Court Opinion

ID: 6573808
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:32:24.342788+00
Date Added: 2024-06-11T15:57:00.345615
License: Public Domain

The opinion of the court was delivered by
Hall, J.
The judgment of the county court in this case being for the defendant, it is to be considered conclusive in his favor of all matters of fact there litigated. The county court have therefore found, that there was no actual fraud in the defendant, in procuring the plaintiff to enter into the composition. It is insisted, however, that the neglect of one of the defendant’s creditors to enter into the composition, and his subsequent collection of his whole debt, is, as matter of law, a fraud upon the plaintiff, which entitles him to treat the whole arrangement as void.
The agreement of the creditors, in this case, is of a different character from those, which are usual in England, and to which- the *131principal authorities cited in the argunl'eni- apply- There the composition is generally ly deed, foundeaN^*ii^an assignment by the debtor of'' hispxcperty, to which deed the creditors, the debtor and the trustees are all parties. The releases to tEe céifeúrareTlíCrfséed-in the same instrument, and the whole business of the comp&sition is completed at the same time, except the collection and distribution of the effects by the trustees. If such deed contain a provision, that it shall be void on a failure of all the creditors to Execute it, and there be such failure, it has been holden to avoid tthe whole composition. . /
The instrument signed by the creditors in this case is ’not, in itself, a composition with the debtor, but is an agreement for a future composition, on certain specified terms. If all the creditors signed it, and the debtor offered sufficient security, within three months, for the payment of twenty five per cent, of the plaintiff’s original debt, the plaintiff was bound to acc.ept it; otherwise he was at liberty to refuse to enter into the composition. But the plaintiff, if he chose, might waive either of the terms of the proposed arrangement, and make the composition without their performance. He might accept the security after the expiration of three months •; or/ he might agree to enter into the arrangement, notwithstanding the neglect of a single creditor to come into it. In either case I apprehend the arrangement, if entered into without fraud on .the part yf the debtor, would be binding. The plaintiff did enter into the arrangement, by accepting the security, either with the knowledge that one of the creditors had not come into it, or at least without any fraudulent representations, on the part of the debtor, that all had none so; and under these circumstances, after the plaintiff has accepted the security and collected the amount he was to receive by the composition, I think it is too late for him to say, that it is all a nullity. To allow him to do so, would operate as a fraud upon th.e debtor’s surety for the composition money, who must be supposed to have become a party to the arrangement on the faith that the plaintiff’s debt would be discharged, and relying upon such discharge as furnishing him the means for his own indemnity.
The condition, upon which the creditors, in this case, were to accept the security and release their debts, being one which they might waive, we think the fact, that the plaintiff did accept the ser *132curity and give the disehar^-e^ jn the absence of all fraud in the debtor, to be consider^ds-^ sufficient evidence that it was ’Slaved; that a legal fraud ougvjit not to be predicated on fei bvaiffact of a -ROn-«Jompiiarl(ie 'mthe debtor with the proviso in the original proposition^ to obtain the assent of all the creditors; but that, in order to avoid {[he actual composition subsequently-made, positive fraud in the debtor sffiould be shown. The judgment of the county court having negatives the existence of actual fraud, the discharge, given on the receipt ok the composition security, is held valid and a good defence to the noUe now in suit.
The judgment of the county court is affirmed.