Court Opinion

ID: 6234980
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:30:25.732376+00
Date Added: 2024-06-11T08:58:01.085606
License: Public Domain

Mr. Justice Si-iarswood
delivered the opinion of the court, May 10 th 1875.
The errors assigned to the charge of the court, except the third, may be dismissed with the general remark that they are not sustained. We have no doubt of the jurisdiction of a state court to entertain such an action, and although in an ordinary case it may be doubted whether a bond fide creditor who has received from a sheriff the amount of his claim and may in good conscience retain it, though the payment to him was by mistake, can be compelled by an action to refund, yet in this particular class of cases that question is precluded by the express provision of the thirty-fifth section of the Bankrupt Act that “ the assignee may recover the property, or the value of it, from the person so receiving it or so to be benefited,” in contravention of the enactment as to fraudulent preferences.
We think, however, that there was error in so much of the charge excepted to as instructed the jury that when a subsisting debt is secured by judgment, and “ a revival is taken merely to extend the lien thereof, it is an act done out of the usual course of business, and being so done, it was the duty of the defendant to make an inquiry as to the solvency or insolvency of ICnerr, and on failure to make the inquiry, the presumption follows, that the defendant would have found reasonable cause to induce the belief that ICnerr was insolvent or was contemplating insolvency. There being no evidence that such inquiry was made, you are instructed that this requisite has been established,” namely, that the defendant, Kemmerer, had reasonable cause to believe that ICnerr was insolvent.
That the learned judge was supported by some of the bankrupt decisions in the Federal courts, prior to the determination of the Supreme Court of the United States, in Wilson v. City Bank, 17 Wallace 473, must be conceded. But the Supreme Court in that case gave a more liberal and reasonable construction of the Bankrupt Act in support of the rights of bonfi fide creditors. It was held, that something more than passive non-resistance of an insolvent debtor to regular judicial proceedings, in which a judgment and levy on his property are obtained, when the debt is due, and he is without just defence to the action, is necessary to show a preference of a creditor, or a purpose to defeat or delay the operation of the Bankrupt Act; that though the judgment-*152creditor in such case may know the insolvent condition of the debtor, his levy and seizure are not void under the circumstances, nor any violation of the Bankrupt Law; and that a lien thus obtained by him, though within four months of the filing of the petition, will not be displaced by subsequent proceedings in bankruptcy against the debtor.
We must assume in this argument that Kemmerer had no knowledge of Knerr’s insolvency, and no reasonable cause to believe it, unless in the bare fact that Knerr, on his, Kemmerer’s, application, was willing to consent to a revival of his judgment, so that it might be a lien on real estate acquired by Knerr subsequent to its date. What was there in this to excite Kemmerer’s suspicion, or put him on inquiry ? Is it out of the usual course of business for a judgment-creditor, the lien of whose judgment is about to expire, to say to his debtor, “I do not wish to put you to any unnecessary costs by adverse process; give me an amicable revival ?” It may be said to be almost an everyday thing. The advantage is all on the side of the debtor, not of the creditor. Kemmerer might at once have sued out an execution, made a levy on the after-acquired real estate, and then secured the lien which he was desirous of obtaining.
Surely, the mere circumstance that the debtor consented to do a thing which in any aspect was for his own benefit, should not be allowed to affect the creditor with knowledge of insolvency, which from no other facts he had any reasonable cause to believe, yet the charge of the learned judge certainly went this far.
Judgment reversed, and venire facias de novo awarded.