Crawford v. Krueger ( 1902 )

Opinion bv

Mb. Justice Fell,

There was no dispute as to the facts at the trial and the case turned on the effect of the agreement between a creditor and his debtor for the discharge of a debt. If a composition agreement, it was valid and prevented a recovery. The form of a composition agreement is immaterial if the essential elements of concession to an insolvent or embarrassed debtor, and mutuality of contracts between the creditors are present. Such an agreement is not with the debtor only, but between the creditors as well, each acting on the faith of the promise of the others to relinquish a part of his claim, and the benefit which each may derive from the mutual concession is the consideration which sustains the agreement, and makes it an exception to the rule that a creditor is not bound by an agreement to accept less than the amount of an ascertained debt.

The defendant owed a few thousand dollars, and had but a few hundred. He proposed to his creditors that instead of using his money to procure a discharge in bankruptcy, he should distribute it among them in discharge of his indebtedness. The plaintiff either personally or through an attorney who was fully authorized to act for him, assented to this proposition and agreed upon an amount for which he would give a release. He was told who the other creditors were, the amounts due them, and what each was to receive in settlement. He was shown an agreement with one of them and was asked to sign a similar agreement to be shown the others. He prepared and executed an agreement addressed “ To whom it may concern,” in which he stated the terms on which he would settle. Manifestly the purpose in executing an agreement in this form was to promote a settlement, and it was given with the express understanding that it should be shown to the other creditors to induce them to settle, and it was shown them. This was not a separate settlement with a separate creditor, but a joint agreement between creditors, and a good composition. The fact that one creditor whose claim was disputed was not a party, does not invalidate the settlement, as the agreement was not contingent upon all the creditors’ settling: Laird v. Campbell, 92 Pa. 470.

The judgment is affirmed.