Horwitz v. Ellinger

31 Md. 492 | Md. | 1869

Alvey, J.,

delivered the opinion of the Court.

Prior $o, and on the 2d of April, 1867, James E. Purvis and James E. Purvis, Jr., under the firm style of Parvis & Co., were doing business in the city of Baltimore as bankers, and on that day (the 2d of April, 1867,) the appellee, being one of the customers of the house, deposited with it, in the usual way, the sum of $5,335.22. This deposit was made shortly after 1 o’clock, and was subject to a small check that had been drawn by the depositor some few hours before, and which, being paid, reduced the appellee’s credit to $5,101.88, the amount sued for in this case.

At the usual hour, on the day of the deposit, the banking house closed, and was never again opened for business, and the members of the firm, regarding themselves as insolvent, and unable to meet their liabilities, at once set about making a general assignment of all their property for the benefit of their creditors, without preference, except such as is made and recognized by law, in the application of the partnership and separate funds to the payment of partnership and separate debts respectively, by way of priority. Such assignment was made to Mr. Horwitz, the appellant, as trustee, on the 3d of April, 1867, and he at once accepted the trust, and assumed control of all the property assigned.

This having been done, the appellee, on the 5th of April, 1867, caused an attachment, under the provisions of the Act of 1864, ch. 306, to be issued against the assignors, and, as grounds for the process set forth in the affidavit, that he had good reason to believe that the defendants had assigned, disposed of, or concealed, their property, or some portion thereof, with intent to defraud their creditors ; and that they fraudulently contracted the debt, or incurred the obligation upon which suit was brought.

The return to the attachment was, that it had been “ laid in the hands of Orville Horwitz, Esq., on the 9th day of April, 1867,” and “attached, as per schedule.” The schedule embraced a number of lots of ground, which were seized and taken as the lands and tenements of James E. Purvis, on the 9th of April, 1867. And on the return being made, Horwitz appeared as garnishee, and as claimant, and defended against judgment of condemnation.

He interposed two series of pleas: the first as garnishee, and the second as claimant.

As garnishee, he pleaded: -1st. That thé defendants did not promise as alleged; 2d. That he had no goods of the defendants; Bd. That the defendants had not disposed of or concealed their property, with an intent to defraud their creditors ; 4th. That the defendants did not fraudulently contract the debt as alleged.

As claimant, he pleaded : 1st. That the property in the schedule mentioned was the sole property of James F. Purvis, Sr., and that on the 3d day of April, 1867, he conveyed the same to the claimant by a good and sufficient deed; 2d. The bankruptcy of James F. Purvis, Sr., one of the defendants, and the appointment of the claimant assignee, since the attachment.

To the several pleas thus pleaded, issue y^as joined, and they were all tried together as one case.

At the trial, all the facts and circumstances attending the deposit made by the appellee, of the insolvent condition of the defendants, and of the making of the deed of the 3d of April, were laid before the jury. And the Court being required to instruct the jury by the respective parties, granted the two prayers offered by the appellee, and refused those offered by the appellant. It is to this action of the Court that exception is taken.

In regard to the first prayer that was granted on behalf of the appellee, we think it unobjectionable. It embraces all the essential elements to render the contract fraudulent. But, as applied to this case, it is decisive of nothing, except the question of fraud, in obtaining the appellee’s money.

Conceding the money to have been deposited under such circumstances as to make it fraudulent in the defendants to receive it, in what relation does the depositor stand to the defendants as bankers ? Is it any other than that of an ordinary creditor ?

The appellee knew that the money, so soon as deposited, would cease to be his, and that its identity would be lost so soon as it reached the till of the defendants. It at once became their money, to be used as they pleased. They were guilty of no breach of trust by employing it as their own. They were not bound to keep it, or deal with it as the money of the appellee; but were oidy bound to repay him on demand, a sum equivalent to that paid in. Indeed, the proceeding adopted against the defendants concedes the relation of debtor and creditor to exist, for the demand is not for the specific money deposited, but for an equivalen! amount to the appellee’s credit in account with the defendants. Nor does the Act of Assembly, under which the proceedings are taken, give its aid to the appellee in any other character than as creditor.

Taking the relation of debtor and creditor to exist between the parties, what is the predicament of the appellee in regard to the deed of assignment of the 3d of April, 1867, which is conceded to be, by its terms and conditions, such as is authorized by law ? He sought to avoid the effect of the deed, as against himself, by treating it as the consummation of the fraud by which his money was obtained from him on the day previous to its date. In this view, the second prayer was offered, whereby the jury were instructed that they were at liberty, upon consideration of all the facts and circumstances surrounding the transaction, to find “ that the execution and delivery of said deed were, and were meant to be, a consummation of the fraud committed by receiving the plaintiff’s money, and if they so find, the plaintiff* is entitled to recover on the issues joined,” &e. Should such an instruction have been granted ?

It is clear, if the money sued for was obtained from the appellee, by means of a fraudulent contract, it required no consummation, by the subsequent execution of the deed, to entitle him to the benefit of the provisions of the Act of 1864. If, on the contrary, it was not so obtained, the subsequent execution of the deed, with whatever motive, would not render fraudulent the contract previously made. The contract of deposit, and the deed of assignment, are two different and distinct acts, and their validity must be determined according to their respective merits..

The assignment, to constitute a sufficient ground of itself to maintain the attachment against the defendants, under the Act of 1864, must have been made with an irw tent to defraud their creditors. But a general assignment, for the benefit of all creditors, such as the one before us, is not denounced by the law as fraudulent, but, on the contrary, sanctioned and approved. That being so, is it competent to the appellee to vacate this assignment as to himself, while it may be good as against everybody else, by showing some particular motive in the assignors in making it ? Clearly not. We are dealing with the act of the parties, and if that be such as the law authorize^ and approves, the secret motives that prompted it are wholly immaterial. Pike vs. Bacon, 21 Me., 280, 285; Covanhovan vs. Hart, 21 Penn., 495, 500.

It máy have been, and most likely was, the purpose of the assignors in making the deed, to avoid the preferences that might have been obtained by attachment, in a race of eager diligence by disappointed creditors. Such is generally the motive to the making of such an assignment. But though such was the motive, or even if it was to prevent the appellee from resorting to process to obtain such preference, th§ assignment is not the less valid. It was the right of the assignors to apply their property to the equal payment of all their creditors, and the appellee being in the category of creditor, can have no more favorable standing in respect to the property thus attempted to be applied than any other of his class; and because his claim may have been specially in the contemplation of the assignors when making the deed, it affords him no ground to set it aside.

But it is contended for the appellee that the debt being fraudulently contracted, his right to proceed by attachment is fixed and indefeasible, and that it was not within the power of the debtor to defeat such right.

That may be conceded. The right to sue out the attachment may exist, but the right to seize other people’s property under it is quite a different thing.

The Act of 1864, ch. 806, under which the attachment in this case was issued, is only a remedial act. It gives the creditor no lien, and only provides a more speedy remedy in the cases , enumerated than before existed. Whatever assignment of property, therefore, that would have defeated a seizure under an attachment before that Act, will be equally effectual to defeat a seizure of property under an attachment sued out by virtue of its peculiar provisions. Any other construction would be most inconvenient and mischievous.

Upon the appellee’s- assumption, the question is, did the fraudulent making of the previous contract deprive the debtors of the right to make a general assignment of all their property for the equal benefit of all their creditors, including the appellee? That it did not, we think, is entirely free from doubt. To hold that it did, would in a great measure defeat the policy of the law in allowing and encouraging insolvent debtors to devote, by assignment, all their property to an equal distribution among their creditors. New cases would occur in which some creditor, in order to gain a preference, would not at least attempt to make it appear that there had been a want of bond fides in the debtor’s dealing with him. To open the door to such an inquiry, and make the validity of the assignment depend upon the establishment of such a fact, would at once beget litigious struggles among creditors, in which those conscientious would often be victimized to the less scrupulous litigants.

(Decided 10th December, 1869.)

Entertaining these views in regard to the effect of the deed of assignment on the position and claim of the appellee as creditor, we think it clear that the court below was in error in granting his second prayer, already referred to. And it results necessarily, from what we have said, that we are of opinion that the first prayer of the appellant should have been granted.

As to the other questions made upon the record, and presented in argument, some of which are interesting and important, we deem it unnecessary to decide, as the view we have taken is decisive of the case. And seeing no ground upon which the appellee could legally claim judgment of condemnation of the property mentioned in the return to the attachment, we shall reverse the judgment appealed from, without procedendo.

Judgment reversed.