Court Opinion

ID: 7193679
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:59:53.885691+00
Date Added: 2024-06-11T16:16:15.467335
License: Public Domain

Dissenting Opinion.
Bermudez, C. J.
I think the evidence shows that an unjust preference was given to the defendant within the three months preceding *517the failure, and that the transaction should be declared to be a nullity, it being nothing but a dation en paiement by the insolvents to the defendant, to extinguish their indebtedness to her, arising from their •diversion of her securities and their liability for their value. The transaction is not shown to have taken place simultaneously, as is •claimed by the defendant. From the evidence, I think the insolvents first appropriated to themselves, without any understanding or agreement, the securities of the defendant and long after strove to replace them by other securities of their own.
The possession of these securities by the defendant might have militated strongly in her favor, had she not herself brought forward evidence which, however weak in itself, has nevertheless proved destructive of any presumption of rightful ownership in her.
The object of the law, as found in the R. S., is double-: first, to deprive the insolvent of the benefit of the insolvent laws, and second, to annul all acts of the debtor done within the three months preceding his insolvency, in consequence of which, a creditor for an antecedent debt is placed in abetter condition,injurious to the other creditors, to which, otherwise, he would not be entitled. The fact of the gratuitous and .injurious bettering of his condition to the detriment of other creditors is what the law frowns upon and proposes to undo.
In such cases the intention of the parties is immaterial. It is indifferent whether they or either proposed or designed to do a fraudulent act. The fraud need not be actual. It is sufficient if it be constructive, that is, if it exist in contemplation of law.
The ruling invoked in 18 Wall 337 was not made in a parallel case. The facts there were not what they are here, and the bankrupt law considered is not analogous to the provision herein invoked by plaintiff on behalf of the creditors of the insolvents.
It is difficult, not to say impossible, to discern what difference exists in principle between this case and that of Black vs. Richardson, recently decided, in which this Court distinctly held that the clear object of the law in such instances is to secure a perfect equality among the creditors of an insolvent whose property is the common pledge of all his creditors.
I think the judgment appealed from should be affirmed.
Poché, J.
I cannot concur in the conclusions reached by the majority bf the Court in this case.
The suit brought by the syndic is not the revocatory action for the purpose of cancelling an undue preference, as contended for by defend*518ant’s counsel. It is simply tlie action provided for by Section 1808 of the Revised Statutes of 1870.
• The elements of proof necessary to plaintiff’s recovery are therefore,, that Mrs. Brugier was a creditor of the firm of- A. Carriére & Sons,, and that they transferred to her the securities in suit, for the purpose of securing her in preference over their other creditors within three-months next preceding their failure.
If it can be proved that the relations between Mrs. Brugier and the insolvent firm, resulting from their use of her-bonds, were those of creditor and debtor, the second point of inquiry is stripped of all the difficulty, because the transfer as shown by the books of the firm was-made on the 12th of May, 1884, and the firm’s insolvency was announced to the world on the 10th of June following.
The theory «that the transaction by which the Carriéres took possession of Mrs. Brugier’s bonds and pledged them to secure loans of money in January, 1884, was an exchange, is not supported by the p pondeiance of the evidence in the record.
It is true that, in his testimony in this case, E. L. Carriére, who was-the real head and manager of the firm, states that such was the nature of the transaction; and that on the day that he appropriated her bonds, he set apart for her in an envelope an equivalent amount of securities. But his statements are not borne out by undisputed facts evolved out of his own conduct, subsequent to the pretended exchangej and they are flatly contradicted by some of his own statements. He admits that whenever any of the paper which, under his theory had become the property of Mrs. Brugier by exchange, reached maturity, it was taken out of the envelops, collected, and that the proceeds were placed to-the credit of the firm, and not to that of Mrs. Brugier, who-was avowedly kept in perfect -ignorance of all these manipulations by her agents.
.A safer mode of testing the conduct of E. L. Carriére, and of ascertaining the true intent and meaning of the transactions which he conducted under his double-headed capacity of-principal in the firm of A. Carriére & Sons and of agent of Mrs.. Brugier, is to be found in the examination of his acts and words previous to the failure, than by considering his testimony in this case.
In the firsG place the absence of an entry in the books touching the alleged exchange of securities amounting to so large a sum, the absence of any entry to show the source of collections realized 'from notes which were ostensibly'her property, is moré eloquent than words to describe the real nature of the transaction. - - -
*519But the meaning of that silence is more than illustrated by Mr. Carriére himself by the answer which he gave on cross-examination to inquiries by counsel as to the reasons for making the entry of the pretended exchange on the l£tk of May, 1884, and not before.
He answered thus:
“ Because my father told me on that day that he wanted the thing to-be settled. We were always expecting to get back those bonds, but Mr. Hardie told me he did hot want to exchange the bonds. We waited to the expiration of the maturity of the loans. My father said, ‘ Enter a sufficient amount of notes to Mrs. Brugier’s credit in place of those bonds.’ ”
If the exchange had been consummated in January, why should the father insist in May following that the thing should be settled; and if Mrs. Brugier-was not a creditor, wThy give an order to enter notes sufficient in amount to her credit on account of those bonds'?
But the words spoken out of court by E. L. Carriére are yet more significant, and shed greater light on the whole subject.
In- a conversation with M. C. Randall, the expert appointed by the court to examine the books of the defunct partnership, he became very confiding and thoroughly communicative on the subject, and he spoke as follows: “ He made those entries for the purpose of doing what he considered an honorable act; that if he had not done it he would have thrown himself in the Mississippi river; that he had used the property of Mrs. Brugier which had been placed in, his hands as a trust and as a matter of honor he had made this entry.” And further:
“And he gave her those notes for the purpose of settling for those bonds. He stated that he owed her a great deal more. But this was a trust fund, and he had done this as a gentleman in order to secure her.”
And thus from the lips of the prime mover in the res gestee flow the very words which afford an absolute solution of the problem.
He had used the property of Mrs. Brugier, and he transferred the notes to her in OTder to secure her. Does this language sound like an exchange made simultaneously with appropriation of her bonds?
The true version of the case, which is actually demonstrated by the record, is that the Carriéres, being in a great stress for money, simply used the property of their principal in order to raise the funds necessary to bridge over some alarming difficulty, so as to obtain á short-breathing spell. They had no definite or settled programme for a future settlement with-Mrs. Brugier. It was the struggle of a “drowning horse catching at a straw.”
*520They knew that their concern was rotten to the core. The appearance of the firm’s standing to the outer world had to be kept up. Some eyes blinded with confidence in the house’s inexhaustible resources, were about to be opened, and they had to be closed. Like consumptive patients, the3r hoped against hope, and continued their battle against civil death. But time was about to tell the story in May, and the day of settlement with Mrs. Brugier in the near future loomed up to their vision like an ugly phantom. And then, and then only, losing all hope of ever regaining possession of her bonds, they perfected their “honorable” settlements with her.
They were her debtors; they secured her within the prohibited time; the law says that the deed is null, but the majority of the Court thinks otherwise as to the effect of the evidence.
I therefore respectfully dissent; and I think that the judgment of the district court should be affirmed.