Callender v. Colegrove

17 Conn. 1

• Court: Supreme Court of Connecticut
• Decided: June 15, 1845
• Status: Published

Opinion

Williams, Ch. J.

It is claimed, 1. That the facts found do not warrant any decree against the defendant, R. Callen-der. The combination is not found ; but it is found, that in April, 1840, John R. Sears commenced the business of a grocer and trader, in a store at the corner of Front and Ferry streets in Hartford; that Ralph Callender put in 1,500 dollars capita), expecting a like amount from Sears, who put in nothing ; that Richard Shepard was a clerk there ; that in April, 1841, an inventory was taken, by which it appeared, there was a loss of 250 or 300 dollars; that in June, 1841, Callender purchased all Sears’ right therein, and put Reuben A. Chapman in possession, who carried on the business in his own name, but for the use of Callender; that in September, 1841, Chapman took an inventory, which he meant should be accurate, showing the amount of goods at cost tobe 3,431 dollars, 47 cents, the credits 3465 dollars, 79 cents, and a gain of 600 or 800 dollars; though the committee were not satisfied there was any such gain. In July, 1841, these parties met in relation to a purchase and sale of these goods. Terms were given, and Colegrove said he did not know any thing about the concern, but he would look into it, and see how it stood; and soon after, ho went with Callende.r, and spent-some time in examining the books and goods, and enquired of Callender, of Chapman and Shepard, as to the state of the accounts. Callender gave him to understand they were pretty nearly correct; so far as he knew about them, they were so. Chapman said, some of them were good, some were bad. Shepard said, he did not keep the books; but gave him to understand, they were nearly correct. Cole-grove was disposed to purchase the goods, without the debts. Callender said, he should sell the concern as it was, if lie sold, and Colcgrove might satisfy himself. In about a week, Cole-grove made up his mind to take the concern. Colcgrove’’s object seems to have been, to purchase the goods, and perhaps the good will of the store. These were open to observation. Callender would not part with them, unless he took the debts due to the store, and paid the debts due from it. These, it is presumed, Colcgrove could know nothing'about, but from the information of Callender and his agents, and from the books themselves. What the precise informa!ion given, as to the state of the concern, by Callender and his agents, was, we are not told ; but are only told, that they represented the books as nearly correct, and that Colegrove was induced to enter into the agreement which he made, principally by the favourable representations made by these persons, and trusting to the information he-derived from an examination of said books and accounts ; and relying upon them as substantially correct, and without knowing that they were otherwise, he, on the 10 th of November, 1841, bought of Callender all his right in the store at the corner of Front and Ferry streets, and the goods in the store of A. Denslow, the book accounts, notes, receipts for goods and cash belonging to Callender in said business, the lease of said store and yard, the policy of insurance, and the fixtures ; and he was to pay ail notes and accounts against ll. A. Chapman and,/. R. Sears, belonging to the business of said store, and gave his notes for 2,920 dollars, 45 cents.

Colegrove could not make this agreement unclerstandingly, without the books showed, with something like accuracy, the state of the concern. What, then, was the state of the books ? The committee have reported inaccuracies in six accounts, amounting to more than six hundred dollars in favour of the concern. But they refer more particularly to the account of R. Sy L. Callender, which, on the day of sale, showed a balance due the concern, (when an error of the committee is corrected,) of 4,073 dollars, 11 cents, when in fact there were but 1,667 dollars, 76 cents due, showing, in this one item, a mistake of 2,405 dollars, 35 cents.

It is said, that Colegrove knew of the advancement by Cal-lender, of 1,500 dollars. The committee do find, that he ivas to pay the capital Callender put in ; but they do not find he knew what that was, before he made the agreement. If he did know that fact, his knowledge from other sources does not in any measure tend to confirm the accuracy of the books. There is, then, in these several items, to be deducted from the credit to this concern, more than 3,000 dollars. If, however, the capital was known, the concern w%s minus 1,500 dollars from what the books would show; and either of these sums deducted from 5,465 dollars, the apparent credit would have had a most important influence upon this bargain.

But it is said, the committee have not found that the whole sum that appears on the books, was not due from Callender. It is true, that it is not found in terms ; but the committee find the sum appearing on the 10th of November, the day of the agreement. They then find the sum due on the 14th of January, 1842, reduced to 2,438 dollars, 90 cents; and on the 27th of January, to 1,447 dollars, 76 cents. It is not shown, that any payments had been made to reduce this account, by Callender to Colegrove; and it is not to be supposed, that when Colegrove owed Callender for this stock, and Callender was so anxious as to be requiring mortgages and issuing attachments to secure his debt, he would be making advances to Colegrove ; and yet the committee find, that on the 14th day of January, a little more than two months after the sale, when the parties were getting the items together with a view to a settlement, credits of cash and interest to the amount of 3,444 dollars, 79 cents, and of bills not credited to the amount of 765 dollars, 96 cents, were entered by Colegrove from loose scraps of paper, and other items in another hand, including the capital, to the amount of 1,935 dollars, 54 cents. We cannot believe but that, if these credits had arisen since the sale, this would have been at least claimed on the trial below.

These credits to Callender, had there not been other errors, would have made the balance in Callender’s favour, had it not been there were charges against him not appearing on the books at all — one of 1,077 dollars, 14 cents, and other charges to the amount of J ,674 dollars, 60 cents. These last, though they do not affect Colegrove, in the same manner as the others, equally show, that no reliance could be placed upon the books. Aside from the specific errors pointed out by the committee, they say, that, the books were kept in such a state, that it was difficult for any person not previously acquainted with them, or with the transactions to which they referred, to obtain from them any certain information as to the true condition of said concern, on the whole; nor could the committee, with all the evidence the parties could produce, determine, with any definiteness, what was the state of the concern, at the time of the sale. Callender’s accounts too, they say, were kept in an unusual manner, “ as if to add to the difficulties.”

It is said, however, by the plaintiff in error, that the committee have not found fraud or mala fides; and this court cannot find it. But the committee reported to the superior court certain facts, and left that court to draw inferences as to other facts therefrom ; and that court have adjudged thereon, that this contract was fraudulent and void: and we doubt very much, whether this court can, on a writ of error, review that evidence. But if they could, we are not prepared to say they came to a wrong conclusion. Callender and his agents made a most favourable representation of the state of that concern. Had he reason to believe it was so?

It appears, that during the first year, the concern had lost money — 200 to 300 dollars — and this appeared from the inventory taken in April. Sears had never brought in any capital. Must not Callender have known these facts; and was he not determined to rid himself of a losing business ? To one witness he said, Sears had loped him out of what he had put into the concern. He declares he had a good many loafers about him, and he meant to shake them off; that he was going to get rid of the store ; that he had lost money enough. In June, another inventory was made, with a simi lar result. The only evidence tending to show that the concern was more prosperous, was that arising from the inventor}' made by Chapman, shewing a gain of 000 or 800 dollars ; which, however, was a mistaken ene ; and even then, it seems from the report, that Chapman barely ■* supposed, from the inventory taken, that tise store would pay its debts.” When we hear Callender asserting, that the books were pretty correct — they were, so far as he knew — and read the account given by the committee of the state of those books, and particularly as to the state of the accounts against Callender’s own house, it is too much to presume Callender was ignorant of their real character. He knew, or ought to have known, that they gave a very imperfect and erroneous view of the situation of the business, and were calculated to deceive ; and when he was afterwards told of the errors in the books, lie expressed no surprise, but promised to make all right. We are not, therefore, prepared to depart from the conclusion of the superior court, that the contract on the 10th oí November was fraudulent.

It is said, that the court cannot find facts, and the committee have not found fraud. But die committee have found the facts, and submitted them to the superior court, who have adjudged, as they might, that they were sufficient evidence of fraud. But if there was no fraud, Colegrove entered into the contract under a mistake as to the real state of that concern. The books did not show the real state of the business; he could not learn from them much about it; and no one is able now to tell the condition of the concern. Enough is known to see, that it was very different from the representation given by the books, and that, no dependence could be placed upon them.

When, then, it is found, that Colegrove entered into that agreement principally by the favourable representation of the concern made by Callender, Chapman and Shepard, and relying upon the books and accounts as substantially correct, we think the case comes within the principles admitted by the counsel of Callender. The substantial object of the contract was defeated, and it is impossible to do justice to the party .; for such is the state of t he books, that he can never prove or know what he has suffered.

2. It is said, that Colegrove did not seek to rescind the contract within a reasonable time ; and so the court should not have interfered. Now, what is a reasonable time cannot-appear, unless we are informed when he made the discoveries of the errors. That he discovered there were errors early, it is true; and he mentioned it to Callender, who promised to rectify them. How long he delayed, for these promises, we do not know : but from the nature of the errors, they must have come gradually, and probably-singly, to his knowledge. The greatest one — that in regard to Cullender’s account— does not appear to have been known to Colegrove, until the attempted settlement on the 14th of January, 1842, in which all the goods in the Front street store, and all the notes and accounts bought of Callender, were placed back into his hands; so that Callender could lose nothing by the delay which intervened between that time and the time of bringing the bill.

3. Again, it is said, that Colegrove waived his rights, by the subsequent mortgage he made, and thus ratified the bargain. The question of waiver is a question of fact; and it does not appear upon this record, that any such question was made below, or that all the facts are stated in relation to it. That Colegro ve was dissatisfied; that he complained; and that the defendant Callender promised to make all right, is certain ; and, as was observed in answer to the preceding objection, when h.e found how incorrect the accounts were, does not appear; and indeed from the nature of the case, the information must have been gradually acquired. The first mortgage was on the 14th of January ; and the committee find, that it was soon after that, when preparing for a settlement, that the facts in relation to the accounts of R. & Jj. Callender appear. Until then, there is no reason to believe, that Colegrove could have elected to rescind the agreement. In the argument, it was claimed by the counsel for the plaintiff in error, that the bill showed, that Colegrove had full knowledge of the facts. We need only say, that we find nothing in the biH to authorize this assertion. As to the mortgage of the goods in the Market street store, on the 20th of January, made under the terrors of an attachment, and by the advice of the sheriff, of whom Colegrove so earnestly enquired what he should do, and under the promise of Callender that he would make all right, we are not satisfied that there was any thing like a waiver of any legal right, or any thing which should subject Colegrove to any additional inconvenience, by the delay. Were this court, then, to review the question of waiver, we should not differ from the superior court in the result.

4. Another ground of complaint is, that the subsequent contracts were set aside, by the decree of the superior court. These contracts were entered into merely to secure the performance by Colegrove of the agreement of the I Oth of November ; and it would seera to follow, as a matter of course, that if that contract was set aside, all those contracts which were merely auxiliary to it, must fall with it. If a debt is paid, a mortgage to secure that debt can be of no value to the pretended creditor ; it would only remain as a cloud over the estate ; and if the debt cease, to exist in any other way, no reason exists why the security should remain. However it might be in a court of law, a court of equity will say, that the security shall attend the debt — shall follow it, or terminate with it.

5. But there is another instrument, dated the 29th of January, 1842, signed by the parties, in the hands of Mr. Goodman, purporting to be an assignment of all right of Colegrove in these goods and debts, and a general release, with a release from Callender to Colegrove of any debt owed to him by Colegrove. This, also, is set aside, by the decree. This agreement, the bill alleges, never was delivered, but placed in the hands of Mr. Goodman, to await the order of the parties, On this subject, the committee do not find there was a delivery of this instrument, but detail the facts in relation to its coming into the hands of Mr. Goodman, and what was done under it. It is very certain, that these facts do not prove a delivery ; and it is claimed, therefore, on the part of Colegrove, that it ought not to remain outstanding.

The counsel for Callender say, that he has sworn it was delivered, and if it was not, it is for the plaintiff to prove it. They have claimed, here and in other parts of the case, that the answers of these defendants are to be considered by this court, as evidence in the cause. The court do not agree to this view of the matter. The answers are before us, because they are part of the record ; but they form no part of the evidence before the court. That evidence, so far as appears to this court, is derived from the reports of the committee ; and whether the committee find the facts in the answer true or not, can only be known by the report itself, or by the finding of the court.

There is, then, no evidence oí the delivery of this writing, but what appears upon the report of the committee; from which it does not appear to have been delivered to Callender, but it was left with Mr. Goodman — with what intent does not distinctly appear. If the defendant, Callender, claimed any thing under tins agreement, it would seem necessary for him to show a delivery. But he says, he has claimed nothing by it — not even a waiver. Now, if he claims nothing under it, why should he object to its being set aside ; and if he does claim any thing from it, why should he not show that it was a subsisting instrument that was delivered? We have no satisfactory answer to these enquiries. The answer given, is, that the bill is brought to set aside this instrument; and the allegations on which the claim is founded, are not found to be true.

Aside from the general charge of fraud, the principal allegation of the plaintiff’s bill in relation to this instrument, is, that it was not delivered; that he consented it should be placed in Goodman’s hands, but never that it should go into the possession of Callender, The counsel of Callender claim that he, in his answer, denies a new delivery — in other words, he sets up that the instrument was delivered; and this he certainly must do, if he claims any thing by it, though his counsel have not chosen to use it in this manner. Callender, in his answer, does not directly affirm, that there ever was a delivery to him ; but he says, it was to be left in the hands of Mr. Goodman, that each party might have access to it; and that this was done to save the expense of a duplicate ; and that when he executed it, he believed it was to be a full and final end of the concern ; and he believed Colegrove so considered it. By this answer, then, Callender means to claim, that the instrument was in fact delivered ; and he must claim it, or it is of no importance to him whether it be set aside or not. The parties, then, are at issue on this point; and bring their proof before the committee. The committee find the facts attending it, which do not prove a delivery. We think, then, it follows, that the plaintiff has proved, substantially, the allegation in his bill, that it was never delivered; at all events, that the court were correct in saying, that it should not remain -as a subsisting, outstanding contract.

6. Sundry exceptions are assigned as matters of error, in the 8th, 9th, and 10th assignments, to the manner ol taking this account between the parties. In answer to all of which, it is to be observed, that the account itself is not given by the committee ; and the manner in which it was taken, does not appear upon this record. All the exceptions which were taken to the second report, were found untrue, except so far as consistent with the facts stated by the committee : and tins court are not called upon to say, that in taking this account the court erred, when we cannot know the principles upon which it was taken, without taking it from the assignment of errors,, or enquiring into the facts in relation to it; neither of which can be seriously claimed.

With respect to these exceptions, it is enough to say, the record lays no foundation for them. It does, however, appear, that by the decree Callender was made liable for sundry goods purchased bv Colegrove for the Front street store. Now, as Colegrove had purchased the goods for the store, and Callender had taken them into his possession, he certainly ought to pay for them. But as Colegrove himself had not paid for them, the court, instead of adding to the judgment against Callender the amount of these goods, decree that Cal-lender shall indemnify him against these claims; thus doing entire justice to all parties. Callender has to pay for the goods but once ; lie then has no reason to complain ; and as Colegrove has not actually paid for them, he cannot complain ; and the decree is calculated to do entire justice, in respect to all the parties.

7. Another question was made as to the notes of hand given by Colegrove to Callender. Now, it does not appear very clearly, what these notes were given for. If they constitute a separate, distinct transaction, it is very certain the decree is not correct; but if they are part and parcel of these transactions, it is as it should be. The notes arc dated on the 5ih of November ; but it is found, that they were in fact made after that time — that is, while Colegrove was in the occupation of the Front street store. They were made at the request of Callender, without any valuable consideration. The facts which the committee report, as respects this part of the case, are shortly these. After examining the accounts, they find abalance due to Colegrove. of 1322 dollars, 26 cents. Besides that, they find, that Colegrove has purchased a variety of goods for said store, which were mixed with the other goods in said store, which Callender has now got into his hands, which they have not charged to him in this account, because Colegrove has not actually paid for them ; and they find, that Colegrove has given several notes to Callender, or orders, which are outstanding, and which, therefore, they have not charged, as Callender may yet be obliged to take them ip. Now, to make an end of this controversy, the court say, Callender shall indemnify Colegrove against these debts and these notes; and we see no reason why he should not. Colegrove, being supposed to be in debt to Callender, gives him accommodation notes. Had he paid them, surely those payments might have been charged and allowed in this account. As he has not paid them, they must either lie outstanding until he has paid them, and then bring another suit against Callender; or they must be considered in this suit. We think better justice is done, by the latter course. It is said, there is nothing in the bill about them, and no claim that they were obtained by fraud. It is true, they are not specified in the bill; and it is not now claimed by the plaintiff, that they were an independent transaction. The fact that they were exhibited before this committee, and that no objection was made upon that ground, gives us strong reason to believe they were part of the transaction. Besides this, it is to be remembered, that this fact comes out in the second report, which is conversant only about the accounts of the parties, showing that these notes were part of the claim in the account, and not a distinct and separate transaction.

8. Again, it is objected, that the plaintiff was admitted as a witness. And why should he not be 1 It appears, that this 'fas upon the second hearing before the committee, when the only question before them, was in relation to the accounts of the parties ; and the objection was to the testimony of the plaintiff and his account book in relation to the accounts between the parties. No authority is shown in support of this objection ; and we know of no reason or practice to support it.

Another error was assigned, which perhaps ought to be -noticed, that the court did not entirely reject the first report, but rejected only that part to which exception was allowed. The object of trial by a committee, is, to ascertain facts. Now, if it is shown to the court, that on some particular points they have committed a mistake, and therefore, that injustice would be done, it is highly proper that that mistake should, be corrected ; but we see no reason why all the rest they have done should be undone, and the parties set again entirely afloat, as before. Here, after a laborious investigation, the committee had ascertained the great facts on which these parties were at issue ; but in the course of proceedings, some mistake had intervened in the matter of account. By opening the whole case, the cause of litigation might be advanced ; but certainly the cause of justice could not be; and we had supposed, that the principle which would regulate the court, was sufficiently announced in the case of Smith v. Brush, 11 Conn. R. 359.

We think there is no error in the judgment complained of.

In this opinion the other Judges concurred.

Judgment affirmed.