Jenkins v. Davis 141 Pa. 266

J. P. H. JENKINS v. DAVID DAVIS.

APPEAL BY EOX, MOORE & CO. EROM THE COURT OE COMMON PLEAS OE MONTGOMERY COUNTY.

Argued February 2, 1891

Decided April 6, 1891.

[To be reported.]

(a) A debtor confessed a judgment to his attorney, as trustee for his creditors. The confession specified that the judgment was given to secure the debtor’s several creditors, and that the moneys collected upon it were to be distributed by the trustee pro rata “ among all my creditors, share and share alike: ”

1. On distribution of the proceeds of a sale on the judgment, parol testimony was admissible to show that the intention of both the debtor and trustee was to secure only certain specified claims scheduled in writing at the time, and that by mistake certain words which would have so restricted the security were omitted from the confession.

2. The parties, for whose specific use the judgment was alleged to have been given, had a standing to show that such a mistake was in fact made, distinct from and independent of the judgment defendant; the acquiescence of the latter in the judgment as entered, whether silent or positive, could not conclude them.

*2673. In such a case, when the fact of the mistake is established by clear, precise and indubitable evidence, and it does not appear that its correction would do any injury to those who may have supposed themselves entitled to participate in the security, equity will not permit the clear purpose of the parties to be defeated.

Before Pax,son, C. J., Green, Clark, Williams, Mc-Collum and Mitchell, JJ.

No. 388

January Term 1890, Sup. Ct.; court below, No. 12 June Term 1886, E. D., C. P.

On March 17,1886, judgment was entered in the court below, in favor of J. P. Hale Jenkins, trustee, etc., upon the following instrument:

$1,500.00 March 17, 1886.

On demand, I promise to pay to J. P. Hale Jenkins, trustee for my creditors, or order, the sum of fifteen hundred dollars, without defalcation, for value received. And I hereby confess judgment in favor of said Jenkins, trustee, for the above named sum, hereby releasing all errors and declaring there shall be no stay of execution hereon. This judgment is given to said Jenkins to secure my several creditors. He is to make a pro rata distribution among all my creditors, share and share alike.

In witness whereof.....

David Davis (seal).

On the same day, an execution was issued upon the judgment. The sheriff, having sold certain personal property by virtue of the execution, realizing therefrom $1,251.48, paid over to the plaintiff the proceeds of sale, less costs.

On May 20, 1887, Mary G. Stacker obtained a rule for a citation against J. P. Hale Jenkins, trustee, to file an account. The rule was made absolute on February 20, 1888, and it was ordered that an account be filed on or before March 5, 1888. On March 1, 1888, Mr. Jenkins filed an account exhibiting a balance of $965.03, in his hands as trustee in the judgment. This account, upon the filing of proof of publication of notice, was confirmed nisi on June 4, 1888, and on June 6, 1888, Mr. Walter S. Jennings was appointed auditor, to make distribution of the balance in the hands of the accountant.

The auditor reported the facts shown by the testimony in substance as follows:

*268On or about March 15, 1886, David Davis went to the law office of J. P. Hale Jenkins, to consult him in reference to financial troubles, and, as Mr. Jenkins was absent, communicated his business to Mr. Frank L. Murphy, in charge of the office. By Mr. Murphy’s advice, he returned the next day and saw Mr. Jenkins. From his statements to Mr. Murphy and Mr. Jenkins, it appeared that some of his creditors were pressing him for payment, though his assets exceeded his liabilities; that, about two months before, he had confessed a fraudulent judgment to his brother-in-law, George W. Eadline, and by means of a sheriff’s sale thereunder had transferred to Eadline all his personal property, including a stock of goods in a country store at Merion Square; that the arrangement made was that Eadline should carry on the store for the benefit of Davis, until the latter’s business creditors would become reconciled to the situation, when he was again to commence business; that Eadline had failed to send Davis money in accordance with the agreement between them, was about starting another store at West Manayunk, and had taken goods out of the store at Merion Square, worth $1,800, to stock the new store, and Davis desired to get the goods back.

Upon making these statements, Davis was advised to get a list of his creditors and confess a judgment to some one in trust for them, so that the goods might be levied on in the hands of Eadline. A list was prepared embracing all his “business creditors ” except two, with the amounts of their claims aggregating a little less than $1,500. Davis said there were two other creditors whose claims amounted to less than $50, but whose names he had forgotten and would procure afterwards. Being asked if he had any other indebtedness, Davis said he owed his father, Joseph Davis, $800, but he would not want to come in on the judgment. He also mentioned a bond for $6,000, held by Mary G. Stacker, secured by a mortgage of real estate at Merion Square, and a mortgage for $3,500 upon nine acres of land he had recently purchased, held by other parties, but said that these two debts were not to be included in the judgment. Davis’s intention and the understanding between him and Mr. Jenkins were that the judgment proposed to be given should be for the use and benefit of his “ business creditors” only, and that the $300 due his father, and the *269amounts of the two mortgages, should be excluded therefrom. Mr. Jenkins then drew up the instrument upon which the judgment Cor $1,500 was afterwards entered, intending to draw it so as to confine the benefits of it to the business creditors, but he prepared it hurriedly and by oversight omitted the word “business” therefrom. The omission was not discovered until in a later stage of the proceedings.

The names of the two business creditors originally omitted from the written list, were procured and added to it by Mr. Jenkins, together with the amounts of their respective claims, aggregating $40.50, within a week after the entry of the judgment. As thus completed, the list, in evidence as paper A, comprised sixteen creditors, with claims aggregating $1,515.90. It was prepared for the purpose of showing the persons for whom Mr. Jenkins was to hold the judgment, and the proportions of their interests therein, and had ever since been retained by him as supplemental to the judgment. Within a few days after the date of the judgment, Mr. Jenkins caused all the creditors named in the list to be notified that he was trustee for them thereunder.

The witnesses by whose testimony it was shown that the judgment confessed in favor of Mr. Jenkins, as trustee, was intended to secure only the business creditors, were Messrs. Jenkins and Murphy and Mr. J. A. Strassburger, the counsel of some of those creditors.

The bond and mortgage for $6,000 in favor of Mary G. Stacker, were dated. June 16, 1885, payable three years after date, with interest at five per cent, payable semi-annually, and attorneys’ commissions of three per cent, in case of collection by suit. The bond contained a warrant of attorney to confess judgment, and judgment was entered thereon on February 11, 1886. The question presented to the auditor was whether that judgment was entitled to participate in the distribution of the proceeds of the sheriff’s sale under the trust judgment. Joseph Davis and the holders of the $3,5.00 mortgage made no claim against the fund, and a release of any such claim, signed by Joseph Davis, was filed with the auditor.

The auditor reported his conclusions upon the question presented for his determination as follows:

*270In considering this judgment, there is nothing upon its face which would indicate that any mistake had been made, or any provision omitted that was intended to have been inserted. Its terms are clearly and forcibly expressed, and the language used is unambiguous, and clearly directs the trustee to make a pro rata distribution of the money realized among all his creditors ; and in such cases the general rule of law is, “ Where there is no ambiguity in an instrument of writing, parol evidence of'the intention of the parties is not admissible: Litle v. Henderson, 2 Y. 295.

That parol evidence is admissible to correct a mistake, or to show that at the time Davis signed the judgment he would not have done it, had he known that by its terms Mrs. Stacker’s judgment would be included, is well settled, even though it varies or materially alters the instrument: Greenawalt v. Kohne, 85 Pa. 369. The parol testimony of Davis would probably be admissible to correct any mistake, made either by himself or by his attorney at the time of the drawing of the judgment, providing that no injury was sustained or legal right waived by a reliance on the judgment. But, unfortunately, Mr. Davis is now insane and confined in an asylum, and we have not the benefit of his testimony, and he does not impeach the judgment or attack it in any way.

Is the testimony of Messrs. Jenkins, Murphy and Strassburger admissible to vary the written and clearly worded and unambiguous judgment? Mr. Jenkins is but a nominal party, a mere stakeholder, acting as counsel for Davis and trustee for all his creditors. The contract is not repudiated by Davis, and his creditors must claim under its terms or not at all. When the judgment was entered and execution issued thereon, Mr. Jenkins’s position as counsel for Davis became secondary, or subservient to his duty as trustee for all the creditors of David Davis. Can his testimony, then, be received to abridge the rights of any of the persons who, according to the plainest terms of the judgment, are included in it ? The auditor is of the opinion that it cannot be admitted; and for the same reasons, the testimony of Mr. Murphy and Mr. Strassburger for the same purpose is not received.

Nor does the auditor believe, even if Mr. Davis testified to the same facts relative to the parties to be included in the judg*271inent, and his testimony were believed as confidently as is Mr. Jenkins’s, that it would be admissible to exclude Mrs. Stacker’s judgment. The bond of Mrs. Stacker was entered in the Court of Common Pleas, February 11, 1886, more than one month prior to the entering of the trust judgment; interest was then due and unpaid upon it, and Mrs. Stacker had the right to rely upon its terms and forbear execution upon her judgment, unless she had timely notice from Davis that she was not included. There is no evidence that she had such notice till long after, when it was too late for her, if she desired, to test the validity of the other debts ; and it is impossible to say what effect, if any, the entry of the confessed judgment had upon the course which otherwise Mrs. Stacker might have pursued.

It is admitted that the Stacker judgment has not been paid; and therefore, guided by the reasons given above, it is allowed a pro rata share in the distribution of the fund.....

—The auditor attached to his report a schedule distributing the fund among the sixteen business creditors and Mary G. Stacker, the dividend being at the rate of eleven per cent. To this report, Fox, Moore & Co., and other creditors included in the list of those whom the trust judgment was intended to secure, filed exceptions specifying, inter alia, that the auditor erred:

1. In deciding that the testimony of Messrs. Jenkins, Murphy and Strassburger could not be received “to abridge the rights of any of the persons who, according to the plainest terms of the judgment, are included in it.” 3

4. In not excluding Mary G. Stacker from participating in the distribution.4

After argument of the exceptions, the court, Weand, J., on March 8, 1890, filed the following opinion:

David Davis executed and delivered to Mr. Jenkins, as “ trustee for my creditors,” a judgment on which the fund for distribution was realized. It is now proposed to restrict payment to a certain class of creditors, designated as “ business creditors,” to the exclusion of a mortgage creditor who held a judgment bond accompanying her mortgage, which judgment was duly entered before the one in dispute.

*272The judgment is clear and precise in its terms, and requires no explanation upon the ground of ambiguity. It is claimed, however, that it was intended only to protect certain persons of whom Mrs. Stacker, the mortgage creditor, was not one, and the evidence to sustain this contention is found in the testimony of Mr. Jenkins, who was then attorney for Davis, of Mr. Strassburger, who represented a creditor, and Mr. Murphy, who was acting for Mr. Jenkins. Mr. Davis does not appear to dispute the distribution, he being now insane.

Whilst it is true that a written instrument, although unambiguous, may be explained or reformed for fraud, accident or mistake, or where it is being used against the expressed intent' of the parties, we think the rule cannot be successfully invoked in this case. In the first place, Davis, the obligor, does not make the claim, nor does any one in his behalf. His creditors, in this respect, do not stand in his shoes. They were not parties to the contract, and were not aware of the judgment until after it had been entered. As soon as delivered, it enured to the benefit of all persons in whose behalf it was expressed to have been given. As there was no inducement held out by any creditor to Davis to confess the judgment, it may well be that he consented that it should be used as written, although he originally intended a different wording. It is presumed that he read and understood it before signing, and although its effect may be different from what he thought it would have as written, such belief in his mind would not alter the effect of the instrument. To hold otherwise would be to allow every obligor to construe a solemn instrument according to his construction, instead of that which the law places upon legal documents whose words are clearly and plainly written and the effect of which is defined by law. Mrs. Stacker, however, when she saw this judgment of record had the right to rely upon its terms as protecting her claim. She knew that she was a creditor, and after being lulled into security by the judgment, cannot now, after she is prevented from taking any action to secure herself on her judgment, be cut out of her share of the fund by an intention of the judgment debtor of which she had no knowledge until too late to protect herself had she so desired. The paper A offered in evidence, is only corroborating proof, but is no higher or stronger than would be the mere verbal *273declaration of Davis made at tlie time he signed the judgment; and when one gives a judgment to all his creditors, it is not in the power of a certain class of creditors to claim it for themselves, although they show that the debtor expressed it to be for their benefit. It is unnecessary to decide what the effect would be were Davis himself making the defence.

And now, March 3, 1890, the exceptions are dismissed and the report confirmed.

—Thereupon, the exceptants took this appeal, assigning for error, inter alia:

3, 4. The dismissal of the exceptions filed.8 4

Mr. J. A. Sirassburger, for the appellants :

1. It is well settled that a debtor may confess a judgment to trustees, to secure bona fide creditors and thus prefer them; and that it may be shown for whom the payee is trustee by a paper filed afterwards or by parol: Breading v. Boggs, 20 Pa. 33; Guy v. Mcllree, 26 Pa. 92; Ewing’s App., 1 Chest. Co. li. 34. Davis had a legal right to confess this judgment for sxich of his bona fide creditors as he saw fit. Can the mistake of Mr. Jenkins, in drawing the confession, defeat his purpose or deprive the intended beneficiaries of their rights ? It is competent to show the mistake by parol testimony: Hurst v. Kirkbride, 1 Binn. 610; Chalfant v. Williams, 35 Pa. 212; Kostenbader v. Peters, 80 Pa. 438 ; Greenawalt v. Kohne, 85 Pa. 369; Hoopes v. Beale, 90 Pa. 82; Phillips v. Meily, 106 Pa. 536; Walker v. France, 112 Pa. 203; Cullmans v. Lindsay, 114 Pa. 166 ; Wanner v. Landis, 137 Pa. 61. Confessions of judgment are open to inquiry by parol evidence for the correction of mistakes, the same as other instruments: Clement’s App., 2 Penny. 313; Ayers’s App., 28 Pa. 179.

2. Had Mrs. Stacker a right to rely on the terms of the judgment as protecting her, and did she lose anything? The fact that the trust judgment was for $1,500, while hers was for $6,000, ought to have been enough to put her on inquiry as to whether the language which seemingly included her judgment was not a mistake, and on inquiry she would at once have ascertained the facts. There is no evidence that she knew of this judgment until long after execution thereon, or that she was lulled into security and prevented from taking *274action on her own judgment. She relies on constructive notice by the record. Moreover, the supposed injury to her by being lulled into security, is more imaginary than real. All she could have done, had she known the real state of the facts immediately after execution, would have been to issue execution on her judgment, levy on the same goods, and afterwards contest for the fund. She could have done the same thing by attaching the fund in the hands of the trustee.

Mr. Montgomery JSvans (with him Mr. Louis M. Childs'), for the appellee:

1. The primary purpose of Davis and his counsel was to recover certain goods which Davis fraudulently put into the possession of Eadline, and which the latter was appropriating to his own use. The use of the creditors, in the trust judgment, was a subterfuge of Davis to escape from the result of his own fraud. Being unable, by reason thereof, to maintain a suit for the goods himself, he was using the creditors to pull his chestnuts out of the fire. Had she not relied on the fact that the judgment was for the use of herself as well as the other creditors, Mrs. Stacker could have issued execution upon her judgment and contested the bona fides of the levy upon the goods in Davis’s own possession, which, as clearly appears from the testimony of Mr. Jenkins, there was no present intention of selling under the execution.*

*2752. If the confession of judgment was read by Davis before signing it, he must have understood that it was for the benefit of all his creditors, and if he signed it without reading it he is bound by it: Greenfield’s Est., 14 Pa. 489 ; Penna. R. Co. v. Shay, 82 Pa. 198; Adams v. Baehert, 83 Pa. 524; Pottsville Ins. Co. v. Fromm, 100 Pa. 347. But neither he nor any one representing him has ever questioned the judgment, or alleged that it is not as he intended it to be. The attempt here is to overthrow collaterally a judgment in our favor. There can be no distinction, in principle, between the case of a single judgment given to a number of creditors, and that of a separate judgment given to each crédito]1. If, in this case, separate judgments had been given to Mrs. Stacker and the other creditors, on what ground could the others have attacked her judgment? The plain answer of the decisions is that they could do so for collusion only: Meckley’s App., 102 Pa. 536; Clark v. Douglass, 62 Pa. 408; Second N. Bank’s App., 85 Pa. 528; Thompson’s App., 57 Pa. 175 ; Dougherty’s Est., 9 W. & S. 189; Sheetz v. Hanbest, 81 Pa. 100; Lennig’s App., 93 Pa. 301.