Case Name: In the Matter of the Applications of James and George Watson, for a Discharge from Imprisonment in Execution
Court: New York Court of Common Pleas
Jurisdiction: New York
Decision Date: 1854-02
Citations: 2 E.D. Smith 429
Docket Number: 
Parties: In the Matter of the Applications of James and George Watson, for a Discharge from Imprisonment in Execution.
Judges: 
Reporter: E.D. Smith's Common Pleas Reports
Volume: 2
Pages: 429–439

Head Matter:
In the Matter of the Applications of James and George Watson, for a Discharge from Imprisonment in Execution.
The provisions of the act (2 R. S., 3d ed., p. 88, marginal p. 31) relating to the discharge of debtors imprisoned in execution, which, in effect, forbid such discharge, if the debtor has fraudulently disposed of his property, or in case his “ proceedings” have not been “ just and fair,” contain no limitation as to time, and it is immaterial whether a fraud upon his creditors is perpetrated before his imprisonment in execution, or intermediate the arrest and examination. Daly and Woodruff, JJ., concurring; Ingraham, First J., dissenting.
Accordingly, where, on the application of two joint debtors imprisoned in execution, for a discharge under the Revised Statutes, it appeared, from the examination of the petitioners, that, being copartners together in New York, and hopelessly insolvent, they purchased, in November, 1881, a passage to California, and for the purpose, as declared in their testimony, of avoiding arrest or interruption, published in the newspapers, on the same day, a notice of their dissolution, with a statement that one partner would carry on the business and close up the affairs of their firm; that four days afterwards, having destroyed their letter-book, they sailed for California, taking with them $8,500, for which no satisfactory account was given; that being immediately brought back on an executive warrant, judgment in a civil action was obtained against them, whereon, in December, 1852, a ca. sa. was issued; it was held, that the facts established a fraudulent disposition of the debtors’ property; and that “ the proceedings on the part of the prisoners were not just and fair,” within the meaning of the particular statute under which the application was made, and that the case was not one wherein a discharge could be granted. Per Daly and Woodruff, JJ., concurring; Ingraham, First J., dissenting.
Under such circumstances, statements of the debtors, that their object in seeking a new country was to accumulate the means of meeting obligations to creditors, must be deemed of no weight. Ingraham, First J., dissenting.
A difference exists between the act providing for the discharge of a debtor imprisoned in execution, on the one hand, and the act to abolish imprisonment for debt, and to punish fraudulent debtors, on the other, in this: that while the latter provides a punishment for a simple removal of property out of the jurisdiction of the court, with a fraudulent intent; the penalties of the former are confined to a fraudulent disposition of property for his own benefit, or to injure creditors. Per Ingraham, First J.
But an insolvent will be held to have disposed of his property, within the meaning of the act providing for a discharge from imprisonment m execution, where, with a fraudulent design, he has effectually placed it beyond the reach of creditors by conveying it to a remote part of the country, and in doing so has, by imprudence or misfortune, lost it himself, although he may not have willfully destroyed or given it away. Daly and Woodruff, JJ., concurring.
. This was an application made in pursuance of the provisions of the Revised Statutes, allowing a debtor, imprison- ' ed in execution, to petition for his discharge upon making an assignment for the benefit of the execution creditor. (See article 6, title 1, chapter 5, of the second part of the Revised Statutes, 3d edition, volume 2, p. 88, marginal p. 31.)
In November, 1851, the petitioners, who were copartners, finding themselves hopelessly insolvent, procured a passage to California, and on the same day, to escape arrest and annoyance from creditors, published in the newspapers a notice of their dissolution, with a statement that George Watson would adjust the affairs of the firm, and continue the business at the same place. Within four days afterwards, having destroyed the letter-book used in their business, they sailed for California, taking with them $900 in gold and a draft upon a responsible house for $7,600.
A few weeks after their arrival in San Francisco, a criminal charge was preferred against them by their creditors, and they were brought back to New York upon an executive warrant.
Civil actions were commenced against them, and prosecuted to judgment. Executions against their property having been returned unsatisfied, they were examined in proceedings supplementary to execution, and they testified, in September, 1852, that they were destitute of any money or property whatever.
An execution against their persons was then issued, and in November, 1852, their imprisonment commenced. The petition for a discharge was presented in May, 1853, and the above facts were all disclosed in the examination of James Watson, conducted in accordance with the sixth section of the act. The petitioners stated, under oath, that their object in removing to California was to enable themselves to accumulate sufficient property to pay their Atlantic creditors.
But the grounds chiefly relied upon by their counsel were, First, that in making the right to a discharge conditioned that the debtor’s proceedings shall be “just and fair,” the particular statute, under which this application was made, referred to his proceedings in the application, and not to transactions at any period anterior to 'his imprisonment in execution. Secondly, that the word “ property,” used in § 5 of the act, signifies only the property which the debtor had when charged in execution, and on which the execution creditor had an equitable lien, entitling him to an assignment thereof. Thirdly, that the word “ creditors,” in the same section,- is limited in meaning to the execution creditors, at whose suit the debtor is imprisoned. Fourthly, that a removal of the debtor’s property is not the disposition of it contemplated in the act. Fifthly, that the act of the debtor, in disposing of his property, at a prior time, for the then future benefit of himself and family, is not a bar to a discharge, if no such benefit shall thereby be and remain so secured after he takes the oath prescribed.
These and other points, which are above briefly and imperfectly referred to, were elaborately stated and argued in behalf of the petitioners.
The application was first made at special term, when the following opinion was delivered by Dalt, J.:
“ An applicant for the benefit of the act is required to make oath that he has not, at any time or in any manner, disposed of or made over any part of his property, with a view to the future benefit of himself or of his family, or with an intent to injure or defraud any of his creditors. If it appear, therefore, upon his examination, that he has so disposed of any part of his property, then, in the language of the statute, his proceedings have not been ‘just and'fair,’ and he cannot obtain a discharge. That the applicants combined to defraud their creditors is, I think, abundantly established by the testimony of James "Watson.”
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“It is urged, on the part of the applicants, that the fraudulent disposition of property contemplated by the act is a disposition made by the debtor between his arrest and his examination ; that if he has disposed of property fraudulently before any proceedings were instituted against him, it is no bar to his discharge. But I see nothing in the statute to warrant such "a construction of it. There is ho limitation prescribed, or any qualification whatever. He is obliged to swear that he has made no such disposition at any time.
“ These words are plain and unmistakable. To attempt to limit their signification by declaring them to be understood as applying only to a particular period, would be departing from the obvious meaning of language.
“ There is nothing in any part of the act, and I have carefully considered it, that will justify such a construction. It is evident, from the terms of the oath prescribed, that the framers of this statute intended to distinguish between the unfortunate and the fraudulent debtor, and meant that the former should have the benefit of the act, and that the latter should not. This distinction was recognized and perpetuated by the act abolishing imprisonment for debt. By the provisions of that act, a fraudulent debtor may, in certain cases, obtain a discharge, as, for instance, when he fraudulently contracted the debt; but a fraudulent disposition of property is equally a bar to a discharge under that act, the debtor being required to take the same oath that the applicants have made in this case. I so held in the case of Paul Andrict, when I examined the statute more at length than I now find occasion to do, and referred to a case which I suppose to be expressly in point, namely, Clark v. Wright, 10 Wend. 584. (See, to the same effect, Townsend v. Morrill, 10 Wend. 582; Spear v. Warded, 1 Comst. 148.)
“ I can give no consideration to the effect that may follow the refusal to grant the applicants a discharge.
“It is the duty of a judge to declare the law as he finds it. If it is expedient that debtors, who have fraudulently disposed of their property, should be discharged from imprisonment, if they have nothing wherewith to satisfy their creditors, the remedy must be sought at the hands of the legislature. The Code provides, that in all cases of commitment under the chapter authorizing executions against the person, or under the act to abolish imprisonment for debt, the party may be discharged from imprisonment by the court or judge committing him, if he is unable to perform the act required or to endure the imprisonment. But we are not asked to apply that provision to the present case. It is sufficient to say, that under the proceedings now instituted, the applicants cannot obtain a discharge.”
On the above decision, an order was entered denying the application for a discharge. The petitioners thereupon appealed to the general term.
A. R. Dyett and John R. Brady, for the petitioners.
John McKeon, for the execution creditor.

Opinion:
Woodruff, J.
I think the judge at special term was correct in holding that a debtor who is largely insolvent, who, knowing that fact, converts his property into money, and with intent to avoid his creditors and place himself and his property beyond their reach, or so far beyond their reach that they must send two thousand miles to a new and unsettled country to reach the one or the other, clandestinely and deceitfully departs and takes his property with him, and there wastes it, either in profuse expenses, gambling, or adventures of any kind, including a large sum employed in litigation, to prevent his creditors reaching him, is not entitled to Ms discharge as an insolvent, when such discharge is resisted on these grounds. His proceedings since his insolvency are altogether unfair, and tend, in every step, to injustice and wrong. Such a man is not the object of that protection and relief the statute has provided for an unfortunate but honest debtor. In every proper sense of the terms, he is, in my judgment, guilty of disposing of his property to defraud his creditors, not because he has taken it from the jurisdiction of the court, but because, for the very purpose of preventing his creditors from recovering their debts and obtaining that property which belonged to them as his creditors, he has taken it two thousand miles from them—by a journey it required five thousand miles of traveling to reach—and then, in fact, disposed of it to suit his own pleasure.
In this view, it is quite immaterial whether California is within the United States or not. I cannot persuade myself that a man may, for the express purpose of defrauding his creditors, hinder, delay and prevent their collecting their debts, go to a remote part of the country—for example, among the Indians—take all his property with him, and if then, by expenses of living or unforeseen losses, or even by inevitable calamity, he loses his money, return here and ask his discharge, without being liable to the charge of having disposed of his property with intent to defraud, &c.
Disposing of his property does not necessarily import its destruction or giving it away; if, with a fraudulent intent, he places it beyond the reach of creditors effectually, and in doing so loses it himself, it is enough. Nor can I doubt, that when the legislature forbade a discharge, if it was made to appear that the debtor's proceedings were not just and fai/r, they meant to embrace the case of an insolvent who knowingly and intentionally had been guilty of acts like these. The statement of the debtor, that he hoped to make money enough in California to pay his creditors, by the use of the money, a use which was, of itself, under such circumstances, fraudulent and unjust as to them, ought not to be allowed to avail him.
I think the order of the special term should be affirmed.