Leitensdorfer v. Webb

1 N.M. 34

Opinions

By Court,

Baker, C. J.:

This case comes before us as by appeal from tbe district court for tbe first judicial district. On the thirtieth day of June, 1849, tbe appellee, J. J. Webb, filed in tbe office of tbe clerk of the' circuit court of Santa Fe county, bis petition in tbe usual form, bis affidavit and bond, and sued out a writ of attachment against tbe lands and tenements, goods and chattels, moneys, effects, and credits of Eugene Leitens-dorfer and Jacob Houghton, partners, under tbe name and style of Eugene Leitensdorfer & Co., to recover tbe sum of eight thousand two hundred and ninety-seven dollars and ninety-two cents, tbe amount of a promissory note made by said firm at St. Louis, March 1,1848, payable to the order of Doan, King & Co. of that place, and by them indorsed to tbe appellee. Tbe -writ of attachment was returned to tbe October term of the circuit court: “Levied on all tbe goods, wares, merchandise, books, and credits in tbe store of E. Leitensdorfer & Co., and now in the possession of C. H. Merritt, sheriff, as per invoice,” etc.

At tbe October term, 1849, tbe appellants appeared and filed their demurrer to tbe petition, which appears to have been tbe only steps taken in tbe pleadings in tbe case in tbe circuit court. At tbe September term, 1851, of tbe United States district court, for the first judicial district, the ap-pellee entered his motion for leave to file the papers of the case in the district conrt, aud that the case be entered on the docket and considered a part of the records of that court, which motion was sustained. At the March term, 1852, the appellants filed their plea under the statute, putting in issue the truth of the affidavit upon which the writ of attachment issued. At the following term a trial of this issue was had, and a verdict was found for the appellee. Upon the trial the appellee introduced as evidence a paper purporting to be a deed of assignment from E. Leitensdor-fer to H. N. Smith and Thomas Biggs, of all and singular the goods and wares and merchandise of said E. Leitens-dorfer, and of all the property and effects of the late firm of -E. Leitensdorfer & Co., for the purpose of paying the creditors of E. Leitensdorfer and E. Leitensdorfer & Co. This deed bears date the eleventh of December, 1848, is signed E. Leitensdorfer and by said Smith and Biggs, and after reciting that said Leitensdorfer, as a partner in the late firm of E. Leitensdorfer & Co. is largely indebted, “and that he wishes to secure his creditors as far as his effects will extend,” proceeds: “he, the said Eugene Leitens-dorfer, party of the first part, has this day assigned, etc., his goods, wares, and merchandise, and all his property and effects of the late firm of E. Leitensdorfer & Co., unto H. N. Smith and Thomas Biggs, parties of the second part, * * * for the use and benefit of the creditors of E. Leitensdorfer & Co.” The assignees bind themselves to sell and dispbse of the property so assigned to them, and to receive and collect all property accounts and debts due the said Eugene Leitensdorfer, and due the late firm of E. Leitensdorfer & Co., and to dispose of the proceeds for the use and benefit of the creditors of E. Leitensdorfer & Co. and Eugene Leitensdorfer in the following manner — that is to say: 1. The clerks and agents now serving in the storehouse of Eugene Leitensdorfer are to be paid their wages, and all arrearages due them; then after paying the actual expenses of conducting the business assigned, etc., they, the said Smith and Biggs, are to pay, as the assets are collected or converted into money, all the annexed debts as being those placed in the list of preferred creditors for money- borrowed or deposited, or sncli as Eugene Leitens-dorfer may bave considered more especially bound to pay, in which are the following: to Lewis and Courtney, nineteen thousand nine hundred and ninety-four dollars and twelve cents; Moodie and Simpson, seventeen hundred and forty-five dollars and fifty cents; to A. Laraux, four hundred and sixty-two dollars 'and thirty-three cents; and to Henry O’Neil, fourteen hundred and fifty dollars; and all other sums of money due by E. Leitensdorfer, etc., for simple deposits or money loaned without interest; and after which payment of preferred creditors, with all assets collected, they, the said Smith and Biggs, are to pay all the other creditors pro rata until the assets are expended. This assignment was ratified by said Jacob Houghton, as appears by the following writing at the foot thereof, viz.:

Know all men by these presents, that I, Jacob Hough-ton, do hereby authorize and empower Hugh N. Smith and Thomas Biggs’ as assignees of Eugene Leitensdorfer & Co., to use my name and sign my name in any way that it may be necessary further to use it in settling up business of the late firm of E. Leitensdorfer & Co.

Given under my hand and seal, this eleventh day of December, A. D. 1848.

(Signed) Jacob Houghton, [seal.]

No schedule of the assets assigned or of the conditions was annexed to the deed of assignment. Thomas Biggs, one of the assignees, proved that the assets assigned amounted to about thirty-two thousand dollars; that some four or five days after the assignment an inventory of assets was made out. A rancho of Leitensdorfer was turned over to the assignees, but they had been unable to sell it. Some cattle of Leitensdorfer, on hand at the time, were sold for less than the expense of keeping them, so that a balance had to be paid. Before the assignment Leitensdorfer sent to Chihuahua a considerable amount of merchandise; that of the proceeds thereof he, Biggs, paid out upon orders of appellants about fifty-one thousand dollars. A short time prior to this transaction tbe appellants bad brought from the states merchandise to the amount of between eighty thousand and ninety thousand dollars. Smith states it at about eighty-nine thousand nine hundred forty-four dollars and sixty-six cents; besides an outfit in the way of wagons and teams, estimated at about twenty thousand dollars, making the entire cost nearly one hundred and ten thousand dollars. This outfit was sent back to the states, and was attached at Independence, Missouri, by creditors of appellants. The liabilities of the appellants at the time of the assignment were one hundred and five thousand nine hundred and forty-four dollars and four cents. There were several agents and clerks in the store before the assignment, and many depositors of money, and debts due for money loaned without interest, not named in the assignment. The assignees paid out to creditors upwards of twenty-two thousand dollars, preferred creditors being paid pro rata as money was collected. Agents, clerks, depositors, and creditors named in the deed only were paid. The assignment was made because creditors were pressing the payment of their demands. Smith, one of the assignees, was agent and attorney for several of the creditors, whose demands amounted to some twenty thousand dollars, and threatened to attach the property of the appellants should payment not be made. The books of the appellants, transferred upon the assignment, showed about seventy-five thousand dollars due them, but not above three thousand or four thousand dollars could be collected. The debtors held receipts, offsets, etc. Of the merchandise brought out, about forty thousand dollars’ worth were sent to Chihuahua by the witness, leaving about fifty thousand dollars to be accounted for. The assignment was on the eleventh day of December, 1848. Two or three months after the return of witness from Chihuahua, the goods arrived from the states — arrived in June or July of the same year.

Smith, the other assignee, stated that some small depositors, and the clerks and agents, were paid in full. Assignment was made because creditors were urging payment. The assignee, Smith, as attorney for Lewis and Courtney, threatened to sue for them, but agreed to await the return of the Chihuahua adventure. Had threatened before the return of the Chihuahua adventure to attach the appellants’ property. The Chihuahua expedition had gone as early as September or October. Understood the amount of goods brought out in the summer of 1848 was eighty-nine thousand nine hundred and forty-four dollars and sixty-four cents. Lewis and Courtney and Moodie and Simpson were preferred as creditors because they had assisted appellants in Independence when they were in difficulty. The-deed of assignment was.written out to be submitted to some other parties before signing, some short time before its execution. There was some other testimony, but it is not necessary to state it.

Appellants’ counsel requested the court to instruct the jirry:

1. That as the assignment was the act of Leitensdorfer alone, with which Houghton had nothing to do, the act of one defendant would not authorize an attachment against two, and their verdict must be for the defendants. '

2. Also the deed of assignment was not fraudulent in law, and unless the jury find from the evidence that, in fact, at the time of the commencement of this suit, the plaintiff had good reason to believe that the defendants had fraudulently disposed of their property and effects, so as to hinder, delay, or defraud their creditors, they must find for the defendants.

8. Also that the plaintiff had shown no title to the note sued on, in himself, he had no authority to sue, and the jury must find for the defendants.

4. Also that if the assignees of the defendants had erred in paying off any of the creditors of the defendants, no advantage could be taken of that matter in this suit, but it could only be co'mplained of by the party injured thereby in a suit against the assignees.

The court refused all these instructions, except the fourth, which it gave, and further instructed the jury:

1. That said deed was fraudulent in law, for want of a schedule thereunto annexed by the assignees of the property and effects conveyed to them by the defendants; and because of the want of a schedule thereunto annexed of the preferred creditors, and because of the preference given to some creditors by said deed; that if the jury found from the evidence that the defendants, or either of them, had fraudulently disposed of their property and effects, so as to binder, delay, or defraud their creditors at the time of the commencement of this suit, they must find for the plaintiffs; that the execution of said deed by Leitensdorfer, unaccompanied by proper schedules, was such a fraudulent disposition in law as aforesaid.

2. That the commission of a fraud in law by defendants, or either of them, without any fraud in fact, or without any intent to defraud, was as sufficient cause for attachment as the commission of a fraud in fact, or with intent to commit a fraud.

3. That on the trial of this issue it was not necessary for the plaintiff to show himself a creditor of the defendants, further than is shown in the affidavit, to entitle him to a verdict in his favor on this issue, on the truth of the affidavit, that the sole issue was whether the defendants, or either of them, at the time of the commencement of this suit, had fraudulently disposed of their property and effects, so as to hinder, delay, and defraud their creditors.

To the refusal to give the first, second, and third instructions, and to giving the instructions above given, appellants excepted. The jury returned a verdict for the plaintiffs, and the defendants pleaded to the merits. The appellants moved to set aside this verdict, and that a new trial might be granted, and the motion was overruled by the court. Whereupon a trial was then had upon the merits, and a verdict rendered for the plaintiffs.

The defendants moved to set aside this verdict, and that a new trial might be granted, which motion was also overruled by the court. The defendants then moved in arrest of judgment, and this motion was likewise overruled by the court. Sundry bills of exception were taken by the defendants to the ruling of the court, and filed of record in the cause. Appellants assign the following errors: 1. The district court erred in placing the cause upou its docket. 2. The district court erred in overruling the motion to set aside the verdict on the first issue. 3. The court erred in overruling the instructions asked for by the defendants. 4. The court erred in giving the instructions asked for by plaintiff. 5. The court erred in overruling the motion in arrest of judgment. 6. The court erred in overruling the motion for a new trial on the second issue.

As to the first point: By the second section of the act of the legislative assembly, entitled “an act perpetuating and declaring in force acts, orders and laws, and for other purposes, passed July 14, 1851,” it is provided that all bonds, writs, and processes that have remained in force shall be carried to a final decision in' the courts established by the legislative assembly, to the same effect as they would have been in the courts previously existing: See Acts, 176.

The third section of the act of the legislative assembly defining the judicial districts, assigning the judges and fixing the times and places of holding the respective courts, passed July 10, 1851, provides that any judge of either' district shall have power at any time, at his discretion, to hold a special term of the circuit court in any county of his district, etc.: See Acts, 119, 120. An act amendatory to this last act was passed on the twentieth of July of jlie same session, wherein, after a recital in the preamble, “ whereas, among other things, the word circuit is used in the third section of said act instead of district, it is enacted, section 1, that the word circuit wherever found in the third section of said act shall be so construed and understood to mean district.” These acts, and parts of acts, being in pari materia, must be taken and construed together. It is insisted on behalf of the appellants, that the district court had not power under these acts to take jurisdiction of this case: 1. Because the legislative assembly had no authority to pass the act providing for the transfer of the cause. 2. Because, if it had such power, it has not properly exercised it. In other words, that these acts are not sufficient to effect that purpose. Before considering these points, it is proper to dispose of a preliminary objection raised on the argument of the cause, viz., that the circuit court of Santa Fe county was not a court in contemplation of law, and hence this cause never had a legal existence.

In the year 1846 a conquest was made of this territory by the Americans under General Kearny. The civil government'then existing here having been completely overthrown and destroyed, a provisional or temporary government was established in its stead by the conquering general, under and by authority of the president of the United States, as commander-in-chief. This was recognized and sanctioned by the law of nations. By that authority the circuit courts were established, their jurisdiction vested, and the proceedings therein regulated; but it is insisted that upon the establishment of peace, the authority to establish such courts ceased to exist, and that such courts must necessarily cease with the power that created them. By.the act to establish the temporary government, act 4, section 1, it is provided that the judicial power shall be vested in a superior court and inferior tribunals to be established by law; section 2, that the superior court shall consist of the judges appointed by the president of the' United States. The judges * * * shall hold court at such times and places and perform such duties as shall be prescribed by law. By section 18 — tit. Courts and Judicial Powers — it is further provided that the judges of the superior court shall be ex officio judges of the respective circuit courts. By the eighteenth section the jurisdiction of the circuit courts is thus defined: “The circuit courts in the several counties in which they may be held shall have power and jurisdiction as follows: 1. Of all criminal cases that shall not be otherwise provided for by law. 2. Exclusive original jurisdiction in all civil cases which shall not be cognizable before the prefects and alcaldes.”

Here, then, we have established by competent authority a temporary or provisional government, consisting of legislative, executive, and judicial powers. Upon the conquest it was competent fo.r the president to have abrogated all laws then existing in the territory; this power, however, he did not exercise, save so far as the laws adopted here by bis authority were inconsistent with the existing Mexican laws. On the contrary, it is provided by the first section, under the title “Laws,” that all laws heretofore in force in this territory which are not repugnant to or inconsistent with the constitution of the United States and the laws thereof, and the statutes in force for the time being, shall be the rule of action and decision in this territory. There is no question, then, as to the validity of these laws and these powers thus established and acknowledged by the conqueror. Up to the time of the ratification of the treaty of peace between the belligerent powers, the-unrepealed Mexican laws and those adopted by the conquering power were the laws existing in the country upon the restoration of peace. What effect did the re-establishment of peace have upon these laws ? Did the laws adopted by authority of the United States instantly cease, and the repealed Mexican laws as suddenly revive ? Had the territory been surrendered to Mexico under the treaty, the jus 'postliminii would have operated, and the laws adopted and the changes in government made by the conquering power would-have been abrogated, and the Mexican laws restored to their former force and effect. “The right of the postliminii,” says Yattel, “is that in virtue of which persons and things taken by the enemy are restored to their former state on coming again into the power of the nation to which they belonged:” Yatt., b. 3, c. 14, sec. 204.

But the territory having been retained by the United States under the treaty, the jus postliminii could have no operation, and it is believed it can be clearly shown, both by reason and authority, that these laws, just as they were at the ratification of the treaty of peace, remained in full force and vigor until they should be repealed by the conquering power. The law of nations on this subject is stated with clearness by Chief Justice Marshall in delivering the opinion of the supreme court in the case of The American Insurance Co. et al. v. Canter, 1 Pet. 541. That case went up from the district court of the United States for the territory of Plorida, and involved to some extent the question of the force of the Spanish laws in that territory. He says the usage of tbe world is, if a nation be not entirely subdued, to consider the holding of conquered territories as a mere military occupation until its fate shall be determined at the treaty of peace. If it be ceded by the treaty, the acquisition is confirmed, and the ceded territory becomes a part of the nation to which it is annexed, either on the terms stipulated in the treaty of cession or on such as its new master shall impose. On such transfer of territory it has never been held that the relations of the inhabitants with each other undergo any change. Their relations with their former sovereign are dissolved and new relations are created between them and the new government that has acquired their territory. The same act which transfers their country transfers the allegiance of those who remain in it, and the law which maybe denominated political, is necessarily changed, although that which regulates the intercourse and general conduct of individuals remains in force until altered by the newly-created power of the state. Upon the transfer of the country then under the treaty of peace, all the laws which regulated the intercourse and general conduct of individuals remained unchanged, as well those adopted under the authority of the United States, as the unre-pealed Mexican laws, and none but those which were political in their nature, such as affected their relations with their former and their connections with their new sovereign, were changed.

Such being understood to be the law, it is deemed unnecessary to consider the power of the president in respect to the government of the territory after the treaty of peace and previous to the passage of the organic law. First, then, as to the power of the legislative assembly to pass the act providing for the transfer of canses from the circuit court to the district court. This objection seems to be without force. Could the congress of the United States have passed a law authorizing such transfer ? That body, in legislating for the territories, exercises the combined powers of legislation which are vested in the state and the federal government. There is certainly nothing in the constitution of the United States, or in the nature of the subject, to prohibit the passage of such a law. If congress, then, could pass such a law, it could confer that power upon the legislative assembly, and it has done so in the organic law to a very enlarged extent.

It is declared in the seventh section of that law: ‘ ‘ The legislative power of the territory shall extend to all rightful subjects of legislation consistent with the constitution of the United States and the provisions of this act.” The transfer of these causes, and thus virtually reviving them, was a rightful subject of legislation not inconsistent with the constitution or the organic law. It is no more than the providing for the revival of an abated suit. As for the transfer of a cause from one jurisdiction to another for trial, acts of legislation similar to this are to be found in the statutes of almost every state in the union.

2. Do the acts of the legislative assembly above quoted authorize the district court to take jurisdiction of these causes ? In endeavoring to arrive at the true construction of statutes which may be of doubtful meaning, it is safe to be guided by the well-established rules which govern such construction. Such construction ought to be put upon a statute as best meets the intention of the makers, which intention is sometimes to be collected from the cause or necessity of making the statute, and sometimes from other circumstances; and when such intention can be discovered, it ought to be followed with reason and discretion in the construction of the statute, although such construction seem contrary to the letter of the statute. A thing which is -within the intention of the makers of a statute is as much within the statute as if it -was within the letter, and a thing which is within the letter of a statute is not within the statute, unless it be within the intention of the makers, and such construction ought to be put upon it as does not suffer it to be eluded: 6 Bac. Abr. 1, 5, 10, p. 379; 15 Johns. 379 [People v. Utica Ins. Co., 8 Am. Dec. 243]; 12 Mass. 385; 1 Bl. Com. 61; 1 Kent Com. 461. If the meaning of a statute be doubtful, the consequences are to be considered in the construction: 6 Bac. Abr. 391.

What was the cause or necessity of making the statutes before quoted?’ A court -which had been legally established, witb jurisdiction of causes of a class to which this case properly belongs, had, upon the taking effect of the organic law, ceased to exist, leaving unsettled a number of cases then pending, involving rights and interests to a large amount, no provision for them having been made in the organic law. To provide that these causes should not absolutely and finally abate, was a rightful subject of legislation. It is clear, that the district courts, established by the organic law, are the only courts in the territory to whose jurisdiction these eases properly appertain. It is equally clear that the legislative assembly did not intend that these causes should absolutely and finally abate. And we must presume (exercising reason and discretion) that it intended that they should be transferred to and disposed of by a court of competent jurisdiction. By the tenth section of the organic law it is provided, that the judicial power of said territory shall be vested in a supreme court, district courts, probate courts, and justices of the peace. Here is the whole judicial power of the territory. In the same section it is provided, that “the jurisdiction of the several courts herein provided for, both appellate and original, and that of the probate courts and justices of the peace, shall be as limited by law.” A part of the jurisdiction of the district courts is defined and limited by the organic law, which gives it the combined jurisdiction of both the circuit and district courts of the United States. Another portion of its jurisdiction is defined and limited by the Kearny code and by subsequent statutes, and amoDg these are the statutes before quoted, providing for the transfer of these causes from the old circuit courts, and for their final disposal in the district courts.' It must be presumed that the object of the legislative assembly was neither unjust, Contradictory, nor absurd. It is true, the language used in the statute is not the most felicitous that might have been used for the expression of its obvious intention. Nevertheless, it is sufficiently so to lead, under the recognized rule of construction, to a satisfactory comprehension of the meaning intended to be conveyed.

The object of a law may sometimes be ascertained by reference to the title or to the preamble. The act of July 14 is entitled, “ An act declaring in force acts, orders, and laws, and for other purposes.” The second section provides that “all bonds, writs, and processes that have remained in force, shall be carried to a final decision in the courts established by the legislative assembly to the same effect as they would have been in the courts previously existing.” As the legislative assembly had no power to establish courts, and it is clear beyond doubt that its intention was that these cases should be carried to a final decision, it seems equally clear that this final decision must be in the newly established courts, to whose jurisdiction these cases properly belong, or else the legislative act must be adjudged an absurdity.

In taking cognizance of these cases, there can be no difficulty. Each court is competent to determine its own jurisdiction, and whether any particular case from the former courts properly falls within it, and to take or decline the same accordingly. Nor is there any well-founded doubt as to the meaning of the words of the statute, “the courts established by the legislative assembly.” The whole judicial power of the territory had been vested in certain courts, specified in and' created by the organic law. The legislative assembly must be presumed to have known that it had no power to create or establish courts, in the proper sense of these terms. It had, only a few days before the passage of the act now under consideration, on the tenth of July, passed the act “defining the several judicial districts, assigning the several judges to their respective districts, and defining the times and places .of holding courts.” The third section of this act provides that any judge of either district shall have power to hold a special term of a circuit court in any county in his district. Here' the legislative assembly, in using the words circuit courts, committed an error of which it seems it afterwards became sensible; and to remedy which, it passes the act of the twentieth of July, already mentioned. In the act of the fourteenth of July, the word established, in the sentence, “ the courts established,” is in the past tense, and must be taken to refer to an act then already passed; and as the act of July 10, was the only act which had then been passed upon the subject, to it alone could reference be had. The legislative assembly may have supposed, however, that the act of organizing districts, assigning the judges, and fixing the times and places of holding the courts, was in some way an “ establishing of courts,” and was hence led to use these terms in the act of July 14. Such an error would, however, in no degree weaken the force of the act. If these cases can be carried to a final decision in the courts only established by the legislative assembly, as is contended on the part of the appellants, then, as the legislative assembly has created and can create no courts, it follows that its legislation touching this subject must be treated as a nullity. This would be to violate the well-established rules of construction applicable to the facts of the case.

3. As to the refusal to set aside the verdict on the first issue: This issue involved the truth of the affidavit on which the attachment issued. The affidavit contained all that was required to authorize the writ to be issued: the amount of the debt; that the plaintiff had good reason to believe, and did believe, that the defendants fraudulently disposed of their property and effects so as to hinder, delay, and defraud their creditors, in the language of the act. The defendants, by their plea, say that at the time of the institution of suit, etc., they, the said defendants, had not fraudulently disposed of their property and effects so as to hinder, delay, or defraud their creditors. Such is the issue, and it involved simply the question whether or not they had made such a disposal of their property and effects, and nothing more. The justice of this decision of the court depends upon its ruling in refusing and giving instructions to the jury. These instructions have already been inserted herein. There is no direct proof of the dissolution of the partnership, although it is inferable from the instrument of assignment and the testimony of some of the witnesses. The rule of law is, that when a partnership once exists, it continues to exist as to its creditors, notwithstanding it may have been regularly dissolved as between the mem-

4 bers; and also, in case of the insolvency of the concern, as to the partnership effects; and the partnership estate can not be used in a manner inconsistent with the wiuding up of the concern. Hence, notwithstanding a dissolution of the firm may have taken place between Leitensdorfer and Hough-ton, they still wei-e partners as to their joint creditors, and also, being insolvent, as to the partnership estate. The deed of assignment, it is true, is made on the one part by Leitensdorfer alone; but it recites that he, as a partner of the firm of Leitensdorfer & Co., is largely indebted, and then proceeds to convey all of his own goods, wares, and merchandise, and also “all his property and effects of the late firm of E. Leitensdorfer & Co.” It appeal's to have been executed on the eleventh of December, 1848, and on the same day (and, it is presumable, at the same time) Houghton, the other member of the partnership, naturally ratified this act of Leitensdorfer by indorsing on the assignment, in writing, under his hand and seal, his authority to the assignees named in the deed, to use his name in any way that it might be necessary for them to use it in settling up the business of the late firm of E. Leitensdor-fer & Co. Thus Houghton, by empowering the assignees to use his name for all the purposes contemplated by the assignment, sanctions the acts of Leitensdorfer, and so far as these tend to hinder and delay or defraud the creditors of the firm, becomes equally implicated with, him in a suit against partners. All the members must be joined, for they are so far considered as but one person.

The act of one partner touching the partnership concerns, is the act of and binds all the members of the firm; so the fraud of one partner, in respect to the partnership estate, affects all the others, and especially where it is with their privity or consent. If .this were not so, it would be impossible to make the attachment process effectual against any partnership, however grossly fraudulent its acts might be, so long as there should be one honest member of the concern. The first instruction asked for is hot law, and was properly refused. The first part of the second instruction asked for by the appellauts will be considered in connection with the instructions given, the remaining part of the instruction having been subsequently given in substance.

The third instruction was properly overruled. The mere possession of the note was sufficient evidence of property in the same to entitle the holder to sue, especially when indorsed as this was; besides, the property in the note was not in issue on the trial of the first issue. The nest instruction given by the court was, “that the deed of assignment was fraudulent in law.” To determine the correctness or incorrectness of this instruction involves a consideration of the laws regulating and controlling such transactions, in force in this territory at the date of assignment. If under these it be valid, the instruction was erroneous; if invalid, it was correct. It has already been seen that the Mexican laws, as modified by the Kearny code, remained in force in the territory after the restoration of peace; and as the deed of assignment bears a subsequent date, it follows that its character must be determined by the Mexican laws so modified. The Mexican laws which regulate and control the disposition of the property and effects of insolvents and bankrupts, so far as we have been able to consult them, may be found in 5 Febrero, c. 10, p. 352; Los Suite Partidas, tit; 15, pt. 5; and in White’s Kecopilaeion, vol. 1, pp. 170-175, and the authorities there cited.

Few proceedings are prescribed by which their property and effect^ may be disposed of for the payment of their debts: first, cession of property; second, concurso, or a meeting of the creditors of the debtors, by which the creditors secure what is due to them, so 'far as the amount of their property is capable of satisfying them. By the proceeding of cessiop, which is termed surrender in thePartidas, those who are unable to pay their debts with the property they possess, cede it to their creditors, in order that they may be paid out of it as far as it may be sufficient. This cession or surrender may be made, first, by every person who is his own master, or who is subject to the power of another not having the means of paying his debts; second, the cession ought to be made before the judge by the debtor himself, or by his attorney, acknowledging his debts, and after a sentence lias been given against him; third, it is to be done by a petition of the debtor to the proper judge, stating the reason upon which it is founded, accompanied by two memorials or schedules, one of his property and effects, and the other of his creditors, praying that the cession may be admitted, the petitioner being held to merely nominal security to pay any balance that may be, if he should become able. To authorize this proceeding, Febrero and Palacio both say at least three creditors are necessary, and their names must be set forth in the schedule or list to be given by the debtor at the time of making the cession.

The concurso, or meeting of the creditors, is the other-proceeding whereby creditors obtain payment as far as the insolvent’s effects will satisfy their demands, and in which the debtor cites all his creditors, in order to be paid according to the force and priority of the right of each!

The concurso differs from the surrender of property in this: 1. Because, in concurso, as the only contention is with respect to the strength and preference of the sum due to the creditors, the amount due to each of them ought not to be expressed in the schedule or list of creditors. 2. Because, in the proceeding of concurso, each creditor is cited individually and particularly. 3. Because bankrupts may form a concurso, but can not make a cession. In'reference to the two modes of proceeding, Palacio says that it ought to be observed, in order to avoid confusion and mistake; that what is said of one appertains to the other, and that really they are the same thing, whether under the name cesión de bienes, or under that of concurso volun-tario y preventivo; the first being called cession de bienes, because the debtor makes the cession, and the other concurso, because the creditors resort to it, and that there is no effectual difference between cesión and concurso, they are both directed to the same end — the payment of the debts due by the insolvent, as far as the property will go in satisfaction of them. Such are the general rules of the Mexican law which were applicable to and controlled the disposition of property and effects of insolvent debtors in this territory, at tbe date of assignment; if there are other and different laws bearing upon the subject, they have not been cited to us; neither have they been found.

By what authority, then, shall the validity or invalidity of this assignment be determined ? By the tenth section of the organic law, it is provided that the supreme and district courts, respectively, shall possess chancery as well as common law jurisdiction. Jurisdiction is properly the power to hear aud determine causes. The common law, then, at least so far as to control and regulate the proceedings of the district court in the hearing aud determining of causes, has been extended over this territory by the act of congress, aud that court, when it proceeds to hear and determine, must observe the course of proceeding prescribed by the common law, although the rights and liabilities of parties are to be determined according to the Mexican laws in force, and the acts of congress and' of the legislative assembly applicable to the subject. In courts whose proceedings are according to the course of the common law, it is the duty of the court to pronounce upon the legal validity or invalidity of instruments of the class of the assignment in this case, and to determine all questions of fraud in law which may arise in the progress of a cause.

This is a principle which need not be supported by reference to authorities. The question, then, of the validity of this deed of assignment, when introduced in evidence, was to be determined by the court and by reference to the laws in force in the territory at the time the assignment was made. Any attempt by the appellants, by means not sanctioned by the laws then in force, to dispose of their property aud effects, and which tended to hinder and delay their creditors, was in law a fraud. “ The doctrines of constructive fraud” (or fraud in law), says Story, “although they may seem to be of an artificial, if not of an arbitrary character, are founded in an anxious desire of the law to apply the preventive principle of justice, so as to shut out the inducements to perpetrate a wrong, rather than to rely on mere remedial justice after a wrong has been committed:” 1 Story Eq. Jur. 280. Thus acts contrary to public policy, to sound morals, to tbe provisions of a statute, etc., however honest the intention with which they may have been performed, are deemed constructive frauds, or frauds in law, and are absolutely void. The policy of the Mexican •laws in force here had prescribed certain modes in which the property of insolvents should be disposed of for the benefit of their creditors. It is clear that the parties to tbe assignment in this case did not comply with the essential requisites of those laws in their attempts to dispose of the property of the appellants. No petition was presented to any judge or court, no schedule of debts or creditors was made out and submitted, no sentence of a court or judge sanctioning a cession or surrender, no citation of creditors, general or special. The parties to the assignment saw proper to disregard the requirements of the law in their attempt to dispose of their effects, and the ordinary consequences must follow. The instruction of the court upon this point was therefore correct.

This also disposes of the third and fourth errors assigned, as they are based upon the ruling of the district court in giving and refusing instructions to the jury. It is objected that the court erred in overruling the motion to set aside the verdict on the trial of the second or main issue. It is difficult to perceive any foundation for this objection. As the record contains no part of the evidence upon the trial of this issue, the verdict of the jury must be presumed to have been founded on sufficient evidence. This, then, in the absence of the evidence, cures any defect that may have existed on the score of evidence. Lastly, it is insisted that the district court should have arrested the judgment upon a critical examination of the record; and upon the best examination of the laws bearing upon the case which circumstances have permitted, I am unable to see any sufficient grounds to support this objection. Some stress has been laid upon the reasons assigned by the district court for its instructions. It has never been held, I believe, that if instructions be correct in themselves, they shall be deemed invalid because an erroneous reason may have been given for them. To allow such objections to prevail would be to lose sight of tbe merits of tbe ease, and to decide it upon a mere quibble.

Tbe common law bad not, at tbe date of this assignment, any force in this territory; and it would violate a plain maxim of all municipal laws, that contracts must be determined according to tbe lex loci, by tbe law of tbe place where made, unless stipulated otherwise — a maxim resting upon tbe reasonable presumption that all men contract with reference to tbe existing laws. Apply this rule to this case and we are forced to determine tbe character of this assignment by tbe Mexican law, as modified by tbe Kearny code. I hold that tbe courts of tbe territory are bound to be governed in their adjudications upon rights and liabilities by tbe Mexican laws as modified by statute, and by no other. We may look to other similar systems, with a view to illustrate, but not to change, tbe positive provisions of our own. In Florida tbe Spanish law prevails under modifications. There they look to tbe Spanish authorities for the law. In Louisiana tbe same system prevails to a certain extent. At one time it existed there in all its vigor. When tbe territory passed under tbe dominion of tbe French, tbe civil law, as modified by the policy of that nation, was introduced to a certain extent, and, so far as it was inconsistent with, repealed or modified tbe Spanish law. Those systems, thus adopted, prevail there at this day. The Spanish civil law and tbe French civil law are derived from tbe same.source, tbe Homan civil law, and are scarcely more dissimilar than tbe common law of New York and that of Indiana. It would, therefore, be much more just to look at tbe civil law of Louisiana for rules to guide us than to tbe common law of any state. I find that in tbe civil code of Louisiana tbe principles of tbe Mexican law in relation to insolvents and their estates are strongly supplanted. By article 1979 of that code it is provided every contract shall be deemed to have been made in fraud of creditors when tbe obligee knew that tbe obligor was in insolvent circumstances, and when such contract gives tbe obligee, if be be a creditor, any advantage over tbe creditors of tbe obligor, and by article 1980 it is provided that by being in insolvent circumstances, is meant that the whole property and credits are not equal in amount, at a fair appraisement, to the debts of the party. Such is the French and Spanish civil law as adopted in Louisiana, and it is certainly quite as strong against the transaction in this case as the Mexican law.

But whatever be the laws of other states, I am bound by the Mexican laws, as they prevail in this territory, to disregard them, and to seek elsewhere for rules to govern the case would be to legislate- and not to adjudicate. I have examined the common law cases having analogy to this, and have been unable to find any one wherein an 'assignment has been sustained, in which it has been attempted to prefer creditors simply by a classification of thei? claims, without the names of those- creditors or the amounts of their demands. On the contrary, in the case of Naylor et al. v. Fosdick, 4 Day, 146 [S. C., 4 Am. Dec. 187], the most strictly analogous to this,' the assignment was declared void, although it was more certain in its details than this, and was accompanied with schedules. But this ease is not determined by the common law. I am therefore of opinion that the judgment of the first district court ought to be affirmed.