Bossak v. Siff — 147 A.D. 177

Majority

p. 177

David Bossak and Others, Respondents, v. Ephraim Siff, Appellant, Impleaded with Jacob A. Cohen, Defendant.

Second Department,

November 24, 1911.

Headnote

Debtor and creditor — agreement of creditors —• trustee — liability — expression of opinion.

Where the creditors of one against whom a petition in bankruptcy had been filed agreed among themselves to a discontinuance of the bankruptcy proceedings; that the bankrupt’s property should be turned

p. 178

over to one of their number and that he should sell it and pay them thirty-five per cent of their claims, the creditor so taking possession of the property is merely a trustee for the others and is not personally liable to them for the balance if the property fails to bring enough to pay thirty-five per cent.

The fact that he said he would pay thirty-five per cent does not bind him to do so, where it was said in connection with the negotiations, and ■ amounted to no more than an expression of opinion as to the value of the bankrupt’s property.

Appeal by the defendant,. Ephraim Siff, from a judgment of the Municipal Court of the city of Mew York, borough of Brooklyn, in favor of the plaintiffs, rendered on the 14th day of June, 1911.

Joseph Sapinsky [Alvin T. Sapinsky with him on the brief], for the appellant.

Isidore Weckstein, for the respondents.

One Velleman was indebted to the plaintiffs and defendant, and a proceeding in bankruptcy had been instituted against him. The creditors, or a committee of the creditors, procured an inventory of Velleman’s property to be taken and negotiations were entered into looking to the discontinuance of the bankruptcy proceedings, and this was subsequently accomplished, the defendant Siff taking over the property. The plaintiffs allege in this action that the defendant took the property, under the composition, agreement, and agreed to pay them thirty-five cents on a dollar for their claims. The business does not appear to have produced a sum sufficient for this purpose, and the plaintiffs seek to hold the defendant personally responsible for the amount, refusing to accept a dividend of twenty-eight per cent, which the defendant appears to have been willing to distribute.

It clearly appears from the evidence that the defendant was merely the trustee of the creditors under the provisions of the composition agreement, and that the property was turned over to him for the purpose of realizing thirty-five per cent for the creditors, who severally agreed to release Velleman upon

p. 179

receipt of this portion of their several claims. It is impossible to spell out from the testimony any reasonable ground for holding the defendant liable to the plaintiffs in this action, other than in his capacity of trustee. It is' true that there is testimony that the defendant said he. “would pay thirty-five per cent ” on the claims, but it was all said in connection with the negotiations between creditors for the purpose of preventing bankruptcy and realizing the most possible from the property of Velleman, and it amounted to no more than the expression of an opinion that the business could be carried on by the creditors through a-trustee in such a manner as to realize thirty-five-per cent, upon the payment of which Velleman was to be released from his obligations. To take advantage of one creditor, acting as trustee for the benefit of all of the creditors, and compel him to pay to a few creditors an amount in excess of the just proportion of each of the creditors out of the fund available for the payment of debts, is so unjust on its face that it will not be permitted in the absence of a clear and distinct obligation, and none such is shown here. The .language of the defendant, as testified to for the plaintiffs, does not indicate any intention on the part of the defendant to do more than to try to get enough out of the goods of Velleman to pay thirty-five per cent on the indebtedness, and the learned trial court erred in submitting the case to the jury.

The judgment of the Municipal Court should be reversed and a new trial ordered, costs to abide the event.

Jenks, P. J., Hirschberg, Carr and Rich, JJ., concurred.

Judgment and order of the Municipal Court reversed and new trial ordered, costs to abide the event.