Hamilton v. Oliver McClintock & Co.

Citations

• 174 Pa. 28
• 34 A. 302
• 1896 Pa. LEXIS 841

Syllabus

<p>Promissory notes — Sale—Collection of notes — Dm diligence.</p> <p>Where the seller of promissory notes agrees as a part of the contract bf sale to use all due diligence to collect them, and to pay the proceeds of the same to the purchasers when collected, he is bound to the observance of the utmost good faith and the exercise of all due diligence in the performance of the duty which the contract imposes.</p> <p>The seller of promissory notes agreed with the purchaser to use all due diligence in collecting them. The seller had an additional claim against the maker of the notes. Subsequently to the sale he signed a composition agreement with other creditors of the maker by which the creditors were to accept fifty per cent of their claim in settlement. The seller lumped his own claim with the notes, but had a secret agreement with the debtor by which his own was to be paid in full. The purchaser of the notes, without knowledge of this secret agreement, acquiesced in the settlement, and was paid fifty per cent of the notes. It also appeared by some evidence that the maker of the notes had real estate out of which the notes, in the exercise of due diligence, could have been collected. In an action by the purchaser of the notes against the seller to recover the unpaid portion of the notes, Held, (1) that the secret agreement of the seller with the maker was a fraud upon the purchaser.; (2) that the purchaser under the circumstances did not waive his right to due diligence on the part of the seller, by accepting fifty per cent of the amount of the notes; (3) that the evidence as to whether the notes could have been collected from the real estate was for the jury; (4) that the fact that the seller’s individual claim against the maker was for goods sold before the notes in question were given to a partner for his interest on retiring from partnership with the maker, was not a defense to the suit; (5) that a judgment on a verdict for plaintiff should be affirmed.</p>