Case Name: Story et al., respondents, v. Nowlan et al., appellants
Court: Montana Supreme Court
Jurisdiction: Montana
Decision Date: 1871-01
Citations: 1 Mont. 350
Docket Number: 
Parties: Story et al., respondents, v. Nowlan et al., appellants.
Judges: 
Reporter: Montana Reports
Volume: 1
Pages: 350–358

Head Matter:
Story et al., respondents, v. Nowlan et al., appellants.
Bankruptcy — preference to creditor. Ia this case the court found that a firm had committed an act of bankruptcy by giving preference to a creditor.
Appeal from the Third District, Lewis and Clarice County.
The facts appear in the opinion of the court and the dissenting opinion. The decree was rendered by Symes, J.
Clag-ett & Dixon and E. W. Toole, for appellants.
The court erred in sustaining the demurrer to the amended answer, which set out an attachment issued and levied by respondent, Story, for Ms debt after tbe filing of tbe petition. Such a proceeding on the part of a creditor violates tbe bankrupt act. § 39 of Act; In re Princeton, 1 Bankr. Reg. 178 ; In re Coleman, 2 id. 172. The demurrer admitted tbe truth of tbe allegation. Tbe creditor was thereby debarred from proving bis debt, and if be could not prove bis debt, be could not maintain Ms petition.
Tbe declarations of Stateler to different persons, concerning tbe drawing of money out of tbe bank of appellants by Stateler and others, were improperly admitted. Stateler was tbe agent of appellants in managing their business. Appellants were bound civilly by Stateler’s acts and declarations as to matters within the scope of bis authority, and no further. He could not commit an act of- bankruptcy for appellants. 1 Gí-reenl. Ev., §§ 113,114; Story’s Agency, §§ 134— 136. As to authority of cashier of bank. Id., §§ 114,115.
A general assignment for all creditors is not an act of bankruptcy. Langley v. Perry, 2 Bankr. Reg. 180; Bedgwiclc v. Place, 1 id. 204; 1 Am. Law Times, 44.
Tbe evidence was insufficient to support tbe findings as to tbe preferred payments to Stateler, King, and Weir & Pope. Tbe decree was based on these findings and facts. These payments were made by Stateler in tbe absence of appellants, and without their knowledge, consent or direction, and were never ratified or confirmed by them. Stateler bad no authority to do these acts, and it was no part of bis duty as their agent. A principal is never bable for tbe criminal acts of bis agent unless specially authorized. 1 Pars, on Cont. 73; Story’s Agency, § 456; Yanderbilt v. Richmond T. Co., 2 N. Y. 479 ; Ciarle v. Metropolitan Banle, 3 Duer, 241.
Our bankrupt act in involuntary bankruptcy is in tbe nature of a penal statute and must be strictly construed. 3 Pars, on Cont. 429 ; Smith’s Stat. Law, §§ 738, 746. All the grounds for involuntary bankruptcy involve fraud. § 39. Mere insolvency is not of itself ground for involuntary bankruptcy. Born v. Compton, 2 Bankr. Reg. 182.
Tbe intent of tbe debtor determines tbe question of fraud within tbe meamng of tbe bankrupt act. An act is not fraudulent unless it was meant to be so. Langley v. Perry, 2 Bankr. Beg. 180; Bump on Bankr. 128-132; James on Bankr. 153, 166-167.
The acts of Stateler were quasi criminal so far as they might be acts of bankruptcy. Appellants never authorized such acts and knew nothing of their commission and could not intend to give a preference, and hence could not commit an act of bankruptcy.
The evidence shows that respondent, Story, consented to the assignment, and the court erred in not finding this fact. He is thereby estopped from proceeding in bankruptcy, or denying the legality of the assignment. In re Sunderland, Law Times, 73; In re Schuyler, 2 Bankr. Beg. 169 ; In re Whitmore, Law Times, 105; Ex parte Stray, 1 Bankr. Beg. 18.
W. F. Sanders and Chumasero & Chadwick, for respondents.
The demurrer was properly overruled. In re Schuyler, 2 Bankr. Beg. 169.
The acts of respondent, Story, do not estop him from proceeding in this case. He endeavored to get the property of appellants into good hands, whence it would be forthcoming for distribution to pay creditors.
Stateler was a general agent about a particular business. His declarations, while properly engaged as agent, are admissible as part of the res gestee.
Bankruptcy in modern days is not regarded as involving the turpitude it formerly did. The bankrupt law is no more penal or criminal than an attachment law, under which property is taken without the debtor’s consent. Bankruptcy is a private tort. 1 Bish. Grim. Law, §§ 392, 405. Making preferred payments under the bankrupt act is not declared a crime or punished. 1 Lead. Crim. Cas. 241. The question as to Stateler binding his employers criminally does not arise in this case.
The payments were made to Weir & Pope, and King and Stateler by the express authority of appellants, or while Stateler was acting in Ms principal’s business. Appellants are liable therefor in either case. 1 Whart. Crim. Law, 154; 1 Bish. Crim. Law, 439, 440; Rex v. Guich, Moody & M. 433; Commonwealth v. Nichols, 10 Mete. 259.
Stateler required no authority to pay depositors in the bank of his employers. 1 Am. Lead. Cas. 569. If an agent is instructed not to do certain acts within the scope of his general authority, but does the acts, the principals are bound thereby. Dispatch L. Packets v. Bellamy M. Co., 12 N. H. 206, 223. The principal is held to the duty of employing agents that will obey instructions. Appellants never disavowed the acts of Stateler in making the preferred payments. They made no effort to get back the money that them agent paid to preferred creditors.

Opinion:
Warren, O. J.
The giving of preference to their creditor Stateler, to the amount of $30,000, is one of the acts of bankruptcy found by the judge of the district court. TMs was the fact sought to be established by the evidence preserved in the record, and, in determining it, all the evidence concerning it should be considered together, and, so considering it, I am compelled to the conclusion that the finding of the judge in' this particular is supported by the evidence. It is unnecessary to review the other findings.. The findings and adjudication of the judge of the district court are affirmed.
Judgment affirmed.