49 Wis. 537 | Wis. | 1880
This case was tried and submitted to the jury upon the theory, first, that a discharge in bankruptcy of one of two co-debtors or joint debtors did not necessarily release the other joint debtor from the obligation to pay the joint debt; second, that in this case the discharge of Trainer, the defendant, released him from the obligation of his contract with the plaintiff to pay and satisfy the debts of the firm of Trainer & Hill; third, that a promise to pay or settle the debts of such firm, made by Trainer to Hill after he had been declared a bankrupt, or after his discharge, notwithstanding such discharge in bankruptcy, was a valid and binding contract, and, if clearly proved, left Trainer in the same condition as to his contract with Hill, his partner, to settle and pay such debts, as before his discharge.
These propositions were not seriously contested by either party, and the authorities cited by the learned counsel for the appellant, and many others which might be cited, would seem to establish the judicial soundness of such propositions. With these propositions established as the law of the case, it is insisted on the part of the learned counsel for the appellant, that the court erred in his instructions to the jury on submitting the case. It is insisted that the court erred in qualifying the instructions asked by the plaintiff, above quoted, by submitting to the jury the question whether the defendant had in fact settled these partnership debts, so that the same were fully discharged both as to the plaintiff and defendant; and by submitting as a question of fact for the jury, whether defendant did settle these debts, in his instructions numbered 9,10, and 11. After a careful examination of. the evidence of the defendant
The only evidence bearing upon this question is that of the defendant himself, which is above quoted in the statement of the case. By an examination of this evidence it is clear that the settlement he speaks of was the settlement by and through the bankruptcy proceedings. He says, speaking of the proceedings in bankruptcy, “ that Puller & Co. had signed off with the rest of the creditors, and he had settled with Puller &Co.” Again he says: “I never at any time said these notes of Puller & Co. had been paid’ in full by me;” and, again: “ I am not certain as to the exact amount for which Fuller & Co. settled in the bankruptcy proceedings, but the papers will show. I think it was fifty cents on the dollar; whatever the amount was, I informed plaintiff of it in my last conversation.” These statements very clearly show that there was no pretense on the part of the defendant that he had settled and discharged the debt of Puller & Co. as against the plaintiff, unless the effect of the proceedings in bankruptcy was such as would discharge their debt both as to himself and the plaintiff.
It was admitted that the discharge introduced in evidence on the part of the defendant was not of itself evidence of the discharge of the plaintiff from all liability to pay the balance due on the notes of Fuller & Co. against the firm of Trainer & Co.; and the only other evidence in the case, which had any bearing upon the nature of the proceedings in bankruptcy, was the evidence of the defendant that Puller & Co. had signed his petition for a discharge; that they had signed off with the other creditors, and that he had settled with his credit
Admitting, as the most favorable construction which can be given to the testimony, of the defendant in'his favor, that it shows that he compromised with his creditors, under the bankrupt act, at fifty cents on the dollar, and that Fuller & Co. voted for such compromise and fully assented thereto, still such settlement and discharge in bankruptcy would not discharge Hill from his obligation to,.pay the balance due on the claim of Fuller & Co.; and the learned circuit judge should have so instructed the jury. The English courts have held, under the law concerning compositions in bankruptcy in England (which law is almost literally a copy of our bankrupt act on the same subject), that the surety or co-debtor is not discharged by the creditor owning the joint or secured debt voting for a composition under the statute.
In Ex parte Jacobs, 44 L. J., B., 34, Justice James, in delivering the opinion, says: “We entirely agree with the decision of the court of common pleas, and in the reasons they have given for it. We think that a discharge of a debtor under a liquidation or a composition is really a discharge in bankruptcy by operation of law. When a creditor voluntarily agrees to a compositiorn by deed or agreement with the acceptor, it is bv his act alone that the acceptor is discharged
In the case of Megrath v. Gray, 43 L. J. (N. S.) in Com. Pleas, 63, the question whether a discharge of one of two partners, by a composition in bankruptcy, discharged his co-partner, was decided in the negative, after a very full discussion of the case, and a very elaborate opinion of the court by C. J. Coleridge, who finally concludes his opinion as follows: “ Consequently, an order of discharge in all these cases releases only the debtor in whose favor it is given, and leaves his solvent co-debtor liable to be sued separately by a joint creditor who has been a party to the release of the insolvent debtor.” The same conclusion was arrived at by the supreme court of New York in the case of Mason & Hamlin Organ Co. v. Bancroft, 4 Cent. L. J., 295; 1 Abbott’s New Cases, 415. The argument in these cases is, that the discharge had in bankruptcy, through a compromise, has the same and no greater effect as to sureties and joint contractors than the discharge granted in such proceedings without compromise.
Giving the defendant the benefit of the most liberal construction of his own evidence as to- his alleged settlement of the debt of Puller & Co., in and by the bankruptcy proceedings, it is evident that there was no such, settlement of the same as discharged the plaintiff, Hill, from his obligation to pay any balance which remained unpaid upon these notes against the firm of Trainer & Hill after the application of all the moneys paid thereon by the said Trainer. As the proofs stood on the trial, the court should have charged the jury that the evidence failed to show that the claim of Puller & Co. had been settled by Trainer so as to discharge Kill from all liability to pay the same, and that his payment of the balance due on said notes, or any part thereof, to the said Fuller & Co., was not a mere voluntary payment on his part, which Trainer was in no way bound to make good to him under his contract to pay the debts of the firm of Trainer & Hill.
It was held, and we think, properly, by the court, that Trainer's discharge released him from his obligation to pay those
By the Oourt.— The judgment of the circuit court is reversed, and the cause remanded for a new trial.'