34 Wis. 596 | Wis. | 1874
The court quite agrees with the counsel for the plaintiffs upon the propositions chiefly argued at the bar, and which arose upon the exception to the refusal of the circuit court to instruct the jury, at the request of the plaintiffs, as follows : “ Where a party enters into a contract under a clear bona fide mistake, ignorance or forgetfulness of facts material thereto, he may, on that account, avoid or rescind such contract, provided the rights of innocent third parties will not be prejudiced by such avoidance. And, in such case, it is not material to inquire whether such party might not, by reasonable diligence, have ascertained correctly the facts which he had forgotten, or
The requests so presented are looked upon by this court as correct statements of the law, and we cannot but congratulate the young gentleman representing the plaintiffs, and who appeared here for the first time, on the industry, ability and clearness displayed in the argument. Such discussions are of the greatest utility, and are always thankfully listened to and received by th& judges, whose energies are too frequently over-tasked by labors of the kind thrust upon them without the aid of similar arguments.
But, notwithstanding the accuracy of the requests, we are still of opinion that the refusal was justifiable on the ground that the rights of innocent third parties were or might be prejudiced by the avoidance. We think the avoidance in this case was one in which all the creditors of Parker, joining in the compromise, were or might be interested, and by which their rights were or might be prejudiced, and not one confined in its operation or limited in its effects to the rights of the parties before the court and connected with the action, being the plaintiffs on the one side and the defendant Parker and his surety on the other. If this were not so, and if none but these parties were interested, and no rights but theirs to be affected, the requests should have been granted. Certainly the defendant Parker, himself knowing dll the facts and not having been in any manner misled respecting them, has no right or equity to refuse to pay his debt because the plaintiffs made a mistake about it or were ignorant of its true character and situation, or because they were negligent or careless in not ascertaining the condition of it in the hands of their attorneys, or their attorneys inattentive or heedless in not informing them, except as he can identify himself with and take refuge behind the rights and equities of his other creditors entering into the composition and who released their debts. That negligence is not actionable, nor will it defeat the right of the
But we think agreements of this nature, by which a debtor contracts with two or more of his creditors for the payment of his debts at a specified sum or rate less than their full amounts, and the creditors contract with' the debtor and mutually with each other to receive such sum or rate in full satisfaction of their respective demands and to discharge the debtor from all further obligation or liability, stand upon peculiar grounds; and that there is an underlying principle of public policy pertaining to them, which excludes all evidence of mistakes of the kind here shown, on the part of single creditors entering into them, when offered for the purpose of breaking through the settlement or going behind and setting it aside. The rule which enables the debtor to take advantage of the rights and equities of his other compromising creditors, when attacked by one of them, is well settled and familiar. In no other way can the rights of the other creditors be protected and their interests made secure under such circumstances, except through the debtor and by means of his resistance to the demands of the subsequently dissatisfied or repudiating creditor. See Lathrop v. Knapp, 27 Wis., 225, 227, and authorities there cited.
The respect paid by the law to compromises of doubtful or disputed claims fairly made, and the favor with which it regards and will enforce them, are well understood. Kercheval v. Doty, 31 Wis., 476. The same respect and the same favor extend likewise to a compromise fairly made between a debtor and several of his creditors. Arrangements of this nature are of frequent occurrence and of the greatest practical importance, especially in commercial circles. The peace and tranquillity of the whole commercial world, or of great numbers in it, as well as that trust and confidence which are the life of trade and commerce, are to a great extent dependent upon the validity and
And so strong and well sustained, in our judgment, is this principle of public policy, that we do not think the mistaken creditor should be permitted to come in at all with evidence to show his own mere mistake. We do not think the way should be open at all for him to enter and speculate as to whether other creditors may sustain loss or be injured by reason of his being allowed to correct or to take advantage of his own mistakes. The presumption, conclusive in its nature under the circumstances, is, that the other creditors will be so injured.
And our confidence in the correctness of these conclusions has been somewhat strengthened by the circumstance, that,' after a quite thorough examination of the authorities, we have found no case where a composition between a debtor and his creditors has been set aside, or its validity questioned, on the ground of such mistake. Avoidances on the ground of fraud, either by secret preferences given or promises made by the debtor to one or more of the creditors, or by false representations of the debtor or his concealment respecting the amount or value of his property, have been frequent enough; but none have been met with where a mistake of the kind here complained of was the ground. It is believed that no such adjudication is to be found, and that no such ground for avoiding the agreement by one of the creditors exists.
We return, therefore, to the proposition with which we started, which was, that this was a case within the exception to the rule recognized by counsel, namely, one where the rights of innocent third parties were involved and would be prejudiced by an avoidance of the contract on account of the mistake.
It is to be observed of the agreement in question, that it was not one the validity or obligation of which was made to depend upon its being executed by all the creditors of Parker. It required, therefore, only the acceptance and execution by two or more creditors, to make the agreement obligatory upon all the creditors who joined in it. It appeared on the trial that, besides the plaintiffs, other creditors united in the execution of the agreement, receiving the sum offered in compromise and releasing the debtor.
On the whole case, therefore, we are of opinion that the judgment of the court below was right and should be affirmed.
By the Court. — Judgment affirmed.