Murray & Mason v. Snow

37 Iowa 410 | Iowa | 1873

Cole, J.

The doctrine that the agreement to accept and the actual acceptance of a part of a debt then due, in full discharge for the whole, is not binding, because of the want of consideration, and will not, therefore, bar an action for the balance, was first established by the case of Cumber v. Wane, 1 Strange, 426; S. C., 1 Smith’s Lead. Cas. 146 (5th Am. ed. 439). That case has been often followed, and, although it has been said that the doctrine is technical and not very well supported by reason, and has, therefore, been frequently departed from on slight distinctions (see Ha/rper v. Graham, 20 Ohio, 105, and eases there cited), it has nevertheless been often re-affirmed, and still stands as a vital general doctrine. But the case at bar is not within that rule. It is said by the learned author of Smith’s Leading Oases, in his notes to Cumber v. Wane (vol. 1, 149 [443 of 5th Am. ed.]), that “ there is another class of cases, also, of frequent occurrence, and of great practical importance, which are exempted from the general doctrine laid down in Cumber v. Wane, though once supposed to fall within it; those, mdelicit, in which a debtor has induced a number of his creditors to accept a composition amounting to less than their entire demand. Such an agreement, if entered into by a number of creditors, each acting on the' faith of the engagement of the others, will be binding upon them; for each, in that case, has the undertakings of the rest as a consideration for his own undertaking. Ray v. White, 3 Tyrwh. 596; 1 C. & M. 748 S. C. (acc. Daniels v. Hatch et al., 1 Zab. 391, 394), and Aikin v. Price, 1 Dudley, 50 ; and it is not necessary that all the creditors should enter into the agreement (Norman v. Thompson, 4 Excheq. 755); and so of an agreement to give time. Goode v. Cheeseman, 2 B. & Ad. 328.”

And in Cutter & Co. v. Reynolds, 8 B. Monr. 596, the court use this language: “ It is true the doctrine is well settled that where one creditor, by undertaking to discharge his debtor, induces other creditors to accept a composition and discharge the debtor from further liability, he could not afterward enforce his claim, since it would be a fraud on other creditors.” In the case of Wood v. Roberts, 2 Starkie, 417; S. C., 3 E. C. L. Rep. 470, Abbott, L. C. J., said: “If the plaintiff had, by his undertaking to discharge the defendant induced any other creditor to accept a composition and discharge the defendant from further liability, he could not afterward enforce his claim, since it would be a fraud on that creditor.” In Steinman and others v. Magnus, 2 Campbell 124, the defendant offered in evidence an agreement in writing, signed by plaintiffs and other creditors of defendant, to accept from him twenty pounds per cent in full payment and satisfaction of their several debts, and also offered to prove that he had paid the composition pursuant to the agreement. This evidence was rejected by the nisi prims court, and the plaintiffs had a verdict. But after full argument upon a motion to show cause against, a new trial, all of the judges “ were clearly of the opinion that the facts offered to be proved on the part of the defendant amounted to a good defense at law to the action,” and a new trial was ordered. To the same effect is Bradley v. Gregory, 2 Campbell, 383; and in Boothby <md others v. Bowden, it was held that an agreement to give time signed by the creditors suspended the remedy until the time elapsed;” and that “ there was a sufficient consideration for each of the creditors entering into this agreement, that it wa's subscribed by all the others.” To the same effect are many other cases, both ancient and modern.

It appearing, therefore, from the pleadings and the findings of fact, that the plaintiffs and the other creditors of the defendant who was in insolvent circumstances, and without any fraud on his part, agreed to accept fifty cents on the dollar in full satisfaction for their respective claims, and that the plaintiffs had been paid such composition in full, and had surrendered the note of the defendant held by them, pursuant to thkir agreement, they cannot maintain this action. The judgment should have been for the defendant. The authorities cited by plaintiff’s counsel, including Burge v. Koop, 48 N. Y. 225, are simply in accord with the general doctrine of Cumber v. Wane. This case, as we have seen, is exempted from that general doctrine.

Reversed.