Indebitatus Assumpsit for goods sold and delivered &c. The
Defendants pleaded that they were certificated bankrupts, and that
the cause of action arose before the bankruptcy; to which the
Plaintiff replied, that the certificate was unfairly obtained; and,
on the trial of the cause, offered testimony in support of the four
following exceptions to wit:
1. That the debt on which the commission was founded, had
been contracted prior to the passing of the act for the regulation
of bankrupts; 3 State Laws. 644. although a bond had been given for
it since the Act was passed.
2. That the petition was exhibited by one person, in the
name of himself and his partner, without any other than the general
authority of the partnership; which is not sufficient for this
purpose. [380-Continued.]
3. That the Defendants were not copartners at the time
the commission issued jointly against them. And
4. That two of the Defendants had not committed any act
of bankruptcy prior to the issuing of the commission.
The admission of testimony upon these points was opposed by the
counsel for the Defendants, who contended, that the certificate was
conclusive evidence of the debt, trading, bankruptcy, and
conformity; and that fraud in obtaining it, or a concealment of
effects, were the only matters which the Plaintiff could now be
allowed to prove, according to the decisions under the 5 Geo. 2. c.
30. which statute only differs, on this point, from our act of
Assembly, by the use of the word fraudulent, instead of unfairly;
words, however, of synonimous import. 3 State Laws 644. Sect. 24.
Green B. L. 244. 245. 9. 1 Stra. 533. Co. B. L. 352. 1 Atk. 79.
208. 2 Wils. 140. They urged, that any objections to the form of
proceeding could only be taken by the bankrupts, who were likewise
precluded by their acceptance of a certificate. 2 Stra. 746. 5
Burr. 2628. Term. Rep. 409. and they controverted the power of the
Court to unravel, in this way, the decision of the commissioners,
whose jurisdiction was competent and conclusive as to all the
preceding steps.
The Plaintiff's counsel, having premised generally, that where a
limitted jurisdiction is established, the Courts of common law are
bound to prevent any infraction of that limitation; 3 Black. Com.
112. 109. and that a Court of limitted jurisdiction can never be
vested with a right to determine upon the legality of its own acts;
Ibid. 112. 114. 1 Bac. Abr. 563. Sir. T. Ray. 189. Salk. 548. 1 P.
Wm. 476. Cowp. 26. contended, that the Common Pleas had a
concurrent authority with the Supreme Court to restrain the
commissioners of bankrupts within the boundaries prescribed by the
act of
Page 1 U.S.
380, 381
Assembly; and that if there was no express provision in the Act
of Parliament in England, or in the act of Assembly here, as to the
mode of ascertaining a violation of those boundaries, yet, by
analogy to other special jurisdictions, the proceedings of the
Commissioners could not be the proof of their own legality; but,
from the nature and reason of the thing, that question must be
examinable at another tribunal. 1 Bac. Abr. 653. Lev. 288. Caf.
temp. Hard. 186. 145. 2 Bl. Rep. 1145. 2 Wils. 582. They remarked,
that, 'till the 4 Ann. c. 17. S. 7. no provision was made as to the
manner in which a Bankrupt should bring forward his discharge; and
that, even under that statute, he was obliged to set forth all the
proceedings before the Commissioners, which eventually produced the
statute of 5 Geo. 2. authorizing the Defendant to plead his
certificate. This, however, they insisted, only made the
certificate prima facie evidence; relieving the Defendant from the
necessity of stating the petition, trading &c. in his plea, and
obliging the Plaintiff to set forth his exceptions in his
replication. See 2 Ld. Ray. 1646. Stra. 869. S. C. Co. B. L. 356.
Doug. 160. They then cited many authorities to show, that since, as
well as before, the statute of 5 Geo. 2. c. 30. and subsequent to
the granting the certificate, as well as previously, the debt,
trading, act of bankruptcy &c. had all been controverted and
enquired into in the Courts of law, in a variety of forms, between
a creditor and the bankrupt, between creditors and the assignees;
and, in short, between any persons who were interested. 2 Stra.
744. Cowp. 569. Bull. 37. Co. B. L. 307. 314. Term. Rep. 409. 573.
n. 2 Stra. 822. 2 Stra. 1042. Barn. 81. 2 Bl. Rep. 725. Cowp. 823.
Co. B. L. 348. 1 Ld. Ray. 724. 1 Bl. Rep. 70 Bull 40. Palm. 325.
Cowp. 427. 428. 1 Salk. 110. Cowp. 398. Bull. 39. 1 Atk. 201. Co.
B. L. 71. Cro. E. 13. 72. Barn. 160. 2 Stra. 809. 7 Vin. 61. pl.
14. 1 Bl. Rep. 441. Co. B, L. 74. Green. B. L. 44. 1 Burr. 467.
484. &c. &c. They added, that to prevent the injustice
which, in many cases would happen for want of a Court of Chancery,
the Courts here are obliged to deviate from the rigorous rules of
the common law, and to adopt the principles of equity. Although in
England the common law courts cannot enquire into the consideration
of a bond, or decree the specific performance of a contract, yet
the Courts of Equity will do both; and here, to afford a similar
relief, wherever the Chancery would order a deed to be given, our
Courts, instead of doing that, presume the deed to have been
actually given, and adjudge the case accordingly. Thus, in the
present case, the same reasons which would induce the Chancellor to
supercede a commission of bankrupts, will induce this Court to
consider the commission as virtually superceded.
Shippen, President.
This is an action brought by Samuel Pleasants against John Meng,
and three other persons, in which the Defendants have pleaded, that
they are certificated bankrupts, and the Plaintiff has replied,
that the certificates were unfairly obtained.
Page 1 U.S.
380, 382
If the plea had been drawn up at large, instead of being entered
on the docquet, it must have been pursuant to the act of Assembly,
'that the cause of action did accrue before such time as he became
a bankrupt;' and the certificate is made by the act only a matter
of evidence. The question, now to be decided, is, whether, upon a
trial at law, the creditor of a bankrupt may give evidence to
controvert the trading, bankruptcy, and conformity? Or, whether the
certificate is conclusive proof of all the proceedings before the
Commissioners: And in this case it is fortunate that the act of
Assembly nearly pursues the words of the statute of 5 Geo. 2. c. 30
for, the analogy of the law must greatly strengthen the application
of the authorities, and facilitate the decision of the Court. The
clause, on which the argument arises, is thus expressed both in the
English statute, and the act of Pennsylvania: 'And, in case such
bankrupt shall afterwards be impleaded for any debt due before he
became a bankrupt, such bankrupt shall be discharged upon common
bail, and may plead in general, that the cause of action did accrue
before such time as he became a bankrupt; and the certificate of
such bankrupt's conforming and the allowance thereof, shall be
sufficient evidence of the trading, bankruptcy, commission, and
other proceedings precedent to the obtaining such certificate,
unless the Plaintiff can prove the said certificate was obtained
unfairly, or make appear any oncealment by such bankrupt to the
value of Fifteen Pounds.' Certain it is, that from the 13 Eliz. c.
7. (at which time Commissioners of bankrupts were appointed in
England) until the passing of the 5 Geo. 2. a period of about 200
years, there is no instance that ever the proceedings of the
Commissioners, when called for, were not revised and corrected in
the Courts of Law. By the statute 5 Geo. 1. c. 24. the bankrupt's
certificate might be given in evidence, and was directed to be a
full discharge of any action that should be brought by any creditor
of such bankrupt; yet, it appears by the case in 1 Stra. 533. that
it was still necessary to prove the act of bankruptcy, besides
producing the certificate; because the words, such bankrupt,
related to such person as was described in the Under that statute,
therefore, the certificate was so far from being conclusive
evidence, that it was not sufficient, without other proof, to show
that he was an object of the act, by being a trader, and having
committed an act of bankruptcy. What then was the alteration
introduced by the 5 Geo. 2. c. 30? It had been found very
inconvenient to compel a bankrupt, as often as he was sued, to
enter into a proof of all the circumstances which had already been
proved before the Commissioners: This statute, therefore, enacted,
that 'the certificate should be sufficient evidence of the trading,
bankruptcy, commission, &c.' and here, ex vi termini, we must
infer that this was not the case before, as the word sufficient
naturally respects what had been hitherto insufficient. The
statute, however, does not declare, that the certificate shall
be
Page 1 U.S.
380, 383
incontrovertible, or conclusive, evidence, but, in rendering it
sufficient evidence of certain facts, which the Bankrupt was before
under the necessity of establishing by specific proofs, it has
merely transferred the burthen from him to the creditor, with whom
it now lies to prove, according to the terms of our act of
Assembly, that the certificate was unfairly obtained. That the
certificate was unfairly obtained, is, indeed, an expression
attended with some ambiguity; but it must have respect to the
subject matter, which was the trading, bankruptcy, commission,
&c. And, if a man had not been a trader, or, if he had not
committed an act of bankruptcy, it was unfair to grant him a
certificate: So that unfair is tantamount to illegal; holding
equally with the converse of the proposition, that a certificate
illegally must be unfairly, obtained. If the Parliament of England
intended to make so essential a change in the bankrupt system, as
to leave the proceedings of the Commissioners without controul, or
appeal, it would be strange that no stronger, no clearer
expression, was employed for that purpose; and, if such was indeed
their sense, it must appear still more strange, that the Courts of
Law have been so far from understanding it, that in every case
since the passing of the statute, they have permitted the same
investigation which was before allowed. In Cowp. 823. it appears,
that a Bankrupt, having obtained a certificate under a second
Commission pending a former one, under which a certificate had been
refused, an application was made for an Exoneretur to be entered on
the bail-piece; but the Judges pronounced the second commission to
be absolutely void, and discharged the rule to show cause. Now, if
the certificate were conclusive, this decision was illegal; for,
the certificate is as much evidence of the commission, as of the
trading and bankruptcy; and its validity was a question equally
before the Commissioners, whose sanction it had received. It is
clear, therefore, in every view, from the words of the law, and
from judicial interpretations of its meaning, that the Legislature
has only made the certificate evidence; and the nature of evidence
necessarily implies an adverse right to controvert and repel. A
foreign judgment is allowed to be prima facie evidence of a debt,
and yet it was adjudged to be open to examination; for, as I have
already hinted, although some kinds of evidence are stronger than
other kinds, yet, in that respect, they are all placed on the same
footing. Doug. 1. But there is a general consideration, independent
of the act of Assembly and the authorities; which is, that the
matters determined by the Commissioners are certainly matters of
law, arising from the facts; as, what avocation constitutes a
trader, or what conduct amounts to an act of bankruptcy: Would it
not then be a strained and unreasonable thing to suppose, that the
Legislature has established a jurisdiction of this sort, competent
to decide questions of the greatest magnitude in their operation,
and yet, that
Page 1 U.S.
380, 384
there should be no appeal to examine its proceedings, no power
to correct its errors! We are happy, indeed, in knowing that our
decisions, if erroneous, may be rectified in the Supreme Court; the
adjudications of which are also liable to the ultimate scrutiny of
the High Court of Errors and Appeals. And, I repeat, is it not
absurd, therefore, to imagine, that the limited jurisdiction of the
Commissioners of Bankrupts is alone exempted from controul; or,
that men, unskilled in jurisprudence, however upright in their
general conduct, and intelligent in their particular arts and
posessions, should enjoy an absolute authority in the discussion
and determination of every nice point of law, which is incident to
the extensive and intricate investigations of the bankrupt
system?
For these reasons, the Court are unanimously of opinion, that
the evidence offered by the Plaintiff, ought to be received.
The case, upon the evidence, appeared to be this: The
Defendants, John Meng, William Goodwin, James Smith, and Robert
Cumming, had been copartners in trade under the firm of John Meng
and Co. On the 26th of April 1785, Goodwin alone, in the name of
himself and his partners, executed an assignment of all their
personal property to Curtis Clay et al. in trust for the benefit of
the partnership creditors: And, on the 30th of the same month, he
executed another assignment, in the same form, and for the same
use, of all the real estate of the company. On the 25th of June
following, a third assignment was executed by Meng, Goodwin, and
Cummings, of all the real and personal estate of the partners to
trustees, for the same use; at which time the Defendants were
indebted to the Plaintiff ( among others) and to Messrs. Rose and
Dickens (who afterwards became the petitioning creditors) to a
considerable amount. After these transactions, about the beginning
of July, 1786, Meng opened a store in Philadelphia under the old
firm of John Meng and Co. in which, however, the messenger of the
company only found a small quantity of soap, and a bundle of paper
money; but Cummings was gone to Georgia to collect debts under the
direction of the assignees, and Goodwin and Smith resided and kept
a store at Cooper's Ferry, in New Jersey. On the 1st of August,
1786, a joint commission of bankrupts against all the four partners
as traders by retail, issued upon the petition of Rose, who alone
subscribed it in behalf of himself and his partner Dickens, having
previously sworn that John Meng and Co. were indebted to them on a
bond bearing date the 8th of July, 1786; payable on the 15th of the
same month; which bond, it was admitted, had been given for the
precedent debt due at the time of the assignment of the 25th June,
1785. It was also agreed that Meng and Cummings
Page 1 U.S.
380, 385
had committed acts of bankruptcy; and, with respect to the other
two partners, it appeared from the minutes of the Commissioners of
bankrupts, that the Sheriff's Officer, having a Ca. Sa. against all
four at the suit of Rose and Dickens, had made enquiries for Smith
and Goodwin at the place where Meng kept his store in Philadelphia,
and at the Ferry-house from which they usually crossed to New
Jersey, but could not find them; that they had requested the
Ferry-man to keep a boat in readiness for them, for fear of a writ
being issued against them; that the Ferry-man, observing the
approach of the Sheriff's Officer, gave them notice; that thereupon
they concealed themselves in the Ferry-house, saying that they did
not like to go to Gaol, but would be able to pay all their debts;
and that soon afterwards they crossed the river to elude the
pursuit of the officer.
On these facts, the Plaintiff's counsel contended, 1st, That the
debt of the petitioning creditor was not within the bankrupt law,
which provides, that the debt, on which the commission issues,
'shall have arisen upon a contract or transaction subsequent to the
passing of the act.' 3 State Laws 644.sect.3. But here the bond
could be given for no other purpose than to make the Defendants
bankrupts; and, although it may extinguish, it cannot change the
original nature of the debt. The doctrine of extinguishment at
common law, is, indeed, more limited than the adverse counsel will
admit; for, although a security of a superior nature will alter the
remedy, the debt itself remains. 6 Co. 44. T. Rep. 17. Barn. 81. 2
Stra.1042. Cases Temp. Hard. 267. And the doctrine which applies in
the last case to support the commission there, applies to prove the
invalidity of the one at present in controversy. Besides, an act
between obligor and obligee, that tends to the injury of other
persons, the law deems a fraud, by which, so far, at least, it is
vitiated and annulled, I Burr.474. 3 Co. 80. The bond of the
petitioning creditor therefore, taken in every point of view, was
insufficient to found a commission; for, whether it was given
without a consideration, or in consideration of a precedent debt,
it is equally contrary to the act; and, if it is regarded as a
fraudulent collusion between the petitioning creditor and the
bankrupts, although it may be obligatory upon them, it is void as
to a third person. See Term. Rep. 406. Doug. 282.
2. The petition and affidavit of Rose alone,
notwithstanding it is said to be on behalf of himself and his
partner Dickens, was also irregular and illegal. There are,
perhaps, no express decisions on this point; but, upon general
principles, he who acts for another must show his authority; and,
in the case of partners, for a purpose of this nature, all must
subscribe the petition, or delegate an express power to another for
doing it in their name; a point already determined in this Court,
in the case of Gerard v. Busse et al. ant. 119. This is not an act
that can be in contemplation in the business of a partnership; and
the reason is the stronger against allowing it,
Page 1 U.S.
380, 386
as a bond must be given by the petitioning creditor. 3 State
Laws. 644. sect. 3. 3. But the commission itself has issued
erroneously and illegally; for the Defendants were not partners at
the time it issued; and a joint commission can only issue against
partners. The assignment of the 25th of June, 1785, divested all
their partnership stock, and, consequently, dissolved their joint
connection; for, partnerships may be dissolved by tokens, &c.
or, they necessarily cease with the objects of their institution. 1
Domat. lib. I. tit. 8. par. 10 11.sect. 5. pa.155. But, although
there was no formal dissolution of the partnership, it is clear
that the second trading was merely colourable, for the purposes of
a bankruptcy; and they are described to be traders by retail, which
cannot relate to their former general partnership, but to the
recent colourable trading. To carry on business after a man's
effects are gone, is, in itself, a fraud. Co B. L. 80. 81. 82. I
Burr. 478. 2 Black Rep. 996 362. 4. In a joint commission, all the
parties must have committed acts of bankruptcy. Co. B. L. 4. I Atk.
97. The certificate, therefore, can be of no avail, at least, as to
Goodwin and Smith, who never committed acts of bankruptcy. In
crossing the river, although they said it was to avoid an arrest,
they were only returning to their home; and absconding, in order to
constitute an act of bankruptcy, must be from the usual place of
abode, where the party does business; which, in the present case,
was in New Jersey, whither they retreated, and not in Pennsylvania,
where the writ issued. In Co. B. L. 71. it is said, that, if a man
flies from the State to which he belongs, this is an act of
bankruptcy: but here the parties did not fly from, but to, their
State, or home; and a denial, or keeping house, to bring a man
within the act, must be at his own place of residence, not at the
residence of another person. Ibid. 74. Nor can an act be made an
act of bankruptcy by analogy; it must be such as is within the law;
and there is no case where a stranger, in another State, has been
deemed a bankrupt for returning to his home, in order to avoid an
arrest where, probably, he could not obtain bail; or for a
temporary concealment in another's house for the same reason. The
Counsel for the Defendant stated, that, if the present objections
were successful, they would be equally fatal to almost every other
certificate which had been granted under the act of Assembly; for,
nine out of ten of the commissions of bankrupts had originated in
the same manner, upon debts either revived by new securities, or
created in concert for the occasion. They then contended 1. That
the original simple contract debt was merged in the bond, 6 Co. 44.
that if both parties agree to bring the debt in this shape within
the act, the proviso in the third sect. is satisfied; and that the
bond was not taken after the bankruptcy, which distinguishes this
from the case in Rep. Temp. Hard. 267. 2. That, on the second
point, the act of one partner, is the act of all in commercial
matters; that one partner may bring a suit at
Page 1 U.S.
380, 387
law for the joint debt, or hold the Defendant to bail upon his
sole affidavit; and that the case of Gerard v. Basse et al. does
not apply, as it did not turn upon a commercial transaction, but
upon an instrument under seal, which can only bind the person that
executes it. 3. That there was no dissolution of the partnership
between the Defendants; that the store kept by Meng in
Philadelphia, was evidently, from the testimony, a continuance of
the old connection; and that the amount of the joint stock, whether
large or small, could not affect the question. See 1 T. Jones. 141.
4. That all the Defendants were enquired for where they carried on
their trade, at Meng's house; that Smith and Goodwin denied and
concealed themselves at the Ferry house, and expressly said, that
they were going off to avoid the arrest; that an absconding out of
the State, equally affects a stranger and an inhabitant; and that
even a departure, with an intent to delay a creditor, is a
sufficient act of bankruptcy. See 2 Stra. 809. Palm. 125. Co. B.L.
74.* The President, having again noticed the cause of action, and
the state of the pleadings, proceeded in delivering the following
charge to the Jury:
Shippen, President. A bankrupt law, in a trading country, must
be productive of many benevolent and beneficial consequences. When
an unfortunate trader has fairly and honestly surrendered all his
property for the use of his creditors, the Legislature certainly
intended, that he should be effectually discharged from all his
debts and left at liberty to acqure new substance; and there are
many instances in England, where, by this encouragement, bankrupts
have been enabled, not only to extricate themselves and their
families from the calamities that oppressed them, but to indulge an
honorable disposition in paying those obligations, from which they
were thus, by law, exonerated. It has often happened, however,
that, on the other hand, the bankrupt acts have been perverted to
the iniquitous purposes of fraud and embezlement; and, therefore,
it is requisite, that, on every occasion, the strictest scrutiny
should take place. With this view, our act of Assembly,
corresponding with the English statute, directs Commissioners to be
appointed, who having received the necessary proofs of the party's
being a trader, and of the commission of an act of bankruptcy, are
amply empowered to investigate the bankrupt's conduct, and to
compel a disclosure and surrender of all his property; and, when
that is satisfactorily done, they are authorized and required to
grant him a certificate of his conformity to the law. In England,
this certificate, (which, when fairly obtained, is a compleat
discharge and release from all the former debts
Page 1 U.S.
380, 388
of the bankrupt) cannot be granted without the consent of four
fifths in value of the creditors; but, in Pennsylvania, the
granting it rests entirely with the Commissioners; and there is no
check upon its operation, but that it must be first allowed by the
President of the Supreme Executive Council, under the great Seal of
the Commonwealth. In the case under consideration, the
Commissioners have granted, and the President has allowed, a
certificate in favor of the Defendants; but four exceptions have
been taken to the proceedings on which the certificate is founded,
in order to maintain the Plaintiff's action, which is brought for
the recovery of a debt contracted before the act of bankruptcy. The
Court being of opinion that the evidence in support of these
exceptions ought to be submitted to the Jury, it now only remains
to consider, whether the exceptions themselves are sufficient, in
law, to defeat the benefit which the Defendants claim from the
certificate. 1. In the first place, it is said, that the debt of
the petitioning creditors, was not such as warranted the issuing of
the commission; for, it was contracted before the act of Assembly
for the regulation of bankruptcy, although a bond of a subsequent
date was given for it: And the Plaintiff's counsel have contended,
that this relation between the bond and the former debt is
sufficient to take the case out of the act. On the part of the
Defendants, however, it is insisted, that the original debt was
extinguished by the bond, which they alledge, is the creation of a
new debt, so as to satisfy the proviso in the 3 Sect. of the law.
The general doctrine of extinguishment is, at this day, well
settled and understood. If a creditor upon a promissory note, or
book account, accepts a bond for the amount from his debtor, this,
being a security of a higher nature, extinguishes the first debt,
and the creditor cannot afterwards sue upon the note, or account
but must proceed for the recovery of his money upon the bond alone.
There is, however, no authority precisely in point to the question
now agitated; but the determination in Cases temp. Hard. 267. is
thought by the Plaintiff's counsel to be in a great degree
analogous. On that occasion a bond had been taken after an act of
bankruptcy, (of which the obligee had no notice) for a simple
contract debt due before, and as any debt that accrues after an act
of bankruptcy is not entitled to a dividend, the Chancellor there
considered the debt as it originally stood, in order to give the
benefit of it to a creditor, who would otherwise have been
excluded, without any default on his part, from a distributive
share of the bankrupts effects. This case, therefore, it is
objected by the Defendant's counsel, must have depended upon the
peculiar circumstances in which it was involved; and that this
appears the more evidently, as Lord Hardwicke expressly says, that,
between the parties themselves, the bond would operate as an
extinguishment of the precedent debt. There can be no doubt,
indeed, that many of the cases on this subject have been determined
by the particular circumstances that attended them;
Page 1 U.S.
380, 389
for, we find, that a transaction of a similar nature with that
just cited, but presented in a different point of view, was decided
directly the other way. Term. Rep. 705. A bankrupt, after an act of
bankruptcy committed, had given a bond with warrant to confess
judgment to one of his creditors for a debt due before the act of
bankruptcy: the judgment was entered and a Ca. Sa. issued.
Afterwards the bankrupt obtained his certificate, and moved to be
discharged from this execution, alledging that the cause of action
arose prior to the act of bankruptcy; but the Court in this case
decided, that the bond was an extinguishment of the old debt, and,
accordingly, denied the motion.
But there are many reasons which might be urged to distinguish
the present case from that determined by Lord Hardwicke. When the
bond was given by the Defendants to Rose and Dickens, no act of
bankruptcy had been committed; no dividend was to be claimed; no
persons, but the parties themselves, were interested; and, as
nothing appears to preclude the idea that this was a voluntary
exchange of securities, certain it is, that after the acceptance of
the bond, Rose and Dickens could never have recovered upon the
original debt. In all these respects, therefore, there is a
material difference between the authority cited, and the case in
controversy; a difference which seems strongly to support the
argument of the Defendant's counsel, that the bond was an
extinguishment of the preceeding debt.
Even, however, if the law is doubtful, from the frequency of the
practice of entering into voluntary bonds, for the very purpose of
obtaining a commission, I should be unwilling to recommend it to
the Jury, on that ground alone; to invalidate the certificate: And,
therefore, as we have indeed no positive rule to guide us, but the
whole rests on an implication arising from the cases, the Jury must
decide for themselves. I will only add on this objection, that the
Legislature probably introduced the proviso in the third section
(with, I presume, a view particularly to foreigners) in order to
evince, that it was not intended to abrogate all former contracts
and obligations: And, as it is only the debt of the petitioning
creditor that must be subsequent to the passing of the act ( for,
the commission having issued, all debts prior, as well as
subsequent, are included) no great mischief can ensue from this
restriction, or from the method which has been generally taken to
bring the debt of the petitioning creditor withing the words of the
law.
2. The second objection is, that a petition subscribed by
one of two partners, in the name of himself and partner, is not a
legal ground for issuing a commission; and this is said to be
supported by a decision of this Court, in the case of Gerard v.
Basse et al. (ant. 119) There can be no doubt of the legality of
that decision. A bond is technically termed a deed; and the
doctrine with respect to the efficacy of a deed, stands upon its
own footing; none being bound by it, but the persons who actually
execute it. In commercial matters, however, the act of one partner
is the act of
Page 1 U.S.
380, 390
both; and, therefore, it is necessary to consider, whether the
petition of a creditor to obtain a commission, is most like a deed,
or a commercial act. It appears to me, indeed, to bear a strong
resemblance to an action at law; and as one partner may institute a
suit, and the oath of one will be sufficient to establish the debt
on a question of bail, I cannot conceive any satisfactory reason,
why more should be required for the purposes of the bankrupt law:
and, therefore, in my opinion, this objection ought not to weigh
with the Jury. 3. The third objection argues, that the partnership
that subsisted between the Defendants, had been virtually dissolved
by the general assignment of their property; and that, therefore, a
joint commission could not issue against them. I have not had time
to examine the authorities upon this point, but, I believe, the
doctrine to be well founded, that there must be a subsisting
partnership at the time a joint commission is taken out, and it
seems also reasonable, to inser the dissolution of a partnership
from an act, by which all its objects are alienated and
transferred. The barely executing an assignment, however, of the
stock in trade, if the joint transactions are not at an end, will
not be an actual dissolution of the partnership; for, where there
is no express agreement to make that dissolution, the assignment
can only be considered as circumstantial evidence of it, which the
Defendant is at liberty to repel by contrary proof. Whether,
therefore, the trading subsequent to the general assignment was
fictitious, and merely for the purposes of a bankruptcy, as the
Plaintiff contends; or, whether it was a continuance of the former
copartnership, as the Defendants alledge, must depend upon the
facts, on which it is the province of the Jury to decide. If they
should think that the old partnership was dissolved, and no new one
contracted, then there was not any legal origin for the joint
commission; to found a commission upon a fictitious partnership
being certainly unfair. But, if, on the other hand, there was
really a partnership between the Defendants at the time of their
bankruptcy, neither the previous assignment of their effects, nor
the smallness of the quantity of goods in their store (a matter
only to be considered as circumstantial evidence of a fictitious
trading) can have any effect upon the case to invalidate the
commission, or to defeat the certificate. 4. The fourth objection
is, that two of the Defendants, Goodwin and Smith, have not
committed acts of bankruptcy; and, therefore, it is argued, that
the verdict of the Jury must, at least, be against them. As these
persons resided in New Jersey, it is said, in support of this
objection, that Meng's store, or the Ferry-house, (at both which
they were denied, and at the last place they concealed themselves
from the Sheriff's officer) cannot be deemed their home, so as to
satisfy the words of the act, in describing an act of bankruptcy,
by 'beginning to keep house;' of which the usual proof is
certainly, a demand and denial. Under the decisions in England
Page 1 U.S.
380, 391
(and our law is subject to the same construction) a person who
resides in a foreign country, trades to that kingdom, and
afterwards goes thither, is clearly within the statute. It is true,
that, considering the mere phrase, it seems absured to say, that a
man keeps his house, who has, in fact, no house to keep, and yet
there is a case expressly to that point, where a man, having no
home of his own, was held to have committed an act of bankruptcy by
keeping house in the dwelling of another. But the Defendants
counsel have controverted this objection upon the ground of a
departure out of the State; which, they say, applies as well to a
stranger as an inhabitant; while, in behalf of the Plaintiff, it is
contended, that, as the only proof of a departure by Goodwin and
Smith, is that of going to their own house in New Jersey, this
cannot, upon principle or precedent, be construed into an act of
bankruptcy. From the evidence, it appears, that a writ had issued
against the four Defendants, of which all of them had notice; two
of them, it is agreed, committed acts of bankruptcy, and the other
two, being enquired for at the store of Meng, and also at the
Ferry-house, where they had ordered a boat to be ready, for the
express purpose of avoiding an arrest, did actually quit the State
upon hearing that the Sheriff's officer was in pursuit of them.
This conduct, in the common cases of a resident, would,
undoubtedly, amount to an act of bankruptcy; for, it has often been
determined, that, if a man goes from home but a day, in order to
delay or defraud his creditor, it is sufficient to bring him within
the statute. Whether, however, the flight of a stranger to his own
home in another State, is such a departure as the law intends, the
cases have left in great obscurity; for the only principle
ascertained by them, is, that the departure must be with a view to
delay or defraud; and the act of Parliament itself contains no
distinction of the nature now contended for. On so doubtful a
point, therefore, the Court would rather, at this time, leave the
decision at large to the Jury, than venture a positive opinion.
Such then are the objections on which the Plaintiff insists that
his action is maintainable; and, if, upon the whole, the Jury think
he has proved (as it is incumbent upon him to do) that the
certificate has been unfairly obtained; either because the
commission ought not to have issued, or that the certificate ought
not to have been granted, their verdict must be in his favor. But,
if, on the contrary, there has been no illegal or unfair methods
pursued by the Defendants to obtain their certificate, they are
discharged from the Plaintiff's demand, and the verdict must be for
them. After staying out some time, the Jury returned to the bar,
and declared that they could not agree in a verdict; whereupon they
were dismissed by consent of the parties, and a Venire sacias de
nova awarded.*
Footnotes
[
Footnote *] My absence from Court
during a great part of the defence, unfortunately prevents my
stating it more at large. What is here published is principally
taken from the arguments of Mr. Fisher.
[
Footnote *] I have been informed by
Mr. Ingersol, one of the Plaintiff's counsel, that his Client,
acting on the occasion upon motives of public spirit, was satisfied
with having obtained the opinion of the Court in favor of the right
to investigate the proceedings before the Commissioners of
bankrupts, &c. upon a trial at law; and that, therefore,
probably, this action would never be prosecuted further.
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