Court Opinion

ID: 6422404
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:01:04.378563+00
Date Added: 2024-06-11T15:51:50.123292
License: Public Domain

C. Allen, J.
The questions of law which the report in the present case seems intended to present relate only to the alleged preference which was obtained by the levy of the execution, and are as follows:
1. Whether, according to the true meaning of the Pub. Sts. c. 157, § 96, making fraudulent preferences by an insolvent debtor void, the act relied on should be considered to have been done with the view, on the part of Fitz and Martin, the insolvent debtors, to give a preference to their creditors North and Company ; that is to say, whether, upon the facts stated, such a view or intention should be imputed to them, from the intention *192entertained by the attorneys, although Fitz and Martin themselves did not either of them, at any time, personally intend to do or cause to be done anything which should give a fraudulent preference to North and Company.
2. Whether the act which was done amounts in law to procuring their property to be seized on execution, within the meaning of the statute.
It has heretofore been clearly established, that, although ah intent to give a preference may be inferred from the fact of doing so, with its attendant circumstances, yet there must be proof of an actual intent to prefer. The inference which a jury may properly draw, that a person intends the natural and probable consequences of his act, is only one element of proof to establish the fact of an actual intent. This intent is essential, and must be found as a fact. Rice v. Grafton Mills, 117 Mass. 228. Parsons v. Topliff,, 119 Mass. 245. Forbes v. Howe, 102 Mass. 427, 437. Beals v. Clark, 13 Gray, 18. Denny v. Dana, 2 Cush. 160, 172. So far as the payment of $100 is concerned, which was made by Fitz and Martin personally, an intent to prefer on/their part is expressly negatived, and it necessarily follows that the plaintiffs cannot recover this item from the defendants. But, as already intimated, the more important and difficult questions arise in respect to the other item of claim.
On a fair construction of the report, it seems reasonable to assume that an intention to prefer, on the part of both of the attorneys, was sufficiently proved. It is expressly found that one of the purposes of the first attorney, who communicated directly with Fitz and Martin, was to facilitate such proceedings as might be necessary in the further prosecution of the suit, and his conduct leaves no room to doubt that he intended to secure a preference to North and Company. The second attorney, though employed on behalf of Fitz and Martin, acted without pay, supposing it was a matter of accommodation to his friend, the first attorney; he sought no instructions directly from Fitz and Martin; he assumed to act for them under this employment ; he entered an appearance and filed an answer; and thereafter he took no steps to prevent the entry of a default and of judgment. While the report does not state in express terms that these attorneys intended by their course of proceeding *193to secure a preference to North and’ Company, and while it is within possibility that the decision of the court may have been placed on the ground that the proof of such fraudulent intention on their part was not satisfactory, yet it seems much more reasonable to suppose that such was not the view taken at the trial.
The inquiry therefore is, whether in law, under the circumstances stated, the intent to prefer which was entertained by the attorneys is to be imputed to Fitz and Martin. The latter were insolvent. They had been sued by North and Company, and their property attached. They had made a proposal to their creditors to compromise their debts by the payment of twenty-five per cent in discharge thereof. They had emplojmd to represent them, in the business of arranging this compromise, the same attorney who brought the action of North and Company against them. That attorney had informed them that the action had been entered in court, that he could not act for them in it, but would employ some one else to do so if they desired, and he was requested to do so. They thus trusted wholly to his selection of an attorney to represent them, and apparently were content to do so. No further instructions were given, and no limitation was put upon the authority of the attorney to be employed. Moreover, so far as appears, they did not seek to have any personal communication with him ; it is not stated that they even took the trouble to ascertain, or that they were ever informed, who he was ; and they have never repudiated or taken any steps to avoid the effect of what he assumed to do in their behalf. Under these circumstances, it cannot be said that they were deceived or betrayed by the attorney thus employed. While it is possible that he acted in contravention of what they wished and expected him to do, he certainly did not act in violation of any directions which they gave, or which he received from the first attorney. There is nothing in the report to lead to the inference that they meant that he should have less authority than an attorney usually has, when entrusted with the management of litigation in court. It has been held that an attorney has authority, by virtue of his employment as such, to do in behalf of his client all acts, in or out of court, necessary or incidental to the prosecution and management of the suit, *194and which affect the remedy only, and not the cause of action. Moulton v. Bowker, 115 Mass. 36. See also Shattuck v. Bill, 142 Mass. 56. To enter an appearance for a defendant in court, in case of insufficient service, without requiring the further notice provided for in the Pub. Sts. c. 161, § 84, is within this authority. What the attorney did, therefore, was within the scope of his employment, and any act so done by him with a view to give a preference was done by him as the representative of Fitz and Martin, although they were ignorant of it and did not intend that it should be done; and his intention was, by construction of law, their intention. • To hold otherwise would be to open a wide door for avoiding the beneficial purpose of the statute.
The principle involved is substantially within the decision in Rogers v. Palmer, 102 U. S. 263, where it was held that knowledge of a creditor’s attorney in receiving a preference is imputable to the creditor; and in Bush v. Moore, 133 Mass. 198. See also Graham v. Stark, 3 Ben. 520. It is not necessary at present to go so far as to say that the same result would follow if •it appeared that the attorney intentionally and fraudulently acted in violation of his instructions, or in contravention of what he knew or believed that his principals expected him to do. Whether such a fraud committed by him upon those for whom he was assuming to act would vary the rule, may be left to be determined when the question is directly presented.
The act relied on to support the charge that Fitz and Martin procured their property to be seized on execution was the voluntary appearance of the attorney for them in the action, thus curing the insufficient service of the writ. It is now to be assumed that the service was in fact insufficient, since the trial proceeded on that ground. The writ is not before us; but the report shows that one of the purposes of the first attorney in causing an appearance to be entered was to save the necessity of taking out an order of notice, and making further service upon Fitz and Martin, the defendants therein. The defendants now contend that the service was good; but we cannot assume this to have been so. Under these circumstances, the entry of an appearance for Fitz and Martin was a positive act, which directly aided the creditors in obtaining an early judgment, upon which *195the creditors took out execution and seized the property. Mere passive non-resistance, on the part of a debtor, to legal proceedings brought without his request or connivance to enforce a claim which is due, and against which he has no just defence, will not bring him within the statute. But any positive act which is done by the debtor with the intention, and which has the effect, to aid the creditor in obtaining a preference by means of levying an execution upon his property, satisfies the requirement of the statute. The debtor procures his property to be seized on execution, if he contributes to such seizure. Sage v. Wyncoop, 104 U. S. 319, 321. Rogers v. Palmer, ubi supra. National Bank v. Warren, 96 U. S. 539. Little v. Alexander, 21 Wall. 500. Wilson v. City Bank, 17 Wall. 473, 484. Lane v. Haynes, 8 Law Reporter, 499, 503.
Construing the report as intended to present the questions . above considered, we have come to the conclusion that, upon the facts stated and reasonably to be assumed, a preference within the meaning of the statute was shown in respect to the property seized on execution. New trial granted.