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1 Hilt. 41

Beach v. Ollendorf

New York Court of Common Pleas

Decided February 15, 1856

New York Court of Common Pleas · decided 1856-02-15

Appeal by defendant from a judgment of the Marine Court. This was au action upon a promissory note. The defence was, that the note was given to induce a firm, of which the plaintiff was a member, to sign a compromise agreement, releasing the defendant from his indebtedness to his various creditors; that it was given without the knowledge or consent of the other creditors and was therefore void.

Decided 1856-02-15

Beady, J. —

¶1The note in suit was given by defendant to plaintiff, as one of the firm of Beach, Case & Co., in addition to twenty per cent, in cash, which the creditors of the defendant had agreed to accept in full discharge of their debts and as a condition of that firm uniting in the composition deed, which they did. It was also agreed, at the time the note was given, that it was to be kept secret from the other creditors. There can be no doubt that where the creditors of a debtor have signed a composition deed, every agreement securing an advantage to any one of them, withheld from the others, is a fraud upon them and void. Beck v. Coll, 4 Sand. S. C. R. 79, and cases cited.

¶2The composition deed was proved by the witness, Case, to have been signed by the plaintiff on behalf of the firm, with au*43thority so to do, and sucb act was subsequently ratified by Case as one of tbe firm. Even if sucb ratification bad not occurred, tbe act of tbe plaintiff would be binding on bis copartners. It created no obligation and incurred no liability. It was tbe sale or compromise of a debt wbicb one partner may malee under seal. It was not necessary to prove tbe signatures of all tbe persons appended to tbe composition deed, a fraud upon any one of them was sufficient to invalidate tbe note. Tbe witness Gray proved tbe signature of John Caswell & Co., Gregory & Co., and Balen & Co., and tbe deed should, when offered, bave been received in evidence. Tbe justice erred in this respect and tbe judgment must be reversed.

¶3Judgment reversed.

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