43 Minn. 389 | Minn. | 1890
In June, 1888, the appellants here executed, pursuant to the provisions of the “Insolvent Law,” (Laws 1881, c. 148,) a general assignment of all their non-exempt property (both partnership and individual) for the benefit of their creditors. In January,
Much of the examination before the referee, and much of the argument of counsel here, has reference to the alleged discrepancy between the .financial condition of the firm as shown by their statement in January, 1888, andas shown by the schedules to.the assignment made in the following June; the-petitioners claiming that the comparison showed a large amount of assets unaccounted for. As the
The here material part of the insolvent law is section 10, which, after providing that only those creditors shall share in the estate of the debtor who have filed releases of their claims, contains the following : “Provided, however, that when any creditor of such insolvent debtor * * * alleges, by complaint made to the judge, * * * that such insolvent debtor has fraudulently concealed or fraudulently incumbered or disposed of any of his property with the intent to cheat and defraud his creditors, such judge” .(after notice) “may hear such legal evidence as he may deem pertinent, relating to such fraudulent concealment, incumbrance, or disposal; * * * and after such-hearing said judge may, in his. discretion, order or direct that all of said debtor’s property and assets, not exempt by law, be distributed among his creditors, * * * upon their filing such releases, or without their filing releases as aforesaid.” The language of the last part .of.this proviso is quite peculiar. But it certainly cannot mean that the judge shall hear evidence merely for amusement, and then decide the matter according to his own arbitrary caprice. What we think it must mean is that, if the petitioner’s allegations against the debtor are proved, he shall grant the petition, otherwise deny it.
Two questions are therefore presented:, (1) What constitutes a .fraudulent concealment, incumbering, or disposal of property by the debtor, with intent to. cheat and defraud his creditors, within the meaning of the statute ? and (2) Do the facts stated in the first finding of the court constitute such a fraudulent concealment or disposal; or, otherwise stated, does the finding amount to a finding of such a fraudulent concealment or disposal?
In Re Gazett, 35 Minn. 532, (29 N. W. Rep. 347,) it was held that the words, “with intent to cheat and defraud,” must be given the meaning ordinarily belonging to them, and therefore a mere preference of creditors by a debtor was not a fraudulent disposal of his-property, within the meaning of the statute, although in violation of its policy, and the effect of it to deprive other creditors of their just
Applying this construction of the statute to the case at hand, we think that the trial judge’s first finding of fact is insufficient to support his order, for the reason that it neither in terms nor in equiva
It seems to us that the finding, and the order based upon it, proceed upon the theory that, if the insolvents intentionally took and retained the money, (as. they did,) and if they had no legal right to do so, (as we shall assume they had not,) and consequently the creditors were deprived of what legally belonged to them, then the act amounted to a fraudulent disposition of property with intent to defraud and cheat their creditors, regardless of the actual intention or purpose of the debtor. We think the judge’s memorandum, which we may take as the construction which he places.uppn his own language, supports us in this view. And while it is the sufficiency of the finding as made, and not what finding the evidence would have justified, with which we have now .to do, yet we may fairly read this finding in the light of the evidence on which it is based as furnishing some aid in ascertaining what construction is to be put on its language, and. the view of the law which the court adopted in framing it. The insolvents were large wholesale merchants, who had been doing a busi
Little need be said as to the second finding, as it is clearly insufficient. While it is true, as held in Re Rees, 39 Minn. 401, (40 N. W. Rep. 370,) a dishonest disclosure by a debtor, or his refusal to
But an examination of the record shows that the. refusal of the debtors to answer the questions before the referee is entitled to but little weight. The refusal was not arbitrary, but under the advice of counsel, who were perhaps not entirely without excuse for suspecting that the questions were not wholly directed to the matter involved in the examination. The witnesses were not compelled to answer any question which counsel might see fit to propound to them, but were entitled to the. ruling of the court on that point, and, in analogy to the old chancery practice of demurrer to the question, if a'witness refuses to answer a question before a referee the party propounding it should have it certified to the court for its decision, and if he fails to do this the question will be considered waived. In the present case the petitioners took no steps to obtain the ruling of the court on the propriety of these questions, but on the hearing on the report of the referee the debtors themselves offered to answer the questions if the court should rule that they ought properly to do so, which offer was refused by the petitioners, who thus persisted in abandoning or waiving their interrogatories. It is also worthy of notice that the entire testimony of the witnesses before the municipal court, which had been reduced to writing, was introduced in evidence on this examination, so that the petitioners had all that they could have obtained by the answers to their' questions.
Order reversed, and new hearing granted.