Court Opinion

ID: 3627643
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:07:49.740021+00
Date Added: 2024-06-11T09:05:02.234253
License: Public Domain

Section 17 of the act of Congress of June 22, 1874, amending the bankrupt laws, provides for a composition of a bankrupt with his creditors. A meeting of the creditors may be called under the direction of the court, and they may resolve that a composition proposed by the debtor shall be accepted in satisfaction of the debts due to them. The debtor is required to produce to such meeting a statement showing the whole of his assets and debts, and the names and addresses of his creditors. The resolution of the creditors and such statement of the debtor must be presented to the court, and the court shall upon notice to all the creditors, and upon hearing, inquire whether such resolution has been properly passed; and if satisfied as specified in the act, it shall cause the resolution to be recorded and the statement to be filed, and the composition when perfected "shall be binding on all the creditors whose names and addresses, and the amounts of the debts due to whom are shown in the statement," but shall not affect or prejudice the rights of any other creditors.
Under the provisions of this act, the defendant made a composition with his creditors, which he claims and the court below held to be a bar to any recovery in this action. The only objection the plaintiff makes to the validity of the composition as affecting his claim is that, in the statement presented at the meeting of his creditors, the defendant understated the amount of the claim.
There is nothing to show that the alleged under-statement *Page 24 
was for any fraudulent purpose, and we must assume that if in fact there was such under-statement, it was by mistake or inadvertance. It may well be doubted whether there was such under-statement. At the meeting of the creditors the debtor makes his own proposition. He names the sum he is willing to pay as a composition with his creditors, and makes a statement of the debts upon which he offers to pay.
It is important that the debts should be stated with substantial accuracy, but it matters not to what time the interest on the debts is computed, provided the interest on all the debts be computed to the same time. He may compute the interest on the debts to the time of filing the petition against him in bankruptcy, and offer to pay a percentage upon the amount of debts thus shown, or he may take any later date for the computation of interest; and, so far as I can perceive, there would be a substantial compliance with the law, and no injustice would be done to any creditor.
Here the amount stated to be due the plaintiff was $1,207.43, which was more than the amount actually due him, as subsequently established by the verdict of a jury, at the time of filing the petition. It does not appear that the statement produced at the meeting of the creditors included, in the debts shown, any interest subsequent to the filing of the petition; and hence no injustice was done, or error committed, of which plaintiff can complain.
But an inadvertent mistake in the amount of the debt would not, in my opinion, avoid the composition as to any creditor. The debtor, and all his creditors whose names and debts appear in the statement, and who are properly served with notice, are the parties to the proceedings in the Bankrupt Court. Such creditors have the right to appear, and be heard; and if the amount of any debt is not accurately stated, it must be corrected in that court, which has ample power at all times to make corrections, and to relieve against inadvertent mistakes.
It must frequently be the case that a debtor, having *Page 25 
numerous creditors, will be unable to state accurately the amounts due to them. His debts may be unliquidated, or in dispute; and the time from which interest should be computed may be uncertain. The provision as to composition would, in many cases, fail of its beneficent purpose, if, in such cases, the debtor is required to state the amount of his debts, with absolute accuracy, at the peril of losing the benefit of his composition.
It is true that the law requires that he shall produce, to the meeting of his creditors, a statement of his debts; and that it provides, also, that the composition shall be binding on all the creditors whose names and address, and "the amounts of the debts due to whom are shown in the statement." But it is his
statement of the debts, as he believes them to exist, which the law requires, and all that can be exacted of him is, that he make it as accurate as, in good faith, he can; and the composition is binding upon the creditors, the amounts of whose debts are thus stated.
It is provided in the law, that "any mistakes made inadvertently by a debtor, in the statement of his debts, may be corrected, upon reasonable notice, with the consent of a general meeting of his creditors." The mistake here meant, is some material mistake, as the entire omission of some debt, or of the name of some creditor. It cannot be supposed that it was intended that there should be a formal meeting of the creditors, for the purpose of correcting a mistake of a few dollars, or a few cents, in the amount of some debt.
I am, therefore, of opinion that the composition was binding upon the plaintiff, and that the judgment should be affirmed.
All concur.
Judgment affirmed. *Page 26