Bruce v. Lee — 4 Johns. 410

Majority

p. 410

Bruce against Lee and Mullikin.

ALBANY,

August, 1809.

Headnote

Where A. au insolventilebtor, petitioned for bis discharge under tiieinsoivent act, and on the day appointed for the creditors to show cause why an assignment should not be made, and the insolvent discharged kc. B. one of the creditors appeared, and showed cause against the discharge ; and it was then agreed between A. and B. that if the latter would withdraw ail opposition to the discharge, kc. C. and D. should execute a bond to him conditioned to deliver to him A.’s notes, with approved, indorsements, in 15 days after A’s discharge, payable in instalments, which bond was accordingly executed by C. and D. and delivered to B. who, afterwards, brought an action pn the bond against C. and D. And it was held, that the bond was illegal and void, as against the policy and intent of the insolvent act.

THIS was an action of debt, on a bond. The decíaration was in, the usual form., The defendant pleaded , 1 1. non est j actum; and m his 2d plea, craved

p. 411

•3yer of the condition, which was as follows, “ that if the above bound William Lee and Joseph Mullikin, jointly, or either of them, their heirs, &c. shall, within fifteen days, from the day that James Elliot, of the city of Nexv-York, may, or shall receive a discharge, by virtue of any act of insolvency, agreeable to the statute of this state, deliver to the said Charles Bruce, or to his heirs, or assigns, James Elliots notes, with approved indorsers, for the sum of 1,231 dollars and 36 cents, one third thereof, in two months from the expiration of the said fifteen days, one third in four months, and the other third in six months, from the time aforesaid ; then the above obligation to be void,’’’ &c.

They then pleaded, that they ought not to be charged, &c. because they say, that before the date of the said bond, to wit, on the 17th March, 1808, the said James Elliot, being an insolvent debtor, within the true intent and meaning of the act of the legislature, &c. did, in conjunction with certain of his creditors, present a petition, setting forth, &c. to the recorder of the city of New-York, who thereupon, made an order, directing notice to be given in the gazette, for the creditors of the said Elliot, to show cause, before him, on the 11th May, 1808, why an assignment of the said insolvent’s estate, should not be made, and he be discharged according to the act, &c. On the day appointed, the plaintiff, as one of the creditors, appeared before the recorder, and showed cause against the assignment and discharge of Elliot, and the plaintiff and insolvent agreed that the bond in question, should be given to the plaintiff, and that he, in consideration thereof, should withdraw his opposition to the assignment and discharge of the insolvent, and that the said bond was given in pursuance of such agreement, and for the consideration aforesaid; and so the said bond is void, &c. wherefore, See.

p. 412

The third plea, was to the same effect: there was a general demurrer to the second and third pleas, and joinder.

D. B. Ogden and Gardinier,

argued in support of the demurrer.

Wells and Talbot, contra.

This cause comes before the court, oil a general demurrer to the second and third pleas. The action is in debt on a bond, the condition of which is, that the defendant should, within fifteen days after the discharge of James Elliot, under the insolvent act, procure and deliver to the plaintiff, the said James Elliot’s note, with approved indorsers, for the sum of 1,231 dollars and 36 cents. The pleas allege, that Elliot was proceeding to obtain the benefit of the insolvent act, and that on the day appointed for the hearing of the creditors, in opposition, the plaintiff, being a creditor, appeared and showed cause against the discharge ; and that, afterwards, and before Elliot was discharged, the defendant gave the bond in question, the consideration for which was, that the plaintiff should withdraw his opposition to Elliot’s discharge.

The demurrer is well taken. The consideration for the bond was illegal, and against the true intent and policy of the insolvent act. It is fairly to be intended, that the opposition made by the plaintiff, would have been successful, and of course, that Elliot was not entitled’ to his discharge, either on account of fraud, or some other cause equally fatal. It was, therefore, a fraud upon the creditors, in aiding the discharge of a person not entitled to it. - The opposition of the plaintiff might have lulled them to sleep, knowing, or presuming probably, that this alone, if persevered in, would defeat the insolvent. This case falls precisely within

p. 413

the decision of this court, m the case of Waite v. Harper, ( 2 Johns. Rep. 386 .) the consideration for the promise there was that the plaintiff would not oppose the defendant’s discharge, under the insolvent act. The court said that the consideration for the promise was illegal, and founded on fraud, being made for the purpose of stifling a due scrutiny into the claim of the defendant to a discharge under the insolvent act. The present action being founded on a specialty, does not vary the case; the seal does not preclude an inquiry into the consideration, if illegal and fraudulent. The principle adopted by the court, in Waite v. Harper, is recognised in all the cases cited by the plaintiff’s counsel $ and it is a principle which will not be found to. have been questioned by any adjudication. The bond having been given by third persons, and not by the insolvent, cannqt alter the character of the transaction, according to the principle adopted by the court, in the case of Robson v. Caize, (Doug. 228.)

We are accordingly of opinion that the defendants are entitled to judgment.

Judgment for the defendants.