Chase v. Bailey & Co.

The opinion of the court was delivered by Ross, J. The only question arising on the report of the referee is, whether the contract of February 10, 1875, was binding upon the plaintiff as soon as executed by him, or was to become binding when executed by substantially all the creditors of the defendants, and by the defendants and Buzzell. We think the provisions of the contract are such as require that it should be executed by all the parties to it, namely, substantially all the unsecured creditors of the defendants, the defendants and Luke Buzzell, before it bound any of them. The creditors are mentioned as if all were [74] to become parties; the sum to be divided is to be divided pro rata. To ascertain the pro rata share of each creditor he must become a party to the contract, and the amount of his debt must be determined in the manner pointed out by the contract. The agreement by the defendants and Buzzell is, to pay the pro-rata share of the twelve hundred dollars to each of said creditors “ after the execution by each of this instrument by him to be subscribed and sealed, and after their proof of the respective debts, or an agreement upon the sum by said creditor and said Bailey & Co.” From this clause of the contract, which is consistent with all its provisions, it is apparent that the defendants and Buzzell were not holden to pay the pro rata share to each creditor until substantially all had executed the contract and the amount of their respective debts been ascertained. One of the principal considerations moving all the parties to a composition deed to enter into the same usually is, to secure the debtors, upon a surrender by them and division of their property equitably among the creditors, from future harassment by the creditors or any portion of them, and to leave the debtors free to form new business relations and enter upon new business enterprises. Such deeds are not designed to tie the hands of a few creditors to receive a percentage of their claims, and leave the other creditors at liberty to strip the debtors of all their property and lie in wait for their future earnings. The deed in question is so drawn as to clearly evince that substantially all the creditors are to execute it before any of them are bound by its terms. Judgment affirmed.