Hefter v. Cahn

Citations

• 73 Ill. 296

Syllabus

<p>1. Composition agreement—not binding if obtained by fraud or deception. In effecting a composition agreement, the law demands the utmost good faith on the part of the debtor. He can not be permitted, by pretend, ing to be insolvent, to. induce a creditor to accept one-half of a debt in lieu of the whole, when, in fact, his property is ample to pay his creditors in full.</p> <p>2. Where a composition agreement is made, the debtor professes to deal with all the creditors who enter into it, on terms of perfect equality, and if, at the same time, he has a secret agreement with one of the creditors, which gives him an undue advantage, this is a fraud upon the other creditors, which vitiates the composition agreement.</p> <p>3. In such case, the creditors, although they may have received the amount named in the composition agreement, may sue for and recover the full amount of their original indebtedness, less the amount received under the composition agreement. It is not essential to the right of action that the creditor should first rescind the composition agreement and return the money he has received under it.</p>