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Decisions of the Superior Courts of New South Wales, 1788-1899

Hughes v Solomon [1832] NSWSupC 1

promissory note - insolvency, deed of composition

Supreme Court of New South Wales

Forbes C.J., 23 June 1832

Source: Sydney Herald, 28 June 1832[1 ]

 

SATURDAY. - Before the Chief Justice and the following Special Jury: - Samuel August Perry, Esquire, Foreman; George Cox, Esq., Hanbury Clements, Esq., Geo. Acrea. Esq. Edw. Cox, Esq., John Larkin Scarvell, Esq., Joseph Hickey Grose, merchant, John Connell, merchant, Ward, Stephens, Esq. (Tales men), Arthur Kemmis, merchant, George Miller, Esq., and D. Allen, Esq.

Hughes and another v. Solomon. - This was an action to recover £233 4 1, being the amount of five promissary notes due by defendant to plaintiff, together with interest on the same.

The defendant pleaded first the general issue, and secondly a special agreement in bar to the action.  The defendant's hand-writing was proved in the usual form.

The defence set up was as follows:- In July, 1831, the defendant's circumstances becoming embarrassed, he made a tender to his creditors of seven shillings and six pence in the pound, to be paid by instalments, rateably, out of £850, proceeds from the sale of defendant's goods, and the remainder in notes, with approved endorsements, at 6, 9, and 12 months; in consideration they were to give up all securities, bills, liabilities, &c., of defendant, to him, this was agreed to by all the creditors, and a memorandum of a deed to that effect was signed and sealed by the creditors, and among the rest, by which they now sued upon, two of which bore Hyam's endorsement.  The deed was subsequently engrossed and taken round to be signed, when the plaintiffs refused to give up the note with the endorsement of Hyam, on the ground that the deed they had signed contained nothing to that effect, at the same time a tender was made of notes appeared to be endorsed by defendant's brother, in conformity with the terms.  Defendant now contended that plaintiffs were bound by the deed they had signed.

In reply, it was proved that two of the notes in question were received from Hyam for goods, and that Solomon, the defendant, was the security; also, that a release had been offered defendant after action brought, but which was refused without Hyam's notes were delivered.

The Chief Justice, in putting the case to the Jury, did not think that it was contemplated at the time the agreement was drawn that Hyam should be released from his responsibility; it was therefore competent, on the part of the plaintiffs, to have refused the bills tendered on such a condition; he conceived the bills ought to have been given up without any qualification, and a release might have been obtained afterwards; he considered the case mainly to rest on this paint.  The Jury found a verdict for plaintiffs. - Two bills full amount, and the remaining three to be subjected to the deeds of composition.

 

Notes

[1 ] See also Sydney Gazette, 28 June 1832; Australian, 29 June 1832.

A colonial Act was passed in 1830 (11 Geo. 4 No. 7) to deal with both insolvency (release from prison) and bankruptcy (release from debts as well), but was found to be inadequate after two years.  In April 1832, it was replaced by 2 Wm 4 No. 11 which was a conventional insolvency Act.  Under it, an imprisoned debtor who had been in gaol for more than three months could be released from prison on giving up all of her or his property to the creditors and engaging to pay the whole of the debt should he or she subsequently obtain sufficient property to do so.  See Bourke to Goderich, 19 March 1832, Historical Records of Australia, Series 1, Vol. 16, p. 566; and for the statute, see Sydney Gazette, 29 March 1832; and see Australian, 27 January, 3 February, 30 March, 6 April 1832.

The 1832 Act was a very harsh law, both because of the three months' wait, and because local traders could not obtain the bankruptcy relief which was available to their counterparts in England.

Published by the Division of Law, Macquarie University