Laird v. Campbell ( 1880 )

Mr. Justice Sterrett

delivered the opinion of the court, January 26th 1880.

The second supplemental affidavit of defence, filed by the plaintiff in error, disclosed the fact that one of his creditors refused to sign the composition agreement in which all the others united. The learned court below considered the defence presented in the three affidavits insufficient, and appears to have based its judgment in favor of the defendant in error solely on the fact above stated. Indeed, it is conceded that in all other respects the defence was full and complete. Assuming then, as we must for the purpose of the present contention, that the allegations of fact, contained in the affidavits, are true, did the refusal of the creditor to sign the agreement render it so far inoperative as to permit the defendant in error to proceed and collect the full amount of his original claim? We are of opinion that it did not. While the bare agreement of a single creditor to accept from his insolvent or financially embarrassed debtor a smaller sum in lieu of an ascertained debt of larger amount is nudum pactum — void for want of consideration— it is now well settled that a composition agreement between such debtor and several of his creditors is valid and binding on all parties thereto, unless it appears that the agreement was contingent upon all, or a certain number of the creditors uniting therein, or the debtor has failed to comply with the terms of the composition. The consideration which supports the agreement of each creditor, in such cases, is the undertaking of the other compounding creditors to release their common debtor from a portion of their respective claims. The agreement of each creditor with the others and the debtor constitutes a good and valid consideration. After a creditor has thus agreed to relinquish part of his claim and induced others to become parties to a composition, it would be a fraud on them to permit him to ignore the agreement and collect the full amount of his claim. If authorities in support of this principle be needed, they may be found in 1 Sm. Lead. Cas. 600; Wood v. Roberts, 3 E. C. L. Rep. 411; Good v. Chessman, 22 Id. 91; Boyd v. Hind, 1 Hurlst. & N. 938; Steinman v. Magnus, 2 Camp. 124.

But, we do not understand that the correctness of the general principle, as above stated, is questioned by the learned counsel for the defendant in error. His contention mainly is, that the agreement in this case, properly construed, contemplated signing by all the creditors ; that inasmuch as one of them refused to sign there never was a valid and binding agreement. He insists that the expression, “We the undersigned, creditors of William W. Laird,” means all and not a portion of his creditors; that other recitals and expressions, contained in the agreement, as well as its expressed object, indicate that it meant to include all creditors. We cannot assent to this as the correct construction of the paper. Full force and effect may be given to every recital and expression it contains by holding that such of the creditors only as would actually sign the agreement were contemplated as parties thereto. If it had been designed to embrace all creditors, some expression clearly indicative of that intent would have been employed. Nothing is more common than to insert in such agreements a provision that they shall not be binding until all or a specified number of creditors shall sign the same. In the absence of any such provision, it is fair to infer that it is intended to be binding on as many as may sign, without regard to the refusal of others. Indeed, it is impracticable in many cases to secure the joint agreement of all the creditors, and in practice it is seldom attempted.

The view we have taken of the agreement, on which the defence is based, renders a consideration of the remaining assignments of error unnecessary; but, in regard to the first, it may be added, that while we entertain no doubt as to the right" of the court to grant leave to file supplemental affidavits of defence, whenever.the original is obscure or otherwise defective; we think it is contrary to well-established practice, under the Affidavit of Defence Act, to require it to be done. If the defendant chooses to stand upon his affidavit, the court may pass upon its sufficiency, but it has no power to enforce an order to file supplemental affidavits. In this case the order was complied with, and no harm resulted to the plaintiff in error. The last assignment is not sustained. After having recognised the note and copy of book account, which accompanied the praecipe, by filing an affidavit of defence, an objection so purely technical at best, loses all its force.

Judgment reversed and a procedendo awarded.