Case ID: mart-os_4/html/0218-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Martin, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ROUSSEL vs. DUKEYLUS SYNDICS.
    
    East’n. District.
    
      March 1816.
    
    Appeal from the court of the first district.
    A conveyance at the eve of a bankruptcy, the consideration of which was not paid, at the time, is void.
    
      Livingston for the plaintiff.
    
    This suit is brought on a mortgage, by a notarial instrument, bearing date March 12, 1811,
    1. To secure the payment of a quantity of indigo sold and delivered by Dukeylus to Roussel, amounting to - $ 1268 13
    2. To secure Roussel against the indorsement of a note, dated March 2, 1811, for - - - - 2347 00
    
      3. As a like security for another indorsement on a note dated 6th of February, for - - - - 2200 00
    4. To secure him against such other indorsements, as he might give to Dukeylus, to the amount of 11000.
    The plaintiff’s object is to recover the amount of the following notes endorsed and taken up by him, after a regular protest, besides the three items aforesaid, which ——————— amount to - - - $ 5815 13
    
      Note of 23d February, 1811, 386 00
    — 1st March, - 1600 00
    — 15th do - 500 00
    — 20th April, - 1800 00
    — do. do. - 2000 00
    Total, $ 12101 13
    All these notes were produced at the trial, and the plaintiff’s right cannot he controverted: but it is said that the mortgage is void,
    I. As respects, the notes not enumerated in the mortgage, because a mortgage must be express. Civil Code, 452, art. 6. This article directs that the mortgage must be expressly stipulated and cannot be inferred. This relates to the stipulation, not the object of it. It does not say that the debt, intended to be secured, shall be particularly set forth, but that no act shall be taken as a mortgage, which is not clearly and unequivocally declared by the parties to be one. A mortgage is expressly defined to be a contract by which a person affects his property, or a part of it, to another, for the security of an engagement, id. 452, art. 1. By these general words, declaring that mortgages may be given as securities, not only for existing debts, but for every species of undertaking. To the same point is the Digest 13, 7, 9, § 1. Non tantum autem ob pecuniam, sed ob aliam causam 
      
      pignus dare potest: veluti si quis pignus alieni dederit, UT PRO SE FIDEJUBEAT. Of which law, the Spanish commentator Rodriguez gives the following exposition. La prenda se puede dar, no solo en seguridad de la candidad que se debe, si no tambien por qualquiera otra especie de obligacion civil y natural, o so natural, civil o pretoria; asi como se dice que se puede dar fiador por qualquiera de las obligaciones expresadas.
    The mortgage, therefore, if valid in other views, is not rendered less so because the object was to secure against a debt, a responsibility that was not actually incurred. On peut contracter une hypotheque pour un dette qui n’est contractée que sous une condition. Pothier des Hypotheques, § 3. and he adds, on peut constituer une hypotheque pour une dette qui n’est pas contractée, mais qu’on contractera. But because this author subjoins that the mortgage, in that case, will not take effect until the debt is contracted, the defendant argues that, as all the notes fell due, and were paid by the plaintiff, after the insolvent’s bankruptcy, the mortgage could not attach, as the negroes mortgaged were then the property of the creditors. This would perhaps apply, if the mortgage had been to secure a sum of money, to be advanced, at a future period, and if the plaintiff was under no necessity to advance. The mortgage, is to secure against indorsements, which he was bound to furnish. The moment then he furnished the indorsements, the mortgage attached. All the indorsements were prior to the bankruptcy : the money it is true was paid after, but the obligation to pay accrued before.
    II. It is said that the $5815,13, specially set forth in the mortgage, cannot be secured there by.
    It is admitted that if, in the sale of the indigo, it had been stipulated that a mortgage should have been given, the security would have been good. Taking this as the true rule, let us see how the law and evidence stands. The sale of the indigo appears, by the testimony of Laignel, to have been made at the time the plaintiff was in town. He was in town, when he came to receive his mortgage, this is proved to have, been in the beginning of March, the mortgage is dated the 12th of March : it was, therefore given at the time of sale.
    But Laignel says a part of the indigo was paid for. If this be so, it does not prove that any part of the sum mentioned in the mortgage was paid. The quantity then mentioned is 1194 lbs. at 106, which makes $1268,13, the sum secured by the mortgage, for this object. So odious a fraud, as receiving the price and then inserting it in the mortgage, is not to be presumed on such slight evidence and sustained by a single witness, and an interested one, as he appears on the bilan as a creditor.
    That the mortgage for the price of the indigo was stipulated for in the sale, may also be gathered from the circumstance that, no note, account acknowledged or other security, except the mortgage, appears to have been taken for the price, which was sufficiently important to have otherwise required it. As to the two notes, mentioned in the mortgage, it by no means follows, because they were dated a few days before it, that they were endorsed on the days of their respective dates. An endorsement is a transfer of the note, and must necessarily have been made after it was drawn. How long after? Of that, there is no positive evidence ; but, on the other hand, there is no presumption that it was done on the day of the date of the notes. One of these bears date the second of March, but as Roussel was in town only a few days at the time he took the mortgage, it is most probable this note was endorsed during that period, and if so, at the time of the execution of the deed. The other is dated the 26th of February, a few days earlier, and appears from the history of it in the mortgage, and the evidence, to have been endorsed in the country : and as Roussel came down in a few days, and the mortgage was executed, it may thereby be inferred, that the security was promised, when the indorsement was asked for, and that Roussel came down to have it properly executed and registered by a notary. The residence of one of the parties in the country, of the other in the city, the want of notaries and legal advice in the country, and the short time that elapsed between the dates of the notes, if we should take them for our guide, and the giving of the security, shew that it was contemplated when the indorsement was given.
    But, if no agreement was made at the time of endorsing these two notes, that security should be given for them, is that security void? It is said to be, because the debtor was in failing circumstances. This rule is so extremely loose, that although I am aware that it has been sanctioned by this court, I presume I may be allowed to question it, and shew, first, the extreme inconvenience and injustice of establishing it; secondly, that the law of the land does not sanction it.
    
      Arguments ab inconvenienti, although in general bad against positive law, are daily used to shew that particular cases do not come within its spirit, and they are used with force, when the law is doubtful, which I think can be shewn here, even if I do not, as I hope establish positive law to the contrary. The rule, as contended for, is simply that any security given for a preexisting debt is void, if made when the party was in insolvent circumstances, that is, when unable to pay all his debts : thereby making the validity of a security to depend on a subsequent investigation of the debtor’s affairs, of which the creditor has no means to compel a disclosure. This must necessarily put a stop to mercantile credit, or so close it as to render it not worth having. No man will lend money, sell goods or endorse notes, without having his security, at the time he does the act, because, if this rule be established, he well knows that he cannot afterwards take a security, without incurring the risk of having it declared void, if the balance sheet of his debtor should at a future day be found to have been against him. All credit then, beyond the strict amount of its actual representative, in real property, will be destroyed, and one of the strongest nerves of commercial prosperity will be cut off. Thus, this will be one of the bad effects of the establishment of the rule on the general operations of commerce. Its particular application to each case will be attended with worse difficulties. Whether the debtor were solvent or not, at a particular period, is to be discovered by oral testimony, and will open a door to perjuries without number, and will put it in the power of the debt or to sacrifice his mortgage creditors to the mass and by a fraudulent arrangement of his accounts, and the concealment of part of his property, to invalidate the securities he had given. The difficulty alone, of fixing on the particular epoch of insolvency, must of itself be a strong objection to its being established, as a criterion for the validity of a security. Important and highly injurious consequences, on other questions, must necessarily follow from the establishment of this particular point. If a security be void for this implied fraud, then monies paid under it may be recovered. Thus, not to go out of the present case, it is proven, if the oral testimony can be relied on, that Dukeylus was insolvent two years ago, that one of his friends to whom he owed money, on receiving security, as well for the old debt as for his new engagements, made further advances or incurred other responsibilities, and was reimbursed out of the pledge he then received. All this, according to the doctrine contended for, might now be redemanded, and the person, who had settled his accounts two years since, might be forced to repay what he had received on the pledge, and come on with the other creditors for his dividend. Again, if the security given for an old debt, under failing circumstances, be fraudulent and void, would not a payment, made in like circumstances, be at least equally void, and a subject of repetition. What is the reason given for declaring the security void? Because it favours one creditor at the expence of the rest : but, if a security favours him, a payment certainly does so in a greater degree. Then a payment of one creditor, in preference to others, coming in the same reason with a security, ought at least to be equally void. If it be so, I pray the court to consider what endless confusion, what a series of claims, what eternity of suits, every failure will give rise to.
    The ordinance of Bilboa, ch. 17, b. 23, declares that the anticipated payment of a debt not yet due is void. Admit this—there was no debt due from Dukeylus to Roussel, on account of the indorsements ; nor was it certain that any would be due. But, from the moment Roussel indorsed Dukeylus’s notes, though Dukeylus did not owe him the amount of the note, yet he owed him an indemnity : and the very circumstance of Dukeylus’s credit being shaken at that time strengthens the argument. If I am surety for one who becomes insolvent, I have a right to ask for indemnity before the debt is due. Civ. Cod. 430, art. 18. So, if I draw a bill and the drawer is insolvent, I may be forced to give security, although the bill be not due. Therefore, in this case there was no anticipated performance of an engagement. The thing demanded and given was security: that security was already due, though the money was not due and it might be demanded of Roussel.
    The 5th Partida, 15, 9, is relied on : it declares payment to one debtor in preference to others, although the debtor be in failing circumstances, to be good, without making any distinction, whether the debt be due or not.
    The ordinance of Bilboa, ch. 17, b. 53, is said to be decisive on this point. Before we examine its tenor let us inquire into its authority. I know that part of it is often quoted, and that the decisions of our courts have been grounded on some of its provisions.
    It is no where extended to the colonies of Spain. It was made as a guide to the Prior and consulate of Bilbao, and by some subsequent edicts, extended to other commercial cities. It is cited by Spanish lawyers and judges of this country ; but that does not give it the force of law. If it forms the law of the land, the whole must be law. Yet, what will the court say to the provision which gives a prompt execution on a bill of exchange without a summon? To that which declares an endorsement on a bill of exchange or note void, unless it be filled up and dated, &c. &c. The court cannot divide a statute. They cannot say this part is convenient and shall be executed, the other shall be dispensed with. This would be assuming legislative authority.
    They may, indeed say “the provisions you refer to have never been practiced on, find therefore, we have right to suppose they are not laws: but the rule we have laid down has.” Even this would be conceding all I ask, and would be referring for the authority of the rule—not to positive law, but to practice. I should say my arguments of inconvenience have great weight, because they are not opposed by positive law. I should further ask, Where is the practice which is referred to? Where is the case, prior to the decision of the court, which establishes the principle—a principle, which has only practice or reason for its basis, cannot surely rest on the decision which for the first time establishes it.
    Let us now examine the provision of this ordinance. It is laid down very broadly, art. 53, that every instrument, made en tiempo inabil, at a time when the party is incompetent to make it, is void, and when it shall be presumed to have been made in fraud of creditors, is void : and it adds, as an example, when the party was about to fail, proximo a quebra, not when he was in insolvent circumstances, but about to break, that is in the language of English jurisprudence in contemplation of bankruptcy ;—having that in view, knowing that all must be given up, and intending to put one creditor on a better footing than the others, con fraude, dolo y malicia.
    
    The 5th Partida, 15, 7, which contains the only legitimate rule, as far as unaltered by subsequent statutes, because the Partidas were expressly extended to this country ; this law and the note 9 require three things to annul an instrument granted as this on an onerous title : fraud on the part of the debtor, knowledge of this in the creditor, and loss to the others. The commentator observes, that it does not suffice to shew that the party knew there were other creditors. This law also requires, in order to annul the instrument, that it should have been made after a judgment, with a view to avoid execution, and that it be of all the effects of the debtor.
    Now, if the ordinance of Bilbao be in force here, and it should be construed, as it seems to me it ought to, to refer to a contemplation of bankruptcy, then it cannot apply to us for ours, far from being an act in contemplation of bankruptcy, was an effort and a strong one to avoid it. It was a stipulation for farther advances, and as far as it purports to be a security for those already existing, these were of so recent a date, that without any violent presumption they might all be classed under the same head.
    The Curia Philippica illustrada, ch. 11, l. 2, no. 26, says, that every thing is suspicious that has passed a little before failure, and that by a royal law u all contracts, made six months before failure are void” to this effect the 5 Recop. de Cast. tit. 19, l. 7, is quoted. This royal law contains no such provision. It declares that no merchant shall have the benefit of the insolvent laws, unless he be actually in prison, and not then, if within six months he has borrowed any money, bought any goods on credit, or drawn any bill of exchange. It will be hardly contended that we ought to enforce this law in this country.
    The 5th Partida, 15, 7, is also relied on to shew that the alienation of all a debtor’s goods in fraud of his creditors is void. But this is no alienation, nor did it extend to all the property of the debtor, for even after all the depredations to which it was subject it sold for $18000. Neither was it an act in fraud of the creditors, for a valuable consideration was received, and thereby the stock of the debtor was increased or the number of his creditors lessened : neither was it after judgment or to avoid execution.
    
    The doctrine laid down by this court in Brown vs. Kenner & al. 3 Martin 270, does not militate against this case.
    1. Because the debts enumerated in the mortgage are not old debts, which the creditor had long been endeavouring to secure, but recent transactions sufficiently so to render it presumable to have been contemplated, as the creation of the debts, and the amount of which added to the mass of the estate.
    
      2. Because the indorser was entitled to demand security, as soon as the want of solidity in the drawer became evident.
    In order to avoid an inquiry into the circumstances of the debtor at the time he granted the security, many commercial nations have fixed a certain period, before the failure, as the limit beyond which no valid conveyance or security can be made. Our own legislature has not been unmindful.
    By the 17th section of the act of 1808, ch. 16, one of our insolvent laws, the debtor is excluded from the benefit of the act, “if it appears that he has, in contemplation of taking such benefit, at any time previous to his arrest, assigned or made over, any part of his estate or effects—or mortgaged his property or confessed judgment,—all such assignments (whether in trust or otherwise) mortgages or confessions of judgment, or giving an undue preference to any or more creditors, or exclusion of other creditors, are void to all intents and purposes.” But, it is provided “that if, the debtor at the time of executing such assignment, mortgage, confession of judgment, the debtor shall have received a bona fide consideration, such assignment, &c. shall be held and considered as good and valid.” If it be said that this act applies only to the case of an imprisoned debtor, I answer, that it never can be believed that the legislator may have intended to render the validity of a mortgage, dependent on the future conduct of the mortgagor, beyond the control of the mortgagee—valid, if the debtor went to jail—invalid, if he avoided imprisonment by a cession of his goods or by his escape. That the attention of the legislator was not confined to the case of imprisoned debtors, appears from the title “an act for the relief of insolvent debtors, in actual custody, for establishing prison bounds for the public jail, and for other purposes.” It contains general provisions not solely applicable to imprisoned debtors.
    
      Moreau for the defendants.
    The mortgage of 23 slaves, given by the defendants’ insolvent, bears date, March 12, 1811. Its object is to secure the payment of a quantity of indigo amounting to - - - $1268 13
    An endorsement on a note of
    March 2, at 60 days, for - 2347 00
    An endorsement of a note, said in the mortgage of the same date as the preceding one, and which really is, of the 26th of February, payable in June for 2200 00
    
      An obligation to furnish future endorsements for 11,000 00
    The plaintiff, by virtue of his mortgage, claims payment of the following sums, amounting to 10,833.
    
      1. A note of February 23, 1811, at four months, of - - - $386 00
    2. Another of the 23, payable in June, - - - - 2200 00
    3. Another of March 2, at 60 days 2347 00
    4. Another of the 10th payable in January 1812, - - 1600 00
    5. Another of the 15th at 60 days, 500 00
    6. Another of April 20, payable in August, - - - 1800 00
    7. Another of same day, payable in September. - - - 2000 00
    It is contended, that his is not an hypothecary claim. 1. That the mortgage does not cover any of the above claims. 2. That his mortgage is void.
    I. The conventional mortgage must be express. Civil Code 453, art. 6. It ought expressly to mention the debt or engagement for which it is given : unless it be stipulated for all the debts due to the creditor. The price of the indigo, and the notes of the 23d of February and 2d of March, alone are expressed : the total amount of these is $5825 13. The notes of the 23d of February and 10th of March, amounting to $1986, must be excluded.
    In vain will it be said that the note of the 10th of March ought to be covered by the mortgage, under the pretence that it was endorsed after its date, and that of the mortgage. Blank endorsements are prima facie taken to be on the day on which the note bears date : and the presumption is not rebutted by any evidence. Galez, the broker, swears he discounted the note before the mortgage was given.
    The debts mentioned in the mortgage, amounting to $5815 13, do not appear to have been contracted, under a stipulation that the creditor should be secured by mortgage; and if the debtor has secured him since, it was to the injury of his other creditors, as he was then in failing circumstances.
    A payment made by a debtor, whose bankruptcy is not declared, is valid, if the debt was payable ; but a payment by anticipation is liable to repetition however received bona fide by the creditor. 5 Partida, 15, 9. Ord. Bilb. ch. 17. l. 3.
    The ordinance does not distinguish whether the anticipated payment be in cash or otherwise, or between paying a debt not yet payable, or securing it, when no security was stipulated for when it was contracted ; neither of the notes mentioned in the mortgage on the day of the insolvent's failure, April 29, 1811.
    The claim for indigo, which we have neither the date nor time at which it became payable, is an evident fraud. Laignel swears Roussel told him it was paid, and the cash had been obtained for this purpose, by the discount of a note, at an exorbitant interest.
    As to the endorsements posterior to the mortgage, the mortgage cannot avail, for it was given suspicious period, and is therefore void. This applies also to anterior endorsement.
    II. From the beginning of March 1811, and before that time, it appears Dukeylus was in insolvent circumstances: this results from the testimony of Laignel, Leboucher, Petit, Blanchard and others. A mortgage granted on the 12th of that month, must be considered as of no avail. Ord. Bilb. ch. 67, l. 23 & 28.
    Dominguez, author of remarks on the Curia Philipica, on no. 26, lib. 2. ch. 11. of Commercio Terrestre, says "Every act is suspicious which is done a short time before the failure.” After stating several opinions as to what is considered a short time, he adds, but jure regio ‘the time fixed in order that every contract, transaction, &c. done in fraud of creditors may be holden to be void, is six months:’ he cites Recop. de Cast. lib. 5. tit. 19, l. 7. 1 Illustracion ala Curia, 333, no. 23.
    
      By the 5th Partida, tit. 5, l. 7, it is provided, that an alienation made by a debtor of all his goods, in fraud of his creditors, may be avoided within the year. Here, indeed, the insolvent has not bound all his estate, because personal estate is not susceptible of being mortgaged, but he has thus bound every thing he could bind, viz: twenty-three slaves, as appears by his schedule : a very strong circumstance, from which fraud may be inferred.
    In the case Brown vs. Kenner & al. 3 Martin, 274, this court took the distinction between an actual payment and a surety given for the debt. The plaintiff there was allowed $2000, which he had really paid, at the giving of the mortgage, but his claim for $4000 on account of what was then due. him, was rejected. Here, Roussel paid nothing when he took the mortgage. It was given him to secure former claims and endorsements, and to secure further endorsements which he did not bind himself to give.
    When, on the 15th of March and 20th of April, he endorsed these notes, he gave his signature, at a period when Dukeylus was a bankrupt, and known as such by the suits brought against him by Mad. Chabot and others, contrary to the solicitations of his wife, who told him Dukeylus was a broken man, and could not stand any longer.
   Martin, J.

delivered the opinion of the court. The defendants contend that the mortgage on which this action is brought is void. 1. Because, contrary to a provision of the Civil Code, 453, art. 6. 2. Because, its object was to give the plaintiff an undue preference over the rest of the insolvent's creditors.

I. The article of the civil code stated, declares, “that there is no conventional mortgage, except that which is expressly stipulated, in the act or writing made by the parties : it, is never understood, and is not inferred from the nature of the act.”

On this, the defendants’ counsel contends, that as the mortgage is to secure the plaintiff, among other things, against future endorsements, within a given time and no express sum is mentioned, the court must declare the mortgage null, at least as to those future endorsements. On this we are of opinion, that the objection cannot prevail. This is emphatically a mortgage expressly stipulated, and the amount of it, even in this part, is sufficiently express: id certum ut quod certum reddi potest.

II. The plaintiff’s counsel repels the objection made to the part of the mortgage, which relates to the price of a parcel of indigo, and the indorsement of two notes, anterior to the date of the mortgage, on the ground that the transactions by which he became a creditor, in this respect, took place so short a time before the mortgage, that the court must presume that this kind of security was contemplated when the debt was created.

1. The date of the sale of the indigo cannot be ascertained from any part of the case before and the idea, that it was effected with a view to a mortgage, seems to be repelled by the testimony of Laignel. This gentleman swears, that in February or March, 1811, the plaintiff came to town and was compelled to stay five or six days to receive part of what was due him for some indigo sold to Dukeylus, a payment which was effected by the discount of a note, at a high interest, as the plaintiff informed the defendant. We are without any evidence of the date of the sale of the indigo, or of the time at which it was payable. For any thing that appears, the sale and time of payment were both anterior to the date of the mortgage. The plaintiff does not appear to have any better title to a security, under the mortgage, for the endorsement of the notes of the 26th of February and 3d of March, anterior to the mortgage. When a creditor requires a court to allow him a privilege, he must prove his claim thereto : it does not suffice to shew circumstances which render it probable.

2. But it is further contended that, as to the two indorsements aforesaid, the plaintiff was a surety, and the debtor being in a state of bankruptcy, the plaintiff might, even before payment demand an indemnification. Civil Code, 430, art. 18.

When a debtor has become a bankrupt, debts due by him, although not yet payable, give to the creditors of them the right of acting with those whose debts are payable. But, weere the creditor, whose debt becomes as it were payable by the bankruptcy, to receive his payment, it would be an anticipated one—out of the course of business and subject to repetition for the benefit of the mass. If it were otherwise, there would be no use for the distinction in the books between a payment in due course of business, and one by anticipation : all the advantage intended to be given to the surety, in the part of the code cited, is to enable him to take as early measures for his indemnification as if the debt was already payable, and indeed as if he had paid it.

Whether a debtor, who is about to fail, may, by an anticipated payment, or a conveyance of his property, defeat the intention of the law, which is that all his creditors may be equally satisfied out of his estate, is a question, which does not depend on the ordinance of Bilbao, although the parts of that ordinance, cited by the defendant’s counsel, furnish a good illustration of the principle by which we are to be guided. The discharge of a debt not yet payable, when the debtor has not wherewith to pay demands, which, according to his undertaking, claim the preference, is so glaring an evidence of partiality, that a court would set it aside, considering that partial justice is partial injustice, even if the ordinance did not require it. So would they an instrument made in deceit and fraud.

It is believed that the ordinance of Bilbao was never enforced by the Spanish government, in Louisiana. We never heard of the appointment of a prior, consuls, or any of the officers whom it requires, and without whom many of its provisions cannot be carried into effect. It is a deposit of principles, consecrated by other laws, relating to commercial affairs, which are there brought together and illustrated, and, in some instances, modified and extended. American jurists use it as a manual, and the court has recognised the wisdom of some of its principles, but often rejected others as totally inapplicable to this country.

The 5th Partida, 15, 7, has been cited. It does not appear to us pregnant with all the evil consequences which the plaintiff’s counsel discovers. We do not believe that the object of its framers was to avoid every transaction which takes place within the year preceding the failure. It is rather a statute of limitations, fixing the year after the discovery of the fraud, in an alienation, as the period within which suit should be brought to set it aside. Neither is the effect of this law confined to the case of a debtor against whom there is a judgment: such a case being mentioned, according to Lopez, exempli gratiâ, ut evidentius dicatur constare de fraude.

It remains for us to inquire whether the two notes of the 15th of March and 20th of April, the aggregate amount of which is $4300, and which were endorsed after the mortgage, represent a fair debt, for which the plaintiff is entitled to privilege under the mortgage.

Our insolvent law 1808, 16, reprobates all alienations of property, on contemplation of its benefit, made within three months, unless the debtor, at the time of the alienation, receives a bona fide consideration therefore, and in the case of Brown vs. Kenner & al. 3 Martin, 270, this court set aside a conveyance as to part, and supported it for the amount of a sum of money actually received by the debtor at the time of its execution. The present mortgage was made within three months of the failure, and in the contemplation of it, as well on the part of the mortgagee as in that of the mortgagor. Nothing was received by the mortgagor at the time of the execution of the deed. It would be absurd to conclude that the instrument is valid, if the cession of goods, which was intended, was made before, and bad if after, arrest. The object of the mortgagor, in the knowledge of the mortgagee, was the removal of a number of slaves, the whole of the mortgagor’s property which was susceptible of mortgage, out of the reach of the mass of his creditors, clearly to defeat the intention of the law. Unless, therefore, it appears that a bona fide consideration was received at the time, we must declare the mortgage null. The plaintiff’s counsel contends that it ought to suffice that a consideration was received afterwards. But we consider that the mortgage was void at the time that it was made, and according to the words of the act—void according to the principles of sound policy. From its date, it covered a large portion of the insolvent's estate, from the claim of his creditors, without being represented by any thing, not even by the plaintiff’s obligation to endorse. If void at the time of its execution, no act of the person, for whose benefit it was intended, can make it good.

The district court acted correctly in setting the mortgage aside, and it is ordered, adjudged and decreed, that the judgment be affirmed with costs.

Livingston on a motion for a rehearing.

The objection made on the hearing to the testimony of Laignel, does not appear to have been taken into consideration by the court, because they rely on his testimony, to shew that Roussel knew Dukeylus was about to fail, and also as to the sale of the indigo.

Now Laignel is not a competent witness, and his interest appears on the face of the papers before the court, for he is a creditor of Dukeylus on his bilan, and there is no rule better established, than that interest whenever discovered shall disqualify. Take away this testimony, and a most material circumstance required by the law of 1808 to render the act invalid, is wanting, to wit : that it was done in contemplation of taking the benefit of the insolvent law. I pray the serious attention of the court to this feature, because I firmly believe, the legislature intended to invalidate no other acts, than such as were done in the intention of making a cession, and giving in that case a preference, but that all acts, though they might ultimately give a preference, are not affected by the law.

Without the testimony of Laignel, there is not the slightest circumstance to shew either that Dukeylus intended to apply for relief under the insolvent law, or that Roussel knew it; and indeed with that testimony I think there is no such proof—every thing, on the contrary, indicates a desire of going on; he not only secured Dukeylus for what he already owed, but he secured further credits and advances. For what purpose? Surely not to enable him to take the benefit of the act, but to avoid it—I hope I may be excused in repeating that if the law of 1808 be taken as it is (and I think properly) by the court for the rule, then actual insolvency is not the test by which the validity of the act is to be tried, but the intent, the contemplation of making a cession.

To return to Laignel's testimony, his evidence, if not inadmissible, is most certainly incredible. As he states, it would appear that Roussel knowing Dukeylus' affairs to be desperate, not only took security for past responsibilities, for which he might have motives, but without any obligation so to do, undertook to endorse notes to the amount of $11000, and more than a month afterwards actually endorsed notes, to the amount of more than $4000, a fact utterly inconsistent with that knowledge, which he must have derived from the information of Laignel, had it really been given—for what possible advantage was Roussel to derive from the transaction as to the subsequent notes, even supposing his mortgage given?

Laignel's testimony then, thus incompetent, or at least unsatifactory, and biassed by his interest, is the only circumstance to avoid the security as to the indigo, which, as it is not proved to have existed as a debt before, will not, I imagine, be presumed to be such an one, as it was not lawful to secure.

The court has totally overlooked the note for $1600 to Galez, dated 10th of March, two days only prior to the mortgage, which from that circumstance must certainly come within the provision of the law of 1808, a bona fide consideration then paid.

The court avoid the security as to the notes endorsed after the mortgage, by referring to the law of 1808, which they adopt as the true rule of decision on this point. Now by this law two things are necessary to invalidate the security.

1. That it should be made in contemplation of the cession, which I think I have shewn was not the case here, but rather that it was made with intent to enable Dukeylus to avoid it; and I lay great stress on this argument, because I think the statute of 1808 has given the rule and the only rule : it has directed the courts as to what act shall be deemed void and what shall not. It has given a rule where, as I have shewn in my argument, there was none fixed by legislative will: (for the court agrees with me in thinking that the Curia Philipica has not the force of a law here) if the act of 1808 then, is our rule, we cannot go beyond, nor say that an act is void because the party was in “insolvent circumstances”, when the statute directs only that it shall be void, if made within three months of the bankruptcy, and “in contemplation of taking the benefit of a cession of goods.

2. The statute provides, that even if made within three months, and in contemplation of taking the benefit of the act, the security shall be considered and held as good and valid in the law, any thing contained in the statute notwithstanding, if the debtor at the time of execu ting the same shall have received a bonâ fide consideration."

There is our rule : we have nothing to do but to understand and apply it. It is simple unequivocal—a bonâ fide consideration must have been received at the time of executing the security.

What is a bona fide consideration? Was it received in this case ? Here are the two questions on which this branch of the argument turns.

1. The bona fide consideration here required, is nothing more than a ‘good,' a 'valuable,' a ‘legal' consideration. The statute certainly does not mean to exclude a consideration from this definition, merely because it was given in contemplation of bankruptcy ; for it says that, even in that case, if it be bona fide, the deed shall be good. Now, if no consideration given in contemplation of bankruptcy were bona fide, then this provision would be an absurdity and defeat itself. The term, therefore, in the sense used here, means that the consideration shall be valuable, legal, and that it shall be given without deceit: "Bonæ fidei nihil magis congruit quam præstari id quod inter contrahentes actum est."

If the consideration then had been a forged bond, or a note that Roussel knew to be bad, or if any other fraud had intervened to the prejudice of Dukeylus, it would not have been a bona fide consideration, and therefore would not have come under the proviso that it takes it out of the law—supposing this to be the proper definition of the words, let us now enquire whether such consideration was received at the time of executing the mortgager.

1. As to the price of the indigo ; there is no doubt that this was a valuable and legal consideration.

2. The prior responsibility incurred by endorsing the notes already in existence, was undoubtedly a legal and valuable consideration, and it had been received at the time of making the mortgage for, I pray the court to consider the particular phraseology of this law.

It does not make it necessary, that, at the time of making the security, the debtor receive a bona fide consideration (as is quoted by the court) but that at the period he shall have received it: evidently intending to include all considerations, existing at the time, whether prior or contemporaneous.

3. The endorsement of the subsequent notes, however, puts, I think the whole transaction out of any risk, under this proviso, not only for the amount of those endorsements, but for the whole sum secured.

Admit for a moment that the two first considerations, the price of the indigo and the endorsement the prior notes did not form a good consideration, then received, and I then ask whether the engagement to endorse these notes and the actual endorsement of them to a large amount, do not form such a consideration? A person owes me $3000, for which I have no security, and he offers, if I will endorse $3000 more, to give me security for the whole. This surely is a good, a valuable and legal consideration, and as I have shewn, this is all that the proviso of the law of 1808 requires. For I repeat that it never can be said that it is not bona fide, merely because done, in contemplation of bankruptcy, when the proviso supposes that very base, and makes this an exception to it. I know that this reasoning is contrary to the decision in the case of Brown vs. Kenner & al. but in that case the court decided not to take the statute of 1808 as their guide, and they have acknowledged it in this.

If, however, the endorsement of the subsequent notes does not form a sufficient consideration for the security of the whole sum, it must, I most confidently hope, on consideration, be decreed such for the amount of those notes : the court seem to consider the words of the law of 1808 strictly, and declare that the consideration having been paid, after the date of the mortgage, it cannot come within the proviso. Will the court excuse me if I remark that in the former part of the decision, this strictness is departed from, and the words “shall have received” are construed to mean receives, and that therefore I hope the same indulgence, if it should be required, will be afforded to this clause. For, surely, the court cannot determine that the legislature meant to make the security good, if the plaintiff had endorsed the notes at the time of executing the deed, but bad, because he endorsed them afterwards, in pursuance to a promise in the deed, that he should be secured if he should so endorse them. What difference, I respectfully ask, would it make to the conditions, except one greatly to their advantage, if Roussel, at the time of receiving the mortgage, had endorsed notes to the whole sum limited of 11,000 dollars. Was the stipulation in the mortgage that he should be secured for all the notes he might endorse, to the amount of $ 11,000, a legal one or not? No doubt can be entertained, after reading the authorities cited in the argument, that such a mortgage was legal (independent of the law of 1808) and surely in that act makes it bad.

The court seem to consider, on this head, that Roussel was under no covenant to endorse : I think, a more close inspection of the mortgage will induce them to alter this opinion. The words are “Enfin pour sureté des autres endossements ou cautionements que le Sieur Mattias Roussel pourra donner ou fournir pour le Sieur Dukeylus, jusqu’a concurrence d’une somme de onze mille piastres.” Now if, after receiving this security, Roussel had refused to endorse for Dukeylus, it would, most unquestionably, have been deemed such a breach of faith, as vould have entitled Dukeylus to a suit. This is evident from the limitation of the sum to $11,000. Why was this introduced ? Clearly for the purpose of shewing the sum for which Dukeylus might call for Roussel's endorsements. The words pourra endosser, &c. were not introduced to give Roussel the option of endorsing or not, but to shew that Dukeylus was bound for no more than he should actually endorse within the limited time. The consideration, therefore, was the promise to endorse : it was a legal, a valuable consideration ; it was given at the time ef executing the security, and it was bona fide, for it has since been faithfully performed.

Moreau for the defendants. The plaintiff's counsel complains that attention was paid to the testimony of Laignel, who it is contended was an incompetent witness.

It is true that, in the court below, this witness was objected to, on the ground of his appearing, by the insolvent’s bilan, one of his creditors. If the objection was to be insisted upon in this court, a bill of exceptions ought to have been, taken to the opinion of the inferior court. An important fact would then have been spread upon the record, viz. that the witness, though once an interested one, was now completely disinterested, having transferred all his rights for a valuable consideration and without a warranty. The plaintiff’s counsel yielded to the opinion of the inferior court, and the witness's deposition, taken in writing, is made a part of the statement of facts. It is therefore too late to object to his testimony in this court.

II. Without the testimony of this, witness, the plaintiff’s counsel contends there is no evidence, nothing from which this court may presume that Dukeylus intended to give an undue preference. Without this testimony, we contend this court would have presumed it. When a man, in failing circumstances, voluntarily transfers a part, and a fortiori the whole, of his property to one, in exclusion of the rest of his creditors, the law concludes that his intention was fraudulent—the legal presumption, resulting from this single circumstance, suffices to establish the fraud. Bankrupts are always supposed to commit fraud. In this respect, presumptions and conjectures are looked upon as proofs. Cur. Phil. 408, n. 16.

Whether, in any particular case, a bill shall be considered as fraudulent, is a question on Which (as it must always depend upon the circumstances of each case, separate or combined, from which the intent of the party is to be inferred) it is difficult to lay down any precise general rule. But besides the circumstances, which afford evidence of fraud generally in conveyances : such as the deed being the voluntary act of the party, the transaction being secret, the grantor continuing in possession, &c. those from which fraud, in relation to the object of the bankrupt laws, has most commonly been inferred, are principally the extent of the conveyance, its being made in contemplation of bankruptcy. Cullen’s B. L. 43. 44.

These last expressions tally with those of our act of 1808, in contemplation of taking the benefit of this act, and relate, not only to the insolvent estate of the debtor at the time of the transaction, but also to the causes which may have led to it.

Therefore, though a trader be insolvent at the time of the conveyance, if the transaction could not be considered as a mere voluntary act, as when done to avoid compulsory process, the transaction will not be holden fraudulent; but otherwise if he appears to have acted upon no other motive than his own will and the desire of granting an undue preference. But on the other hand, if the party be insolvent, or become so soon after the conveyance, although it may defeat that equality among the creditors, to secure which is so great an object of the bankrupt laws, or though (in the language commonly used on the occasion) it may operate as a preference to a particular creditor; yet, if the conveyance be not the voluntary act of the party (as when it is given to deliver him from legal process, from the threats or apprehension of it, or even from the pressure or importunity of a creditor, without the threat or actual apprehension of an arrest) it cannot be said to be done with the intent to defraud creditors : the preference, as it is called, being only consequential, will not be held fraudulent or an act of bankruptcy. Id. 51, 52.

This is the reason on which the law does not only consider as good, but even authorises the payment by an insolvent of a debt actually due on the very day of the failure. Partida 5, 15, 8. There certainly results a preference from this payment, but the law does not consider it as undue, because the payment may have been made from other motives, than the mere will of the debtor, and without any fraud on his part.

The mortgage of the plaintiff was executed on the 12th of March, 1811. The witnesses all agree that from the beginning of the year Dukeylus's credit was ruined—his notes were discounted at an exorbitant interest—his goods were sent to auction and sold below the cost: he was at a loss to take up even small notes, and threatened his endorsers to suffer them to be protested, and in the month of February, the general opinion of his friends was that he could not stand it any longer, and his failure was unavoidable.

The mortgage was the voluntary act of the insolvent : his notes, endorsed by the plaintiff, were not yet payable; he could not be acted upon by the pressure of his debts, nor the threat or dread of any compulsory measures on the part of any of his creditors.

The preference given was undue on account of the extent of the property conveyed. Twenty-three slaves were mentioned, their value about $ 15000, the whole of the insolvent’s property, susceptible of being mortgaged and the other property ceded, is of a value relatively insignificant.

III. It is true the act of 1808, regards as valid the assignment of property, made by an insolvent, when made bona fide: but it is expressly required that the consideration be actually paid, at the time of the execution of the assignment—that the consideration be bona fide.

Now can it be said that the consideration, given by the plaintiff, was actually received by Dukeylus, at the time of the contract? Could the creditors of the latter, by any possibility, be benefited, even accidentally, by that part of the mortgage which relates to endorsements previously given by the plaintiff, without any stipulation that he should be in any manner secured?

It is true that in all cases, which turn upon the fraudulent intent of the debtor, the following circumstances (tho' with respect to some of them it is impossible to draw any precise line) must always be considered as favourable, and according as the particular case turns upon one or several of them, taken together, will have more or less weight, in the general consideration—as, namely, when the party continues in good credit, and a bankruptcy does not take place till some time after the conveyance—where the transaction is beneficial to the generality of the creditors—where possession is given immediately. Cullen’s B. L. 53, 54.

Dukeylus failed on the 29th of April 1811, about seven weeks after the date of the mortgage, and it is clear that his creditors, far from receiving any advantage, were materially injured, by the mortgage, as far as it relates to prior endorsements. Let us examine, whether the case is more favourable, in regard to the part of the mortgage, intended to secure the plaintiff in regard to future endorsements.

Can a vague and loose promise to endorse in future to the amount of $11,000—a promise not express, but which is contended clearly to result from the plaintiffs acceptance of the mortgage, in the words of the law, be a bona fide consideration, actually received at the time of the contract? What benefit could the creditors possibly, or did they actually, derive from this pretended promise?

Let it be admitted that the plaintiff did furnish endorsements for $4300—the last note, thus endorsed for $3800, was given three days before the failure. Is it clear that the amount of it, increased the estate out of which the creditors are to be paid, or is not the presumption strong that this endorsement was for the renewal of a note, endorsed by the plaintiff? If this be not the case, where is the property represented by this note?

If property be purchased from a man in failing circumstances, not within the knowledge of the buyer, the latter, on proof of an actual payment, ought to be protected, especially if the proceeds of the sale are found in the mass of the debtor’s estate, and the creditors are thereby benefited. On this ground, was the decision of the court in the case of Kenner & al. vs. Brown, 3 Martin 270. But in the present case the plaintiff has nothing similar to allege. As to the endorsement, prior to the mortgage, no consideration was received : the creditors derived no benefit. As to the subsequent endorsements, they could only tend to increase the mass of the debts, by affording to the insolvent the facility of raising money, by discounting notes to great disadvantage. The plaintiff does not appear to have been under any obligation, express or implied, to endorse. There are no words in the conveyance from which this obligation may be inferred. It speaks only of notes which he, the plaintiff, may endorse, qu’il pourra endosser.

Finally, he complains that the court pass over, in silence, the note of $1600. It was quite useless to mention it, since the judgment declares the whole mortgage to be null and void. But we are to observe, that this note could neither be considered, as endorsed at the date of the mortgage, which that instrument was intended to cover, because those notes are therein detailed, nor as one endorsed after the mortgage, because it has an anterior date. It has been alleged that, tho’ dated before the mortgage, it was endorsed after it. But this allegation is not supported by any part of the testimony, and is, on the contrary, discredited by that of Galez, Who deposes that he procured the discount of it before the date of the mortgage, and he expressed his surprise to the plaintiff, when he discovered that it was not mentioned in the mortgage.

REHEARING REFUSED.