Court Opinion

ID: 5205420
Source: CourtListenerOpinion
Date Created: 2022-01-06 16:00:55.086029+00
Date Added: 2024-06-11T08:27:16.527686
License: Public Domain

McLaughlin, J. (dissenting):
I am unable to agree with the other members of the court that the exceptions should be ov'erruled'and judgment directed for the plaintiff.
The defendants by their contract agreed to pay the plaintiff, on or before the 1st of May, 1900, the sum. of $25,000, and interest thereon from the 2d of April, 1894, as. the purchase price of 250 shares of Waterbury and Marshall Company stock. There are thus present, as it seems to me, in this agreement all the elements constituting a provable debt under subdivision a of 'section 63 of the Bankruptcy Act of -1898 (30 U. S. Stat. at Large, 562). The amount to be paid is $25,000 and interest. The debt' is evidenced *463by a written instrument. It ivas absolutely owing at the time the petition in bankruptcy was filed, though not then payable.' The amount to be paid was susceptible of accurate determination,’ because all that had to be done was to add the accrued" interest to . the principal sum. The fact that the defendants had until May 1, 1900, to perforin their contract to purchase the stock does not alter the character of the debt as a provableone, because they had absolutely promised to pay this sum with interest. It was a fixed liability, and as it seems to me absolutely owing at the time the petition was filed, and, therefore, provable.
Nor does the fact that the plaintiff did not see fit to. exercise its right to prove its. debt in the bankruptcy proceeding affect the question. The act does not give the creditor an option. If the debt is provable, and the creditor has notice of the proceeding (which it is conceded the plaintiff here had) then the debt, whether proved or not, is discharged. (Crawford v. Burke, 195 U. S. 176.) When the defendants filed their petition in bankruptcy, the plaintiff had a right to treat that act as a breach of the contract and to prove its claim against the bankrupts. (Matter of Silverman, 101 Fed. Rep. 219; Matter of Swift, 112 id. 315; Matter of Stern, 116 id. 604; Matter of Pettingill & Co., 137 id. 143; Matter of Buffalo Mirror & Beveling Co., 15 Am. Bank. Rep. 122.)
The case at bar is clearly distinguishable from Ames v. Moir (138 U. S. 306). There the contract had been completely executed before the commencement of -the bankruptcy proceedings and the sole question before the court, as I read the opinion, was whether • the debt came into existence by virtue of the contract itself or by the delivery of the goods. The contract had apparently been made in good faith, but possession of the goods was fraudulently obtained, and the court held that the debt was created not by the contract, but by fraud, and for that reason was not discharged by the subsequent adjudication in bankruptcy. Here .the defendants’ promise to pay was an absolute and not a contingent one. They absolutely promised to pay to the plaintiff on the 1st of May, 1900, or at any time prior thereto that they saw fit, “ the sum of twenty-five thousand ($25,000) dollars and interest on said sum at the rate of six per centum per annum,” from a date specified. In no view can the liar *464bility of the defendants, to pay the amount which they agreed to be said to be as contingent as was the liability considered by this court in Morrison v. Vaughan (119 App. Div. 184). There One Hoagland had engaged plaintiff’s firm to finish the stone work on certain houses for the sum of $2,000, t.o be paid in two installment's of $1,000 each at certain stages of the. work. The contract was made on the 3d of July, 1899, and on the same day the defendant guaranteed-its performance by Hoagland and the prompt payment of tli6 money to become due. The first payment-became due on the 13th of January, 1900, and was not paid-. Defendant, on the 4th of November, 1899, filed a. petition in bankruptcy and was discharged on the 7th of February, 1900. Plaintiff had knowledge of' the bankruptcy'proceedings, but in January, 19.05, brought an action to recover upon the guaranty. This court held, reversing the judgment of the court below, that the claim was provable in the bankruptcy proceeding, and for'that reason the action could not be maintained. There, at the time the petition was filed,, defendant’s obligation had not matured. He had simply guaranteed the payment of a certain sum which had not then become due. Here, the bankrupts might at any time intermediate the making of the contract and the filing of their petition in bankruptcy have taken, the stock. By their contract they had agreed to pay a specified sum. on or before a specified date, together with interest thereon. To §ay that such claim could not have been proved in thé (bmikru-ptcy proceeding is to destroy, in a large measure* as it seems to me, the purposes sought to be accomplished by the Bankruptcy Act.
■ I am of the opinion that the exceptions should be sustained and a new trial ordered, with costs to defendants to abide event.
- Exceptions overruled and judgment directed, for plaintiff, with costs.. Settle order on notice.