In re the Assignment of Leslie , 10 Daly 76 ( 1881 )

Van Brunt, J.

[After stating the facts as above.]—It seems to me reasonably certain that we cannot go astray in the construction of the compromise agreement of March 20th, 1877, if we bear in mind the provisions of that agreement, the purposes which were to be attained by its execution, and the relation of the various provisions to each other. It was undoubtedly the intention of both of the parties to that agreement to effect a compromise of the claims of the various creditors of Mr. Leslie, upon the payment of a smaller sum than the total amount due the said creditors, within a future period, and to provide Mr. Leslie with the means, within the period named, and produced by the management of the assigned estate under the supervision of a committee of the creditors and under certain restrictions contained in the said agreement, wherewith to pay the amount which he agreed to pay by the terms of the compromise agreement in full discharge of the claims of these creditors upon him. The instrument is entirely complete in both its branches.

It is a sufficient agreement of compromise if we strike from it all the provisions looking to the management of the property by Mr. Leslie during the time which was given to him to pay the amount for which the debts were compromised. This being the case, there is not necessarily any relation between the compromise agreement and those provisions in this agreement which relate to the management of the business, the profits of which business were to afford Mr. Leslie the means of paying the amount which he agreed to pay. If this is true, and an inspection of the agreement makes it apparent, then Mr. Leslie, the day after the execution of this agreement, had a right to pay the 50 per cent, therein provided to be paid, and to claim from the creditors a complete release and discharge from the debts owing by him to them. lie was not necessarily bound to wait to pay the amount of the compromise until he should realize the amount necessary to make-such payment from the profits of the business mentioned in the agreement. That privilege of conducting the business and realizing from the business such moneys was a concession to him, and not to the creditors. Therefore, there is nothing in those parts of the agreement looking to a continuation of the business, which in any way affected Mr. Leslie’s right to be released upon the payment of the 50 per cent, therein mentioned. If this is true, then it is difficult to see, Mr. Leslie having died, why the rights of Mr. Leslie have not descended to his successors in interest, and why they have not the right to comply with the terms of the compromise and pay the balance remaining unpaid, as the time to make such payment has not yet expired.

It was strenuously urged by the counsel for the creditors and the committee, who opposed this construction of the agreement, that it was a personal agreement between Mr. Leslie and his creditors, that as Mr. Leslie has died, and he cannot give that personal supervision to the business which the agreement contemplated, the agreement must necessarily fail. As far as the agreement for compromise is concerned being personal to Mr. Leslie, it is not more personal than every agreement of compromise between a debtor and his creditors. The inducement which moves a creditor to agree with a debtor to receive a less amount than the full sum of the debt in full discharge thereof, is usually the recollection of past profits made out of the trade between the creditor and the debtor, or the expectation that the debtor will continue business, and that future profits may be made sufficient to compensate for the loss then sustained; but it is not claimed that if a debtor has compromised with his creditors, payments to be made at a future day, and the debtor dies before all the payments are made, that his personal representatives have not the power to complete the payments contemplated by the compromise and release his estate from the payment of the debts in full, in conformity with the terms of the compromise.

The argument which I have suggested would undoubtedly be fatal to this compromise agreement if it was necessary that this business should be continued as is contemplated by the terms of the agreement, in order to produce the balance of the fifty per cent, remaining unpaid, because I think it clearly appears that in case of the continuance of the business to realize the funds sufficient to pay the balance of the fifty per cent, remaining unpaid, the creditors would have the right to claim the personal attention, supervision and experience of Mr. Leslie in the management of the business.

But, as I have already suggested, this was a concession to Mr. Leslie. He had the right to waive the means of raising the money to pay the amount of the compromise, and his personal representatives, coming forward to pay the whole amount due under the compromise without seeking to raise the money from the profits of the business, would seem to be entitled to the benefits thereof.

I am unable to see why the personal representatives of Mr. Leslie are not his successors in interest in reference to the whole of this matter.

It was claimed that there was no right of property to descend to such personal representatives arising out of this transaction. There certainly were equities in Mr. Leslie’s favor which could descend, and any surplus which might belong to his estate after the payment of his debts undoubtedly descended to his personal representatives. If that surplus was to be increased by reason of an unfulfilled compromise agreement, and the terms for fulfilling that compromise agreement had not expired, his personal representatives had the right to comply with those terms, make the balance of the payments required to be made thereunder, and reap the benefits thereof, precisely the same as though the terms of the agreement had not had appended to it the peculiar provisions allowing Mr. Leslie to raise the money out of the proceeds of the business to be thereafter conducted by him to make the payments provided for by the agreement.

It is urged by the counsel for the creditors that the thirty-five per cent, paid to the creditors since the making of the agreement of March, was paid by the assignee and not by Mr. Leslie, and that, therefore, Mr. Leslie could not have the benefit of that payment. The difficulty with that proposition is that, although the money was paid by the assignee to the creditors, it was paid out of the very fund out of which the creditors had said that Mr. Leslie should be permitted to pay the amount of the compromise, namely, out of the profits of the business. The agreement of the creditors with Mr. Leslie was that the fifty per cent, should be paid out of the results of the assigned property ; the thirty-five per cent, paid by the assignee formed the very fund which the creditors had consented should be used by Hr. Leslie in the payment of the amount of the compromise.

The papers submitted upon this motion show that the creditors have failed to carry out the agreement upon their ¡Dart by which Mr. Leslie was to be put in full possession of this property for the purpose of raising the money wherewith to pay the compromise. It therefore comes with very ill grace from them to say that Mr. Leslie personally has not paid the thirty-five per cent, which has been paid by the assignee on account of these claims. If the creditors had carried out the provisions of the agreement upon their part, Mr. Leslie would have made the payment out of that very fund; but as they have not done so, so as to enable the assignee to transfer the property to Mr. Leslie, the assignee has made the payments out of the identical fund which was to be transferred to Mr. Leslie.

It seems, therefore, to be difficult to come to any conclusion adverse to the present claims of the representatives, because some other person applied the very fund which Mr. Leslie, under the compromise agreement, had the right to apply to the payment of the amount of the compromise.

I have, therefore, come to the conclusion that the estate of Mr. Leslie, upon payment of the balance due upon the compromise, has the right to be subrogated to the claims of the various creditors.

Application granted.