assistance to William Duryea, who was the father-in-law of one of its members. In the latter part of that year the firm owed' Otto E. Loh-rke & Co. about 870,000,. the Bank of Montreal about .$70,000, Mrs. Boot about $60,000, and the customers of the firm about $70,000. With its affairs' in this condition, dependent upon public confidence as a great’ asset ',in its business, and being in danger of proceedings which might end its career, the firm succeeded in enlisting the aid of Duryea, who thereupon entered into the following written agreement with defendants composing -the firm of Otto E. Lohrke & Co., ¡which
“ Agreement made this First day of March, A. D., 1904, between William Duryea, of the City, County and State of New York and the copartnership of Otto E. Lohrke & Co., doing business in New York and Chicago.
“ Whereas C. D. Irwin and A. W. Green, copartners doing business under the name of Irwin, Green & Co., in the City of Chicago, Cook County, Illinois, have applied to the said William Duryea for money to be used to carry on their business ; and
“ Whereas the said William Duryea has agreed to advance or loan to said Irwin, Green & Go. such sum or sums of money as he may deem necessary in the ordinary conduct of the grain and commission brokerage business now conducted by said Irwin, Green & Go. in the City of Chicago, but, as a condition precedent to advancing or loaning such money or any part thereof, has requested that the firm of Otto E. Lohrke & Co. subject the payment of their claim against said Irwin, Green & Go. to the repayment to said William Duryea of any moneys by him advanced under this agreement ; Now, therefore, it is agreed as follows :
“ 1. Said William Duryea, in consideration of the payment of the sum of One Dollar and the agreements hereinafter contained on the part of the firm of Otto E. Lohrke & Co., hereby agrees that he will from time to time, as the conditions of the business may seem to him to require, loan or advance to said Irwin, . Green & Co. such sum or sums of money as in his judgment may be reasonably required in the ordinary conduct of the business of said Irwin, Green & Co., except, however, for the claims against said Irwin, Green & Co., held by the Bank of Montreal of said City of Chicago, and said firm of Otto E. Lohrke & Co.
“ 2. Said Otto E. Lohrke & Co., in consideration of the sum of One Dollar in hand paid, and.the agreements herein contained on the part of said William Duryea, do hereby promise arid agree to and with said William Duryea, that said Otto E. Lohrke & Co. will at all times subject their claims against the firm Irwin, Green & Co. to the repayment by said Irwin, Green-& Co. to said William Duryea of any and all moneys advanced or loaned by him to them after the*558 date of this agreement, and it being understood and agreed that - said William Duryea may make a similar agreement with the Bank of Montreal.
“WM. DURYEA.
“ Witness as to Wm. Duryea,
“Robt. B. Honeyman,
“ Witness as to O. E. Lohrke & Co.,
“H. Aaron.
“ OTTO E. LOHRKE & CO.”
- The agreement between Duryea and the Bank of Montreal therein referred to was duly made on or about the same date, and a further agreement .was then made with Harriet E. Root, which, however, is more explicit than the one hereinbefore set forth.
On the day this agreement was executed, Duryea advanced $25,000 to Irwin, Green & Co., and in April the further sum of $5,000, in all $30,000. He never did anything further to relieve the firm from its financial distress,'and it is obvious that his advances were insufficient to meet the debts due by the firm to its customers, exclusive of the three principal creditors with, whom Duryea had made this arrangement. With matters in this condition and the firm still continuing to do business, Otto E. Lohrke & Co. demanded payment of their debt, and Irwin, Green & Co. made payments to them on account, beginning with one of $2,500 on July 21, 1904, and followed by others which by December thirty-first had reached an aggregate of $25,000. The firm of Irwin, Green & Co. was dissolved in the latter part of 1905, and in the interim, between the end of 1904 and the time of dissolution, the business of the firm suffered because rumors became current of its insolvent condition, and confidence in it was impaired. Duryea meantime had received a payment of interest on October 26, 1904, of $761.15, but no other sum was paid him by Irwin, Green & Co. He died on April 26, 1907, leaving a last will and testament, whereof the plaintiffs are executors. They commenced an action and obtained judgment against the members of the firm of Irwin, Green & Co. on July 27, 1907, in the sum of '$34,754.62, for the advances made by Duryea, -with interest; the execution issued on said judgment has been returned unsatisfied. They have brought the present action against Otto E.- Lohrkéi & Co. on the theory that their claim became impressed with a lien or
Upon the submission of the case to the jury, a verdict was returned in favor of defendants. And this determination of the issue was correct, for, as we view the agreement in question upon which plaintiffs rest their right to recover, there was no covenant upon the part of Lohrke & Go. to desist from the collection of their admittedly valid claim, or to postpone either to a day certain or indefinitely their right to enforce .it, or to assume the payment of the debt owing to Duryea. Duryea only agreed to advance from time to time such sums as in his judgment might be reasonably required in the ordinary conduct of the business of the firm; he was. not to consult with defendants upon the advances nor take their judgment thereon, nor notify them of what he did thereunder ; he was careful not to obligate himself to advance any definite sum, and left himself at liberty to do exactly what he after-wards did when he ceased assisting the firm far in advance of their relief from their difficulties. With no promise on Duryea’s part to do anything save to loan such amount as he might desire, what did defendants promise to do ? Only to subject their claims against the firm to the repayment by the firm of Irwin, Green & Go. to Duryea of the moneys he might thereafter loan them. That is, to subordinate their rights to those of Duryea, so far as the latter might choose to assert them. If Lohrke & Co. had commenced suit against Irwin, Green & Go. it may well be that Duryea might have claimed a right to intervene and have sought to restrain their enforcement of their claim by judgment and execution until his claim had first been satisfied. Or, had Irwin, Green & Co. become insolvent, Duryea might'well have asserted a preferential right to payment over defendants out of the assets of the firm. But it cannot be fairly argued that defendants in any way bound themselves to hold as trustees for Duryea any moneys which might be voluntarily paid them. To subject means to subordinate. It has been
The judgment should be modified by striking therefrom the sum of $1,500 allowed as .extra costs, and as modified affirmed, with costs to respondents; order denying new trial affirmed. Order granting extra allowance reversed, without costs.
Ingraham, P. J., McLaughlin and Clarke, JJ., concurred; Scott, J., dissented.
Dissenting Opinion
Although a large amount of evidence was received in this case, much of which was irrelevant and some inadmissible, the principal facts upon which the rights of the parties depend are few and simple. In the spring of 1904 the firm of Irwin, Green & Co., of Chicago, a grain commission house, found itself insolvent and upon the verge of absolute failure. Its principal creditors were the defendants herein, the Bank of Montreal and a Mrs. Boot, of Chicago, to each of whom the firm owed many thousands of dollars, these debts being only partially secured by collateral. The firm had little or no tangible assets of value, but had a large earning capacity, its earned commissions in the previous year having amounted to upwards of $100,000. In the hope of averting absolute bank
“ Agreement made this First day of March,. A. D. 1904, between William Duryea, of the City, County and State-of Hew York, and the copartnership of Otto E. Lohrke & Co., doing business in Hew York and Chicago. •
■ ' “Whereas C. D. Irwin and A. W. Green, copartners doing business under the name of Irwin, Green & Co., in the City of Chicago, Cook County, Illinois, have applied to the said William Duryéa for money to be used to carry on their business; and
“Whereas the said William Duryea has agreed to advance ¡or loan tó said Irwin, Green & Co. such sum or sums of money -as he may deem necessary in the ordinary conduct of the grain and commission brokerage business how conducted by said Irwin, Green, & Co. in the City of Chicago, but, as a condition precedent to advancing or loaning such money or any part thereof, has requested that the firm of Otto E. Lohrke & Co. subject the payment of their cláim against said Irwin, Green & Co. to the repayment to said William Duryea of any moneys by him advanced under this agreement;
“ Now, therefore, it is agreed as follows :
“ 1. Said William Duryea, in consideration of the payment of the sum of One Dollar and the agreements hereinafter contained on the part of the firm of Otto E. Lohrke & Co., hereby agrees that he will from time to time as the conditions of the business may seem to him to require, loan or advance to said Irwin, Green & Co. isuch sum or sums of moneyas in his judgment may be reasonably required in the ordinary conduct of the business of said Irwin, Green & Co., except, however, for the claims against said Irwin, Green & Co., held by the Bank of Montreal of said City of Chicago, and said firm of Otto E. Lohrke & Co.
“ 2. Said Otto E. Lohrke & Co., in consideration of the sum of One Dollar in hand paid, and the. agreements herein contained on the part of said William Duryea, do hereby promise and agree to*563 and with said William Duryea that said Otto E. Lohrke & Co. will at all times subject their claims against the firm Irwin, Green & Co. to the repayment by said Irwin, Green & Co. to said William Duryea of any and all moneys advanced or loaned by him to them after the date of this agreement, and it being understood and agreed that said William Duryea may make a similar agreement with the Bank of Montreal.
“ WM. DURYEA,
“ OTTO E. LOHRKE & CO.”
On the signing of these'agreements William Duryea advanced to the embarrassed firm $25,000, and in the following month advanced a further sum $5,000. The firm managed to struggle on until some time in 1905 when it ceased to do business and was dissolved. William Duryea was never repaid the amount of his advances. Very soon after Duryea had advanced the money to enable the firm to continue its business the defendants began to press the firm for payments on account of the debt which they had agreed to “ subject * * * to the repayment ” of the amounts advanced by Duryea, and so insistent did they become that between July 21 and December 31, 1904, the firm of Irwin, Green & Co. repaid to defendants on account of said indebtedness upwards of $20,000, which these plaintiffs now seek to recover. Out of these simple facts grew a somewhat complicated situation owing to the fact that by signing the foregoing agreement the defendants assumed relations between themselves and Duryea, which were quite independent of and quite different from their relations with the firm of Irwin, Green & Co. These latter relations remained precisely what they had been before, to wit, those of debtor and creditor. Defendants had not agreed to postpone the collection of their claim from the firm or to forego any remedies which were open to them to collect it. They were, therefore, entirely justified, as between themselves and the firm, in insist-; ing upon the payment of some part of their debt, and in accepting such payments as they could induce the firm to make. The only question is as to the nature of their obligation to Duryea, and their right, as against him, to retain the amounts collected from the firm. The agreement is not perhaps as precise and definite as it might have been, but I think that it is possible to discern its meaning and effect. In the first place we should consider the circumstances under which
• The judgment should, therefore, be reversed and a new trial granted.
Judgment modified as directed in opinion, and as modified affirmed, with costs to respondents; - order denying new trial affirmed. Order granting extra allowance reversed, without costs. Settle order on' notice.