Appeal of Miners' National Bank

57 Pa. 193 | Pa. | 1868

The opinion of-the court was delivered, by

Agnew, J.

So long as men manage their own affairs, and preserve the control of their property, it has been the policy of our laws to suffer them to deal with their estates, in the absence of fraud, as they find most conducive to their interests. They may, therefore, convey or deliver property in satisfaction of debts, compromise liabilities, prefer creditors by mortgage or judgment, and even secure a class of creditors by a judgment to a trustee for their use: Chaffees v. Risk, 12 Harris 432; York Co. Bank v. Carter, 2 Wright 446; Blakey’s Appeal, 7 Barr 449; Guy v. McIlree, 2 Casey 92; Wiener v. Davis, 6 Harris 331. This results in absence of bankrupt laws, from that freedom of individual action which the genius of our institutions secures and concedes, as a measure of liberty belonging to the citizen, and necessary to the development of the greatest good of society. It supposes that while the debtor preserves the control of his affairs in his own hands, the vigilance of creditors will be competent to protect their interests and to avert any injury. But when compelled by embarrassments he is obliged to part with that control, by placing his affairs in the hands of others, and thereby putting his property out of the reach of his creditors, experience teaches that restraint becomes necessary. When a man can no longer go on in business, and what he has must pass into the liquidation of his debts, fairness requires that he should not dictate the course his property shall take. To permit it, is to afford an opportunity for the enemies of virtue to obtain preference, and to create prejudicial hostility. The first efforts to correct the evil began by simple regulation. The assignment was to be recorded to prevent secret trusts. The trustees were made answerable to the courts by requiring them to give security, to render true accounts and to make proper distribution. The entire laws were revised and reduced to system in the Act of November 14th 1836. Still preferences were tolerated by express provision, and by conditions of release. This led to the Act of 17th April 1843. It is entitled “an act to prevent preferences in assignment,” and it is argued from the title that its intention was only to forbid preferences expressed in the deed itself. But this is contrary to the public sentiment which led to the proposal of the act, and to the plain intent found upon its face. It'would enable the debtor always to prefer creditors simply by framing his deed to suit his purpose. He has thus only to name those he would prefer in the deed, and leave out all others; and indeed, under that construction of the law, I see nothing to prevent his multiplying his deeds, and thereby to divide his estate and graduate his preferences. All his property could be assigned for the benefit of a favored few, and they his nearest relatives. Such cannot be the meaning of the law, but its true design is, that when a debtor cannot go on in business, but finds he must stop, his property shall be administered for the benefit of all his creditors alike, on the principle, Equality is equity. The language of the act plainly points to this, the assignments it applies to being those made “ on account of inability at the time of the assignments to pay their debts,” and made “to prefer one or more creditors.” If the words “on account of inability,” &e., had been omitted, the laws would have had a range inconsistent with the individual freedom to dispose of property possessed by solvent debtors not likely to have been sanctioned by the general sentiment of the people. But these expressions furnish a key to unlock the intent. Inability to pay debts marks the period when business must stop, and the assignment at this time evinces the motive of the debtor to control the actions of his creditors. He knows best the state of his affairs, and when he is likely to stop; and the law intends, that on arriving at this point, he shall not anticipate the disclosure by placing his property in trust for his favorites, and beyond the reach of others. Something was meant by the expression “ to prefer one or more.” If all or the bulk of his effects be assigned in trust for one creditor, or for two or three, what matters it that there is no preference among these few ? The preference is thus effectually given, and it is palpably against the main intent of the law to prevent debtors, on the eve of failure, from placing their property in the hands of trustees, and out of the reach of all not named in the assignment. Some importance must be also attached to the words used to give effect to the assignment, to wit, that it shall enure to the use of all the creditors in proportion to their respective demands. It is thought that this means all the creditors named in the deed. Had this been the legislative intent, it would have been easy to express it, and the very absence of qualifying expressions is a strong circumstance against it.

The same expression appears in the Act of 1849, passed to prevent preferences by way of conditions requiring creditors to release. The words are copied literally from the Act of 1843, without qualification, and indicate no restriction to the creditors named in the deed. It is thought, that however just it may be to give this offset to a general assignment of all a man’s property, the law ought not to be construed so as to prevent a partial assignment for some of the creditors; and the facts of this case are appealed to in proof of the propriety of this position. But the answer is, that the law makes no distinction in the character of the assignment, when its procuring canse is the impending failure of the debtor. The language is, “ All assignments of property in trust” made on account of inability at the time to pay their debts. Such a distinction would defeat the main purpose, and would introduce an impracticable rule. How much property should pass by a partial assignment ? How many creditors shall be included in its benefits ? It would be impossible to answer this definitely. There is no legal standard; and what would be reasonable either as to the quantity of property or the amount of debts to be preferred, would be as fluctuating as the circumstances of each case. Former laws relative to assignments applied to both general and partial, and this act being in pari materia, should receive a like interpretation to preserve harmony in the system, and arrive at the probable legislative intent. The circumstances of this assignment prove conclusively, that it was made by Charles Miller on account of his inability to meet his debts ; and the large amount of property assigned, and magnitude of the interests intended to be protected by it, leave no room to doubt that this case falls within the provisions of the Act of 1843.

The main question upon the construction of the act, has not been distinctly decided so far as we know. Expressions have been used, indicating the impression that particular judges supposed the act had reference only to preferences expressed in the assignment, as in Blakey’s Appeal, 7 Barr 449, and Lea’s Appeal, 9 Id. 504. But the point before us not being in the mind of the court, dicta cannot prevail over what we believe to 'be the true intent of the Act of 1843.

We are therefore of the opinion that the assignment made by Charles Miller enured to the benefit of all his creditors. Concurring with the learned judge of the Common Pleas in his able opinion, we affirm his decree, and order the costs to be paid by the appellants. The court further order and refer the account to the prothonotary of this court, for the purpose of ascertainment, adjustment and distribution of the balance, after notice to the counsel of the parties.