M'Donnell v Broderick

• Jurisdiction: Ireland
• Judgment Date: 18 May 1895
• Docket Number: (1893. No. 10,748.)
• Date: 18 May 1895
• Court: Court of Appeal (Ireland)

M'Donnell

and

Broderick (1).

Q. B. Div.

Appeal.

(1893. No. 10,748.)

CASES

DETERMINED BY

THE QUEEN'S BENCH AND EXCHEQUER DIVISIONS

OF

THE HIGH COURT OF JUSTICE IN IRELAND,

AND BY

THE IRISH LAND COMMISSION,

AND ON APPEAL THEREFROM IN

THE COURT OF APPEAL,

AND BY

THE COURT FOR CROWN CASES RESERVED.

1896.

Statute of Limitations — Common Law Procedure Amendment Act (Ireland), 1853 (16 & 17 Vict. c. 113, s. 20) — Arranging debtor — Assenting creditor — Failure to pay composition — Action for original debt — Implied promise to pay.

A debtor carried an arrangement with his creditors, whereby his creditors were to accept a composition for their debts, payable by instalments. The first of these instalments was not paid. Five years afterwards the plaintiff, an assenting creditor who had proved in the arrangement (a period of more than six years having elapsed since his debt originally accrued), commenced an action for that debt:—

Held, by the Queen's Bench Division (Harrison and Gibson, JJ., diss., and Gibson, J., withdrawing his judgment), and by the Court of Appeal, that the plaintiff was entitled to judgment; that there was implied in the arrangement a promise on the part of the arranging debtor that, in case he failed to pay the composition at the time agreed, he should pay the entire debt.

New Trial Motion. The action was tried before Mr. Justice Holmes, without a jury at the Easter Sittings, 1894. It was brought to recover £136 12s. 1d. for goods sold and delivered. There were several defences pleaded and a counterclaim; but this last was abandoned and the defence relied upon was the Statute of Limitations.

The writ was issued on the 28th October, 1893, claiming £136 12s. 1d. for butcher's meat supplied between September, 1883, and July, 1887, £200 16s. 10d., less payments on account £59 10s., and an allowance of £4 14s. 9d. It was admitted that these payments on account were made prior to July, 1887.

As an answer to the plea of the Statute of Limitations the plaintiff relied on certain proceedings in bankruptcy instituted by the defendant, as an arranging debtor. It appeared from the file of the Court of Bankruptcy which was produced on the new trial motion, that on the 15th November, 1887, the defendant filed a petition in bankruptcy as an arranging debtor. The first sitting was fixed for the 6th December, and protection given to the person and property of the defendant until that date. The sitting was postponed and the protection enlarged until the 20th December. On the 16th December the plaintiff filed his verified proof of debt (for the sum now sought to be recovered) and appointed the debtor's solicitor to act as the plaintiff's proxy at the several sittings. On the 20th December the first sitting was further adjourned, and the protection extended to the 6th January, 1888, when the first sitting was held. At this sitting, debts, including the plaintiff's, were admitted, and the protection further extended to the 27th January, which was appointed for the second sitting. On the 27th January the. Court of Bankruptcy approved and confirmed the debtor's proposal of a composition of 5s. in the £ payable by four promissory notes of the defendant at three, six, nine, and twelve months from that date. The defendant's person only, not his property, was further protected to the 30th April being the day on which the first note would become payable. On the 13th March it was ordered that the notes should be transmitted to the creditors, and accordingly four promissory notes for £8 10s. 9d. payable on the 27th April, 27th July, 27th August, 1888, and 27th January, 1889, were given to the plaintiff. The first and other notes were presented as they fell due and were dishonoured.

In his account and statement of affairs, filed in the arrangement by the defendant before the first sitting, the defendant had returned the plaintiff as a creditor for the amount now claimed.

The learned Judge, after hearing argument on both sides and having taken time to consider, gave judgment in the following terms:— “In this action all the defences except that of the Statute of Limitations have been withdrawn and the counterclaim has been abandoned.

“The original cause of action accrued more than six years before the issue of the writ, and the plaintiff relies upon an arrangement by the defendant under the Irish Bankruptcy Act within that period to take the debt out of the statute, or rather to substitute a new debt for the old one. The defendant carried an arrangement under the Court by which his proposal to pay a composition to his creditors secured by promissory notes was confirmed, and notes of the composition on the debt now sued on were received by the plaintiff. These notes were, however, dishonoured when they came to maturity, and the composition has not been paid.

“Under these circumstances, Mr. Campbell argues on the authority of Slater v. Jones (1) that the arrangement, coupled with the acceptance of the bills by the plaintiff, put an end to the original debt, subject to an implied promise by the debtor that in case he failed to pay the composition in the manner agreed upon he would pay the whole debt. I think that the pleadings as they stand are sufficient to entitle the plaintiff to make this case; and, if not, as there is no suggestion of surprise, I should be willing to allow any amendment that might be required. Slater v. Jones (1) arose under the 126th section of the English Bankruptcy Act, 1869, and the mode of composition thereby provided differs in details and machinery from an arrangement under sections 343 and 352 of the Irish Statute of 1857. In the one case it is carried out by the creditors themselves, in the other it is under the control of the Court, and there is necessarily considerable difference in the language of the respective provisions; but after careful consideration I

have come to the conclusion that the essential features and the effect of the two proceedings are identical, and if there is no authority to the contrary I am prepared to follow Slater v. Jones (1).

“Mr. Carton, however, says that there is such an authority in the case of Kennedy v. Blackburne (2), and that it is there decided that an arrangement is no bar to an action on the debt unless and until a certificate is produced, and that up to that time the debt can be sued on and judgment obtained, although promissory notes for the composition still current have been received by the creditor, and even after the amount of the composition has been actually paid. Now if there is such a decision on the Irish Act by the Court of Queen's Bench, much as I might dislike it, I should feel myself bound to follow it, and to hold in this action that inasmuch as the original debt could have been sued on at any time, Mr. Campbell's argument founded on Slater v. Jones (1) does not apply. But is there such a decision? There is no doubt a great deal in the reasoning of Mr. Justice O'Brien's judgment in Kennedy v. Blackburne (2) going the full length contended for by Mr. Carton, but Mr. Justice Fitz Gerald was very guarded in his language. In that case the plaintiff had not merely not assented to the arrangement but had strongly opposed it and had refused to accept payment of the composition. Fitz Gerald, J., calls attention to this fact, and says expressly that if the plaintiff had taken the money the case might have resulted differently, not by reason of the provision in the statute but in consequence of the creditor's own act. In the case before me it does not appear whether the plaintiff voted for or signed the resolution. I asked the question, but there were no materials in Court for answering it.

” It also appears, however, that he proved his debt and took the notes. In Smith v. Simmonds (3) a similar question to that in Kennedy v. Blackburne (2) arose, and the marginal note to the report states that the previous cases was followed and approved. But how was it understood, and to what extent was it followed? Admittedly there was no certificate; and if Mr. Carton's view is right that ought to have disposed of the case. But it did not

dispose of it. By consent of the parties, the proceedings in the Bankruptcy Court were referred to, from which it appeared that the plaintiff withdrew his proof, and did not receive any notes for the composition. Morris, C. J., says:—‘On the express authority of Kennedy v. Blackburne (1), if these bills were not paid, we are of opinion that the demurrer must be overruled.’ I regard this case as an authority for the proposition that, if the notes had been taken up by the creditor and paid at maturity, it would have been a good answer to the action independent of a certificate. It seems to me to follow that if the creditor had accepted the notes, the debtor could have defended an action brought while the notes were still current.

“This in fact is the decision in Slater v. Jones (2). Accordingly I give judgment for the plaintiff in the original action for £136 12s. 1d., and he is also entitled to judgment on the counterclaim.

“Having decided the case on the grounds I have mentioned, it is not necessary for me to consider the other point argued, that the statement of affairs of the debtor, followed by his proposal, was not such an acknowledgment as would take the case out of the statute.

“I ought to add that I have carefully considered section 68 of the Bankruptcy Act, 1872, to which my attention has been called by Mr. Carton, but whatever may have been the views or intention of its framer, I am unable to construe it as a declaration by the Legislature that the only remedy of an arranging debtor, when sued by the creditor, is to apply to the Bankruptcy Court to restrain the plaintiff from proceeding.”

The defendant now moved that the verdict and judgment should be set aside, and verdict and judgment entered for the defendant, or for a new trial.

Cur. adv. vult.

Carton, Q.C., and Wade, for the defendant.

J. H. Campbell, Q...