Ogden & Thomas v. Jackson

1 Johns. 370

Opinion

Spencer, J.

delivered the opinion of the court. From the manner in which this case is presented, we are unable to perceive that a jury has passed on the question, whether the assignment was made in contemplation of an act of bankruptcy, ike. and to give a preference to individual creditors ?

I shall therefore, now assume the question to be, whether the facts stated in the case were in point of law, such as would warrant a jury in inferring the assignment to have been made with those views.

The defendant can be considered in no other light than a voluntary agent for the creditor, T. Cummings, with respect to whom, it does not appear that he had urged the bankrupts for security, or that he even knew of the assignment. Courts of law consider the property of the bankrupt completely at his disposal before an act of bankruptcy committed, so far as to protect a creditor in the receipt of money or the acquisition of goods, if done in the usual course of business ; indeed, if money be obtained or security given when a bankruptcy is inevitable, and even contemplated by the bankrupt, such acts are valid if the effect of measures taken by the creditor. It will not, however, be permitted that a person, insolvent at the time, and contemplating an act of bankruptcy, should parcel out his estate to such creditors as he may1 see fit to prefer; this is opposed to the very genius of the bankrupt laws, which proceed upon a prin ciple of equality and a just distribution.

Footnotes

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* It cannot be expected in general, that any other evidence should be offered of the intention of the bankrupt in parting with his property, ■than.circumstances clearly indicating an approaching bankruptcy, and that the transaction is out of the usual course of trade ; and in this case the stopping of payment and insolvency are controuling circumstances. The language of the memorandum to the assignment, in addition to those facts, is proof of a contemplated bankruptcy ; they say “ this “ is intended to secure them let our business take what “ turn it may.” If the cause rested solely on the circumstances of the Cummings at the time of the assignment, and the manner in which that took place, I should think a jury might well pronounce it to be fraudulent and void.

This case presents the most decided marks of a voluntary preference by the defendants, on the eve of a bankruptcy and in contemplation of it, to favoured creditors, and this proof stands unexplained and uncontradicted by the bankrupts. Notwithstanding some loose cases upon this question, I am disposed to say, in the language of lord Mansfield, that it never entered into the mind of a judge, to say that a ** man in contemplation of an act of bankruptcy, could sit “ down and dispose of his effects, to the use of different creditors.”

I have not taken notice of the debt due to the bank, because they had a pledge for it; it is true, they gave it up on the defendant’s undertaking to pay them out of the proceeds ef the cargo, but that arrangement can have no bearing on . this question. The plaintiffs must have judgment.

Livingston, J. gave no opinion.

Judgment for the plaintiffs, .

6 Term, 84. Barnes v. Freeland. 2 East, 117. Neate v. Balt. 4 Term, 212. Smith v. Hodson. Cowp. 122. 632. Harman v. Fisher. Rust v. Cooper. 3 Wil. 47. Linton v. Bartlet. 4 Burr. 2240. Alderson v. Temple.