New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1888-10-28
HOW MEN FAIL IN NEW-YORK.
PREFERENCES AND ANTIPREFERENCEs.
INEFFEcrUAL LAWS, AND HOW THEY OUGHT TO

INEFFECTUAL LAWS, AND HOW THEY OUGHT 10
BE CHANGED.
The eminent writer on economics, Edward Atkinson,
has said that nine out Of ten men who engage N
business fall II this Is so, the question naturany
presents itelf How do they do it1 This question Is
Of equal interest to creditors and falling debtors
After the Bankruptcy law was repealed, raining
debtors could under the law Of this stare, MAKE
preferences in general assignments to the full extent
Of their assets. AS consequence there were very
few assignments made which did not contain prefer
ences that covered all the debtors property; ana
general creditors, as a rule received nc u''iu"u'
whatever These preferences were largely given u
relatives and friends for alleged borrowed money, anu
the merchandise creditor would invariably DC toh Dy
the debtor that the conhdentals' had to be taken
care Of After a while the merchants began TO attack
such assignments and many were set aside ior irauu
in the dispostion Of property Immediately prior 10 the
assignment or on the ground that all or some OF the
rrofororcos rers hous Then there occurred
change in the manner OF falling and debtors lesorco
to confessions OF Judgment which were lnVailapv
given for alleged borrowed money advanced by WIVES
brothers, fathers and even sometimes W ino'"'i' "
law.
Under confessions Of Judgment, the sheriff would
take possession of the stock Of goods and the Only
ready remedy for the merchandise creditors 10 pursue
was rcplevin. But herein the creditors oi1eh sho"eu
as much dIshonesy as the debtors. by claiming under
and which they had no moral right to take. lhese
renevln proceedings often depleted the stock IN inc
sherI,s hands TO such an extent that very little was
left to apply on the confessions OF judgment, anu
again the debtor and his conidentials" were loneu'
But the system Of giving preferences worAed So Uoh
harm to the honest creditor class, that last year uio
Legislature passed law allowing preferences III
general assignments only to the extent OF one-thru
of the actual assets; and since then 1t mas pceh
ser,ous question whether confessions Of judgment or
any other mode Of preference beyond inc statutory
limit can be valid For this reason the failures tnae
have taken place since tho enactment Oh inc ah'i
preference law have been characterized by the gosses
fraud and the rule IS that when failure Is publicly
announced the stock of goods has disappeared
and tn-dav II is common occurrence for
debtors TO owe upward OF 900 for merchandise
bought within four months of the time OF faure, anu
vet TO not have hand $1,000 OF merchandise n
clothing dealer failed on Broadway fortnight aso'
owing 100000 to different merchants ana not q
single dollars worth of goods was found on hano'
This fraud was so palpable that the debtor fed to
| Canada TO avoid criminal warrants for his arrest
A recent canvass among the wholesale woollen mer'
chants in the dry goods district disclosed the aston
ishng fact that they have not averaged dlVloehd
OF Is cents the dollar out of their bad deOs or
the last ten years and they all complain that the
laws and present decisions of the courts OF this state
favored the falling debtor and that radical changes
| should at once be made.
A lawyer who for the last ten years has maze
| speclalty Of commercial failures, when questioned
as TO what changes out to be made in the law In order
that the creditor class should not suffer, suggested
| that the insolvency laws existing in the New
England States which efectuay prevent preferences
and fraudulent disposition Of assets should be adopted
here: that the books Of the debtor should at once
| upon the failure be deposited with an officer APP
| pointed by the court and II the books did not
honestly account for all the assets the debtor should
be deemed guilty of fraud and imprisonment the same
as for misdemeanor should follow; that all modes
of preference either by confession, bill of sale, mort
gage or assignment should be abolished, and creditor
DO at liberty, without first procuring Judgment, to
bring an action to set aside and examine into all Of
the debtors transfers made within year Of the
| failure; and, generally, that our criminal laws
| should be amended that commercial fraud Of
| all kinds could be dealt with as severely
as against the person and the public welfare
lie said that imprisonment in Sing sing OF one fraudu'
lent debtor would do more to check dishonest failures
than all the civil remedies now ON the statute BOOKS.
TO illustrate the facility with which frauds OF this
class are committed, a single instance Will suffice. a
creditor, finding his debtor backward In his payments,
| called upon him, and was promised a settlement on
the following day. He called the next day, and
found that during the night the debtors place OF
business had been destroyed by nTe belng assured
| pay all debts, the creditor, who was director III
several Insurance companies, brought about an Inn
that the fire insurance companies had paid the debtor
| called upon him moro and congratulated him
upon being able to reopen his business incidentally
tho creditor asked for payment Of his claim and was
stunned by the debtor telling him that he could mol
| pay, aud that tho money from that Insurance be
| ragged creditor then called the debtor all the bad
names he could command; and the debtor apparently
bmsiness had been run in his wifcs name for few
| years he could make settlement for 20 cents on
the dollar, and that the creditor might then hear from