Burgess v. Simpson Grocery Co.

Cobb, P. J. (After stating the facts.) 1. Adjustments of controversies between parties are favored by the law, and' compromises, when founded upon a sufficient consideration, will generally be upheld. A debtor, however, must deal in the utmost good faith with his creditors; and while a composition with creditors is not only allowed but favored, if the debtor misrepresents or suppresses any material fact in the statement of his affairs, either as to the amount of his property, or of his indebtedness, the composition is void. Civil Code, §2692; Saul v. Buck, 72 Ga. 254; 8 Cyc. 463; 6 Amer. & Eng. Enc. of Law (2d ed.), 392. 2. When a composition of creditors is rendered void as the result of the fraudulent conduct of the debtor, the creditors may ignore' the composition and bring action against the creditor for the. [428] amount of the original indebtedness. It is not necessary to the institution of the action that there should be a return of the amount received under the composition agreement; the creditors being allowed to credit the amount so received and bring suit for the balance due. Cobb v. Tirrell, 137 Mass. 143; Cobb v. Fogg, 166 Mass. 466; Stuart v. Blum, 28 Penn. St. 225; Hefter v. Cahn, 73 Ill. 296; 8 Cyc. 476; 6 Amer. & Eng. En. of Law (2d ed.), 392; Lewin v. Thurber, 62 Ga. 25. 3. While creditors who have been injured by a composition agree; ment brought about by the fraud of the debtor may attack the composition at law and show it to be void, they may also sue in equity to set aside the composition. 8 Cyc. 477. The creditors may certainly proceed in equity in those cases where the remedy at law is incomplete and inadequate. Those of th'e creditors w-ho desire to take advantage of the fraud perpetrated upon them may unite in an equitable petition, having for its purpose the cancellation of the agreement and the subjection to their claims of the assets wrongfully withheld by the debtor; and the mere fact that other creditors are content with the amount received under the composition agreement, and do not desire to incur the expense of litigation necessary to reach the assets wrongfully withheld by the debtor,. furnishes no reason why those who desire to subject these assets can not unite in equity and obtain a decree for that purpose. In a suit brought by creditors to cancel a composition agreement, the court may grant the relief prayed for, enter judgment in their favor for the amount due them, and require the assets brought in appropriated to the payment of their claim. We think the averments of the petition were of such character as to authorize the order complained of, and the reasons stated in the demurrer as cause against the granting of the injunction and receiver were not well taken. The evidence was conflicting as to many material points, and we will not control the discretion of the judge in reference to the matter. In the order appointing the receiver the court directed that the costs of the interlocutory hearing and the compensation of the temporary receiver should be paid by J. M. Burgess, and entered judgment to that effect. Error is assigned upon this portion of the order, for two reasons: (1) that the evidence did not authorize the judgment directing J. M. Burgess to pay such costs; and (2) •that the judgment was prematurely entered. This portion of the [429] order is merely an interlocutory decision, .and it is not so connected with the judgment appointing the receiver and granting the injunction as that it could be properly brought to this court by a fast writ of error. Judgment affirmed. All the Justices concur.„