Macaltioner v. S. Croasdale & Son — 8 Del. 365

Majority

p. 365

Robert Macaltioner, plaintiff below, appellant, v. S. Croasdale & Son, defendants below, respondents.

p. 366

Headnote

A promissory note given by a debtor to one of his creditors on entering into a composition with them, for the payment of an equal per cent upon their claims against him, secretly, and without their knowledge, for a larger amount than is due to him under the composition, is fraudulent and void, and no action will lie at the suit of the payee against the maker of it. And if a release of all demands be executed and delivered on the same day by the payee to the maker of the note, it will-be presumed to be released by it, unless it is proved that the note was made afterward on the same day.

Pronarr in assumpsit on appeal from a justice of the peace, on a promissory note for $52.44 made by the defendants to the order of the plaintiff, and payable two years after date, January 31, 1862. On that day the defendants had entered into a composition - with all their creditors, of whom the plaintiff was one, to pay each of them twenty per cent, of their claims in two installments, the first in three, and the second in six months, and all of whom, including the plaintiff, had on the same day executed a deed of release to them of all claims and demand whatsoever which they had against them. The note in question, however, was secretly given without the knowledge of the other creditors, to secure a larger payment than twenty per cent, on the claim of the plaintiff against them, the whole indebtedness being $143.00.

Nields, for the defendants.

Under the facts proved the contract in virtue of which the note was given and taken, was fraudulent and void in law, and the plaintiff can maintain no action upon it, or upon the note either, for both are fraudulent and void. Add. on Contr. 138. Cockshot, et al. v. Bennet et al. 2, T. R., 763. Leicester, et al. v. Rose, 4 East 372. Turner v. Hoole, 16 E. C. L. R. 418. Alsager et al. v. Spalding et al. 33 E. C. L. R. 393.

Lore, for the plaintiff.

If there was fraud in the contract and in the transaction, the defendants must have been more deeply involved in it, and more responsible for it than the plaintiff, for one solitary creditor could hardly have stood out long against all the other creditors

p. 367

in the matter of the composition of their claims* if it had not been the secret and spontaneous wish and intention of the defendants to prefer and pay the plaintiff more than any of the rest of them. If then there was a fraud in the transaction between the parties to the suit, and the defendants were as much affected by it as the plaintiff, would they be allowed to take advantage of their own wrong, or their own fraud to defeat the action?

that if the plaintiff could recover at all, he could only recover on the promissory note, as all the previous indebtedness of the defendants to him up to the date of it, had been formally and and absolutely released by him. But if the note had been given for the purpose stated and proved, it was fraudulent and void, both in fact and in contemplation of law, and the plaintiff could not recover upon it. Besides, as the release was executed and delivered by the plaintiff and their other creditors on the same day the note was made by the defendants to him, the presumption would be that the note too was released by it unless it had been proved that the note was made afterward on that day.