Hall v. Merrill

9 Abb. Pr. 116

• Court: The Superior Court of New York City
• Decided: May 15, 1859
• Status: Published

Opinion

By Thee Court.

*—Hoffman, J.

The subject of the nature and legal operation of composition deeds, was considered much at length in the case of Renard a. 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 & McCorkle, 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 their notes at six, nine, and twelve months, from the 1st day of February, 1857, without interest, in full satisfaction of our respective claims against said Fuller, Hart & MeOorkle.

“ All claims to be put on the same basis, and considered as ■ due on the 1st day of February, 1857, by allowing or deducting interest, and the original notes are-to be held as collateral, until the notes given in composition are paid.

“Dated, 6th January, 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 $225,000.00, and the whole amount of the demands of creditors who signed was $87,000.00.

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 agreement between each other, as well as with the debtor, which was found in several of the cases. The implication of 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 Park in Horman a. Thompson was recognized: “ An agreement by two or more of the creditors, unconditional, 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 sufiicient 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 counterclaim, 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 section 153 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 a. 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 would 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 allowed, in the absence of distinct proof, that the execution was contemporaneous by all, 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 1st day of January, 1858, without objection.

The instrument itself only prescribes that the notes were to be at six, nine, and twelve months from the 1st day of January, 1858. No time for the delivery of the notes is expressed in it. The implication may be reasonable that the 1st day of January was 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 whether it was a violation of the contract between the parties, seems to depend upon the fact of the proffer being made within a reasonable or unreasonable time, and that question, with all circumstances bearing upon it, may be proper for a jury.

In a case decided at the general term of this court in 1857, the rule that a debtor must strictly observe any conditions affixed by a creditor to his consent to a composition was recognized and applied, where the condition was 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 was held not bound, although a short time elapsed after the day, before it was accomplished, and no special injury was shown.

The cases referred to by Justice Cowen, in Fellows a. Stevens (24 Wend., 302), were of this character. The instrument of composition contained stipulations or clauses amounting to conditions precedent. See Oughton a. Protter (2 Nor. & Mann R., 71), where Littledale, J., 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.

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

Present, Hoffman, Woodruff, and Pierrepont, JJ.