The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1879-02-04
INTERESTING OPINION.
THE muoHTs or A RANKaUpTis CRED
ITons-A NICE QUESTION IN THg
RAYLY Il POND CASE.

nAYLY L. POND CASE.
judge Woods, Of tho United States Circuit
Court, yesterday rendered the following I'm
portant and interesting decision:
In re- Bayiy. 4. Pond bankrupts Petition o
On Mafeh .. 1915. Bafiy 4 Pond. . oommercla
ffm In Tho city u Ney Orleans. filed in. tho Dis
suptcy gY IN which hey q plo"oseg and Drsysd fel
y oomposit,on wl'h their creditors. ndwlthh-
sanal99g tbg alps 4 saa Rstiion Bs
1915. Instituted . suit IN tbs Fourth Dlsrie,
court ofthe parish Of Orleans against said iFm
Of Bayly h Pond 70 recover tho sum o. sl2d due
BayIy h FOND. on March N. 1915. pleaded n
said action the certificate Of protection Of said
United stgea. District Couft, and on April 70
they set out that the creditors bad held. 10 the
BANKRUPTCY proceedings. meeting and nc
asoea pg .; praspessd by ns ,bs T
ons half on hs con6rmation ~ ihs cqurt. 81 the
CON position proceedings. and tho other half In
NJ iihstanding their defenses. ths State
court rendered judgment 10 favor of Fourcbsy
No inst Bayly h Pond for lz87, hnd interest. and
Ths debt dus 70 Fourchey. on which The
Judgment was based. was never proved against
Bayly h Pond In the bankruptcy proceedtnes;
snsd an Injunction restraining fourehsy from
enforcing the collection Of his judgment By ex-
ecntlon,
Bayly h Pond failed TO Day Fourcbey tho rrst
lbstaIimsnt ~ ths compositlont md also failed
To pay Fonrehsy and other creditors tbs second
install lmsnt VIII % The same fsll due,
On January 4, 1877. Bayly n Pond being still
10 default. in lths payment. Of their compost
ton. Foprchey glsd motion for the dlssolu-
ton III the iBiun cti0D above mentioned. Oh
this motion the District Court made an order
In these words; Ordered, that unless the bank
rS1 aas esy 9et TN tha I
grocesdlpgs. tho Injunction herein granted be
Tho petitioner thereupon fled this petition of
order aod n dissolution of said Injunction.
because, as he claimed.
the full amount recovered. the said Bayly
n Pond having never boon aJjudlcatsd bank
rupts. and having failed to carry into effect the
said com pos ton and, bechnss.
. Tho right Of the creditor 10 enforce his
claim Ia an absolute right whom the debtor does
not SOCK ~ set aside Tho competition or Onsr
and when the creditors do not seek 10 sst aside
the com position or 10 enforce y.
Mr.. \. J. Ssmnss for petitioner; Mr., J. II.
Woods. Circuit Judge.--It Ia clear that -Four.
ehey Was In the fret instance properly eniolned
from proceeding 70 enforce the collection of his
judgment out Of the property 81 tho bankrupt5.
Bayiy d Pond fled their petition In bankrupt
CT March 2. 1916, Ia which they prayed for tho
benefit o. The oct 70 establish uglf9rma system system
approved March 2. 1911. The suit Of Fourchey
was not begun until March 10. and Judgment
Tss n9 u he wss By s ores
81 the bankrupt aet protected from any inter.
terence By their Judgment or execution Issued
thereon. See section si0s Revised ftatutes.
The only 1uestion, therefore, Tor solution Ia:
What Ia the effect oil the imposition proceed
ings. aud tho failure Of the bankrupts 10 pey
the compositioD. on the rights Of the petit
tinnerT
Clearly M long ~ the bankrupts we're paying
the install monte according 10 the terms Of their
enforce ths collection Of bis debt against the
property ~ the BANKRUPT. for toe act Of Con
grfss providing. for competition declares that
this provisions Of a. composition accepted by
resolution adopted at meeting Of the credit
ors shall be blndlng on all tbs creditors who.e
names and address 9. and the amount Of the
debts due 10 whom are shown In the statement
OF the debtor produced at the meeting at which
the. resolution sshall have been paced" fis
the O.; amount du him rom the baakruos wsrs
Has ths failure q ny I Bond 70 perform
Fourchey With the right 70 disregard the s bank
rnptcy proceedings. and sue for his whole
IL fesms 10 me that such result does not fol-
low the failure Of the bankruDts TO pay thsir
The bankruptey PROCEEDINGS are not deter
mined and closed By the order Of tbs court
approving the resolution Of the creditors ac.
eepting he com position. The cslse Is sill pend
Ing. Further steps In the case may BE- neces-
com position made In pursuance Of this sectIon
may he enforced by the court on motion made
In 8 sum mary 10 tnnsr by any. person Interested
and on reasonable notice. and any disobediencs
Of the order ofthe court made to such motion
shall be deemed contempt OF court.
II It should at any time appear TO the court
on notice. satisfactory eyidence and hearing
consequences OF legal difficulties. or for any
sufficient cause. proceed without Injustice or
indus delay 10 the creditors or To the debtor,
the court may refuse TO accept or confirm such
composition. or may set the same aside, and ia
either case the Debtor shsil be proceeded with
s az 81 aw AMI W ts9
cordingly, and the time during which such
imposition shall have been In force shall not
Of time prescribed By said act" Is Stat. ia.
1t Ia clear from these provisions Of the statute
that when eomposition 10 set aside By the
prosecu.sd without beginning de moro. No new
petition - required. The case is taken up Just
where Il vas when interruD'ed BY the com posi-
all the time, and by Its force protects the prop
erty II the debtor from seizure By any creditor
who 10 bound ~ the composite resolution.
III composition falls and the court order the
case In bankruptcy 10 proceed. the court has IL
IN its power TO see that tho=e creditors who
have not received IL pro rata shares. II any,
distribution OF the assets OF the bankrupt estate
10 hold that a failure TO pay, according 10 he
omposition resolution. authorizes the cred
tor. who are not paid TO seize The properly NJ
the ban krupt would be TO render vain and futile
the bankruptcy.
The petitioner in review has attempted to
Sustain MS views By the citation OF cases under
the English com position act. Edwards Va
gombs. Law Rep. Com. Pleas. $40: Newell W
Van Praagh, Law Rep. Com. Pleas. ss: In vs.
Hatfon, Chi. Appeals, 7z3.
Il is to be observed that these eases arose
under sections 12s. 81 and SO Vic See Bumen-
steers Law and Practice OF Bankruptcy, page
AZ ~; WHICH provides that the creditors OF a
0rDtnr unable 70 pay his debts may without any
proceedings In bankruptcy. By an extraoraf-
LILY resolution, resolve that a congestion
snall De accepts la satisfaction OF the debts due
20 tnsm from the debsor. II il appear to the
court in satisfactory evidence thai compost
sion UNDER fn1s section cannot, In consequence
on leRa difficulties, or for any sufficient cause.
proceed without Injustice or undue delay 70 the
eeeoliors or to the debtor. the court may adj
laoge the debtor 2 bauE rupt. and proceedings
NAV be had accordingly
me difference between the English act and
ours Is evid- Mt at q glance. Under his EDgli-h