The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1873-07-29
Observation-Disclosures VRsEsss
DECISION IN BANKRUPTCY
OPINION OF JUDGE TREAT. ss

rnptey when the principal falls 10 pay. This
will have the effect of inducing merchants
aud others to be more careful lin intioripe
the paper OF others and exercising more pr,l.
tlence in making sales on credit:
sin the matter OF John Clemens, ii, bank
ruptcy. The defendant. against whom the
petition is filed, does not deny that he be.
longs to the class the suspension of whose
commercial paper for fourteen days is an act
of bankruptcy.
The petitioning creditor ayers that he is
the holder for value of a negotiable promis-
sorry note for $4,000, OF which Christian
Staeh,in is the maker and the defendant the
first indorser. and that said note was presented
for payment ut maturity, protested for nom
payment, and notice thereof duly given to
the defendant. There arc several indorsers
Of the note.
The petition alleges an act of bankruptcy
as follows:
"And your petitioner further represents
that within the six calendar months next
preceding the date of this petition the said
John Clemens, being insolyent and in con-
temptation Of insolvency and bankruptcy,
did commit an act of bankruptcy within the
meaning of the act-to wit, In that the said
John Clemens did heretofore-to wit, on the
10Th day Of May, 1S73,-being merchant,
manufacturer, and trader, suspend, and did
not resume payment of his com uercial paper
! within period of fourteen days, nor at any
time thereafter"
Defendant AYERS that he Endorsed the notes
set out in the creditors petition, and several
others made by said Staehin, solely for the
accommodation of Staehlin; that said notes
| were not made or indorsed In the course of,
or in connection with, defendants own bust.
ness; that said notes have remained past
due more than fourteen days; that no notes
| made by the defendant are past due; that
the only notes outstanding and past due on
| which his name appears are those 60 Endorsed
| by him for Staehlin's accommodation, the
same being in no wise connected with de-
| PENDANTS business; and that /" he is not in
solvent, but is fully able to pay his own
| debts in full, contracted in or about his own
! business"
The present purpose of this answer is to
obtain the ruling Of this court on the several
| propositions involved, concerning which
| there are conflicting opinions. In few of
| the earlier cases decided under the bankrupt
act, doctrines were announced by some Of
| the district courts to which this court never
| assented. To interpret this law it is neces-
sary to keep strictly In view the cardinal
| canon of construction, which requires refer
ence to all It's parts, and to its scope and OBJ
iect Its main purpose is, while furnishing
| relief to unfortunate debtors, to secure
equality among creditors. Another impor-
| tant object is to prevent over-trading, by
requiring those whose commercial paper Is
put into circulation to meet it promptly,
| according to the law merchant, il they en-
| bark in any of the classes of business speci-
| fed.
Without going into review of decided
| cases, or into labored analysis of the act of
| Congress, it must suffice for the present case
! to say that, in the opinion of this court, as
often heretofore held, the clause in question
does not mean that the suspension of pay
ment for fourteen days Of one piece or more
Of commercial paper is an act OF bankruptcy,
| irrespective of the circumstances under
which the suspension occurred. In re Comp
/ ton Il Doan, and in re Brown, Weber Il
| Co.. as we'll as in other cases decided by this
court, it was held that the suspension con-
templated was general suspension; or
suspension from financial inability to meet
ones indebtedness as it natures. and not a
suspension with respect to some paper the
liability to pay which is honestly questioned,
| it being supposed bona .ttde, that good de-
| through mere inadvertence, the ability to pay
being clear, and tender made so soon as the
| inadyertonce was known; nor suspension
ut the instance of the holders Of the paper
pending negotiations for renewals, &c.
In this respect the court has differed from
some other district courts, as it does also
on the following points, on which it holds
that by Commercial paper" the act of Con-
| greSS does not mean only such paper when
| issued in connection with ones own mer
camille, trading, banking, manufacturing or
mining business; or what is sometimes de-
nominated I" business paper" Some courts
have ruled that such paper when given for
money borrowed, though for the purpose of
conducting the business described, is not
within the meaning of the act-a construc-
ton wholly irrecoucilable with the scope
and object Of the law. The doctrine held
by most of the courts is the correct one
viz, That the term commercial paper"
means all negotiable paper known as such
by the law-merchant, as modified by the
statute Of Anne and the various American
statutes.
1t seems obvious that when Congress APP
piled special rule concerning commercial
paper to specified pursuits, it did so to Gu
force punctuality OF payment. In addition
to the ordinary days of grace, it allowed the
fourteen within which merchant, &C., If
solvent, ought to be able to take up his paper,
or make satisfactory arrangements therefor.
1t is we'll known that many business men
holding such paper rely on its prompt pay
ment to enable them to meet ther own obli-
cations ut maturity and that the failure OF
one to pay promptly may affect not the hold
er of his paper alone, but the creditors OIL
the holder. Indeed, in the present modes
of business, the non-payment OF such paper
by one may produce serious consequences 10
many who are successfully creditors OF eacn
other. The reasons for insisting upon SUCH
prompt payment are so urgent that some
! iudges have enormously held that any one
who issued commercial paper is merchant
within the meaning Of that term as USED III
the act of Congress, irrespective OF bis real
occupation. If the origin Of the paper Is TO
determine whether it is commercial or
not, the elemental qualities of such paper are
DESTROYED; for it loses in the hands OF
bona fde indorsee for value the element Oh
certainty which the law merchant imposes.
Being, for a sam certain, payable at specl-
fed time, such an indorsee is not affected by
any equities existing between the original
parties. Each indorser contracts Win us
Immediate indorsee and all subsequent IN
dorsees for the payment OF the sum
named and the contract OF the maker
is not more definite under the Jaw
merchant than is the contract OF the
indorser. AS to bona .tSde indorsees for
value, it is immateral whether the indorser
put his name to the paper merely to accom-
modate the maker or not. The very object