Slidell v. McCrea

Headnote

Where an insolvent protopurchasefln and supper-son pays notha nominal considerabon,^ for ment, he can be a petitioning creditor only for the sum paid. If in such case the purchaser becomes a petitioning creditor for the whole amount of the judgment, and such sum is necessary to make up two thirds of all the money owing by the insolvent, and the insolvent obtains a discharge, such discharge will be adjudged void. The act per se avoids the discharge without proof of the intent. A failure to specify and set forth, clearly, the true cause and consideration upon which the debts were contracted, renders the discharge fraudulent and void, under the act of 1817, and a specification that the debt is due on a promissory note, without setting forth the consideration thereof, was held to he insufficient. From the want of a proper specification, the inieni to defraud is inferrible, and need not he proved.

This is an action of assumpsit. The declaration contains the usual counts in indebitatus assumpsit for monies lent, had and received, &c. &c. Plea, the general issue, with notice set The cause was tried at the New-York circuit, in December, 1S25. The plaintiff’s demand was proved by the production of certain insolvent papers, in an application by tjie defendant for a discharge as an insolvent debtor, in October, 1822. In the account of creditors then presented by

the defendant, the plaintiff is stated to be a creditor. The defendant then produced his discharge as an insolvent debtor under the two third act, granted by the recorder of New-York, on the 18t.h January, 1828»

From the papers in this case of insolvency, it appeared that the whole amount of debts owing by the insolvent, was $19,086 43, that the amount signed off, or debts owing to petitioning creditors, was $12,922 75, that David H. Robertson was one of the petitioning creditors, and the amount signed off by him was $7169 99. In the specification of the cause and consideration upon which the debts were contracted, as set forth in the account of creditors presented by the insolvent to the recorder, two debts are stated to be due on promissory notes, for goods sold and delivered, and a number of others are stated to be due on promissory notes, without stating the consideration of the same. In the affidavit of Robertson, the petitioning creditor, the debt due to him is stated to be on a judgment entered up in favour of D. S« Kennedy and D. Maitland, and by them assigned to him; the circumstances in relation to which judgment, and the assignment of the same to Robertson, were as follows : in October, 1822, James McCrea, the defendant in this cause, was holden to Kennedy and Maitland, as the indorser of bills of exchange on London,- drawn by John McCrea, of Philadelphia, and which had been returned protested» The defendant applied to Kennedy and Maitland to become petitioning creditors for him, in his' application to be discharged as an insolvent debtor, which they declined, lest it might affect their claim against the drawer of the bills. Kennedy, however, told the defendant, that if his legal advisers could point out any course by which he could serve defendant, without impairing his remedy against the drawer of the bills, he would do it On the 21st October, 1822, a bond and warrant of attorney to confess judgment, was executed by the defendant to Kennedy and Maitland, conditioned for the payment of the sum of $7169 99, and on the same day the judgment was entered up. On the same day, also, the judgment was assigned by Kennedy and Maitland to Robertson,

who was a clerk in defendant’s store, for the nominal consideration of one dollar, and even that sum was not paid, and Robertson became a petitioning creditor. This course of proceeding was adopted on the suggestion of defendant’s legal advisers, and the-whole object of the bond, judgment and assignment was to aid the defendant’s discharge under the insolvent act. About two years after this transaction, the protested bills were paid to Kennedy and Maitland by the drawer. [There was a mass of other testimony introduced on the trial; on the one hand, for the purpose of impeaching the discharge; on the other, to shew the fairness of the defendant’s proceedings, which, on the argument of the case, was discussed by the counsel; but as the opinion of the court is based on the facts already stated, it is deemed unnecessary to present any more of the testimony, or to give an analysis of the arguments of counsel, founded on those other facts.] The judge charged the jury, that among other points raised by the plaintiff, it had been contended that the defendant had not sufficiently set forth, within the true intent and meaning of the eleventh section, of the amendatory act of 28th February, 1817, (Statutes, ml. 4, b. 41,) the cause and consideration upon which certain of the debts stated by the defendant, in his account of his debts, to be owing by him, were contracted; with respect to which, he was of opinion that such objection was not well founded, and did not afford any legal ground for avoiding the discharge, provided the statements which he did make were true as far as they went. That it had also been contended by the counsel for the plaintiff, that the defendant .was not bona fide indebted to David H. Robertson, in the sum for which he became a petitioning creditor for the defendant, and that inasmuch as that sum was necessary to make up the amount required to be petitioned for, in order to entitle the defendant under the act to a discharge from his debts, the discharge was, on that ground also, ineffectual and void ; with regard to which, also, he was of opinion that the objection, if they believed there was no fraud, was not well founded, and afforded no legal ground for avoiding the discharge. That with respect to

Robertson’s signing off for more than the consideration given for, or expressed in the assignment to him of such debt, that also afforded no ground for avoiding defendant’s discharge, provided the jury should believe there was no intention of fraud. That as to the objection that the defendant had not set forth clearly, in the account of his debts, the true cause and consideration upon which each and every of the debts therein stated were contracted, it was incumbent upon the plaintiff to satisfy the jury, that in such omissions the defendant had a fraudulent intent; and that if the jury could not, upon the evidence before them, take it upon themselves to consider them fraudulent, they afforded no ground for impeaching or avoiding the discharge. The counsel for the plaintiff excepted to the charge. The jury found a verdict for the defendant. Á new trial is asked for, on a case made by the plaintiff.