Smythe v. Graydon

Sutherland, J. The agreement or composition deed contained the provision “ that if the said Graydon, McCreery & Co., shall'find it necessary to make an assignment Or other general disposition of their property, and shall secure the payment of the said fifty per cent, of our debts, either by preference in such assignment (after confidential debts), or by turning out property or collaterals to secure the same, and if by such means we shall eventually receive payment to the extent of said fifty per cent., then, and without regard to the time above limited, such payment shall be in full discharge of our respective debts.” Graydon, McCreery & Co., made an assignment or general disposition of their property for the benefit of their creditors. There was no proof by the defendants that the plaintiffs by that assignment were, preferred after confidential debts; that the preferences prior to the plaintiffs were confidential. The plaintiffs offered to prove that $50,000 of debts which were not confidential, were preferred to the plaintiffs. This evidence was objected to and excluded, and plaintiffs excepted.' The case was tried and the [19] jury charged on the theory, if there were sufficient assets in the hands of the assignee to eventually secure the payment of fifty per cent, of the debts of the compromising creditors, then there should be a verdict for the defendants. This, I think, was a mistaken theory of the rights of the parties. The plaintiffs’ notes were due, and they had a right to a judgment on them unless the composition deed was a bar; that they had complied with its terms or conditions. The provision of the deed before referred to, was, if Graydon, McOreery & Co. should find it necessary to make an assignment or other general disposition of their property, &c., or by turning out property or collaterals, &c., “ and if by such means we shall, eventually receive payment,” &c. The question was not whether the plaintiffs might eventually, when the trust created by the assignment was closed, get their fifty per cent., but whether the fifty per cent, had been secured by the means or in the way specified in this provision of the composition deed. It is evident that the general assignment was not a turning out of property or collaterals within the meaning of the latter part of the alternative provision. The plaintiffs then, when they offered to prove that by the assignment $50,000 of debts not confidential were preferred before theirs, in effect offered to prove that neither part of the alternative provision had been complied with by Graydon, McCreery & Co.; that the plaintiffs could not by the means mentioned in the provision, eventually receive payment, &c. The plaintiffs were entitled to a strict construction of the composition instrument. If these views are correct, it appears to me to follow that upon Graydon, McCreery & Co. making the assignment, the plaintiffs had a right forthwith to sue upon their- notes, for by making the assignment they did, they put it out of their power to secure the payment of the fifty per cent., either at the average time of twelve monfh-s, or eventually, without regard to that limitation, by such means as were [20] specified in the composition agreement. Looking at the whole compromise agreement, I do not think it a fair construction of it to say that the plaintiffs agreed to take fifty per cent., or to wait the average time of twelve months after April, 1862, for the fifty per cent.,: if Grayd'on, McCreery & Co. made a general assignment for the benefit of their creditors, by which they preferred debts not confidential, to the debts of the composition creditors. My conclusion is that the judgment should he reversed and a nexv trial ordered, with costs to abide the event of the action.