In re Clark & McMaster Piano Co.

HOUGH, Circuit Judge (after stating the facts as above). One point of practice may be noted. The statement prefixed to this opinion consists of the material findings of fact made by the referee. When by petition of review appellant took the matter before the District Judge, he filed elaborate exceptions to the referee’s report. This is not the practice. The matter of review by the District Court is fully regulated by the twenty-seventh General Order in Bankruptcy (89 Fed. xi), which requires the petitioner to file his petition “with the referee * * * setting out the error complained of.” This is the only exception or assignment of error required or permitted. By the same order the referee is required to certify to the judge the question presented, and to submit his finding and order together with a summary of the evidence. Exceptions such as are shown in this transcript merely incumber the record. We hear the case, as did the District Judge, on the referee’s return. Since the argument of this appeal appellant has moved to return the cause to the District Court in order that the “record may be * * * corrected.” Argument shows that this really means to insert in. the summary of evidence certain matters calculated to show that the proceedings on the part of Clark, resulting in the issue of preferred stock, were so defective that there never was any valid preferred Clark, stock. The conclusion sought to be reached is directly-opposed to a finding made by the referee and supported by evidence. Whatever virtue there was in this contention has been apparent from the beginning, and it is much too late to raise the point in this court. The motion is denied., [473] The statement prefixed to this opinion also shows that there was an agreement or contract duly formed between certain creditors of Clark inter sese, and also with Clark. This contract necessarily remained executory until (e. g.) Clark delivered the preferred stock and National surrendered its notes. We agree with the referee’s finding that National committed a breach of this agreement, but whether that breach occurred before petition filed against National, or whether the latter’s bankruptcy itself constituted■ the breach, remains uncertain; but this is immaterial. It suffices that there was a breach of a valid agreement as found by the court below, a result with which we agree. It therefore follows that National’s trustee (the present appellant) is substantially claiming that by the proven breach he has become entitled to prove on the original debt. The unusual facts at bar present a question of more curiosity than importance, viz.: Was the contract one for an accord and satisfaction, or one of compromise and settlement; or was it a composition with creditors? In the court below it was treated as one of compromise and settlement, and governed by Boston, etc., R. R. Co. v. Union, etc., Co., 92 Vt. 137, 143, 101 Atl. 1012; and this was clearly right, if the agreement was properly called a compromise and settlement, because the contract was fair and just, compromises are favorably regarded in a court of equity, and a court of bankruptcy is one of equity, which should therefore uphold and enforce any compromise agreement which does not override any other principle guiding chancery in the enforcement of contractual obligations. If the agreement be regarded as a composition with creditors, we find present all the elements necessary for the validity of such a contract, to wit, good faith, absence of secret preferences, and stipulations by and between, not only debtor and creditor, but between the creditors themselves. The appellant now claims that the agreement was one of accord and satisfaction, and that, inasmuch as National never received the consideration agreed on; it may still sue on the original debt. It is true that, at law, a plea of accord and satisfaction must not only allege the agreement clearly, but declare that it was executed by the acceptance of the agreed consideration. Young v. Jones, 64 Me. 563, 18 Am. Rep. 279. The court, however, in that case, added that the remedy of the defendant, whose offer of the consideration had been refused, was to sue the plaintiff for failure to perform his end of the contract. It does not follow that such circuity of procedure is necessary in equity, but every composition agreement is a species of multiple accord and satisfaction, and it is an exception to the rule of law just referred to, so that in cases of composition the contract for the same is a bar even to an action at law to recover on the original debt by one who agreed to the composition, although the same remains executory at. date of action brought. Kromer v. Heim, 75 N. Y. 574, 31 Am. Rep. 491. Thus we are not concerned to assign with nicety this contract to any particular legal pigeonhole. In truth it partakes of the nature of all three; but, whatever it be called, the result is the same, and the action of the court below was both morally and legally right. Order affirmed, with costs.