Hilton v. Tyrrell

⁶⁵⁸ Boyd, J., delivered the opinion of the Court. Charles S. Hilton, one of the appellants, and William'H. Tyrrell, one of the appellees, were engaged in the general merchandise and drug business in the town of Aberdeen, in Harford County, under the name of Hilton & Tyrrell. On the 15th of April, 1895, they.dissolved partnership and Hilton purchased Tyrrell’s interest and assumed the liabilities of the firm. Not having the ready money, he gave his own note for $ 150, which was paid in a short time, and the single bill of his wife and himself for $1,850, payable two months after date:— $2,000 being the amount agreed upon to be paid for Tyrrell’s interest.

The single bill contained a provision for confession of judgment and on July 24th, 1895, a judgment was entered by the Clerk of the Circuit Court for Harford County for $1,735.39 and costs-—there being some credits endorsed on the single bill. An execution was issued on that judgment and the bill in this case was filed August 6th, 1895, alleging that the agreement was that a statement should be prepared showing thé assets and liabilities of the firm and that Hilton was to give his obligation for one-half of the net assets thus ascertained. It charges that Tyrrell undertook to state the .account and prepared a statement which he told Hilton was fair and correct, but was in fact fraudulent, containing “a most gross under estimate of the firm liabilities,” and by his fraud and misrepresention induced the plaintiff to accept it. The assets^ amounting to $6,009.44, are alleged to have been correctly stated, but it is charged that the liabilities, instead of being $2.883.11, as stated by Tyrrell, were $4,617.56, and Tyrrell owed the firm $34.70 instead of nothing, as he falsely represented ; that one-half of the net assets thus only amounted to $695.94 instead of $1,563.i6}4 and after deducting the $34.70 the half was only $661.24.

The bill states that Hilton agreed to give Tyrrell $436.83 as a gratuity to be added to the $1,563.16^, thus making the $2,000.00. The plaintiffs further charged that the true amount due by Hilton is $392.72, which he had tendered to the sheriff, together with all costs incurred, and that the judgment was entered without ⁶⁵⁹ authority. The bill- then prays (A) that Tyrrell may be ordered to surrender the obligation for $1,850 upon being paid the sum of $392.72, and costs; (B) that he be required to enter the judgment satisfied upon receiving that sum and costs; (C) that the sheriff be enjoined from selling Hilton’s property under the execution on said judgment, and (D) for general relief. By agreement the bill was amended so that it alleged mistake as well as fraud on'the part of Tyrrell in making the statement.

The answer denies fraud and mistake, but alleges that Hilton agreed to pay Tyrrell $2,000 for his interest in the firm. Testimony was taken and the Court dismissed the bill, but intimated that the judgment could be stricken out on the law side of the Court on the ground that it was void. Hilton' then made that application and the judgment was stricken out, but on appeal to this Court that action of the lower Court was reversed—the question being in that case whether the judgment was validly entered by the clerk. Tyrrell v. Hilton, decided at October term, 1900, 92 Md. 176 .

The appellants now seek relief on the ground that the single bill was obtained through the false representations of Tyrrell as to the liabilities of the firm, and they contend that whether it was made fraudulently or by mistake is immaterial. Hilton says that Tyrrell undertook to ascertain the condition of the firm and fraudulently represented the liabilities to be something over $2,800, while in fact they were over $4,600. Considerable testimony was taken by the appellants to show that Tyrrell was a competent bookkeeper and was experienced in business matters, but if all that is claimed for him in that respect be conceded, it is manifest that Hilton was more familiar with the business than Tyrrell. He was conducting it in April, 1894, when Tyrrell became a partner, and had been for several years.

He had experience as a merchant, which Tyrrell had not previous to the partnership. If, in point of fact, the liabilities of the firm were over $4,600, instead of $2,800, it is difficult to understand how Hilton could have been deceived by anything Tyrrell did. One of the items omitted, according to his claim, was rent due him amounting to $200. The ⁶⁶⁰ book in which the inventory was taken and a list of “ unpaid invoices ” made in the handwriting of Tyrrell, was before Hilton.

The latter list was made up of a number of items, covering parts of four pages in that book, which amounted to $1,706.36. When Tyrrell showed that list to Hilton the latter said that was not all of the liabilities and he (Hilton), got from the bank a list of the discounts which amounted to $ 1,100. Hilton wrote below the list of “ unpaid invoices,” “ Bank Disc’ts ” on one line and on the next two “ other liabilities including “ Bills Pay.” He therefore must have known that there were other liabilities besides the unpaid invoices and discounts in bank and the amount of the latter he had gotten himself and handed to Tyrrell, who carried out the figures “ 1,100.00” opposite the words “ Bank Disc’ts.” The “ Bank discounts” included the paper executed by the firm, or members of the firm, which they had discounted in bank. Five out. of the seven notes in the list were signed by both members—the other two being signed in the firm name.

One dated April nth, 1895, and payable six days after date, for $146, was apparently not included in the list, as including that they amount to $1,246. Hilton was asked what he said when Tyrrell handed him the statement of the $ 1,700, and he replied “ I said there were other liabilities, that that amount was not all of it. I called his attention to our bank discounts and bills payable and other liabilities.” He claims not to have added up that list, but it would be difficult to believe that a man of his experience and intelligence, as shown by the evidence, would not have known by even a cursory glance that the seven items in it amounted to about $1,100. He saw, or could have seen if he had looked, what were included in the list of invoices, and what in the list of bank discounts, and if he did not know that they did not include all of their liabilities, why should Tyrrell be expected to know and be charged with fraud for not telling him ?

But there are some items which Hilton certainly did know of, long before he said he found out the discrepancy, which he fixes as on or after July 2nd. He certainly knew what rent was due himself. One item he testified to as omitted ⁶⁶¹ was that of $400 due Hood, Faulkrod & Co., and another was a note of John A. Horner & Co. for $150. On May 23rd, 1895, he wrote to Tyrrell “ I send you a letter I received from J. A. Horner & Co. They seem to be inclined to push for a settlement and to enforce the law on me, relative to co-partnership dissolution settlement.

If you care to sign, do so and return to me. I will ask you not to place the note you have for collection. I will make you a direct payment on it.” On June 18th, he wrote “ I send you check for $50 on note. This is best I can do now as Hood, Faulkrod & Co. are pushing through attorney for settlement of balance of $300 due them and they must not get judgment, as you know that would be an act of insolvency.

They and Jno. A. Horner & Co. will not release Hilton & Tyrrell, but seem bent on being as contrary and disagreeable as they can.” He added a postscript to that letter as follows: “ Horner & Co. are due 21—24 inst and I will give them $98 and new note for one month $200, please sign and return enclosed.” On June 28th he wrote returning the $200 note intended for Horner & Co. which they refused and on June 29th he wrote explaining why his check for $50 had gone to protest, for which and costs of protest he had sent another check, and he said, “My friends, Horner & Co., gave me twenty-four hours to cancel $298 note and it had to be fixed, consequently the protest. I do not intend to have any one sue me (in this case it would have been H. & T.) for an honest debt if I can help it. That you know, is an act of insolvency, there is no need of it with our resources.” That letter was written about two months and a half after dissolution and up to that time there was not the slightest suggestion in his letters that he had been imposed upon.

Not only had all the bank discounts matured before then, but every note of the firm recorded in the book marked “notes and bills payable” had also—all of the latter in April and May, except one for $26.74. The firm notes in that book, exclusive of bank discounts, amount to $911.35, and the protested notes held by Hood, Faulkrod & Co. amounted to $400. The note omitted from the list ot ⁶⁶² bank discounts for $146.00 was due April 20th, and the rent due him was $200. These sums amounting to $1,657.35, which constitute the greater part of the difference between the $2,800 and $4,600 were therefore certainly known to him before he wrote the letter of June 29th, and most of them long before that time.- He had in his possession the books showing what was included in “unpaid, invoices.” It is therefore asking a great deal to expect any one to believe that he did not know until after July 2nd, as he now says, that these- liabilities were not in existence.

Yet . he wrote the letters of June 18th and June 29th, 1895, above referred to. In the former he said, “I have -so far paid on discounts and bills $1,700, and in another two months hope to be free from annoying debt; then I can begin to pay you, although I shall not fail to remember you whenever opportunity affords in the interval.” He had also renewed a number of the notes as shown by entries in the list of “notes and bills payable” and may have renewed others which are not entered there. In the latter letter (June. 29) he said, “I hope in sixty days to have open accounts in shape that is paid in full—then I shall be in a position to cancel your note in decent style. ■ In the meantime I promise to remember you as best I can.” He thus not only had the opportunity to know that the $ 1,100 did not include all the liabilities outside of “unpaid invoices,” but he had actual knowledge that at least $1,457.35, besides his rent of $200, over and above those, included in that list making up the $1,100 were due when he wrote those letters. But there is not a suggestion that he had been imposed on and he made no such claim until after Tyrrell had placed the single bill in the hands of an attorney for collection.

Even after that, July 2nd,. 1895, Hilton wrote expressing surprise at what had been done and added, “Do you not think it would havé been better to have told me that you needed the money at once, and to have made a special auction sale to.make the sum? I shall expect to hear from you immediately and in the event of your intention to force me I now inform you that I shall fight you a good fight. I want only my rights and to give you ⁶⁶³ yours.” It is true that he says he did not know, until he made the investigation after he got the letter from Tyrrell’s attorney, the amount of the liabilities, although he said, “in the latter part of May I began to think the, liabilities of the late firm must have been more than $2,800 odd dollars from the fact that although I was paying out all the time, things did not appear to be getting any easier and demands were as pressing as ever, although I was not sure there was any mistake,” etc. He said when he commenced to investigate “I opened the notebook and on the first two pages saw at a glance $800 of $900 of the firm liabilities that had been left out,” and again, “Anybody could have seen the notes if they had opened the books and looked at them. They were right there and the largest part of them on the first page of the book.” Yet he had the note-book right before him—made,