Hall v. Merrill

By the court—Hoffman, Justice.

The subject of the nature and legal operation of composition deeds was considered much at length in the case of Renard agt. Fuller, in January, 1859, before the general term of this court. The action was upon promissory notes given in the course of business, and the defence was a composition instrument, as follows:

“ We, the undersigned, creditors of the firm of Fuller, Hart & McOorkle, in consideration of the sum of one dollar to each of us paid, agree to accept the sum of sixty cents on the dollar, in three notes at six, nine and twelve months, from the first day of February, 1857, without interest, in full satisfaction of our ■ respective claims against said Fuller, Hart & McOorkle.
“ All claims to be put on the same basis, and considered as due on the first day of February, 1857, by allowing or deducting interest, and the original notes are to be held as collateral, until the notes given in compromise are paid.
“ Dated, January 6th, 1857.”

Creditors to a considerable amount had signed before, and creditors to a large amount had signed after the signature of the plaintiffs. The liabilities -were about $225,000, and the whole amount of the demands of creditors who signed was $87,000.

,It was held that there was nothing, in the instrument or evidence, to show that the signature of the plaintiffs was upon any condition that all should sign. And it was held that the composition instrument was a bar to the action. The basis of the doctrine is, the relinquishment to the debtor, by others who sign, of a part of their claims, or the concession of some modification of the right to enforce them. This constituted the consideration. This existed without any clause of a mutual *43agreement between each other, as well as with the debtor, which was found in several of the cases. The implication oj. such a contract between themselves was raised, and was equivalent to its being expressed.

The English and American authorities were examined, and the result, as stated by Baron Parke, in Norman agt. Thompson, was recognized. “ An agreement by two or more of the creditors unconditionally to enter into a composition is perfectly good and binding as to those parties, whether the others do so or not. The agreement by each individual to give up part of his claim is a sufficient consideration.”

In the present case, it is not proven that more than two or three creditors signed the instrument at all. It is found by the judge that two or three signed before the plaintiff signed. It is not shown that any signed afterwards. It is true that the answer states that the plaintiff and eleven other persons or firms, creditors of the defendant, signed the instrument. And to the fourth clause of the answer, which contains this averment, a reply was put in, although the answer was sworn, to in July, 1858. But, as before stated, this part of the answer is by way of counter-claim asking for affirmative relief, by compelling the plaintiff to take the notes in full discharge of his demand. The reply, however, denies every allegation in this part of the answer contained, except as thereafter admitted.

I apprehend, then, that even assuming a reply was necessary, yet under the 153d section of the Code, the allegation, as to the number of creditors who signed, was put in issue. The general denial was sufficient. The release itself does not appear to have been given in evidence.

We think, however, that enough appears in the case to bring it within the scope of the rule laid down in Renard agt. Fuller, before referred to. We do not think it essential to prove that creditors subscribed a composition deed or agreement after the plaintiff in an action signed it, in order to give it validity. If so, it Avould not be binding upon a last signer, and its efficacy in each case might depend upon parol testimony of the time of execution. A legal presumption might well be al*44lowed, in the absence of distinct proof, that the execution was cotemporaneous by ail, under one general influence, and one general consideration, although the location of names on the paper might indicate a signing one after another. But in that view, proof of the actual time of execution, even if admissible, is unimportant.

The next question is, whether the fact of the non-delivery of the notes until the middle of February, was such a breach of a condition of the composition deed as to exempt the plaintiff from its obligation? ■

The plaintiff was permitted to prove this fact, and also that the notes were to be delivered as early as the first day of January, Avithout objection.

The instrument itself only prescribes, that the notes were to be at six, nine and twelve months, from the first day of January, 1858. No time for the delivery of the" notes is expressed in it. The implication may be reasonable that the first day of January Avas to be the period of delivering the notes, and their reception then may have been of moment for the business purposes of the plaintiff. Yet it is clearly not made a condition in the instrument, and Avhether it Avas a violation of the contract betAveen the parties seems to depend upon the fact of the proffer being made Avithin a reasonable time, and that question, AA-ith all circumstances bearing upon it, may be proper for a jury.

In a case decided in general term, 1857, the rule, that a debtor must strictly observe any coiylitions affixed by a credit- or to his consent to a composition, Avas recognized, and applied Avhen the condition Avas expressed, that a certain amount of claims should be signed off, on the same terms, by a specified period. It was not done, and the creditor Avas held not bound, although a short time elapsed after that day before it was accomplished, and no special injury was shoAvn.

The cases referred to by Justice Cowen, in Fellows agt. Stevens (24 Wend. Rep. 292), Avere of this character. The instruments of composition contained stipulations or clauses amounting to conditions precedent. See Oughton agt. Trotter, (2 Nev. *45and Man R. 71), where Littledale, Justice, takes the distinction above noticed, that in common cases of agreements to take composition, the debtor has a reasonable time to give the notes; but in that case it was stipulated they should be given in fourteen days.

We think there was error in the conclusion of law of the learned judge, in giving judgment for the amount of the original debt. This view renders it unnecessary to consider the propriety of the question put by the court.

There must be a new trial, with costs to abide the event.