Globe Wernicke Co. v. Siegel Myers School of Music

Mr. Justice Dever delivered the opinion of the court. 3. Compositions with creditors, § 2*—what does not constitute breach of composition agreement. An agreement between the creditors of a corporation and the debtor provided that the creditors should elect a trustee who should be placed in control of the business and property of the corporation. The creditors, the debtor and the trustee agreed that the debtor should receive an extension of time as long as the business should be conducted pursuant to the agreement, and the creditors agreed to receive payment of their claims proportionately as directed by the trustee. The trustee was given discretionary power to manage the business of the corporation to secure the payment of the claims and a majority of the stock was placed in his hands with' power to vote it. The trust agreement also provided for the payment of certain dividends to the creditors at specified intervals after the payment of the trust expenses. After some dividends were paid, those remaining unpaid were passed, and the trust was, by agreement, extended to a certain date, specified dividend payments being provided for. Before the date of expiration, a further extension was agreed upon by the creditors, the resolution also passing the unpaid dividends and authorizing a payment of a certain dividend each month, “as near as may be,” and the creditors voted the trustee $500 for his services. Held, that the payments of dividends directed by the last extension were not intended to constitute a contract binding on the trustee, the creditors and the debtor, but the provision in regard thereto merely constituted a direction to the trustee to make such a dis>tribution and was dependent upon profits accruing from the operation of the business, and that a failure to pay dividends as provided does not constitute a breach of the agreement, permitting a creditor to sue on his claim. 4. Compositions with creditors, § 2*—when creditor may not repudiate composition agreement. A creditor who has become a party to a trust agreement under which the debtor has conveyed its property to a trustee to be managed for the creditors, and who has acquiesced for 3 years in the agreement and has received dividends distributed by the trustee pursuant to its terms, cannot thereafter repudiate the agreement and sue on his claim before the termination of the agreement or of authorizd extensions of it. 5. Compositions with creditors, § 2*—when creditor is not released from composition agreement. The fact that, at a meeting of pensation, does not release a creditor from the agreement nor voted a certain sum in payment of his services, the trustee held . enough proxies of creditors to enable him to vote himself the compensation, does not release ■ a creditor from the agreement and authorize him to sue on his claim before the agreement expires, especially where he made no objection on this ground for several months and received and retained dividends distributed under the agreement pursuant to a resolution which was adopted at the same meeting at which the trustee was voted such compensation.