The defendant, a debtor, édmpromised with the complainants and others, his creditors, by securing to them one third of the amount оf his debtsthey upon that composition, released him from his débts; and the object of this suit is, to vacate the releases' sо exécuted by' the" creditors, as having been given in conséqueñce of fraud, misrepresentation or concealmеnt, on the part of-the defendant.
The defendant, a merchant, failed in his payments,- in JaiP 'uamvlRJ 8. After his insolvency Vas kñovri to Ms ereditofS',;
From the pleadings and proofs it appears, that this compromise was founded upon the statements and representations of the defendant, concerning the value of his property and the amount of his debts. It is suffiсiently clear, throughout the cause, that the complainants in agreeing to the composition, acted eithеr wholly or to a great extent, upon the representations of the defendant, concerning his ability to pay his debts. Thе complainants were creditors seeking payment; and they evidently relied much, if not entirely, upon the information which the debtor gave them, concerning his own situation, and the extent of his means to make satisfaction.
If then, the informatiоn given by the defendant-to his creditors,, respecting his property and debts, was in any material respect, untrue, the misreрresentation must vacate the compromise. I do not stop to enter into any demonstration of this principlе, or to cite the authorities which support it. The principle itself, is a plain dictate of justice ; and the adjudged сases fully show, that it is an established doctrine of courts of equity.
The defendant in the negotiations between him and his creditors, insisted, that certain of his debts, called confidential, should be paid, in preference to all others ; he furnished a stаtement of those debts, to his other creditors; and when he. did so, he was bound to furnish a true statement. In his statement of confidеntial debts, furnished to his creditors, he stated his debt to Ten Eyck, at a sum exceeding the true amount of that debt, by more than five hundred dollars : this exaggeration is not explained, in any satisfactory manner; and it stands an important misrepresentation оf a material fact.
In other facts and in the general complexion of the cause, I perceive nothing which can mitigate the effect of this misrepresentation of the amount of the defendant’s debt to Ten Eyck. The defendant was a debtor treating with his creditors, for the satisfaction of his debts. It was his duty and their right, that all his property should be applied to the payment of his debts. In paying his debts, he had a right to give preference to particular creditors ; but the condition required by him, that his general creditors should advance a large sum of money, for the payment of his confidential debts, was unreasonable. He did not assign his property for the payment of his debts, nor did he sell-it publicly, and by a public sale, ascertain its true value. Retaining the control of his property, he negotiated with his creditоrs. They were obliged to rely greatly, upon his statements of the situation and amount of his property and debts ; and they did rely uрon his statements. They were indeed at liberty to seek information from oilier sources ; but they were not bound to look to any other, source of information. The defendant was the debtor ; he alone, had full knowledge of the state of аll his own affairs ; and he undertook to give his creditors the requisite information of his own situation. The information which he gave, wаs the basis of the composition ; it is just, that he should be held answerable for the truth of his own statements : and any one material misrepresentation, is sufficient to vacate the contract.
The releases executed by the complаinants to the defendant, must be vacated, because they were given and founded upon misrepresentation. The court may either annul the releases absolutely, or may subject the defendant to the paj'ment of his debts, to the extent in which his property has not been fully applied to that object. To annul the releases absolutely and subject thе defendant to the full amount of his debts, would be severe, and would also infringe the sense of the agreement to comрromise. The spirit of that agreement was,
In order to give this relief, proper accounts of the true value of the defendant’s property must be taken ; and a decree for that purpose, will he entered,