Opinion
Argued October 28, 1890
Decided December 2, 1890
George C. Greene and William C. Fitch for appellants.
George Wadsworth for respondent.
The plaintiff is the surviving member of a firm which was composed of himself and one A very L. Smith, deceased. This action was brought to foreclose a mortgage given to the firm by the defendants, who are husband and wife, to secure the payment of their bond of $3,000, dated September 12, 1883, payable in two equal annual payments from the date thereof with semi-annual interest. The defense alleged that both the bond and mortgage were given without any consideration and were procured from the defendants by the plaintiff or his firm by fraud, duress and undue influence; and further, that both instruments were given by the defendants to Smith Weber for the purpose of compounding a felony committed by one John W. Rumoher in feloniously stealing, taking and carrying away from the store of the firm a large quantity of goods. The court at Special Term found that at the time of the execution and delivery of the bond and mortgage by the defendants, they were indebted to the plaintiff's firm in the sum of $2,450, with interest from December 1, 1882, for goods taken from the store of the firm and applied and converted by the defendants to their own use. That there was no fraud, duress or undue influence in procuring the mortgage, and that it was not given to compound or settle a felony. That there remained due thereon the sum of $1,772.62 for which the usual judgment of foreclosure and sale was directed. It appeared from the proofs at the trial that the defendants are husband and wife and were engaged in the retail grocery business in Buffalo, in the name of the wife, in at least two different places in that city. The management of the defendants' business was intrusted to the husband, Joseph Barrett, who bought or gave orders for such goods as were needed at the stores under his charge. Rumoher was a nephew of Barrett and a clerk in the wholesale grocery house of Smith Weber, entering upon the duties of that position about April 1, 1882. About three months thereafter, in pursuance of a preconcerted arrangement between himself and Joseph Barrett, he commenced to take goods from the house in which he was a clerk in order to supply the defendants' retail stores. This continued from time to time on about forty different occasions, until they were discovered about a year thereafter. In general, the manner of operating was this: after the close of the store about six o'clock in the evening, the proprietors and clerks left, but Rumoher would return and meet Barrett there with his horse and wagon, and with him take such goods as they wished from the store and put them in defendants' stock. The goods were not charged to anyone on the firm books, but Rumoher kept an account of them on his private diary and Barrett paid to him from time to time a sum about equal to half their value, which the young man appropriated to his own use. On some occasions, Rumoher would erase charges made upon the firm books for goods purchased by defendants in the regular way, and carry the amount into this private account. It was to secure to the plaintiffs' firm payment for the goods thus taken that the bond and mortgage were given. The Barretts, husband and wife, brought an action against Weber, as survivor of the firm, for the purpose of procuring a decree declaring the bond and mortgage null and void on the ground, as alleged in their complaint, that they were procured by fraud and duress and were without any consideration. The two actions, under a stipulation made by the parties with the consent of the court, were tried together. In the last-mentioned action, the court found that the securities were given for a good and valuable consideration, and to secure the payment of a debt justly due from the mortgagors to the firm of Smith Weber, and that they were not procured by fraud, duress or undue influence, and judgment dismissing the complaint was directed against the Barretts. The General Term affirmed this judgment and it comes to this court for review in the same record containing the judgment and proceedings in the foreclosure action, which has also been affirmed at General Term. The issues in both cases involved important questions of fact which the Special Term upon a full trial, and after hearing the testimony of all the actors in the transaction, which resulted in the execution and delivery of the bond and mortgage, has determined against the appellants. It is not seriously contended in support of the appeals that any finding of fact made by the trial court is without evidence to support it, and certainly the conclusions of law are sustained by the facts found. The voluminous brief submitted by the learned counsel for the appellants is devoted principally to a discussion of the facts for the purpose of showing that the findings, or some of them are against the weight and clear preponderance of the evidence. Even if he was correct in this position his right to review the judgments upon the facts ended with the determination of the General Term. But a somewhat careful perusal of the whole record leads the mind to the conclusion that the Special Term made a just and correct disposition of the controversy. The real estate embraced in the mortgage was the separate property of the wife. She did not participate in the criminal operations by means of which the goods of Smith Weber were appropriated to her use, nor does it appear that she had any knowledge of the fact that her husband and nephew were engaged from time to time in furnishing her store with goods purloined from others. But the husband was her agent in conducting her separate business, and this business and her separate estate had the benefit of the property wrongfully obtained. She was asked to pay for what went into her store, through the criminal conspiracy between her husband and nephew and of which she was the unconscious beneficiary. She was bound to return the property or its value, and the promise to do so is founded upon a good consideration and binds her unless vitiated by fraud or duress, or some promise or agreement to compound a felony. A threat to sue her at law for the value of the goods that had gone into her possession, or to prosecute her husband and nephew criminally for the felony may have influenced her mind, and induced her to sign the mortgage, but whether this operated to coerce her was, under all the circumstances, a question of fact which has been found against her. In order to avoid the contract on the ground that it was made under fear of imprisonment, the imprisonment, threatened or feared, must be shown to have operated upon her mind so as to deprive the contract of the character of a voluntary act, and the evidence was not of such a conclusive nature as to require such a finding. In order to avoid the bond and mortgage on the ground that they were given to compound a felony, it was necessary to show that there was some agreement or promise on the part of the mortgagee to forbear prosecution for the crime, or to suppress evidence that would tend to prove it. Nothing of this kind is found, and no sufficient evidence was given to warrant such finding. We think that the Barretts failed to bring the case within the rules that authorize courts to annul contracts on the ground of duress or fraud or for the reason that an agreement or promise to compound a felony was an element inducing the execution and delivery of the instruments. ( Haynes v. Rudd, 83 N.Y. 251; Met. L. Ins. Co. v. Meeker, 85 id. 614; McPherson v. Cox, 86 id. 472; Dunham v. Griswold, 100 id. 224; Haynes v. Rudd, 102 id. 372.)
We have examined the exceptions taken at the trial and discussed in the appellants' brief, and we are of the opinion that they were correctly disposed of in the courts below.
The judgment should be affirmed with costs.
All concur.
Judgment affirmed.