Court Opinion

ID: 8636742
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:46:29.647567+00
Date Added: 2024-06-11T16:55:57.198186
License: Public Domain

LOWELL, District Judge.
I have expressed my opinion upon the general subject of a secret advantage to one creditor, to induce him to assent to a discharge of a bankrupt, and as to the debtor’s knowledge, &c., in the late Case of Whitney [Case No. 17,580], which, I think, has been printed. It is vain to expect that privity in such a fraud shall be usually brought home to the debtor by direct evidence, and it must be, as it always has been, the rule, that he who has the advantage may be presumed to have had a part in obtaining it until the contrary is proved. The statute distinctly avoids a discharge obtained by means of a pecuniary consideration, given to a creditor with the debtor’s privity; but the composition law is silent on this point, leaving us to general rules and principles; and it is a well-recognized rule of all courts that any compact between creditors compounding with a debtor is vitiated by any advantage given to one of them. There is no rule more universally acknowledged, and the statute rather limits than enlarges the scope of this doctrine, when it spéaks of the debtor’s privity.
Under the composition clauses my opinion is, that if a creditor is induced to vote or sign, by any means different from or beyond the composition, whether known to the debtor or not, his vote, so influenced, operates as a fraud on the other creditors, and makes the composition voidable by any of them, from the nature of the case. In England, from whose law we borrowed this particular feature of ours, it has several times been held that if the vote is influenced by good feeling merely, and a desire to benefit the debtor, it will not stand against an objection; and a saying of the learned chief judge in bankruptcy has received the approbation of several courts. “Benevolence; generosity, forbearance, may be well exercised, with this restriction, however, that the practice of these moral virtues is not to be made at the expense of other people.” Ex parte Williams, L. R. 10 Eq. 57. See Ex parte Cowen, 2 Ch. App. 563; Hart v. Smith, L. R. 4 Q. B. 61; Ex parte Russell, 10 Ch. App. 255; Ex parte Greaves, 5 Ch. App. 326; Ex parte Deacon. 4 Ch. App. 87. Whether our courts would go so far. I do not undertake to say; but it is clear that a majority arrived at by bribery, though the bankrupt be *560no party to it, is no fair majority; and it seems to follow that if a vote is influenced by the expectation of advantage, though without any positive promise, it cannot be considered an honest and unbiased vote.
The man who was undoubtedly bought did not vote or sign any paper, but simply with, drew an intended opposition. In the case of assent to or dissent from a bankrupt’s discharge, it has been said by several eminent judges that a creditor has no moral right to oppose, unless for good cause; and so, if the opposition of a creditor is bought off, it must be presumed that there was good ground for opposition. Browne v. Carr, 7 Bing. 516; Hall v. Dyson, 17 Q. B. 785; Dexter v. Snow, 12 Cush. 595. It is not proved that the bankrupt took part in this fraud, and it does not stand on the footing of any other creditor being actually misled, because this creditor signed nothing. Still, as I have said, knowledge must be imputed to the bankrupt in most cases, unless there is clear and undoubted evidence against it.
Order to record composition set aside.