Mehr v. Starr

138 N.Y.S. 317

• Court: Appellate Terms of the Supreme Court of New York
• Decided: March 15, 1912
• Status: Published

Opinion

STAPLETON, J.

The action was for money received. The facts are:

The corporation known as Mehr Bros, entered into a composition agreement with its creditors. The defendant was a creditor. He signed the agreement, agreeing to accept, in full satisfaction of his claim against the corporation, 40 cents on the dollar—25 cents in cash, payable when all the creditors signed the agreement, and 15 cents by a promissory note payable in six months, with two indorsers. The 40 per cent, of the claim was paid.

The creditors of the corporation, executing the composition agreement, undertook on their part to surrender to the corporation debtor all promissory notes or other collateral then held by them. The defendant surrendered all notes of the corporation held by him, except two, aggregating $104. Those notes were afterwards presented at the bank at which they were made payable, and paid. The plaintiff is the assignee of the debtor in the composition agreement.

This action is to recover the money thus received by the defendant. There was competent evidence from which it was proper for the trial court to find that there was a secret arrangement between the corporation debtor and its creditor, the defendant, whereby he was to retain the two notes in question as an inducement for him to enter into the composition agreement. Upon such a state of facts the plaintiff may not successfully prosecute this action. The law will leave him where the transaction left his assignor, who was in pari delicto with the defendant in a secret and fraudulent agreement. Solinger v. Earle, 82 N. Y. 393; Hanover National Bank v. Blake, 142 N. Y. 404, 37 N. E. 519, 27 L. R. A. 33, 40 Am. St. Rep. 607; Harloe v. Foster, 53 N. Y. 385.

Judgment affirmed, with costs. All concur.