Court Opinion

ID: 8628415
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:33:43.445453+00
Date Added: 2024-06-11T16:55:41.310606
License: Public Domain

CADWALADER, District Judge.
The certificate by the register of a question dated 4th instant, is received this morning. He-asks my opinion whether the facts set forth in the annexed affidavit of James H. Beck, if proved, constituted an act of bankruptey-so as to displace the lien of his execution, and of the levy under It, and prevent him from claiming the proceeds of sale of the subjects of the levy.
If the register had reported the facts instead of the evidence of them, the certificate would perhaps have been more regular. But I could not then have answered the question in its present form. They may have constituted an act of bankruptcy on the part of the debtor without necessarily depriving the execution creditor of his lien, because: the bankrupt may have intended to give a? preference without the creditor’s knowledge- or intention being such as to implicate him.. In the present case the adjudication of bankruptcy may, for aught that I recollect, have-been pronounced upon the transaction with. John O. Beck, without any intimation of am opinion as to the transaction with James H~. Beck. The petitioning creditor alleged that' the warrant to confess judgment given to» James H. Beck was an act of bankruptcy^ and further alleged that the bankrupt procured the property to be taken in execution-, by the creditor. The latter allegation was: that of a distinct act of bankruptcy which if' committed, can scarcely have been committed without the creditor’s privity. It lies upon the assignee representing the general body of creditors, to impugn the apparently prior lien of this creditor. But in such a case very little evidence may suffice at the outset to shift the burden of proof so as to cast it upon him. Here the fact of the warrant of attorney having been given after the-protest of the note of the debtor, which: protest was known to the creditor who obtained the warrant of attorney, and the admitted facts which followed, certainly required explanation. Whether Mr. James H-Beck’s affidavit suffices to relieve him of the burden thus cast upon him, is a question. *18which, if the affidavit were competent evidence, I could not finally decide without hearing an argument. Nor ought such a question to be decided as upon a sort of demurrer to such evidence, without a definite understanding that the evidence on both sides concerning it is closed.
If the place of transaction of the business in this case were less distant, I would add nothing. But as the counsel on both sides may be incommoded by leaving home, I will make two remarks, one of them on the question of preference, the other on that of procuring the property to be taken in -execution. The first remark is that the form of words used in conversations between a debt- or and his creditor should be very little regarded where the words were not, in themselves, acts, or inducements to acts. When a debtor’s commercial paper has already, with the creditor’s knowledge, been protested, the effect of any conversation which follows may be determinable with more or less of reference to the frequency of other intercourse between the debtor and the creditor, and the amount of the latter’s knowledge of the details of the former’s business. Consanguinity may not be wholly disregarded in weighing the effect of the evidence. A circumstance which may sometimes be regarded is the subsequent continuing knowledge of the creditor, if derived from the debtor, of the movements of other creditors whom the preference may have been intended to defeat. The second remark has, in part, been anticipated in the former connection. This remark is that Hr. James H. Beck, where he deposes that the warrant of attorney of 30th July, 1867, was kept by him until 20th August, 1867, when he heard that the creditor whose note was protested had commenced suit upon it, does not state from, or through, whom, this information was obtained. If it was obtained from, or through, the bankrupt, the fact may not be unimportant.
In administering this part of the business of a case in bankruptcy, the ex parte affidavit of a witness ought not to be received, much less that of a party himself whom the act of congress of 1804 [Rev. St. § 858] makes a witness. Had Mr. James H. Beck been examined by way of deposition, and had he, after cross-examination by the counsel of the assignee, disclosed nothing more than appears in the affidavit before me, the register would probably, in taking the depositions, have asked certain questions to elicit more complete information. Every facility should be afforded to Mr. James H. Beck in obtaining a prompt adjudication of the question upon his claim of priority. The register is authorized to investigate it. His report upon it will be subject to exception. Such a report should be made as soon as the evidence on the part of Mr. Beck and the as-signee shall have been fully adduced, and the question argued by counsel. If I have overlooked the intended point of the question submitted by the register, he may restate it A statement of his own impressions upon it, or of his reasons for presenting it, would not have been out of place in the certificate which he has already furnished.