Court Opinion

ID: 6637158
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:41:56.498096+00
Date Added: 2024-06-11T15:59:05.469362
License: Public Domain

Knowles, J.,
dissenting. TMs proceeding is brought to this court on a petition for a review of the adjudication by the Hon. Gr. Gr, Symes, Associate Justice of tMs court, made while holding the district court for the third judicial district, declaring Nowlan and Weary bankrupts.
The petition of Story and Bradway, filed herein, makes various allegations of acts of bankruptcy committed by Nowlan and Weary. The answer of Nowlan and Weary puts in issue these allegations. It confesses an assignment of all their property to one Thompson, and from him to *354one Corbin, for the benefit of all their creditors, and avers that the same was done with the consent of petitioners, while it denies that the same was done with the intent to hinder, delay or defraud their creditors or to defeat the operation of the bankrupt act. To constitute this general assignment an act of bankruptcy, it must have been done with one of these intents. In support of this, see the reported decision of Justice Swayne, in Langly v. Perry, 2 Bankr. Reg. 180, and Thos. Farrin v. John Crawford et al., id. 181. These intents are facts to be established by the evidence, and cannot be inferred from the mere fact of such an asssignment. I am well aware that there is a decision adverse to this view, namely, Langly v. Perry, 1 Bankr. Reg. 155, but this decision is evidently the very one which Justice Swayne reversed in the same entitled case above referred to. This issue cannot be treated then as though it was admitted, and made the foundation for the above adjudication. When a court below finds that a defendant has committed certain specific acts of bankruptcy, upon which it evidently based its adjudication, and which, if correctly found, were sufficient to warrant the adjudication, it will not be presumed by this court that it found other acts than those specified, although there were issues presented in the pleadings upon such other acts. Only those acts then are to be considered that are specified in the findings of the court. If the evidence did not warrant the court in finding that Nowlan and Weary had committed these acts, the judgment of the court below must be reversed.
The first finding of the judge was to the effect that Nowlan and Weary had committed an act of bankruptcy in paying to their clerk, Stateler, something near $30,000, with the intent to give him a preference. The evidence shows .that Nowlan and Weary were indebted to Stateler in about, this amount; that he was the cashier, book-keeper and teller of their bank at Helena; that at the time of this payment neither Nowlan or Weary were present, Weary being at Yirginia city, and Nowlan at the Cable mine; the former one hundred and twenty miles distant, the latter some *355eighty miles. , The only evidence offered to prove that either of these partners bad directly authorized this payment was the testimony of one Dunovan. He testified that he was present when Stateler paid himself out of the funds in the bank, and that at that time Stateler told him that he had an understanding or agreement with Nowlan and Weary, that in case of a crash he should draw out sufficient to pay what they owed him. Counsel for defendants objected to this testimony of Dunovan, which objection was overruled, and to this ruling defendants’ counsel duly excepted. It is contended by counsel for petitioners that this declaration of Stateler was part of the res gestee of Stateler taking this money in payment of himself. The res gestee of a transaction is something that was said or occurred at the time a transaction was being conducted, and may be introduced in evidence, when the same is the subject of controversy, to explain or throw light upon it, but the res gestee of one transaction cannot be introduced for the purpose of explaining or throwing light upon another. As to another transaction, it is hearsay, • unless the parties to be affected by the same were present and acquiesced therein. This evidence could not be introduced as part of the res gestee of any agreement between Stateler and Nowlan and Weary to explain or throw light upon the same. In considering whether or not Stateler was authorized by Nowlan and Weary to make this payment to himself, the point to be considered is, whether or not there was the agreement named by Dunovan. For the purpose of establishing or explaining any such agreement, the declarations of Stateler, so far as they affected Nowlan and Weary, were clearly incompetent. What other evidence was there presented to the judge to warrant him in finding that Nowlan' and Weary had ever made such an agreement with ’ Stateler ? None, save that Stateler was retained in the employ of Nowlan and Weary, after the time the judge found them insolvent, when he had it in his power to make himself a preferred creditor. Such evidence is not sufficient to warrant the finding of such an agreement, although it may *356be a strong ground of suspicion that such was the case. A judge, however, cannot act upon suspicions. For these reasons I do not think the court below was warranted in finding any such agreement. The other point involved in the discussion of this finding is, as to whether the authority given to Stateler, as cashier, book-keeper and teller of the bank of Nowlan and Weary, was sufficient to authorize him to make a payment to himself, with the intent to give himself a preference. This point is involved in the determination of the other two findings of the judge, before whom the cause was heard, and will be discussed in connection with them.
The second finding was, that Nowlan and Weary had made a payment to one King, with the intent to give him a preference; and the third, that they had made a payment to Messrs. Wier & Pope, with the intent of giving them a preference.
The evidence shows that Stateler went to King, and also to Wier & Pope, and told them that there was about to be trouble at the bank and that they had better come and draw out what money they had therein, which they accordingly did. Undoubtedly if Nowlan and Weary are bound by these acts of Stateler, the court was warranted in adjudicating them bankrupts, for it is evident Stateler intended to give these persons a preference. It is not contended that Nowlan and Weary ever gave Stateler any direct authority to perform these acts, or ever ratified them afterward. It does not appear that up to the time of this trial Nowlan and Weary had any knowledge of the manner in which these payments were made. Neither of them were at Helena at the time the same were made. This brings us to the consideration of the authority possessed by Stateler, as bookkeeper, cashier and teller of appellants’ bank. In general, it may be said, that the law presumes that an agent has all the authority necessary for conducting the business intrusted to him, and unless some notice is given to the person dealing with such agent of a limitation in this authority, the principal will be estopped from denying it in any contest be*357tween Mm and snob, person, where the latter will be subjected to any loss if the former was permitted to deny this authority. Was the business intrusted to Stateler of such a nature as to authorize Mm- to commit the acts of bankruptcy specified in the findings of the court ? Stateler had authority undoubtedly to pay all checks that were presented to that bank in the due course of business. Such payments as these, however, do not constitute acts of bankruptcy. If so, then the payment of any check by a bank, or any sum by any person, being at the time insolvent, would be an act of bankruptcy. Payments to constitute acts of bankruptcy must be made with the intent of giving a preference, or in other words, the payments must be such as amount to an attempt by the person making, them to parcel out his effects among certain of his creditors, leaving the debts of the balance unprovided for. They are payments made for the purpose of defeating one of the principal objects of the bankrupt act, namely, the general distribution of the assets of a bankrupt among all his creditors. Now, such payments as these are not within the usual scope of the business of a banking-house. Such payments are prohibited by law since the passage of the bankrupt act, and it will not be implied that an agent has the authority to violate the provisions of law. It was not then within the scope of the business of Stateler to make payments with the intent to give a preference to the parties named. Hilliard on Bankruptcy lays down this rule: One cannot commit an act of bankruptcy by the conduct of his agent unknown to him. See Hill, on Bankr. 24. In looking over the list of acts that constitute a man a bankrupt, it will be readily seen that it would be impossible to bind a principal by such acts of his agent without specific authority. It will be observed that many of the acts which make a man liable to be adjudged a bankrupt involve some wrong intent. To make a principal liable for the intent with which his agent may do any act, it appears to me would be holding him to too strict a liability. In general, I should say, that a court in bankruptcy could only inquire as to the in*358tent of the principal in authorizing his agent to perform the act complained of, and that the intent of the agent could in no way be considered. It may be observed upon this point, that the same rule should not prevail in bankruptcy as where a principal contracts through an agent. In the latter case the principal is bound by the apparent authority of his agent. In the former he should be bound only by the actual authority given his agent. The reason for the rules in estoppel should not apply in bankruptcy upon this subject.
It does not appear that Story actually obtained any preference by means of his attachment process. From the answer of defendants I understand the law to be that a party is prohibited only from proving his debt when he has actually obtained a fraudulent preference. It may also be doubted whether the defendants could raise this point, for if Story and ■ Bradway actually have obtained a fraudulent preference, Nowlan and Weary must have suffered it, and hence do not possess clean hands themselves, and courts of equity will not allow parties to set up as a defense a fraud which they have participated in. The denial of the right to prove a claim by a person who has obtained a fraudulent preference is a matter that the other creditors can take advantage of after the adjudication of bankruptcy.
The court below did not find upon the issue as to whether Story and Bradway had consented to the assignment of' Nowlan and Weary to Thompson, and from Thompson to Corbin, nor upon the issue as to whether this assignment was made with the intent of defeating the operation of the bankrupt act. This court will not determine these issues.