Case Name: J. and B. Cheston vs. Page's Executors and Devisees
Court: Court of Chancery of Maryland
Jurisdiction: Maryland
Decision Date: 1799-12
Citations: 4 H. & McH. 466
Docket Number: 
Parties: J. and B. Cheston vs. Page’s Executors and Devisees.
Judges: 
Reporter: Maryland reports, being a series of the most important law cases argued and determined in the Provincial Court and Court of Appeals of the then province of Maryland, from the year 1700 [i.e. 1658] down to the [end of 1799]
Volume: 4
Pages: 466–475

Head Matter:
COURT OF CHANCERY,
DEC. TERM 1799.
J. and B. Cheston vs. Page’s Executors and Devisees.
The hill in this case, (filed on the 27th of September 1793,) states, that. John Page, deceased, on the 1st of October 1774, was indebted to William Randolph, William Stevenson, and the complainant James Cheston, as joint merchants and partners in trade, in the sum of 1379k 8s. 4d. sterling money of G. B. of the value of 2299Í. 8s. 4<k current money of Maryland, for divers goods. &c. by them sold and delivered before that time to the said Page, at his special instance and request, and which sum of sterling money the said Page assumed ¿0 pay to them. That for the recovery of the said debt, anil interest thereon, the said W. S. and J. C. after the death of the said W. S. did commence an action in the general court for the eastern shore, by the consent of the other complainant B. Cheston, for the use of the said W. R. J, C. & B« C. against the said Page, and such proceedings were therein had, that at. April term 1790, a special verdict was taken between the parties in the said cause, by and with their consent, and which facts, so found by the jury giving the said verdict, contains and are a full statement of the facts which exist in the case between the complainants and the defendants herein named, up to the death of the said Page, as by an attested copy of the said special verdict, produced and lodged in this court, to which the complainants beg leave to refer, and pray that the same may he taken as part of their bill of complaint, to all intents and purposes as if the said facts stated and found in the said, special verdict were herein again particularly enumerated and charged in this their bill. That after the finding of the said special verdict, the said cause- continued in the said general court, under a rule for argument, up to the death of the said Page, being continued, awl the decision thereof postponed on account of the indisposition ant! absence of the defendant’s counsel. That the said Page afterwards, in the. year J 792, departed this life, having first duly made and published his last will and ■testament, leaving’ a considerable real and personal estate, more than sufficient to pay all just claims against Mm, and thereof constituted and appointed his sons J. 3?. & M. P. two of the defendants herein named, his executors, who have caused the said will to be proved, and taken upon themselves the execution thereof, and possessed themselves of all the personal estate of the said testator, Ac. That the said cause continued, wilder the direction of the court, to advise thereupon, after the death of the said Page, until April tern 1793, to which term the executors of the said Page had been summoned to appear and defend the sa-d .suit according to the directions of an act of assembly in such case made and provided; hit the general court, at the said last mentioned term., determined the said cause "was not within the provisions of the said act, ami ordered the same to be entered abated by the death of the said Page. That the said W. R. hath also depart''?! this life, and the complainant J. Cheston is the only surviving partner of the partnership of the íiaid R. S. & C. and the. said complainant, as the surviving partner, together with the other complainant B. Cheston, the assignee of the said W. S. a bankrupt, have the sole right to settle the concerns of the said partnership, and have therefore applied to the executors of the paid Page, since his decease, to pay and satisfy the debt aforesaid, which they wholly refuse to do. And forasmuch, as tlie complainants are without remedy, unless by the aid of this court, the said assignment to the complainant, D. Chesion, not being sufficient, as be is advised, to enable him to sustain an action in his own name in a court of law against the said executors, or against the devisees in the said will mentioned. The hill piso states the issue left by the said Pa,ge, who are tlie defendants in this case, and that be left real and personal estate which have come to the hands of tlie defendants, pr to the hands and possession of gome of them, more than sufficient to satisfy the said claim of the complainants, and which they charge is liable for the payment thereof, in tlie hands of the said defendants, the said claim not having been discharged or paid by the payment made by the said Page in his life-tinic to the said W, S. in the manner and under the circumstances stated ii) the said special verdict herein before referred to. Prayer, that the defendants may answer, &ca and tliat the complainants may be paid and satisfied out of the persopal assets of the said Page, or in default thereof out of his rea] estate, &c, and for further and other relief, &c.
The special verdict exhibited, finds that the. said John Page on the 1st of October 1774, was indebted to the said William Randolph, James Oheston, and the said William Stevenson, deceased, in the sum of 1379i, 13s. 4d. sterling inoney of G„ B. of the value, &c.'for divers goods, &c. by them before that time sold, &c. to -he said Page. That at the time of the said sale the said R. C, and S, were merchants and copartners,' the said R. and' S. residing in England, and the said C’. residing in'Maryiandi and that their partnership continued'until the SIst of December 177b", at which time it was dissolved. That op the 35th of January 1777, and for divers years then last past, the said Stevenson was a merchant and liege subject of the king of G. B. residing in England, and for all that time used and exercised the trade of merchandize by way'.of bargaining, &c. and that the said S. within tliat space of time, wag truly and justly indebted unto a certain Daniel Chesion, (being a liege subject of the said king of G. B.) in the sum of 344 rL 11s. 4d. lawful money of G. E. Tliat‘by ah act Of the parliament of the kingdom of England, made at p parliament begun and holden at Westminster, in England, the 3d day of A.pril, in the 13tli year of the reign'of Elizabeth, formerly queen of England, and the year 1571, entitled, ¿‘An act touching orders idr bankrupts,? it was enact-! ed, that, &c. and that by another act of said parliament of England, ¡BC.de, Ac» the 19th of March, in the 1st year of the reign of Janies I. formerly king of England, and in the year 1603, entitled, “An act for the better relief of the creditors against such as shall become bankrupts,*’ it wan enacted, that, &c. Aud that by another act of the said parliament of England, made, &c, the . 9tk of February, in the 21st year of the reign of king James L and in the year 1624, entitled, “An act for the further description of bankrupts, and relief of creditors against such as shall become bankrupts, and for inflicting corporal punishment upon the bankrupts in some special cases,"’ it was enacted, that, &c.
That the said W. S. being indebted to the said B. C, as aforesaid, on the 25th of January 1777, at the city of Bristol, in England aforesaid, because a bankrupt within the sense and true meaning of the aforesaid statutes. That on the 1st of February 1777, on the petition of the said li. C. on behalf of himself and other creditors of the said W. S. the Lord Chancellor issued a commission, which is set forth, with its return, declaring the said W. S. had become a bankrupt before the issuing the saul commission. That the said commissioners on the 8tii of March 1777, executed an indenture of assignment to the said D. C. of all goods, &c. of the said "W. S. in trust for the benefit of the said D. C. and all and every other creditor of the said W. S. That the said Page afterwards, to wit, on the 20th of May 1779, paid to the sabs AV. S. at Kent county, in this state, the said sum of 2299Z. 8s. 4tí. current money of Maryland, mentioned in the pleas by the said Page pleaded in this case; hut that before the said payment the said Page had received notice, (not by the said R. S. and C. or either of them, but by a citizen of this state not authorised to give such notice,) óf the dissolution of the partnership of the said R. S.and C. as '.foresaid, and of the bankruptcy of the said S. That the original writ in this cause was sued out in the names of the said R. S. and C. for and on behalf of the said R. an»5 J. C. and of the said B, C. assignee of the commissioners aforesaid, and for the purpose of enabling them the said 11. and J. C. and the said B. C. to recover and receive the money mentioned in the declaration in this cause, and not for the benefit, use or behoof, of the said S. That the said Page and J. Cheston were bom in the late province of Maryland, and resided and were inhabitants thereof, until the said province ceased to be a pari ol‘ the dominions of the king of GL B. and became a sovereign independent state; and the said debt was contracted and became due between the 13th of April 1769, aud the 1st of October 1774, for goods, &c. sold by the said E, S, and J. C= to the said Page? than res:;! ing in the said province, and in consequence of a contract made, between them in the said province. That the late province of Maryland did, on the 4th of July 1776, cease to be a province of the king of G. B. and the said province, and the inhabitants thereof, did cease to be subject to or dependant on the king and government of G. JO. or on the dominions of the said king; and that the said 4th of July 1776, a free, sovereign, independent state, called the state of Maryland, took place, and was established within and comprehending the whole territory which before had been called the province of Maryland, and that the inhabitants of all that extent of territory, which had been before called the province of Maryland, did at the same time become citizens and subjects of the said state of Maryland, and then did cease to be subjects of the king of G. B. and that the said state of Maryland, and its said citizens, ever since have remained independent on, and unconnected with the said king* of G. B. an<1 his dominions; and also that the said Page and J. Cheston did, on the said 4th of July 1776, become subjects and citizens of the state of Maryland aforesaid, and ever «since have been subjects and citizens of the said state, and have not since that time been citizens or subjects of the king of G. B. That the said Stevenson was born in the late province of Maryland, and that he was residing in G-. B. on the said 4th of July 1776, and that he did withdraw from the British dominions for his attachment to the United States, and on the 1st. of January 1779, did come into the state of Maryland, and became a subject thereof, and from that time did reside in and was a citizen and subject of the said state, until his death, which happened on the 22d of October 1785, in the said state. And that the said Page, on the 19th of May 1779, at the county of Kent in the said state, did, at the special instance and request of the said Stevenson, pay and satisfy to the said S. as having been one of the partners of tbe said B. S. and J. C. the sum of 2299Z. 8s. 4d. current money of Maryland, in full satisfaction and discharge of all claims and demands which the said B. S« and J. C. had - against the said Page on account of the said goods, &c. so as aforesaid by them to the said Ik sold and delivered, and in full discharge of the said assumption and promise so as aforesaid by him to them made; which said sum the said Stevenson then and there did receive from the said Page in full satisfaction and discharge thereof. That upon a final adjustment of the partnership accounts of the house of the said B. S. and J. €. made on the 1st of June 1781, between the said B. and J. C. and tbe said D. C. assignee of the said S. as aforesaid, and signed by the parties, a balance of 29S-8Z, 18s, 10d. lawful money of G. B. of the value of 4981L lis. 5d. current money of Maryland, was due to the estate of the said S. it being his proportion of the effects of the said partnership of R. S. and J. C. then remaining and consisting of outstanding debts. That the said Page, together with a certain James Stevenson, are joint administrators of all the goods, &c. of the aforesaid W. Stevenson, and thereof have the administration in due form of law to them granted. But whether upon the whole matter above stated, the payment made by the said Page to the said Stevenson be good in law to preclude the plaintiffs from recovering in this suit, the jurors are wholly ignorant, and pray the advice of the court thereupon. And if the court, &c.
The defendants by their answers, admitted the matters stated in the bill and special verdict, “ but they do not admit, know or believe, that their said father had any time before, or at the time he paid the said debt to the said Stevenson, any information or knowledge that a statute or commission of bankruptcy had been sued out or prosecuted against the said Stevenson, or that any person or persons had been appointed trustee under the bankrupt laws of Great-Britain.”
Hanson, Chancellor, on the 14th of May 1798, passed the. following order, viz.
“ The. said cause being set down for hearing, and being submitted, the bill, answers, and all other proceedings, were by the chancellor read and considered. It appears that a suit was brought by the complainants against the deceased John Page, in the general court for the eastern shore, and that a special verdict was therein found during the life-time of the deceased,* and that afterwards the said suit was struck off or abated before the judgment of the said court was obtained. Whether or not the complainants are entitled to the relief prayed by their bill, depends merely on the law arising from the facts stated in that special verdict.
The chancellor therefore requests the honourable the judges of the general court to take the said verdict, a copy of which is hereto annexed, into consideration, aad to report to him their opinion, whether or not the payment. therein stated to have been made by the said John Page to William Stevenson, on the 19th day of May 1779, of the sum of 2299Í. 8s. Ml. current money of Maryland, in full satisfaction and discharge of all claims and demands which the said Randolph, Stevenson and J. Cheston, had against the said John Page, on account of the gyods. &r. stated to have been to liim deb vered, &e. was good in law to preclude the plaintiffs in the said suit in the general court from recovering in the said suit.”
The cage was argued before the General Court, by
Cooke and Key, for the plaintiffs, and
Martin, (Attorney-General,) for the defendants.
Key, for the complainants.
In examining the point which arises out of the special verdict, and which is submitted to the court,-1 shall make but a few observations in addition to Mr. Cooke’s, as to the effect of the notice in defeating the pay merit made by Page to Stevenson.
The special verdict, amongst other facts, finds this, that Rage, before payment, had notice of tiie bankruptcy, hut riot from any person authorised to give it.
On principle it appears plain, that a debtor after notice of an act of bankruptcy, is guilty of a fraud if he pays a debt to the bankrupt, because he diminishes the fund which on principle of law, justice, and commercial policy, should he exclusively applied to the payment of the bankrupt’s debts. If it be a fraud, then it is proper to examine what notice is required to prevent the debtor paying a bankrupt.
The commission of itself is notice in England, and overreaches all subsequent transactions with the bankrupt in that country. But where no commission lias issued, if a secret ad of bankruptcy is committed, and the debtor has notice of it before commission issues, the notice overreaches the subsequent payment, and it is deemed fraudulent; and upon the same principle and reason, I contend,- that notice actually given of the bankruptcy to a debtor in this country, and that too after coriunission had, should defeat and make void a payment after suchhotice. The notice which constitutes the fraud upon the fund and creditors generally, being as operative in one case as the other. But the special verdict haS found that notice was not given by either of the parties, but by a person not authorised to give such notice. I take it, that notice is a fact, and it is wholly immaterial by whom given, the law designating no person to give it. It is a fact, like all others, to be inferred or established by diversity of proof, but in our case it is admitted by the verdict to have been given. If the notice Constitutes the fraud, it is the only essential thing — Through what medium does reason or law say it must come to the debt- or? Not from the assignees surely, because before any commission issues, or assigjiees are appointed, if a debtor having notice of a secret act of bankruptcy pays, the payment is void and overreached by a subsequent commission. It i§ not necessary the bankrupt should give notice, because this, would defeat the whole system, and put it in his power, by fraudulent combination with his debtor, to cheat his creditors; the bankrupt at least, par iicips criminis wherever a payment is made to him, after a secret act committed, or a commission issued. In truth no form of notice is prescribed, nbr no person’s duty to give it, but being privy to or informed of it, the party who pays with such privity and information, pays at his peril — 2 T. R. 113. 2 Burr. 932. 4 Burr. 2477. 1 Burro 396-, 474, 482»
I further contend, that the payment was wholly void, because made to a person incompetent to receive it. Stevenson was a British merchant, resident in England, and a British subject at the time the commission of bankruptcy issued; and so being, it wholly and conclusively operated on him ánd his property. It deprived him of all right and power to receive dr collect debts be they situated v/hefe they would. The jaw had complete operation on him, he was Wholly subject to it; and if notice was had by a debtor of his situation, operated on by such a law, lie must pay at the peril of its being void. It occurs to ine that the bankrupt law has a two-fold operation — -One cm the person and privileges of the bankrupt, and anothcroh his debts and the debtors. It is true the municipal law of any particular country may direct on what terms the debts may be collected by the assignees; that is ks in our'own case, Out of what is collected they must, first wholly pay the debts due in the country. But imposing this, by no means gives the debtors á light to pay the bankrupt, ñor can it restore or revest him with the power of 'collecting debts. If this be so, it follows that a payment to a known bankrupt must be void. And if I am rightfully informed the practice of this country is illustrative and in conformity to this idea. Before the year 1775, if an English merchant became bankrupt, and Commission issued, and the assignees gave bond to pay country debts as far as their collections extended, I am informed the practice was to sue in their own names. If they did hot give security as aforesaid, then suit was brought in the bankrupt's name for their use; and this was equivalent to notice, which would aifeet any debtor who should attempt to pay.
No fraud more glaring could be practised, than is found by this special verdict. It finds that Page liad notice of Stevenson's bankruptcy, and knew him to be a British subject; that he knew J. Ohéston to be a partner and re-_ sident of Maryland; but to consult J, Ghesion was not his object. Page wished to avail himself of a payment in depreciated paper, at least to make the experiment, and the needy rapacity of an insolvent partner made Stevenson a proper instrument to work on. The fact admitted by the attorney general as part of the verdict, shews no surplus could in any event some to Stevenson. against which the payment of Page might be applied, so as to validate the payment in that way.
It appears Page had notice; that no particular form of giving it is required by law; that no person is designated bylaw to give it; and that justice, reason, and the safety of mercantile transactions, which are bottomed on credit, require all transactions to he honafule; and if so, a payment with notice must be inale fide, and of course void. Our courts have deiermined'that the bankrupt laws of other states are to be taken notice of in our courts — Harrison vs. Young» General Court, May 1788* Is it not a solecism and absurdity to say, that the bankrupt shall have the benefit óf the law, but not its disadvantages; that is, we will protect his person, discharge him from arrest on common bail, and yet establish a payment to him made with a knowledge of the situation in which he stands, and allow him to receive his debts, although he is to pay none?
The Generai Court, at October term, Í799, certified to the chancellor, as follows, viz.
“We do hereby certify to the honourable the chancellor of Maryland, that wc have considered the special verdict in this case, and the facts therein contained, and are of opinion that the payment therein stated to have been made by John Page to William Stevenson, on the 2 9th day of May 1779, of 2299/. 8s. 4d. current money of Maryland, was a good and valid payment in law to preclude the plaintiffs in the said suit in the general court from recovering therein.”
“Jeremiah Townxey Chase,
“G. Duvaee.”
Done, J. owing to indisposition did not attend.

Opinion:
Hanson, Chancellor,
at December term 1799, decreed as follows: "This cause having long since been submitted, and the chancellor having requested the opinion of the general court on the special Verdict, in the bill mentioned, on which depended the question, whether oi* not the complainants had any just claim against the defendants; and the opinion of two judges of the said court in favour of the defendants, on the said verdict, having been filed in this court; and the papers being this day laid before the chancellor for a final decree; and no other claim against the defendants, as heirs aforesaid, being exhibited — -It is thereupon, this 17th day of February 1800, by A. C. Hanson chancellor, and by the authority of this court, adjudged, ordered and decreed, that the bill of the complainants, J. and D. üheslon, be dismissed; and that the defendants be also hence dismissed? but aa it is evident from the proceedings that both parties conceived there was probable grounds for instituting the suit, and as the chancellor is of that opinion, they are dismissed without costs."