Case ID: njl_13/html/0308-01.html
Source: Caselaw Access Project
Author: {"author": "Hornblower, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

ABRAHAM I. BERRY v. JAMES ARTHUR.
    If an insolvent debtor intentionally, or fraudulently, omits to give notice to any one- or more of his creditors, residing in this state, he has not in all things complied with the requirements of the act. Proof of such notice is preliminary, and indispensable and lies at the foundation of the proceeding.
    The creditor is not bound to confine his evidence exclusively to the enquiry, whether the debtor was really insolvent, and whether he had fairly surrendered all his property to the use of his creditors, but he may enquire, whether the debtor has in every other particular conformed to the requirements and provisions of the-act. .
    An insolvent debtor is not called upon to make his assignment, until his title to a discharge, so far as respects his own acts, is settled.
    This was a certiorari direetef! to the court of Common Pleas-of the county of Bergen, to bring up to this court the judgment and proceedings in a matter of insolvency. Several reasons for reversal were assigned.
    Zabriskie, for plaintiff in certiorari.
   Hornblower, C. J.

It appears by the amended return to the certiorari in this cause, that on the trial of the issue joined between the insolvent, who is the defendant in certiorari, and Abraham I. Berry, who was the opposing creditor, and is the plaintiff in certiorari, in the first place ; that the creditor offered to prove that Arthur, the insolvent, had other creditors to a large ¡amount, besides those mentioned in the schedule filed with his petition in this case ; and that the court overruled the evidence, .as irrelevant to the issue.

In this, I think, the court were right, admitting the issue to be as the plaintiff in certiorari contends, and as it no doubt is, ■“ that the debtor has in all things complied with the requirements of the act.” Let us se.e what the act requires in this particular. By the first section, Rev. Laws 217, the petitioner is required to present, together with his petition, “ a list of all his •creditors with the money due and owing to each of .them to the best of Ms knowledge.” The qualifying influence of the words, “ according to the best of his knowledge,” cannot by any just rule of construction be confined in their application, to the ¡amount of his debts ; but must be extended, to the list of his creditors. The list of creditors, and the sums due to them, are coupled together by the word “ with, ” and both subject to the reasonable qualification, “ according to the best of his knowledge.” The evidence offered therefore to prove that the insolvent had other creditors, did not negative the issue on his part or go to shew that he had not complied with the requirement of the statute in this particular, by presenting a true list of his ■creditors, “ according to the best of his knowledge,” — secondly, that the opposing creditor offered to prove that no notice of the hearing, had been served on some of the insolvent’s creditors resident in this state ; which evidence, the court also rejected.

I11 this I think the court below was wrong. I11 the case of Smick v. Opdycke, 7 Halst. R. 347, it was fully, and I think most correctly determined by this court, that the enquiry on the trial of the issue, is not restricted to the truth, honesty and fairness, or otherwise, of the surrender and disclosure of the insolvent’s estate, but extends to the question whether he has in every other particular conformed to the requirements and provisions of the act. By the second section of the act, it is directed that the debtor shall cause notice in writing, at least thirty days previous to the day appointed for its hearing, “ to be served on or left at the usual place of residence, of each of his creditors, if residing within the state ; ” and in this provision there is no reference to the knowledge or belief of the debtor, nor any allowance made for failure of memory. Proof of such notice is preliminary and indispensable ; it lies at the foundation of the proceeding ; and if the debtor has intentionally or fraudulently omitted to give such notice to any one or more of his creditors residing in this state, he has not “ in all things complied with the requirements of the act.” I can scarcely conceive of anything more material and relevant, on the trial, than the enquiry wheth'er such notices have been given — there doubtless were other-matters more important to be enquired into, but none more directly within the issue. I do not mean to say that the accidental omission to give notice to one or to two or to any specific number of creditors would be fatal to the insolvent’s discharge. Such omission may be accounted for in a manner to repel the idea of a fraudulent intention on the part of the insolvent; but without giving any opinion on that point, I am clearly of opinion the evidence was admissible. It follows of course, from what has been said, that when the court below; (as it. appears they did by the amended return) ordered the creditor to confine his evidence exclusively to the enquiry, whether the debtor was really insolvent, and whether he had fairly surrendered all his property to the use of his creditors, they committed an error. It is unnecessary, therefore, to examine the other reasons assigned for a reversal. The judgment founded on the verdict, in my opinion, ought to be reversed.

Drake, J. It appears, by the amended return sent up in this case, that on the trial of the issue joined, before the Court of Common Pleas, the opposing creditor offered to prove, that the insolvent had other creditors, to a large amount, not named in his schedule ; and that no notices had been served on several of his creditors, residing in this state. The court overruled the testimonv, and directed the creditor to confine his evidence solely to the points, whether the petitioner was really insolvent, and whether he had fairly surrendered all his property to his creditors.

This general direction is opposed to the decision of this court in the case of Smick v. Opdyke, 7 Halst. 349. And besides the error in this particular, the evidence, which was overruled, ought to have been admitted, as- operating upon the question of the full compliance of the debtor with the requisitions of the insolvent laws. A failure to notify such creditors as were named on the list of creditors, would be clearly a non-compliance, but even if not named, as was probably the fact in this case, the issue is broad enough to embrace the enquiry, whether the list was made out according to the best of his knoioledge. The jury have a right to judge of that matter. And although the omission to place upon the list, and to notify a single creditor, or more, provided it was by forgetfulness, or mistake, should not defeat the application; yet, the omission of several, and to a large amount, would be evidence to a jury of designed and fraudulent omission ; which ought not to be countenanced, and should deprive the debtor so conducting of their verdict.

Another objection taken to this proceeding is, that no assignment was made by the debtor, before the trial and verdict. This should be done, either on the day of the hearing before the court, and at the time that the creditor makes his undertaking, and of course before the declaration is filed, or issue joined; or it should be the last thing to be done, before the judgment of discharge. The language of the act appears to me rather to favor the first view. But it is not so explicit as to be decisive. The usual .practice is the other way, and I think convenience favors it. It appears to me, that the debtor should not be called upon to make his assignment, until his title to a discharge, so far as respects his own acts, is settled. And therefore, if this were the only objection, I should be unwilling to reverse. But upon the first point, I concur in reversing the judgment.

Ford, J. concurred in reversing the judgment.

Cited in Hogan v. Hutton, Spencer, 84.