Tarner v. Smith.

after the partnership accounts are taken. There is little doubt that the right under discussion is one asserted by the courts of law to avoid encroachment upon equity jurisdiction, and it is not the only instance in which the division of jurisdictions, legal and equitable, has led to useless and absurd circumlocution. There is no doubt that equity had the power to interfere in a case like this, and would do so, and since the blending of the different tribunals in one under our present system, there is no reason why a stay should not be granted on an • execution, as stated by Justice WILLARD, in accordance with the suggestion of SAVAGE, Ch. J., in Serugham v. Carter, supra.

The plaintiff has, however, brought his action in equity, and alleges that there is nothing to be sold.

Assuming that to be so, it would be very unjust to allow the partnership property to be sold and delivered, leaving the plaintiff to pursue the vendee, who would not be obliged to give security, and might not only dispose of the property, but be utterly insolvent.

I think there are reasons why the right to sell and deliver should never have been given. The right to sell the interest, leaving the purchaser to ascertain what it was, and a rule requiring a reference to be submitted to by all partners would have subserved the ends of justice better than the existing rule.

In this case I think the plaintiff entitled to an injunction, and the defendant to the reference which the plaintiff tendered, if they feel disposed to require it at the present stage of the action.

Philipe v. James.

PHILIPE against JAMES.

New York Superior Court; General Term, February, 1865. BANKRUPTCY.-PLEADING.

Where a defendant relies on a foreign discharge in bankruptcy, as a bar, or on his having entitled himself to a certificate in bankruptcy, by which the cause of action is abated, he must set forth not only the statute, but the certificate or discharge, and the prior proceedings which warranted the granting of it; or, if no discharge or certificate has been granted, the facts in the proceedings relied on, as an accord.

Of the requisite proceedings to obtain a discharge under the English insol. vent laws; and what must be pleaded in setting up a discharge under such statutes.

Appeal from a judgment on demurrer to answer.

The defendant, Edwin James, was sued by John Philipe and George Hilder, as trustees under a deed made by the defendant in England.

The defendant answered, admitting the alleged contract, and setting up certain proceedings in bankruptcy in England. The answer alleged the presenting of a petition to the Court of Bankruptcy, with the concurrence of, and signed by, one-third in number and value of the defendant's creditors; that the court appointed a trustee, to whom he surrendered all his estate, and the other and further proceedings there taken in accordance with the said act, which, as he alleged, entitled him to receive a certificate from the said court, discharging him from his debts. It did not state that such a certificate was granted, nor that he was examined in respect to the matter of said petition by a commissioner in bankruptcy, or that such commissioner directed a meeting of all his creditors, or that any meeting of them was held, or that the requisite or any number of creditors agreed to accept any arrangement or composition.

The plaintiffs moved at special term in 1863, to compel the defendant to make the answer more definite and certain, and

Philipe v. James.

the motion was granted by the chief justice, who rendered the following opinion:

BOSWORTH, CH. J.-Where a defendant relies upon a discharge in bankruptcy in another country, as a bar to the action, or, as in this case, on a certificate of a commissioner in bankruptcy, under Act of 7 & 8 Vic., ch. 70, entitled "An Act for facilitating arrangements between debtors and creditors," he must set forth in his answer:

First. The statute under which the alleged proceedings were had, and certificate was granted (Holmes v. Broughton, 10 Wend., 75; Minse v. Douglass, 5 N. Y. [1 Seld.], 4+7).

That

is not done in this case, and the answer is therefore defective. Second. The answer, besides pleading the certificate, must set forth, with particularity, such prior proceedings as warranted the granting of the certificate..

If no certificate has been granted, and enough has been done to extinguish the plaintiffs' cause of action, the material facts relied upon as affecting the extinguishment, or the defendant's discharge from liability, must be pleaded.

If a certificate has been granted, it must be pleaded, and other facts be alleged, which, if true, authorizes the granting of it (Thomas v. Robinson, 3 Wend., 267, 617; Loudo v. Sampson, 2 Smith, 659; 1 Chitty's P., 514, 515; 3 Id., 913; Barnes v. Harris, 3 Barb., 603; Ayres v. Covill, 18 Barb., 260; Alcard v. Wesson, 14 English L. and Eq., 360; 16 Barb., 481).

The motion must be granted.

The defendant then served an amended answer, in which, after alleging the presentation of the petition, he stated that in the petition was "set forth a proposal, which was the only proposal this defendant could make, for the future payment or the compromise of such debts and engagements, and which proposal was truly and bona-fide made, and which this defendant was then ready and willing to carry out and fulfill. And this defendant further says, that more than one-third in number and value of his said creditors assented to such proposal. And the said petitioner further prayed that such proposal should be carried into effect, under the superintendence and control of the said court, and that he, the said petitioning debtor, should, in the meantime, be protected from ar

Philipe v. James.

rest by order of the said court, which said petition is on the files of the said court in bankruptcy, at London, in England."

The amended answer further alleged that the commissioner in, bankruptcy approved the proceedings, and found "that the proposal was reasonable, and proper to be executed under the direction of the said court," and that he called a meeting of all the creditors to act on it.

"That at such meeting of creditors, where this defendant was not present, nor was he required by law to be present, but was represented by his attorney and solicitor, the major part in number and value of his said creditors, whose debts exceeded twenty pounds, did assent to the proposal of the said petitioning debtor. This defendant cannot set forth the date or time when the second meeting of the said creditors was called by the said president, but is informed and believes that such second meeting was duly called and held, and that due notice was given to the said creditors, in the same manner and form as for the first meeting; but he states that at such second meeting one-third in number and value of the creditors of the petitioning debtor were present, either in person or by an authorized agent.

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That at such second meeting of the creditors, three-fifths in number and value of all the creditors then present did agree, resolve and accept such arrangement as was assented to at the first meeting, and that the terms thereof were reduced into writing, and that the same were duly signed, and that the same were binding and of full force against the plaintiffs in this action, both at law and in equity, under the powers and provisions of the herein before recited act, and that their agents and solicitors had due notice, under the provisions of the the said act, of the several meetings of creditors held as before mentioned. The defendant further states, that within fifteen days after the pas sage of the above resolution and agreement to accept his proposition, the same was submitted to the commisioner acting in the matter of the said petition, who decided and ruled the same to be reasonable, and proper to be executed under the direction of the court, and caused the same to be filed and entered of record thereon.

"And this defendant further answers and says, that he fully complied with all the provisions of the said act, and became entitled to receive a certificate from the said court, discharging him from his debts and liabilities as fully and effectually as if

Philipe v. James.

the same were a certificate of conformity under the statutes relating to bankrupts. That this defendant, not having applied for the said certificate, does not plead the same as a bar or extinguishment of the debt of the plaintiffs for which this action is brought, but answers and says, that the plaintiffs are not entitled to maintain this action against him; that the plaintiffs, who were then creditors of this defendant, in respect of the same debt for which this action is brought in this court, were bound by the arrangement made and entered into by the creditors, and the necessary majority of the same, under the provisions of the act under which the petition was presented to the Court of Bankruptcy in England; that the plaintiffs are not entitled to maintain this action against this defendant until all the proceedings taken in the said Court of Bankruptcy in England are. vacated and annulled; that the plaintiffs are not entitled to maintain this action againt this defendant until the estate, effects and property ceded and given up by this defendant for the plaintiffs with the other creditors of this defendant are restored and returned to him; that the proposal and arrangement made and entered into with the creditors of this defendant, under the powers and provisions of the said act, are binding in law upon the plaintiffs, until the same is reversed and annulled by the said court; that under the provisions of the said act, the said arrangement is an accord and satisfaction in law of all damages sustained by the plaintiffs, by the breaches of covenants, by this defendant, contained in the deed upon which the action is brought, and which have accrued up to the time of the commencement of this action."

The statute referred to was set forth at length annexed to the answer as amended.

To this answer the plaintiff demurred for insufficiency.

The plaintiff demurred to the amended answer, and judgment was given for him on the demurrer, with leave to defendant to amend by alleging that he had obtained a certificate of discharge, or that the plaintiff had participated in property delivered to the Registrar or official assignee, if so advised.

From this order the defendant appealed to the general term.