Hoffman v. Overbey/Opinion of the Court

The principal question raised by the pleadings and discussed at the bar involves actual fraud upon the part of James R. Millner in procuring the release from Hoffman, Lee & Co. We have seen that according to the bill Millner sought such release upon the ground of his 'total inability' to discharge that claim, and because the mortgaged property, which he proposed to surrender absolutely, and free from his wife's contingent right of dower, was all that he owned and 'all he had on earth;' whereas, it is alleged he had at the time $12,000 in cash, that had been fraudulently kept out of the moneys advanced to him from time to time for the purchase and manufacture of tobacco to be shipped to Hoffman, Lee & Co. for sale, the proceeds to be applied to the payment of the moneys so advanced. That Millner had $12,000 in cash during the summer after the settlement with Hoffman, Lee & Co. is clearly established by the evidence. But that he represented to them at the time of, or as an inducement for, the settlement of February 28, 1873, that the mortgaged property was all he had, or that he threatened to take the benefit of the bankrupt law unless discharged upon the terms stated in the writing of that date, or that he retained without investing in his business, $12,000 out of the moneys advanced to him, only appears from the depositions of Hoffman and his attorney and a physician, each of whom details conversations had by them, separately, with James R. Millner, in June, 1885, at Buffalo Lithia Springs, Va., where he was then staying for his health. Upon a careful scrutiny of all the evidence, oral and written, bearing upon the condition of James R. Millner at the date of the above conversations, we are satisfied that he was of unsound mind. What he said in those conversations cannot properly be made the basis of a decree against him. His mental faculties had then become too much impaired to admit of any decree against him, based upon his statements or admissions. Indeed, the evidence fairly requires the conclusion that he was not, at any time during the six months immediately preceding that time, competent to make any admission that ought to be the foundation of a decree affecting his rights of property.

The only representation that he may be held, upon the present record, to have made in order to induce Hoffman, Lee & Co. to accept the mortgaged property, and discharge him from further liability, is that at the time of the compromise he was-in the words or the agreement of February 28, 1873-'unable to pay the said debt [$15,758.67] in full.' Was that representation false or fraudulent? That it was either is not shown with sufficient clearness to justify the court in disregarding or setting aside a settlement made more than 12 years before this suit was instituted. Besides, there is no proof that James R. Millner had, at the time the compromise was made, the means that he subsequently invested in the business conducted by Millner Bros., nor does it satisfactorily appear when or from whom he got the moneys that were thus invested. If he were in such condition as to be ableto testify or to furnish evidence upon this point, it may be that the fact of his having, in cash, as much as $12,000 shortly after the settlement of 1873, if not explained, would justify the conclusion that he had that amount at the time he asserted his inability to pay in full the debt of Hoffman, Lee & Co. No such rule ought, however, to be applied in the present case; for it may well be supposed that his committee could not, after the lapse of so many years, furnish the explanation that would properly be required of Millner if he were alive and of sound mind.

Beyond this, it is not at all clear from the evidence that Hoffman, Lee & Co. released Millner in the belief that, when surrendering the mortgaged property, he gave up, or intended to give up, literally everything that he had, retaining nothing for the support of himself or family pending his efforts to establish himself again in business. The representation that he was unable to pay the debt of the plaintiffs in full was not equivalent to a representation that the mortgaged property was all he owned. Liberally construed, the former representation was not inconsistent with the retention of a part of his means for the support of his family, or to meet the demands of other creditors.

The fact principally relied upon to show that he and his brothers combines to defraud the plaintiffs is that the property surrendered to the latter, and by them sold and conveyed to Millner Bros., was ultimately repurchased by him. But there was no concealment of the fact that Millner Bros. before taking a conveyance from the plaintiffs, had arranged to sell the property to James R. Millner. Of that fact the plaintiffs were informed both by Millner Bros. and by James R. Millner as early as April, 1873. The deed to the latter was put upon record September 3, 1874; so that Hoffman, Lee & Co. knew, or could easily have known, at least 10 years before this suit was brought, that James R. Millner had become again the owner of the property surrendered to them in 1873. If they understood him as representing, in February, 1873, that the mortgaged property was 'all he had on earth' the question would naturally have arisen in their minds as to how he was able to buy that property back so soon after the compromise. But no inquiry upon that subject was instituted; at least the evidence does not show that when the facts were recent, or before James R. Millner's mind was permanently impaired, any was made by them. The utmost that can be fairly predicated of such of the evidence as may be properly considered as the basis of a decree in the cause is that there is ground to suspect that James R. Millner did not make a frank and full disclosure as to his financial condition at the time the compromise was effected with the plaintiffs. But a suspicion of the want of good faith is not sufficient to justify a decree setting aside, upon the ground of fraud, a compromise made as far back as 1873; especially, when the party to be affected by such a decree has become incapable, from impairment of intellect, to present his side of the question. Upon the whole case we are of opinion that the ends of justice will be best subserved by not disturbing that compromise.

These views render it unnecessary to consider other questions argued by counsel, and require an affirmance of the decree.