Court Opinion

ID: 5514532
Source: CourtListenerOpinion
Date Created: 2022-01-10 04:28:07.733624+00
Date Added: 2024-06-11T08:34:15.409503
License: Public Domain

By the Court,

Nelson, J.
The reference of the question as to the right of the plaintiffs below to present their claims under the first assignment, as included in the first class, and the award in pursuance of such reference, do not materially affect the point before the court. They leave the rights of the parties in all respects the same, as they would have been, had the assignees received the note as embraced in that class without such reference. The defence still stands upon the ground that these demands have been presented under the assignment, and that a dividend has been received, and nothing more. The right thus to come in, instead of being determined by the assignees themselves, was referred to arbitrators, and by them settled. The validity of the assignment, however, cannot be questioned by the plaintiffs. They are estop*103ped from taking that position, by having presented their demands under it and receiving the dividend; as probably they likewise would be by virtue of the submission, even assuming the law respecting the assignment- to be otherwise in Rhode Island.
The assignment is not a composition deed with the creditors, as they had nothing to do with the making or execution of it. Had it been the transfer of all the property of the insolvent to them, or for their benefit and with their assent, it would have constituted a good consideration for their agreement to take it in satisfaction of their respective demands, though it might have been insufficient to pay the whole. 5 Johns. R. 386. Here the debtor assigns his property to his own trustees, and provides that the creditors may come in as directed, on certain terms. Those who do not choose to comply are put at defiance; they shall have nothing. Those who do come in and take a dividend, undoubtedly thereby impliedly agree, to comply with the conditions. The question here is, does this operate as a technical bar to a suit for the residue of the debt ? It appears to me not. The assignment of the property is not the consideration for this implied agreement by the creditors; that is already complete, and independent of them ; but it is the agreement of the debtor contained in the assignment, that the assignees shall pay any surplus (after their expenses are taken out) to those creditors electing to come in under it. This clearly does not operate as a satisfaction of the debt; it is a nudum pactum, as between the debtor and his creditors. There is no new consideration or responsibility. It is a mere agreement to pay the debts of the insolvent as far ás his property will go, after taking out the expenses of converting it into money. There is no personal responsibility on the part of the assignees. It is the agreement of the debtor himself to be executed by others on his behalf, and superadds nothing to his original liability to his creditors. Suppose no assignment of the debtor’s property had been made, and while in possession of the property he had held out the same terms to his creditors ; it could not for a moment be pretended that it would be a valid agreement, or that payment of a rateable part of a *104debt in pursuance thereof would have been a satisfaction of it. Upon this supposition the case would fall directly within those where an actual payment of part of a debt, and an agreement to receive it in full satisfaction of the whole, is a nudum pactum. 5 East, 232. 2 Johns. R. 450. 5 id. 271. 17 id. 174. This case is not as strong for the defendant, for here is only an agreement to pay an amount that turns out to be less than the whole. Now, as respects the defendant, the assignees stand precisely in his place. He transferred the property to them, without consulting his creditors, to subserve his own purposes, and prescribed his terms as freely and absolutely as if the property remained in him. As regards the plaintiffs and other creditors, he may be considered as still holding it. In judgment of law,, they are in no bettter condition than if the fact was so, and he had made the same agreement and paid the dividend. The case, stripped of immaterial matter, in truth presents the simple question, whether payment of part of a debt, with, an agreement to receive it in satisfaction of the whole, will, constitute a good bar to a suit for the balance. The cases cited above settle the point that it will not, without a release under seal. 17 Johns. R. 174, and cases there cited.. The reasons upon which this general rule is founded are technical, and not very satisfactory; but we need not regret the necessity of its application in this case, or any other defence founded upon voluntary assignments of the descrip», tion of that under consideration.
Judgment affirmed*