In re the General Assignment of Stowell ( 1887 )

Martin, J.:

The composition of Stowell Brothers with their creditors, under the regulations and supervision of the bankruptcy court, absolutely discharged the debts of all their creditors, whose names and debts were placed in the statement produced at the meeting of creditors and no other discharge was needed. {Re Becket, 2 Woods 173, 12 Nat. Bankruptcy Reg., 201.) A resolution of composition duly ratified confines the secured creditor to his security and discharges the debtor from personal liability for the secured debt. {Re Lytle, 14 Nat. Bankruptcy Reg., 457; Matter of Stowell, 16 Abb. N. C., 94.)

The appellants have no debt against the assignors. Their only existing claim rests upon such rights as they acquired under the general assignment of Stowell Brothers. By that assignment their creditors acquired the right to have the assigned property applied by the assignee to their debts fro rata. That right was. absolute. The Stowells could not deprive any creditor of that right, nor could one creditor deprive another. (Matter of Stowell, 26 Hun, 260.)

The appellant’s claim to be entitled to their whole debt notwithstanding the fact that the assignee under the direction of the bankruptcy court, surrendered the whole assigned estate to the assignors, upon their composition with their creditors; and notwithstanding the further fact that when such composition and surrender were made they were entitled under the assignment, to only about twenty-one per cent of their debt. Their contention is that the County Court should have charged the respondents with all the assets that came into the hands of the assignee, and then based its order of distribution on the debts existing at the time of the distribution. We do not think these claims can be sustained.

As we have already seen there were no debts of the assignors at the time the order of distribution was made. They had been discharged, and hence the court could not make them a basis of an order of distribution. When Stowell Brothers made a composition with their creditors, the appellants’ interest in the trust fund extended only to their fro rata share. Their debts did not survive the composition. Their then acquired interest in the trust fund alone survived. The measm’e of the assignee’s liability to them was the interest of the appellants in that fund at the time of the composition. All the other creditors consented that their interests should be transferred to the assignors in' consideration of their composition with their creditors. That transferred nothing to the appellants. They in no way succeeded to the rights of the other creditors. The appellants, on the final accounting, were entitled only to the proportion they, in common with, all the creditors, would have received of the assets bad no composition been made. (Matter of Orsor, 10 Daly, 26.)

Tbe decree appealed from awards to tbe appellants all tliey are entitled to. It was proper and should be affirmed, with costs against tbe appellants.

Hardin, P. J. and Follett, J., concurred.

Decree of tbe county judge of Cbemung county affirmed, witb costs.