Court Opinion

ID: 7897668
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:53:29.137013+00
Date Added: 2024-06-11T16:32:08.672782
License: Public Domain

Buy an, J.,
filed the following dissenting opinion:
The Constitution gives to the. Court of Common Pleas exclusive jurisdiction in all applications for the benefit of the insolvent laws within the City of Baltimore. But the mode in which this jurisdiction is to be exercised, and the limits to which it extends are determined by the provisions of the statute law. The power of the Court over this subject has been conferred by successive enactments of the Legislature. By the Act of 1880, ch. 171, the jurisdiction was given for the first time to make adjudications of involuntary insolvency; and the whole power of the Court in proceedings of this character is derived from this Act and its amendments. The Act of 1886, ch. 208, made some changes in the thirteenth, twenty-third and twenty-fourth sec*334tions of the law, and gave them their present form. The thirteenth section declares that no deed executed by a banker, stock-broker, merchant, manufacturer or trader, being insolvent, or in contemplation of insolvency, shall be lawful or valid if the same shall contain any preferences, save such as result from operation of law, and save certain wages or salaries to clerks and others; provided the party making such deed shall be proceeded against under section twenty-four of the Act, or shall apply for the benefit of the Act, under section one, within four months after the recording of the deed; and shall be declared, or shall become under the provisions of the Act, an insolvent. The twenty-third section declares what shall be deemed an act of insolvency. Among other things which are enumerated, it includes the execution of a deed giving such preferences as are stated in section thirteen, when such deed is made by a person belonging to any of the classes therein mentioned. The twenty-fourth section provides the mode of proceeding against persons who have committed acts of insolvency. After a petition is filed alleging the facts on which the application is grounded, the Court is directed to issue a summons for the debtor, and to require him to show cause why an adjudication of insolvency shall not be made against him. If the allegations are sustained and are sufficient to warrant it, it is enacted that the Court shall make an adjudication that the debtor is insolvent; and it is provided that thereupon his right and power to dispose of any part of his property shall cease; and when the Court shall appoint a preliminary trustee and his bond shall be approved, all the property of the insolvent shall be divested out of him and shall be vested in the trustee ; and thereafter such proceedings shall be had, as are prescribed in relation to persons who apply for the benefit of this law'. It will be seen that the debtor is *335the only person for whom a summons is authorized to be issued; and he is the only person who is mentioned in the adjudication of insolvency; and his property alone is declared to be divested.
Let us now examine the proceedings of the Court below. The petition hied against the debtor alleged that he, being a merchant and trader, and being indebted to the petitioners in the sum of about six hundred dollars, and being insolvent, or in contemplation of insolvency, executed a deed of trust wherein he made several fraudulent and void preferences in contravention of the insolvent laws. The petitioners and the trustee were non-residents. The debtor’s answer admitted the execution of the deed of trust, but denied that the preferences were illegal; and alleged that the persons named as preferred creditors all reside out of the State of Maryland ; and were creditors under contracts with the debtor made and to be performed out of the State of Maryland; and that each of said creditors agreed with the debtor at the time of the execution of the deed to accept the provisions therein made for them in full satisfaction of their respective claims; and did in consideration of the deed and its provisions release the debtor from all obligation to them on account of the said debts. The answer denied the jurisdiction of the Court to decide upon the validity and effect of the deed of trust. The cause being submitted on petition and answer, the Court overruled the defences and passed an order or decree adjudicating the debtor an insolvent, and declaring the deed of trust void. As the deed gave preferences to certain creditors, the debtor committed an act of insolvency; and if the Court had merely adjudicated him an insolvent, its decree would have been within the limits prescribed by the statute. Such a decree unreversed conclusively determined the legal status of the debtor, *336and it would not be competent to draw this determination in question before any tribunal. All Courts would be obliged to recognize him as having all the rights, privileges, disabilities, capacities and incapacities of an insolvent debtor. Decisions of competent Courts on the personal, domestic and social relations of individuals, are regarded as judgments in rem, and preclude all further controversy of the questions decided. Marriage and divorce, legitimacy and bastardy, insolvency and bankruptcy, grants of probate and of administration, and such like matters belong to this class of subjects. There is no difference of qpinion among the Courts as to the effect of judgments of this description. The judgment is a conclusive settlement of the matter decided; but is not evidence of any other matter which maybe inferred by argument from it. It is unnecessary to elaborate this question; because in Emmert vs. Stouffer, 64 Md , 551 and 552, it received the careful consideration of this Court, and was there decided in accordance with the uniform course of the authorities since the Duchess of Kingston’s Case.
Among the illustrations made by this Court in the case just mentioned was one quoted from Taylor on Evidence, sec. 1490, in these words: _ “Thus, although the ecclesiastical Courts were not, and the existing Courts of probate are not, authorized to grant letters of administration, unless the intestate he dead, these letters are so far from being conclusive evidence of the death, when that fact is put in issue in another Court, that on one or two occasions they have, not been regarded as prima facie proof.” And there was an illustration from the Supreme Court of the United States, where in Mutual Benefit Life Ins. Co. vs. Tisdale, 91 U. S., 238, if was held that in an action brought by a plaintiff in his individual character, letters of administration to him were no evidence whatever of the death of his intestate. *337Of course the death of the intestate was a necessary and indispensable preliminary to the grant of letters of administration ; and it was incontrovertible that the Probate Court must have found the fact of the decease before it granted letters. But we adhered to the rule of evidence established by unbroken precedent, and approved the statement in Taylor on Evidence, sec. 1520, “that it is an unquestionable rule of law that neither a judgment in rem nor a judgment inter partes is evidence of any matter which can be inferred only by argument from the judgment.” The debtor had made a deed with preferences, and thereupon he became liable to be adjudged an insolvent. The statute makes no mention of any other judgment as within the Court’s power; and certainly the Court derives its power entirely from the statute. In an action against the trustee, or the preferred creditors, or any one else, an adjudication of insolvency would have been evidence that the debtor had been legally declared an insolvent, and of nothing else whatsoever. It would not even have been evidence of any matter which could have been inferred by sure and inevitable deduction from the adjudication. And yet the Court not only draws the inference that the deed .is void; but so far as its decree can operate, prevents persons who were not parties to the proceeding from ■ever making a defence against this inference.
Let us pursue this subject. The twenty-fourth section of" the insolvent law (1886, chapter 298) enacts that after the approval of the bond of the preliminary trustee, such jn'oceedings shall be had as are prescribed in relation to persons who shall apply for the benefit of the law. By the seventh section of this law, confessions of judgment and conveyances made by an insolvent for the purpose of defrauding his creditors, or giving an undue preference were declared void, and the property or thing conveyed or assigned was vested in the trustee *338in insolvency. This section refers to proceedings under applications voluntarily made by an insolvent debtor. Under this section it has never been held in a solitary instance that the confessions of judgment or the conveyances mentioned were ipso facto void. The trustee has uniformly been required to assert his title before the appropriate tribunal against the person claiming under -the judgment or conveyance ; and in due course of law the question in controversy has been determined between the litigants. And it would have been a great anomaly to hold otherwise. When a statute states that under certain circumstances a deed shall be void, it does not dispense with the ordinary proceedings necessary for a judicial decision of the questions involved. Far less can it be construed to take away from any claimant, the inestimable right of being heard in defence of his own property. No matter how clear the question may be supposed to be, it cannot be decided without a hearing of the party interested. If the Court had possession of .a hundred affidavits of the most credible witnesses, fortified by the written confession of the party himself, it would still be obliged to proceed according to the ordinary course of justice, and give him a hearing.' The necessity of hearing both sides is an intuitive principle of justice. So far as we know, it has been maintained as an axiom in all countries where the semblance of freedom has existed. It seems to be the quocl semper, quod ubique, quod ah omnibus. Certainly in our own jurisprudence, it has been the frequent theme of lofty and fervent eulogium. Lord Coke, in the quaint pedantry of his age, makes it a bitter reproach against Rhadamanthus, that he set at naught this principle while presiding in the'supreme tribunal of Pluto’s kingdom. Another eminent Judge, nearer to our own time, has said that a disregard of it is a violation of the first principles of justice. And no less *339a jurist than the illustrious Story has said that a judgment pronounced without hearing both sides wants the most essential quality of a judicial sentence, and can have no other force than belongs to the edict of every power which is strong enough to execute its own decrees.
Upon the considerations which I have stated, it seems to me that the Court of Common Pleas had no jurisdiction to bind the title of the trustee in the deed. I forbear to express any opinion on the defences set up in the answer, because as the Court had no power to defeat the trustee's title; neither had it power to sustain it. It had not the jurisdiction to decide the question at all; nor has this Court on the hearing of an appeal from it. The jurisdiction of a Court is the power which the law has given it to render a judgment. When this power has not been given ; or in other words where the Court has no jurisdiction, its judgments are absolutely null and void. I think that the order of the Common Pleas should be reversed, and that anew decree should be passed conforming to the terms in which the jurisdiction is conferred by the statute.
(Filed 13th November, 1888.)