Brooks v. Thomas

8 Md. 367 | Md. | 1855

Lead Opinion

Mason, J.,

delivered the opinion of this court.

’The questions presented on this appeal arise under the act of 1834, oh. 293, sec. 1, and are. firs!,, whether, when Thomas made the transfer to Jerome, the defendant, he did so in contemplation of insolvency, or that at the time he “had no reasonable expectation of being exempted from liability or execution for or on account of his debts, without applying for the benefit of the insolvent laws?” and secondly, if so, whether Jerome “had notice of the condition of insolvency as aforesaid of said debtor?” Unless these two circumstances are established, the deed in question, as to the party claiming under it, cannot be avoided.

The defendant, Jerome, denies flatly, in his answer, that he knew of the insolvency of Thomas, and unless the force of this answer be broken by independent proof, in accordance with the rules of evidence adopted in such cases, his statement on this point must be sustained. A positive denial in an answer to the allegations of the bill must be disproved by the testimony <of two witnesses, or by one witness with pregnant circumstances. We will not pause to inquire whether this case falls within the exception to this general rule, which is laid down in the case of Jones vs. Belt, 2 Gill, 106, because we think that under the rule itself, the answer of the defendant, Jerome, has been sufficiently disproved so as to destroy its force as a ground of defence against the claim of the complainant.

Evans, a competent witness, expressly states, that he “ stated to Jerome that he wanted indemnity, as Thomas was generally considered insolvent — this was the general opinion in the neighborhood. Mr. Jerome did not seem surprised at witness’ remark.” Jerome, in reply, “informed witness that Thomas sold the goods by consent of the creditors,” and that “Jerome did give the guaranty.”

If this is not notice or information of (he insolvency of the defendant, Thomas, we are at a loss to conjecture what other kind of notice could be furnished of such a fact. Prom the nature and character of insolvency, the knowledge of its existence in third parties must of necessity be to some extent conjectural or inferential, unless the information should be derived directly from the insolvent himself; and in a majority of cases, even the party is often deceived as to his own condition, and other persons are often as well, if not better, informed of his pecuniary circumstances than he is himself. A knowledge that a party is negotiating or compromising with his creditors, accompanied with the actual information that he was generally considered insolvent in his neighborhood, is, in contemplation of the act of 1834, “ notice of the condition of insolvency of said debtor.” Nor do we consider this as such “technical or constructive notice,” as is referred to in the case of- Cole vs. Albers & Runge, 1 Gill, 412, but we regard it as an actual notice, as much so, as such a fact ordinarily is susceptible oí' being the subject of actual notice, \.

The facts just mentioned were established by the evidence of Evans, and thus we have the positive testimony of one witness. But under the rale this is not sufficient, unless it be accompanied with pregnant circumstances. These are to be found, we think, in the close and intimate relations, both business and social, which existed between Thomas and Jerome, and in the fact, still more pregnant with an inference of the knowledge of insolvency on the part of Jerome, that Thomas proposed, previous to the preference complained of, to make an assignment of all his property for the benefit of his creditors, upon condition that they would release him from further responsibility, and the appellee admits that the proposition was made to him and agreed to. While we are willing to admit that a proposition from a debtor for a composition with his creditors is not conclusive evidence of insolvency, yet it is still one of the most pregnant circumstances imaginable from which insolvency can be inferred. Indeed it may not be too much to say, that it is an unheard of circumstance for a debtor to propose a composition with his creditors, unless he be in a state of insolvency.

From all the facts, in the case the conclusion is irresistible to our minds, that at the time of the transfer of money and property to Jerome by Thomas, the latter was insolvent, or that he had no reasonable expectation of being exempted from liability or execution for or on account of his debts, without applying for the benefit of the insolvent laws, and that the former had knowledge of the fact.

The transfer or assignment is therefore void, and the property which it embraced vested in the trustee, and a decree will be passed accordingly.

Decree reversed, with costs, and case ordered

to the circuit court of Baltimore city.

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Dissenting Opinion

Le Grand, C. J.,

dissented, and delivered the following opinion:

I have carefully examined this case and concur in the correctness of the decree of the chancellor, and for the reasons assigned by him. I feel bound to say, however, that it is a case — apart from the stern rules prescribed by the law of evidence for the interpretation of the motives of parties — entitling the appellant to the relief sought by him; for it is impossible to suppose — when his close and intimate relation to Thomas is considered and the taking of all his property — that he was not aware of his insolvent condition; a fact which, according to the testimony of Mr. Evans, seems to have been generally believed. But Mr. Jerome denies such knowledge, and he is not contradicted as fully and in the way required by the law, and as a consequence, his denial prevails.