National Mount Wollaston Bank v. Porter

The indorser of a promissory note, before its maturity, was adjudged a bankrupt, and made a proposition of composition, under the U. S. St. of June 22, 1874, § Í7, which was accepted by the requisite majority of the creditors, and approved by the court, but did not appear to have been assented to by the holder of the note. At the maturity of the note, payment was duly demanded, and due notice of nonpayment given to the indorser. The maker was afterwards adjudged a bankrupt, and made a like composition with his creditors, which was duly accepted and approved, and was performed. The indorser did not, according to his composition, pay the proportion agreed to the holder, but offered to pay him a proportion of the balance due, after deducting the amount received by him from the maker. Held, that the holder could maintain an action against the indorser for the whole balance due on the note, after deducting the amount received from the maker.

Contract upon a promissory note for $871.53, dated March 16, 1875, payable in six months, made by E. Mann & Son, and indorsed by the defendants. The case was submitted to the Superior Court, on an agreed statement of facts in substance as follows: The plaintiff became the holder of the note for value, before maturity. On May 11, 1875, before the maturity of the note, and after the plaintiff had become the holder of it, the defendants were adjudged bankrupts in the District Court of the United States for the District of Massachusetts. Pending these proceedings, the defendants, on May 24,1875, under the U. S. St. of June 22, 1874, § 17, made a proposition for a composition with their creditors, at the rate of fifty cents on the dollar; the composition was duly accepted by the requisite majority of their creditors, and on June 2, 1875, having been duly confirmed by their creditors, was ordered by the District Court to be recorded. The note in suit was described, on the schedule of debts filed by the defendants, according to its terms, and as held by William F. Lawrence. The defendants had, after receiving the note, passed or sold it to Lawrence, and, at the time they filed their schedules in bankruptcy, they did not know that Lawrence bad parted with the note. The plaintiffs did not assent to the composition, nor did they have notice thereof. On November 3, 1875, after the maturity of the note, the makers were adjudged bankrupts, and on December 6, 1875, made an offer of composition to the creditors, including the plaintiff, for the payment of fifty per cent., which was duly accepted and ordered by the court to be recorded, and had been duly performed before the bringing of this action. Shortly after the bankruptcy of the makers, the defendants were informed that the plaintiff held the note, and offered to pay to the plaintiff fifty-five per cent, of the balance due on the note, after deducting the. amount paid thereon by the makers, but made no legal tender of that sum. The plaintiff declined to accept that amount. Payment of the note was duly demanded at maturity, and due notice of non-payment given to the defendants. If, upon the foregoing statement of facts, the plaintiff was entitled to recover upon the face of the note, judgment was to be entered for $435.77, with interest, the balance due thereon, after deducting therefrom fifty per cent., being the amount of the maker’s dividend; otherwise, judgment was to be entered for $239.67, a sum equal to fifty-five per cent, of the balance. The Superior Court ordered judgment for the plaintiff, for $435.77, with interest; and the defendants appealed to this court.