Ecker v. McAllister

45 Md. 290 | Md. | 1876

Grason, J.,

delivered the opinion of the Court.

This suit was brought to recover from the appellant a sum of money due-by Jacob S. Bohn to the appellee, and which, it is alleged, the appellant promised to pay in consideration that the appellee would forbear to institute proceedings in bankruptcy against Jacob S. Bohn.

There was a demurrer to the declaration, which was overruled, and exceptions were taken by both parties to the rulings of the Circuit Court upon the evidence and the prayers, and we shall consider the questions raised by them in their proper order.

The declaration is alleged to be defective, because it does not state that the promise of the appellant was in writing, and because tbe transaction between tbe parties was a violation of the Bankrupt Act of the United States, and of public policy. It is not necessary, to allege in the narr. that the promise was in writing, that being a matter of proof at the trial. The Act of Congress of 1867, chap. 176, commonly known as the Bankrupt Act, does not forbid the creditor of an insolvent debtor to take a contract, or covenant from any third party, in consideration of forbearance to proceed against his debtor, for the purpose of having him declared a bankrupt, and therefore such a transaction is not a violation of the Act or of public policy. The demurrer was therefore properly overruled. Both of these questions were fully considered in the case of Samuel Ecker vs. Daniel Bohn, ante p. 278, and we refer to the opinion filed in that case, for a more extensive expression of our views upon them.

The appellant’s first and second exceptions were taken to the rulings of the Circuit Court in refusing to permit the commission to take evidence in this case, the return of the commissioner and the evidence taken thereunder to be read in evidence to the jury, to contradict Jacob S. Bohn, a witness for the appellee, who was sworn and examined at the trial. It was contended that the commission was not admissible, .because it did not appear to have been executed and returned in accordance with the requirements of the law, and the facts relied upon were that the envelope, in which the commission, return, depositions and interrogatories were contained, had been opened, and because the name of the commissioner was not written across the seal of the envelope. The commission and all the other papers were found in the office of the clerk of the Circuit Court, for Frederick County, who was the proper .custodian of the papers, and it must be presumed, in .the absence of proof to the contrary, that the envelope had been opened by order of the Court. The return to the commission was under the hand and seal of the commissioner, and in all respects was formal and regular. It was also contended that the answers of Jacob S. Bolin to the interrogatories were not admissible to contradict his evidence given orally at the trial, because they had not been read to him, before he signed his name to them ; and further, because they har1 not been submitted to him to he read, before he was asked by counsel if he had not made certain answers to the interrogatories propounded to him. Even if it were necessary tffat his answers should have been read to him, he had sworn that a part of them at least had been read to him before he signed his name. But it was not necessary that his answers should have 'been read to him ; as it is presumed that the commissioner, an officer of the Court, acting under oath, put them down exactly as he gave them. Neither was it necessary that he should have been shown his answers and been permitted to read them, before asking him in regard to them. All that was required was to prove that he was the witness who had been sworn and examined by the commissioner, and whose answers the commission and return purported to give. He had testified that he was sworn and examined as a witness in this case under the commission, and the foundation for his contradiction had been properly laid, and the commission, return and depositions taken thereunder, were admissible for the purpose for which they were offered; and the Court below erred in refusing to permit them to be read in evidence.

The third exception of the appellant was taken to the granting of the appellee’s prayer, and the rejection of the first, second, third, fourth, fifth, eighth, ninth and tenth prayers of the appellant. The tenth prayer is not in the record, and consequently there can be no reversal of the judgment upon that. The prayer of the appellee asked an instruction that the verdict must be for him, if the jury found the facts therein stated, although they should further find that he had received from Jacob S. Bohn the assign-merit and bill of sale offered in evidence, knowing or Laving reasonable cause to believe that said Bobn was insolvent. The appellant’s first, second, third and ninth prayers, after substantially stating the same facts to be found by the jury, as were set forth in the appellee’s prayers, contained the legal proposition that the appellee was not entitled to recover, if the jury should find that he received the bill of sale and assignment as a preference from his debtor Bohn, having good cause to believe at the time that said Bobn was insolvent. The question of law presented by these prayers depends for its solution upon the construction of the 39th section of the Bankrupt Act. It declares that if any person, within the jurisdiction of the United States owing debts, provable under the Act, exceeding the amount of three hundred dollars, shall make any gift, sale, conveyance or transfer of his property, estate, rights or credits with intent to delay, defraud or hinder his creditors, or who being bankrupt or insolvent, or in contemplation of bankruptcy or insolvency, shall make any payment, gift, grant, sale, conveyance or transfer of money or other property, estate, rights or credits with intent to give a preference to one or more of his creditors, shall be deemed to have committed an act of bankruptcy, and, subject to the conditions therein presented, shall be adjudged a bankrupt on the petition of one or more of his creditors, the aggregate of whose debts, provable under the Act, amount to at least two hundred and fifty dollars, provided the petition be filed within six months after the act of bankruptcy was committed. And it is further provided that if the person shall be adjudged a bankrupt, the assignee may recover back the money or other property so paid, conveyed or transferred, provided the person receiving the same had reasonable cause to believe that a fraud on the Act was intended, or that the debtor was insolvent, and that such creditor should not be allowed to prove his debt in bankruptcy. If the appellee had received the bill of sale and the assignment from Jacob S. Bohn, (and the evidence of his having received them was uncontradicted) and at the time he received them had knowledge or reasonable cause to believe that Bohn was then insolvent, he thereby received a preference forbidden by the Act, and could not have proved his debt against his debtor in bankruptcy, and therefore could not have filed a petition in bankruptcy against him.

If he could not have proceeded against him in bankruptcy, the promise of the appellant to pay the debt in consideration that the appellant would forbear to proceed in bankruptcy against Bohn, was without consideration, and there could he no .recovery upon it. 1 Parsons on Contracts, 365, marg., and authorities there cited in note c; Wade vs. Simeon, 52 Eng. Com. Law Rep., 564, 565 ; Jones vs. Ashburnham, 4 Past, 463; Hartle vs. Stahl & Wife, 21 Md., 171, and Busby vs. Conoway, 8 Md., 62. The question whether the appellee had reasonable cause to believe that Bohn was insolvent at the time the bill of sale and assignment were executed, was material to the decision of the case by the jury, and should have been submitted to their determination. The appellee testified that he had received a preference by the hill of sale and assignment as far as they went. There was evidence also that Bohn and the appellee had been partners in the milling business, that the latter kept the hooks and knew that the former had put into the business but eight hundred and six dollars, and drawn out two thousand one hundred and twenty-six, while the appellee had put in nine hundred and forty-five,-and drawn out hut five hundred and forty-six. There was also evidence tending to prove that Bohn was unable to pay the debt due to the appellee, which the •latter found amounted to thirteen hundred dollars, at the time their partnership was dissolved. The very fact of the execution of the hill of sale and assignment to the appellee furnished some proof of that fact. Jacob S. Bohn testified that the appellee had also knowledge of the execution of the deed of the mill property to the appellant about the time of its execution, whether before or after, he could not say, and that the appellee generally knew all about what was going on; that the witness concealed nothing from anybody, and that he supposed the appellee knew, at least in part, what the witness owed. There was also proof to show that Jacob S. Bohn had, by his deed to the appellant, and the hill of sale and assignment to the appellee, stripped himself of all the property of every description he owned. This proof was proper to be submitted to the jury, and considered by them in determining whether the appellee had reasonable cause to believe that Jacob S. Bohn was insolvent at the time of the execution of the hill of sale and assignment. The Circuit Court, therefore, erred in granting the appellee’s prayer and rejecting the first, second, third and ninth prayers of the appellant.

The appellant’s fourth prayer was properly rejected. It asked an instruction, if the jui’y should find the facts therein stated, that the appellee was not entitled to prove his debt in bankruptcy, or to institute proceedings therein against Bohn, unless he had surrendered the property which the jury should find from the evidence, he had received under the assignment and bill of sale, and that there was no evidence in the case from which the jury could find such surrender. We think by the true construction of the Act, that no creditor who has received a preference, having, at the time, reasonable cause to believe his debtor insolvent, is authorized to institute proceedings in bankruptcy. By the twenty-third section of the Act, it is provided that no one who has received a preference under the circumstances mentioned in this Act, shall prove his claim or receive any dividend on account thereof, until he shall have surrendered to the assignee all property, money, benefit or advantage received by him under such preference. It is clear that under the Act, no debt can he proved until after the petition has been tiled, and no surrender made until an assignee has been appointed. The twenty-third section relates to the proving of debts in bankruptcy. The petition can be filed by none other than a creditor, who has a debt due him of at least two hundred and fifty dollars, which is provable in bankruptcy at the time the petition is filed.

The appellee having shown by his own evidence, that he received a preference from Jacob S. Bohn, if the jury should find that, at the time he received it, he had reasonable cause to believe that he was insolvent, he had not a debt then provable under the Act. There was still an act to he performed by him after a petition was filed, before he could prove his debt, and that was a surrender of all he received under the preference. The fourth prayer was erroneous, therefore, in assuming as matter of law, that a creditor who had taken a preference, knowing at the time, or having reasonable cause to believe, that his debtor was insolvent, has the legal right to file a petition in bankruptcy against his debtor., upon surrendering all advantage derived from the preference.

The appellant’s fifth prayer, though stating a perfectly correct legal proposition, is based upon the finding by the jury of the facts stated in his fourth prayer, and as we have shown that the fourth prayer was properly rejected, the Court below did right in rejecting the fifth also.

The eighth prayer did not submit to the jury, the fact whether the appellee had accepted a preference from his debtor, having at the time, reasonable cause to believe that he was insolvent, or that a fraud on the Bankrupt Act was intended; but it asked an instruction that the appellee was precluded from proving his debt, if the jury should find that the preference was given, and that Bohn was insolvent at the time, or gave the preference with intent to commit a fraud upon the Act. This,prayer was also properly rejected for this reason.

The appellee took two exceptions, one to the ruling of the Court in refusing to permit Bohn to state what his intention was in executing the hill of sale to the appellee, and the other to the granting of the appellant’s sixth and seventh prayers; and as a new trial of this case.will be awarded, it becomes necessary for the Court to review and pass upon these exceptions, as directed by sec. 41 of Art. 11 of the Code of Public General Laws.

The evidence offered in the first exception was inadmissible. The intent with which a grantor executes a deed, must he gathered from the deed itself, and from his acts and the surrounding circumstances. When the probable consequence of an act is to give a preference, the debtor will he conclusively presumed to have intended to give such preference. Bump on Bankruptcy, 404. Every person of sound mind is presumed to intend the necessary natural or legal consequences of his deliberate act. “ This legal presumption may he either conclusive or disputable, depending upon the nature of the act aud the character of the intention. And when, bylaw, the consequences must necessarily follow the act done, the presumption is ordinarily conclusive, and cannot he rebutted by any evidence of a want of such intention. ***** When the, result, which necessarily and inevitably follows the act, is to defeat the operation of the Bankrupt Act, the law conclusively presumes that the party intended to accomplish that result, and his denial of such intent is of no consequence.” Bump on Bankruptcy, 406, 407. Bohn knew that he was insolvent, for he swears that after executing the hill of sale and assignment to the' appellee, and the deed to the appellant, all of which hear date the same day, he had hut forty dollars left, while it appears in proof that he was still in debt to various other parties. If, therefore, the answer to the question objected to, would have been that he did not intend to give the appellee a preference, it was inadmissible. If it would have been an explanation of the hill of sale, it was equally inadmissible upon the ground that parol evidence is inadmissible to contradict, explain or vary a written instrument.

(Decided 22nd June, 1876.)

There was no evidence whatever to support the seven additional counts of the narr., and therefore the sixth and seventh prayers of the appellant were properly granted.

Judgment reversed, and new trial awarded.