In re the General Assignment of Leipziger , 8 Daly 78 ( 1878 )

Charles P. Dalt, Chief Justice.

My conclusion on this application is: That the composition is a proceeding distinct and different from the proceeding for a discharge in bankruptcy, and that the construction which has been given by the United States courts to the law respecting the one does not necessarily apply to the other. That the composition does not become effective so as to discharge the petitioner from his debts until the composition notes are paid ; and if a note given to the creditor, agreeing to the composition, is not paid when due, he can sue for the original debt, and is entitled to his pro rata proportion under an assignment for the benefit of creditors, if one has been made. (Edwards v. Hancher, L. R., 1 C. P. 116 ; Edwards v. Coomer, L. R., 1 C. P. 519 ; Newell v. Van Praagh, L. R., 9 C. P. 96.)

What was held in Miller v. Mckenzie (2 Weekly Dig. 205), upon which the assignor relies, is that where the creditors agreeing to the composition were all paid, and the creditor had been tendered the sum paid to each of the creditors agreeing to the composition, and he had refused to take it, that his debt was extinguished, and that a writ of attachment, sued out by him to enforce his debt, should be quashed, which is not the present case. Nothing has been done in this case but to give notes for the composition, which may never be paid.

The composition provided for by the act is “ a pro rata payment or satisfaction in money.” The creditors in this case agreed to take notes payable in three months, with a certain person as endorser; but until these notes are paid there has not been a pro rata payment or satisfaction in money. There has been simply an agreement on the part of these creditors to give the debtor time to effect the composition, and it is not effected until the notes are paid.

The creditors taking these composition notes also agreed that the assignee, under the State law, might surrender up and deliver to the debtor all property received by. him under the assignment, and waived notice of any proceeding he might take to be discharged from his liability as assignee.

It does not follow from this that we are called upon to relieve the assignee from giving the bond required to perfect his title to the property. If he does not file the bond within the specified time the court has power to remove him to make provisions for the safe custody of the estate, and to appoint another assignee. (L. 1877, c. 466, § 6.) If he files it and then transfers the property assigned to him to the debtor, he does it upon his own responsibility if the composition is not carried out and effected.

So far as this court is concerned he must file his bond .or be removed. After he has done so he must act upon his own responsibility, and that of .his sureties, if he considers himself justified in delivering up the assigned property to the debtor.

Whether the extinguishment of the debts by the payment of the composition notes will have any effect upon an assignment made within three months of the filing of his petition by the debtor for the discharge of his debt, upon an agreement of the requisite number of his creditors to accept a composition, is' a question I am not now called upon to decide. What I do decide is, that the assignment is in no way effected by what has in fact taken place, viz., an agreement of the requisite number of creditors to receive endorsed notes for the pro rata amount agreed upon, and their agreement that the assignee may deliver up the assigned property to the assignor.

Motion denied.