Court Opinion

ID: 6136212
Source: CourtListenerOpinion
Date Created: 2022-02-04 21:42:43.096512+00
Date Added: 2024-06-11T08:54:31.197867
License: Public Domain

Bosworth, Ch. J.
If a creditor, who has become such by purchasing a demand against the insolvent debtor for less than its nominal amount, cannot become a petitioning creditor in respect to such demand for a larger sum than he paid therefor, although between the time of the purchase and so petitioning he has prosecuted it to judgment, and recovered a judgment for the whole nominal amount, then a discharge in this case must be refused.
That he is to be deemed a creditor to the amount of the sum paid, and to that amount only, is expressly declared by statute. *459(3 Rev. Stat., 5 ed., 110, § 10.) Being limited to the sum paid, as the one for which he is a creditor, as regards the insolvent’s application for a discharge, it is not easy to perceive on what principle he can claim to be a creditor for a larger sum, by merely prosecuting the demand to judgment.
Notwithstanding he has prosecuted it to judgment, he is, in substance and good sense, a creditor in respect to such demand.
Although his affidavit states the existence of the judgment, yet it must state the nature- of the demand, and the general ground and the consideration of the indebtedness (Ib., 92, § 7); and he must annex to his signature to the petition a declaration in writing that he relinquishes to the assignees who shall be appointed the benefit of the security to be created by such judgment for the-benefit of all the creditors, (Ib., 110, § 11.)
So the petitioning creditors, whose demands are in judgment, understand the statute, for théy have severally signed such a declaration in writing, which forms part of the papers on which the present application is based.
The fact, therefore, that a creditor who has. bought a demand against the insolvent, knowing him to be such, at a discount, sees fit to prosecute it, and recover judgment upon it, although valid as against the debtor for the whole amount, does not take him out of section 10 of the statute in respect to his position as a petitioning creditor.
He can be treated as one only to the extent of the sum paid.
He is to be treated as a creditor for all that he bona fide paid to become such, that being less than the demand purchased, and for that sum only.
William Emberson is a petitioning creditor for the sum of $5,841.19, in respect to demands now in judgment, for which he paid $2,200. If he can be deemed a creditor only to the amount of $2,200, then two-thirds in amount of the insolvent’s creditors have not petitioned for his discharge.
[The judge then reviewed the facts relative to some other alleged debts, which made the proceedings appear questionable, and continued:]
But it is not necessary to pass decidedly on these and other questions raised and discussed. The fact that petitioning creditors are not such for two-thirds of the aggregate of the insolvent’s debts is sufficient to prevent his being discharged (3 Rev. *460Stat., 96, § 30; Ib., 110, § 10); although, after a discharge has been granted, it cannot be avoided for that mere fact, there being no actual fraudulent act or intent of the insolvent originating that defect in the proceedings, (Ib., 99, § 40, subd. 4, 5, and 7.)
The application must be denied, and the proceedings filed with the clerk of the city and county of ¡New York.