#### DAVID W. SANDERS vs. SAMUEL SMALLWOOD.

To avoid a plea of a discharge under the bankrupt law, the plaintiff must shew, not merely a mistake or omission in making the inventory on tho petition of the bankrupt, but a fraudulent and wilful concealment.

Upon a case agreed, on such a plea, the Court cannot give a judgment for the plaintiff, unless the case states in terms a wilful concealment, or unless such wilfnl concealment *necessarily*results from the facts stated.

Where a marriage settlement had been made on a wife, and the husband afterwards obtained a certificate of bankruptcy and did not inventory the property so secured, and where it appeared also, that the marriage settlement had not been properly registered and was therefore void against creditors, but it did not appear that the husband knew of this defect in the registration, or, if he did, was aware of its operation in law, *held,*that he could not, by the Court, be declared to have been guilty of a fraudulent concealment in regard to such property.

Appeal from tbe Superior Court of Law of Onslow County, at the Spring Term, 1847, his Honor Judge Pearson presiding.

*126Debt on a bond, and plea of a certificate of bankruptcy to the defendant as a voluntary bankrupt, granted by the District Court of the United States. The plaintiff replied, that, at the time the defendant exhibited his petition in bankruptcy, he was seised of a certain tract of land specified, and owned certain slaves also specified, and that he did not set forth the same as a part of his property in the petition, or any inventory annexed thereto, but fraudulently and wilfully concealed the same, and, by means of such fraudulent and wilful concealment of the said land and slaves, procured the said Court to declare him a bankrupt and decree him the certificate of his discharge.

Under these pleadings the parties drew up a case agreed, stating the following facts. Mary Boyd owned the land and negroes specified in the replication, and intermarried with Smallwood, the defendant, on the 17th of October 1835; but, before the marriage, by a deed of marriage settlement, made by and between herself, Small-wood, and George Boyd, she conveyed the land in fee, and the slaves to George Boyd as a trustee, in trust for herself until the marriage, and afterwards in trust to, and for her separate use, free and clear of any interest, control or power of the intended husband, and in trust to convey the same to any persons she might appoint in her life-time, or by her last will, as if she were solé, and in Case she should fail to make an appointment of any part of the property, then in trust as to it for her next of kin. The deed was proved before the Clerk of the County Court, November 16th, 1835, and registered the same day. The defendant did not include in his inventory any part of the land or negroes mentioned in the deed, and omitted, failed, and neglected to set out, or disclose the same in any part of the proceedings in bankruptcy.

It was agreed between the parties, that if the Court should, upon these facts, think the plaintiff was entitled to recover, judgment should be entered for the principal *127money mentioned in the bond, and interest; and if otherwise, then judgment for the defendant.

The Court was opinion with the defendant, and gave judgment accordingly, and the plaintiff appealed.

*J. W. Bryan,*for the plaintiff.

The plea of the defendant, of his discharge in bankruptcy simply, is insufficient and ineffectual to bar the recovery of the plaintiff

1. There is no averment in the plea, that the debt due the plaintiff was proveable under the bankrupt act, and without such averment, the discharge does not appear to be a bar to the action.

2. There is no averment that this debt was not created, in consequence of the defalcation of the defendant as a public officer, or while he was acting in a fiduciary capacity.

The Federal Courts are agreed, that fiduciary debts are not discharged by the certificate, unless the creditor comes in and proves the debt. The plea should have shewn that this was a debt on which the discharge might operate. *Sachett*v. *Andross,*5 Hill’s (N. Y.) Reps. 327.

As a voluntary bankrupt, the defendant was required to present with his petition, an accurate inventory, *of his property, rights, and credits, and the location, and situation, of each and every parcel, and portion thereof.*And he was afterwards subject to examination on oath, before the Court, or a commissioner in relation among other things, to his property and rights of property. His omission to insert this property in his inventory was a fraud upon his creditors and the bankrupt act, *Brereton*v. *Hull,*1 Denio’s (N. Y.) Reps. 75. It was not for the plaintiff to shew that “ the defendant knew or had any reason to believe that the marriage settlement had not been proven and registered as required by law.” This was a fact peculiarly within the knowledge of the defendant — he was a party to the deed, and interested therein, and *128moreover, if it were not proved and registered according to the directions of the act, it was void as to *his*creditors, *Smith*v. *Garey,*2 Dev. and Bat. Eq. R. 42. The *law*presumes that the defendant knew that the deed had not been proven and registered as required by law, and the legal effect of the same, and he cannot allege his ignorance of the same; for a neglect to acquire a knowledge of the laws which have been promulgated is voluntary ignorance. *Doct. and Slu. 1,*46. *Plowd.*343. The statute, which was known to the defendant, required certain formalities which had not been complied with, which were essentially requisite to give validity to the deed ; and the registration of the same under the *fiat*of the clerk, was an unauthorized act, and is not even notice, *Smith*v. *Castries,*5 Ired. R. 518. The omission and failure to insert the property in his schedule was in law a wilful and frudulent concealment, within the meaning of the act of Congress, for it counteracted the policy of the bankrupt act. The defendant knew that the deed of marriage settlement, thus proven and registered, did not convey the property therein mentioned to the trustee as against his creditors ; it therefore became requisite before he could be legally entitled to be declared a bankrupt, that he should set forth his property rights and credits of *every name, hind and description and the location and situation*of each and every parcel thereof, verified by oath, in his inventory, according to the bankrupt act of 1841, s. 1 ; so that the same might be taken possession of by the assignee in bankruptcy, and become vested in him for the benefit of his creditors, according to the third section of said act. *Adams*v. *Alexander,*1 Ired. R. 401. Mr. Justice Thompson, in the case of *Wakeman*v. *Hoyt,*reported in the Law Reporter 300, in commenting upon that clause in the first section of the bankrupt act, which declares wherever such person, “ shall willingly or fraudulently procure himself to be arrested, or his goods and chattels distrained,” &c. says, “ Willingly ar *129fraudulently” is the language of the act. The debt se- . cured by the attachment or execution may be *bona fide*and justly due. Nevertheless, if the debtor so willingly procures himself to be attached or his property to be taken in execution, it is an act of bankruptcy. What is there in such a transaction that partakes of fraud ? Nothing if it is an honest debt. All that the debtor does is to procure the execution to be levied on his goods, &c. Why is this an act of bankruptcy? It can be for this reason only, that he thereby does an act contrary to the policy of the bankrupt law. That policy is, in cases of hopeless insolvency, to cause an equal distribution of the trader’s effects. It is 011 no other principle that it is made an act of bankruptcy, for a trader to aid a creditor in securing his debt, by attachment or execution. Then if that be so, how does it differ from the act of bankruptcy last specified in making a fraudulent conveyance, assignment,” &c. Does the word “ fraudulent” there used necessarily import moral turpitude ? or may it be satisfied with a fraud in law, counteracting the policy of this act, and preventing a general distribution of his property among the creditors of the bankrupt, by applying it exclusively to the benefit of such of them, as he may choose to prefer? Whether such preference is given to two or more, is wholly immaterial. It equally counteracts the policy of the law. If we look to the second section, it appears to mo that it serves to explain what shall be deemed the kind of *fraud*which may render a conveyance fraudulent, within the meaning of the first section. All future payments, securities, conveyances, &c. shall be deemed *utterly*void, and a *fraud upon this act.*It is precisely as honest an act for the debtor to procure an attachment or execution to be levied on his property by a creditor, as it is to secure to him a preference by means of a conveyance. It is *fraudulent*only because it counteracts the polieyof the law; and this is equally true in the one *130case as in the other. If the defendant therefore knew that the marriage settlement was not proven and registered accoi’ding to law, or he was bound by law to know it, then an omission to insert the property in his inventory deprived his creditors in bankruptcy of the benefit of it and was a fi’aud upon the bankrupt act. But he in fact knew it. Else how could he *omit and fail to do it ?*The very terms used, imply a previous knowledge, and it is upon thatpi’inciple, that acts of omission and commission are made criminal by law, and so too we are taught in the revealed law. In the matter of *Nicholas G. Nor-cross*before Judge Wake, in the District Court of the United States, Maine, Law Rep. Yol 5, 124. it was objected that the petitioner had omitted to set forth all his property, &c. in his schedule, and the objection was sustained and the proceedings declax-ed to be defective; and subsequently the petitioner was permitted to amend his schedule. In this case no amendment can be made, for not only are the proceedings in bankruptcy with regard to the same, finally closed and adjudicated and the assignee discharged from the same, but the bankrupt act itself is repealed and that too in a way restrictive of the rights of creditoi’s in all adjudicated cases, so far as this remedy is concerned. If therefore, the plaintiff has no remedy in this case, he is entirely remediless.

*Stanly*and *Rodman,*for the defendant.

Ruffin, C. J.

The deed was not properly proved before the Clerk, and, not being duly proved accoi’ding to the directions of the Act, it was void, as against the husband’s creditors. *Sanders*v. *Ferrill,*1 Ired. 97. *Smith*v. *Garey, 2*Dev. & Bat. Eq. 42. But, admitting the property to have been in the defendant for the benefit of his creditors, it is not the necessary consequence, that his certificate of bankruptcy can be impeached and avoided, for the omission to insert that property in his inventory, or *131otherwise disclose it to the Court sitting in bankruptcy. For such omission may have been innocent, as the defendant might not have been aware of the legal insufficiency of the probate, or, indeed, might not have known how, in point of fact, the deed was proved ; and the Act of Congress does not invalidate the discharge for every omission of property, but only “for some fraud or wilful concealment of property, contrary to the provisions of this Act.’.’ As the previous parís of the Act require the party to file with his petition, “ an accurate inventory of his property, rights, and credits, of every name, kind, and description, and the location and situation of each and every parcel and portion thereof,” it could hardly be expected, that any discharge would stand, if the mere failure to give in some one article of property, however inconsiderable, and though unknown to the bankrupt, would invalidate it; for no person, or very few indeed can furnish such inventory, including by accurate description *every*parcel or portion of his property or rights. Therefore, although it is made his duty to give such an inventory upon his oath, and he ought to come as nigh the exact truth as he can, yet a mistake or omission in making the inventory is not to affect the certificate, but only a fraudulent and wilful concealment. The certificate is avoided by the Act, as a punishment for the dishonesty of the applicant, and that is solely the policy of the provision. For the insertion or the omission of property in the inventory is of no consequence to the rights of the assignee or creditors, except as it may promote the convenience or inconvenience of getting it in, and disposing of it; since the bankrupt Act, unlike our insolvent Act, vests in the assignee all the property, and rights of property, of every name, and nature, and whether real, personal, or mixed,” and not merely that which is inserted in the schedule. It is plain, therefore, that the terms “wilful concealment,” mean, in this act, a fraudulent and dishonest attempt to withdraw irom the use of his creditors property, which the bank*132rupt knew they were entitled to have, and that, to that end, he corruptly and knowingly omitted to disclose it. The replication, in this case, puts the point on the *quo animo,*and does so correctly; and, therefore it was incumbent on the plaintiff to establish the bad purpose imputed to the defendant. That is properly an enquiry for a jury ; and it is not perceived how the Court could give a judgment for the plaintiff upon a case agreed, in which the wilful concealment was not stated in terms, or did not *necessarily*result from other facts stated. *Prima facie,*there is a presumption in favour of innocence. But in the present case the fraud of the defendant is not directly admitted, nor can it be reasonably inferred; but on the contrary, the honesty of his error and omission is hardly to be questioned. It was not his part to have the custody of the deed, nor to have it proved, nor to take any control over the property ; nor does it appear, that he had any reason to believe that the deed was not properly proved, and registered, or that he ever set up any claim to any part of the property. Although, then, the property itself may be subject to the claim of his creditors through the assignee, yet the defendant himself and his subsequent acquisitions are protected from prior debts.

Per Curiam, Judgment affirmed.