Perley v. The County of Muskegon.

were promiscuous and from all sources, it would be idle to attempt to attach contract relations with the county to funds which no ingenuity could identify.

There is not much difficulty in reaching the personal duty of the treasurer. He is bound to have money to pay liabilities as required, to the full extent of his receipts. And he is bound when his term ends to have the balance ready to turn over to his successor. He could not be liable to a civil action if he makes all the payments required by law to be made. He and his sureties are bound on their bond when any such failure occurs. And it appears to be reasonable that if he has with any dishonest understanding put money into the hands of others which has not been returned, and which it was known could not have come from any other source, and could only have been derived from his office, an! must be officially accounted for and restored, those persons have don an injury for which they should be accountable to those whom they have injured. It may be questionable how far the county could be re garded as directly damnified, if the sureties are responsible, or damuified beyond the deficiency in their ability. But there can be no injury where all that is borrowed has been restored. In such a case as the one suggested the injury consists in destroying to a given extent his power to meet his obligations, and this cannot be done when he is placed again in his former position. As he is the only legal custodian of county funds, no one can be required to do more than put them in his hands. He has a right to demand them, and he can keep them where he pleases. He is himself, to all intents and purposes, the treasury, and bound to account for all that he receives, and no one else can supervise his action.

But an action based on any such theory must be an action on the case, or a bill in equity, and not an action for money had and received. It can never be determined in advance when money is lent, how far the county will be injured, or that it will be injured at all. And the action is not based on the source or identity of the particular funds which have been used. It must depend more on the state of the accounts than upon the identity of the money, and the wrong is much in the nature of a voluntary transfer of property in fraud of creditors, whereby they will be delayed or hindered, and of which the county may justly complain if actually defrauded.

As we are of opinion that the action is improperly framed, we need not discuss the other questions.

The judgment must be reversed, with costs, and a new trial granted.

The other justices concurred.

Sanford v. Huxford.

SANFORD V. HUXFORD.

(32 Mich. 313.)

Consiaeration - agreement to withdraw objections to bankruptcy proceedings.

The consideration of a contract was that one of the contracting parties should withdraw opposition to bankruptcy proceedings pending against his firm and consent to an adjudication against them. Held, that the consideration was valid.

A

CTION on a contract.

The opinion states the case.

A. M. Culver, Alvan Peck and Theodore Romeyn, for plaintiff in error. Rienzi Loud and C. I. Walker, for defendants in error.

CAMPBELL, J. Suit was brought below on an agreement by defendants to furnish to Jesse Crowell the value of a certain house formerly owned by him, or means to buy it, and also money enough to support him. The alleged consideration was his withdrawal of opposition to certain bankruptcy proceedings pending against his firm, and consent to amendments and adjudication against them. A separate count contained the averment of an additional agreement to procure the withdrawal of opposition by the other partners.

The facts averred are set forth substantially as follows: On the 3d day of February, 1871, Crowell owned the dwelling-house property in question, at Albion, which is valuable. On the 15th of October, and until February 17, 1871, he was a member of a commercial firm at Albion, under the style of J. Crowell & Co., composed of himself, William V. Morrison and Osman Rice. The firm was indebted to various creditors, among whom were the defendants, and the First National Bank of Marshall, and the National Exchange Bank of Albion, of which latter Irwin was president. On the 4th of November, 1870, these two banks (the latter by Irwin as its president) filed a petition in bankruptcy against the firm, with the necessary jurisdictional allegations, averring an act of bankruptcy by the suspension of payment of their paper, and also setting up individual acts of bankruptcy against Rice. On the 23d of November the respondents in bankruptcy joined issue, denying the acts of baukruptcy, and demanding a trial by jury, which had not come to trial on the 14th of February, 1871, when Crowell withdrew and procured the others to withdraw opposition, and consented and procured their consent to the steps contemplated by the contract. On the 3d day of February, 1871,

Sanford v. Huxford.

the contract is alleged to have been made as before mentioned. On the 9th of March defendants proved their debts and became parties to the proceedings.

The defendants demurred to the special counts, the grounds of demurrer being, 1st, that the declaration sets out no consideration for the promises of the defendants; 2d, that the contract was void as against public policy; and 3d, that it was a fraud on the partners of Crowell. The demurrer was sustained, and error is brought on the rulings.

The objection for want of consideration rests on several distinct grounds which were, in substance, that there was nothing showing a doubtful case, or a defense, or belief in a defense, in good faith, to the bankruptcy, and nothing to show that the proposed amendments were material, or that defendants could have been benefited, or Crowell injured, by his consent to the adjudication. It is insisted that all these, or enough of them to make out a consideration, should affirmatively appear.

If the arrangement was not illegal, it is not disputed that it may be upheld if any valid consideration appears. But it is claimed there is no presumption of that kind arising out of the facts set out. The rule as to consideration for agreements to abstain from litigation, present or contemplated, does not seem to differ from that relating to any other contracts, although upon the facts difficulties often arise. The rule seems to be well determined, that there must be a benefit on one side, or a detriment suffered or service done on the other. We find nothing to indicate that the benefit rendered need be to the party contracting, if it is to any one else at his procurement or request, any more than in other contracts. And in the present case, if the arrangement made was to the detriment of Crowell, or for the advantage of the petitioning creditors, it is not important what share defendants may have had in the advantage. Pullin v. Stokes, 2 II. Bl. 312; Smith v. Algar, 1 B. & Ad. 603; Anonymous, Cowp. 129; Rood v. Jones, 1 Doug. (Mich.) 188. It is admitted that if Crowell lost any advantage which he had a right to insist upon, or if the creditors obtained an advantage otherwise not obtainable, and which Crowell had a right to withhold, or if there was an honest doubt concerning their respective rights, there would be a sufficient consideration. But it is not admitted that the declaration shows this.

By withdrawing opposition to the bankruptcy proceedings, and consenting to amendments and to a decree, Crowell divested himself of the possessory control and of the legal ownership of his whole estate, and subjected it without further delay to the disposition of the bankrupt court, and to ratable distribution by an assignee among his creditors. He had a right to the control of it until otherwise ordered by the bank

Sanford v. Huxford.

rupt court, and he could not lose title to it unless adjudged a bankrupt. If not so declared, he would have retained the dominion recognized by the common law and State statutes, and could apply it as he saw fit so long as he committed no fraud. He thereby gave up a positive value in present enjoyment, and a contingent right of absolute control and dominion, in case he succeeded on the issue.

That these were valuable rights cannot be doubted. The courts regard involuntary bankruptcy as an injury to which a party should not be subjected except for his legal omissions or violations of duty. The Supreme Court of the United States has recognized this principle very plainly, in refusing to raise presumptions of fraud to bring transactions within the statutes. See Mays v. Fritton, 20 Wall. 414, following Wilson v. City Bank, 17 id. 473, in which the subject is fully discussed. Mr. Justice MILLER says, concerning involuntary bankruptcy (p. 482), " But when a person claims to take from another all control of his property, to arrest him in the exercise of his occupation, and to impair his standing as a business man, in short to place him in a position which may ruin him in the midst of a prosperous career, the precise circumstances or facts on which he is authorized to do this should not only be well defined in the law, but clearly established in the court." And Lord KENYON, in Kaye v. Bolton, 6 T. R. 134, sustaining an agreement to withdraw bankruptcy proceedings, on the promise of a third person to pay creditors, as entirely reasonable, says: "It would be monstrous to say that the bankrupt's estate shall still be torn to pieces by the expenses of the commission." Common experience shows that an estate can seldom be applied in bankruptcy as prudently or economically as in private hands, by debtors, and that often (as remarked by MILLER, J., in 17 Wall. 486), "by forbearance of creditors, by meeting only such debts as are pressed, and even by the submission of some of their property to be seized on execution, they are finally able to pay all, and to save their commercial character and much of their property.

The law gave Crowell an absolute right to contest these proceedings before a jury, of which he could not be deprived, except by consent. This right he surrendered by the agreement in question, if made as alleged.

On the other hand, if we assume the allegations to be true, it appears, and must be taken as true, that the creditors of the firm thought it for their advantage to procure a decree in bankruptcy, and were willing to pay a large price for that privilege. They, and not Crowell, appear as the parties anxious for a withdrawal of the legal controversy to be submitted to the jury, and for a confession of judgment (or what is anal ogous to that) which would expedite their proceedings, and prevent absoVOL. XX.-82

Sanford v. Huxford.

lute delay and possible failure. It is plain that this was in fact, and was considered, an advantage.

We have, then, a double consideration, whereby Crowell gave up important rights, and the creditors gained important advantages.

It is urged, however, that unless Crowell had a defense, or at least a case of doubt in his favor, that there was no justice in defending, and therefore no consideration for abstaining which the law can favor. And reference is made to compromises where no suit has been commenced, as standing on the same footing with cases of litigation. There are some cases which appear to confound the distinctions, and which may deserve consideration, although upon the present declaration without amendment it is doubtful whether it is very important. But the questions are before

us, and cannot be regarded as foreign to the case.

It has been held that a party who gets an agreement in his favor, by a relinquishment or an agreement to relinquish a right, must have some right, or some show of a right to relinquish. This was held in Edwards v. Baugh, 11 M. & W. 641, in regard to a declaration on an agreement to abstain from prosecuting, which did not aver any debt, actual or supposed. This case, however, contains an express assertion that if suit had been commenced before the compromise, no such showing would be needed, and the saving of litigation and its attendant expenses would be a sufficient consideration in itself. In Cook v. Wright, 1 B. & S. 559, the court intimate that the declaration in Edwards v. Baugh was sufficient, and that the decision was questionable. In Kaye v. Dutton, 7 M. & G. 807, the consideration was confined to the transfer of an interest, and held bad because there was none. In Jones v. Ashburnham, 4 East, 455, it was held an agreement to forbear suit was nugatory unless it was in favor of some person named or otherwise designated, and in that instance there was no person liable to suit indicated or existing. In Barber v. Fox, 2 Wm. Saunders, 136, an heir's promise, based on a bond in which there were no words binding heirs, was held invalid, as, in Tooley v. Windham, Cro. Eliz. 206, was a promise to compensate a personal tort of an ancestor, on which there was no surviving cause of action. In Seaman v. Seaman, 12 Wend. 381; Busby v. Conoway, 8 Md. 55; Prater v. Miller, 25 Ala. 320, it was held an agreement not to oppose a will formed no consideration for a compromise, unless the party would be in some way interested in its defeat. See, also, Jarvis v. Sutton, 3 Ind. 289. And in Rood v. Jones, 1 Doug. (Mich.) 188, it was held an agreement not to attach property, where there was nothing to attach, was no consideration for a promise. But in the latter case, as in the best considered cases generally, it is also held, that when parties have acted without fraud, the