Cohen v. Lachenmaier

Siebeckee, J.

The note was executed on December 30, 1909. On Eebruary 7, 1910, the defendant was adjudged a voluntary bankrupt, and on February 17, 1910, he filed an offer of composition of thirty-three and one-third per cent, with his creditors. This offer was accepted by a majority in number and amount of the creditors, including the plaintiff, and was confirmed by the court on March 15 or 16, 1910.

The plaintiff testified that, between the time when the defendant was declared a bankrupt and the time when he was discharged of his debts in the bankruptcy proceedings, the defendant told him that he would pay him every dollar that was due him on the note, and that a like promise was made after the order of discharge had been made.

The action was instituted in the civil court of Milwaukee county, and, after a nonsuit was denied, judgment was duly entered therein in favor of tbe plaintiff. Upon appeal to the circuit court tbe judgment of tbe civil court was affirmed. Tbe judgment of tbe circuit court was rendered after argument on an order to show cause wby tbe judgment of tbe civil court should not be affirmed.

Upon tbe evidence of the plaintiff and bis bookkeeper, a jury having been waived, tbe judge of tbe civil court found:

“That said promises and neither of them were made upon consideration of plaintiff’s acting or forbearing to act in tbe bankruptcy proceedings; that said promises were not extorted from the defendant; that they were not based upon any unlawful consideration.”

It is contended that tbe evidence fails to sustain tbe finding of tbe court. Tbe trial court in passing on tbe weight of tbe evidence as to tbe first promise of tbe defendant, made before tbe plaintiff accepted tbe composition agreement, considered that tbe evidence fell short of showing a violation of sec. 29 b of tbe Bankruptcy Act of 1898 (30 U. S. Stats, at Large, 544, cb. 541), which prescribes a punishment “upon conviction of tbe offense of having knowingly and fraudulently . . . extorted or attempted to extort any money or property from any person as a consideration for acting or forbearing to act in bankruptcy proceedings.” We have examined tbe evidence and find that this finding is not against tbe clear preponderance of tbe evidence. Tbe probative force of tbe evidence adduced depended largely upon tbe credibility and weight of tbe plaintiff’s evidence, and this tbe trial court, with tbe advantage of observing him while testifying, is better qualified to determine than we can from a reading of tbe record.

It is further contended that each promise, if made, is nudum pactum, because tbe plaintiff, as one of tbe creditors, joined with tbe majority of tbe creditors in number and amount in accepting tbe defendant’s offer of a composition ■with, the creditors in settlement of their claims. This claim is based upon the ground that a discharge in bankruptcy in a composition is not a discharge by operation of law but is one effected by the voluntary assent of the creditors. The adjudications are to the effect that a debt which has been extinguished by a voluntary agreement of the debtor and creditor will not support a new promise and that one discharged by operation of law will support one. The proceeding resulting in the discharge of a debtor from liability, based on a composition after bankruptcy proceedings are instituted, is not in its nature such a voluntary act of the creditor as is considered in law as being a voluntary assent of the creditor to the satisfaction of the debt. As stated in In re Merrimans Estate, 44 Conn. 587:

“The proceeding is not a composition inter partes, in which proceeding each creditor can make his assent or dissent final as to himself, but is a statutory composition wherein the assent only of a specified number is required, subject to a subsequent decree of court. . . . The differences are radical between the nature of a composition inter pcurtes and of a bankruptcy composition; the root of their differences is the fact that the entire proceedings for and in a bankruptcy composition are proceedings in bankruptcy, and are a part' of a system for the compulsory division of assets which is administered by a court, while a composition inter partes derives its validity merely from the will of the parties.”

Upon the promises of the defendant as found by the trial court the plaintiff established his right to recover the unpaid balance of the debt.

By the Court. — Judgment affirmed.