50 Ala. 573 | Ala. | 1874
We will assume, that it can be fairly collected from the agreement described in the pleadings, that the contracting parties had received from their debtors, Parker, Lake & Co., payments or preferences, which they could not retain against an assignee in bankruptcy, and the making or giving of which subjected the debtors to involuntary bankruptcy, at the suit of a creditor not participating in them. We will further assume, that the object of the agreement was to prevent the institution of proceedings in bankruptcy, so that such payments or preferences could be preserved and retained. Proceeding on this assumption, the conclusion we have reached is, that the agreement is valid, not offending public policy, or violative of law. To render the agreement invalid, we must be prepared to pronounce, that the payments or preferences, which the contracting parties had received, were made or given and accepted in violation of law. This we cannot declare, for, in the absence of the provisions of a bankrupt law, the right of a debtor to prefer one creditor to another, either by payments, or assignment, sale, or conveyance of property, is as absolute and unqualified as his power of disposing of his estate. The only qualification of this right is, that the appropriation must be absolute to the payment of the preferred debts, reserving no benefit to the debtor. That the debtor is in failing circumstances, or actually insolvent, and that the favored creditor has full knowledge of his condition, and obtains a preference which deprives all other creditors of the means of payment, does not affect or qualify the right. A reference to the numerous decisions of this court affirming this principle, commencing at an early day, is unnecessary, for they are familiar to the profession, and are recognized as just expositions of- the law. A debtor may be actually insolvent, and suffer his property to be seized under legal process; or he may confess a judgment in favor of a particular creditor, that his property may be so seized, without offending any other than the bankrupt law; and the seizure, or the judgment, will prevail against all the world, except an assignee in bankruptcy. No creditor can avoid the seizure, or impeach the judgment.
When this agreement was made, no proceedings in bankruptcy were pending. The jurisdiction of a court of bankruptcy had not attached. Neither the debtor, nor his estate, nor his creditors were then under the operation of the bankrupt law. The payments or preferences which the contracting parties had received, and which they were solicitous to preserve, were legal, and their right to them was indisputable. We can see no good reason for declaring that it was offensive to public policy, or violative of law, for them to contract to preserve the legality of, and the right to such payments or preferences. A contract contravening the policy or provisions of the bankrupt law is doubtless void; so is any contract to defeat • its operation, or prejudicial to creditors at large, or securing one creditor a preference over another, not allowed by
The rulings of the court below were adverse to this conclusion, and its judgment is therefore reversed, and the cause remanded.