Eldridge, Dunham & Co. v. Phillipson

58 Miss. 270 | Miss. | 1880

George, J.,

delivered the opinion of the court.

The plaintiffs in error sued out an attachment against the defendant upon the ground that the latter had disposed of his property, or some part of it, “with intent to give an unfair preference to some of his creditors,” and the principal question presented for our consideration is as to the true construction of that portion of sect. 1420 of the Code of 1871 which authorizes an attachment when the creditor will make oath “that the debtor has assigned or disposed of, or is about to assign or dispose of, his property or rights in action, or some part thereof, with intent to defraud his creditors or give an unfair preference to some of them.” This provision, so far as it relates to “ an unfair preference,” was first introduced into the statutes of the State by the Code of 1857, art. 2, p. 372. It has not as yet received a direct construction in this court, though it has, as we believe, been frequently construed in the Circuit Courts, and generally, if not uniformly, interpreted in accordance with the views which we here announce. We have giveu the question that careful examination which its importance demands. The right of a debtor, insolvent, or in failing circumstances, to give a preference to one or more of his creditors, if it be bona fide, and with no intent to secure .a benefit to himself, is a firmly established rule in the jurisprudence of this State. See Farmers’ Bank v. Douglas, 11 Smed. & M. 469 ; Ingraham v. Gregg, 13 Smed. & M. 22; Hunt v. Knox, 34 Miss. 656 ; Mangum v. Finucane, 38 Miss. 354 ; Wright v. Henderson, 7 How. 539. All of which cases were decided in reference to transactions prior in date to the Code of 1857. Since that time the rule has been also frequent!}' recognized in this court. See Savage v. Dowd, 52 Miss. 278 ; Surget v. Boyd, 57 Miss. 485 ; Kaufman v. Whitney, 50 Miss. 103.

The provision under consideration must be construed with reference to the rules thus established and recognized. The attachment law of 1857, reenacted in 1871, authorizes a seizure of the debtor’s estate, before judgment, for certain specified dispositions of his property, either consummated or threatened ; but it does not undertake to lay down rules by which the validity of these dispositions is to be tested, nor to denounce as illegal dispositions which were theretofore valid; and unless “ an unfair preference ” be an exception, all of the disposition^ of property which are causes for an attachment are illegal by the general law, independent of the statute. This should uot be lost sight of in fixing the, proper meaning to the clause in question. If it had been the intention of the Legislature by this clause to prohibit, under penalty of liability to attachment, all preferences whatever of creditors, the language used is singularly inappropriate to effect that purpose. The Legislature has, therefore, not prohibited the giving of preferences by debtors. It has only condemned to attachment proceedings those debtors who give an “ unfair preference.” What is an “ unfair preference ” the Legislature has not defined. This must be determined either in accordance with the rules of law relating to preferences by debtors, or is solely a question to be determined by the jury. It cannot be the true meaning of the statute that the question should be left solely to the jury, since there would then be no certain standard for adjudging the rightfulness of the attachment. On the contrary, in every case «this would depend upon the opinions of the members of the jury, formed from their own notions as to what is “ unfair” in a moral sense. One jury would be of opinion, as is usually expressed in bankrupt-laws, that all preferences would be unfair, and that an insolvent had no right to make a disposition of his property except to provide for an equal distribution of it among his creditoi’S; another jury would decide that any preference was fair which was not condemned by law; and another would sustain or condemn a preference, as the members of it might think the debtor, in view of his connection with aud obligations to the preferred creditor, or other creditors not preferred, might be morally bound to prefer one or the other. We cannot adopt a construction which would necessarily lead to such results. What is an “ unfair” preference must, therefore, be a question of law, where the facts attending it are ascertained. It must be determined, like all other legal questions, by the law of the land, which is the only test by which to determine in a court the validity of any transaction. What the judge may think, in a moral sense, cannot be the standard in any case ; since that would be to make his will, and not the law of the land, the rule of decision. The law does not denominate any transaction as unfair which it tolerates and enforces as valid, whatever may be its nature when considered in a purely moral point of view. Courts know nothing of an “ unfairness ” which does not result from a rule of law condemning it on that account. Transactions, when before a court for enforcement or annulment, are either valid or invalid, and they are the one or the other as they are in accordance- with or contrary to law. If a transaction be legally valid, it must be enforced ; and the judge, in decreeing its performance, has no right or power to say it is “ unfair” or unjust. ELis sole duty is to ascertain the rights of the parties as fixed by law, and, having ascertained, to enforce them. It follows, therefore, that no preference is “unfair” which, tested by the rules of law, is legal. As the statute does not pretend to define these rules, we must necessarily resort to the rules which have been laid down by the courts and received their sanction as the law of the land. As has been shown, preferences to creditors are valid if they be bona fide and reserve no benefit to the debtor. The right to make a preference results from the dominion which the owner has over his property; it is a part of his proprietorship. The law has not said he shall divide his estate ratably among his creditors. It has left to him the discretion to act as he wills, provided only he acts with the honest intent to pay a valid debt, and does . not, under cover of such a disposition, stipulate for a benefit to himself. The reservation of such a benefit would make the assignment different from what it professes to be. It would be contrary to the full dominion and ownership of the assignee over the property professed to be conveyed, because an interest is reserved to the debtor, and would therefore be a mere device to secure to the debtor the enjoyment of his property as against the just rights of his creditors. The reservation must be for the personal benefit of the debtor, or a volunteer under him. It must be expressed, or implied from the circumstances, that the preferred creditor cannot use the property at his will without a violation of the expressed or implied agreement. That the debtor may hope, from his relationship to the assignee, as his wife, or near relative, or from the generosity and friendship of the preferred creditor, that he will be assisted in the future, will not vitiate the transaction. There must be a reservation of an interest in the property itself, or in property to be furnished by the creditor in lieu of, or in exchange for it. These principles are fully recognized in the cases above quoted. In transactions taking place since the Code of 1857, assignments by the husband to prefer the wife as a creditor were sustained in Savage v. Dowd, 54 Miss. 728, and in Kaufman v. Whitney, 50 Miss. 103, and assignments to prefer near relatives were sustained in Surget v. Boyd, 57 Miss. 485.

We conclude, therefore, that the word “ unfair,” as used in the statute, is the exact synonym with “ fraudulent ” or “ illegal . ’ ’ The correctness of this view is conclusively demonstrated by the consideration hereinbefore alluded to, viz.: that when the statute makes the debtor’s disposition of his property the ground of an attachment against his estate, it in every instance designates a disposition which the law prohibits the debtor to make. It is the illegal conduct of the debtor in making, or attempting to make, an assignment of his property prohibited by law, and therefore invalid, which subjects him to this harsh and summary proceeding. Such assignments are also invalid, and will be annulled, except only where the assignee can show he has parted with present value for it, in entire ignorance of the debtor’s illegal act or illegal intent. If “ uufair,’.’ in the statute, means less than “ illegal ” or “fraudulent,” it must follow that an attachment would be justified on account of the preference, aud yet the debtor would be guilty of no violation of law ; and when the assignment itself is attacked, it must be held valid and the parties to it entirely innocent. It must further follow from this construction that the Legislature, in its anxiety to discountenance the exercise of an acknowledged legal right to prefer one creditor to others, has provided that when such right was exercised, the preference thus given should not only remain unimpeachable, but should be the occasion by which another creditor could secure a like valid preference for his debt by first levying his attachment on the debtor’s property not included in the assignment. A construction which must lead to this absurd and unjust result cannot be the true one. That the conclusion we adopt renders the clause in question — “ with intent to give an unfair preference ”— surplusage, is true. Though this is a difficulty, it is less than the difficulties to be encountered by the opposite construction. It is not the first instance in which the framers of statutes, in order to make their intent clear, have obscured it by unnecessax’y repetitions or unnecessary additions. For this reason this clause was omitted from the Code of 1880, which, with this omission, leaves the law on the subject, exactly as it was before its adoptioxx.

The charges given to the jury were in accordance with this view, and are coxTcct.

The evidence was contradictory, and while the preponderance was probably in favor of sustaining the attachment, the jury believed the contrary, and we cannot say their verdict was so clearly wrong as to authorize us to set it aside.

The judgmoxxt is affirmed.