Case ID: sw_280/html/0841-02.html
Source: Caselaw Access Project
Author: {"author": "BARCUS, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SHEAR CO. v. DICKEY.
    (No. 303.)
    (Court of Civil Appeals of Texas. Waco.
    Jan. 14, 1926.
    Rehearing Denied Feb. 11, 1926.)
    Compromise and settlement &wkey;>5(2) — Agreement to assign for benefit of creditors all property not exempt and waive benefit of bankruptcy laws in consideration of discharge from all liability held enforceable, although one-third of debt was not paid.
    Agreement of insolvent debtor to assign all property for benefit of creditors except that which was exempt, and to waive right to take benefit of bankruptcy laws in consideration of discharge by creditors from all liability, held. enforceable as against creditors, notwithstanding less than one-third of debt was paid.
    Error from District Court, McLennan County; Sam R. Scott, Judge.
    Action by the Shear Company against E. D. Dickey. Judgment for defendant, and plaintiff brings error.
    Affirmed.
    Williamson & McDonnell, of Waco, for plaintiff in error.
    Bryan & Maxwell, of Waco, for defendant in error.
   BARCUS, J.

The parties will be designated as in the trial court. Plaintiff filed this suit against defendant, seeking to recover the balance of about $1,700 and interest due on a note for $5,301.49 executed by defendant. In 1917, tbe defendant was running a mercantile business and was insolvent, and some of bis creditors filed an involuntary petition against bim in bankruptcy. Thereafter, at tbe suggestion of plaintiff and other of bis creditors, be executed a general assignment to S. B. McDaniel of Corsicana and O. P. Hall of Waco, conveying all of bis property to said trustees, except that which was exempt to bim under tbe exemption laws of Texas, for the purpose of paying all bis creditors an equal pro rata share of bis estate. O. P. Hall, one of tbe trustees named, was tbe agent of and acting for tbe plaintiff. Tbe defendant alleged that all of bis creditors, and especially the plaintiff, agreed, in consideration of bis executing ^said assignment and turning over bis property to said trustees, that they would accept tbe funds received therefrom in full and complete settlement of all claims held by them against bim; and be alleged that after tbe execution thereof, at the instance and request of bis creditors, and especially plaintiff, the bankruptcy proceedings were dismissed in order to save tbe costs incident thereto, and that by reason of tbe plaintiff having accepted under said assignment its pro rata part of tbe proceeds of bis estate, bis debt was thereby fully paid and discharged.

Plaintiff denied tbe allegations of defendant, and further alleged that tbe instrument executed by defendant was a general assignment under tbe statute, and since tbe estate paid less than 33% per cent, of tbe debts, it was not any bar to its recovery of the balance due. The cause was tried to a jury, submitted on special issues, and tbe jury found that at tbe time tbe assignment was made tbe plaintiff, acting through its agent, O. P. Hall, agreed with tbe defendant that in consideration of bis executing tbe assignment be would be released and discharged from all bis indebtedness due plaintiff after tbe proceeds of the property under tbe assignment had been distributed pro rata to tbe creditors. On tbe findings of tbe jury tbe court rendered- judgment for defendant. It'was an admitted fact that tbe trustees in said assignment took charge of all the property and sold same, and did pay 32% per cent, to each of defendant’s creditors, including plaintiff.

Defendant, being insolvent, and having waived bis right to take tbe benefit of tbe bankruptcy law in consideration that bis creditors, including plaintiff, would accept his property and discharge bim from all lia-' bility, was entitled to have tbe contract enforced, and plaintiff, having agreed to said contract and having accepted thereunder, is bound thereby. Curlee Clothing Co. v. Jack Uberman (Tex. Civ. App.) 273 S. W. 889, and authorities there cited; International Shoe Co. v. Stewart (Tex. Civ. App.) 245 S. W. 723; Irwin v. State Nat. Bank (Tex. Civ. App.) 224 S. W. 246.

Tbe contention of plaintiff that tbe assignment under tbe statute did not relieve tbe defendant of bis obligation because tbe estate did not pay as much as one-third of bis debt is not tenable. Tbe plaintiff in this cause, under tbe jury’s finding, which is abundantly supported by tbe testimony, made a contract with tbe defendant to release tbe defendant from all liability, in consideration of bis having made the assignment, and under tbe authorities above cited tbe waiver of a debtor’s right to take tbe benefit of tbe bankruptcy law, and in lieu thereof turn over to bis creditors bis entire estate in satisfaction of bis debts, is a sufficient consideration to sustain tbe contract.

We have examined all of plaintiff’s assignments of error, and same are overruled.

Tbe judgment of tbe trial court is affirmed. 
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