Court Opinion

ID: 6667300
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:07:03.223424+00
Date Added: 2024-06-11T16:00:22.629363
License: Public Domain

Eaule, J.
delivered the opinion of the court.- It has been a complaint against the general insolvent laws of this state, ever since the year 1805, that no adequate provision was made for dispossessing the insolvent of his property, from the time of his application for relief. This provision is not supplied, as has been mistakenly supposed, by the act of 1808, ch. 71, sect. 3. There must be a petition de*408pending, according the terms of this section, before thd court, or even the judge, can go into the appointment of a trustee; and by far the greater part of the applications for relief are made by persons, actually imprisoned during the recess of the county coui'ts. This inconvenience, i¡ ap*» peárs to have been one of the objects of the act of 1816, ch. 221, sect. 2, tt) remove, in the city and county of Baltimore.
By this law a provisional trustee is for the first time mentioned, and to the act we must look for a description of his powers. By the words and terms of if, this trustee is to take possession, for the benefit of the creditors of the insolvent, applying to the judges for relief, “of all propei’ty, estate, and effects, books, papers; áccounts, bonds, note's and evidences of debts,” and until he is possessed of them, and the trustee’s possession is reported by the commissioners to the judge, the insolvent cannot obtain even a personal discharge from imprisonment. The provisional trustee is thus to receive all the property, &c. of the insolvent, of which he is possessed, and.mention is no where made in the law, of a power in him to wrest the property, &c. of the insolvent, out of the hands of third persons. Where this is to be done, and no further trustee has been appointed, the court think the name of the insolvent must be used for the purpose. The possession only passes' to the provisional trustee, and the absolute property remains with the insolvent until a permanent trustee is appointed, in whom, by the operation of the acts, the title to the property vests. It does not vest at all, according to our ideas, in the provisional trustee, and therefore he can sustain no-suit, which involves the right of property. The action brought on this occasion is an action of trover, and to maintain it, the plaintiff must have a general or special property in the chattel contended for. If a general property, the legal possession follows it, and need not be shown, but ifa special property is relied on, the plaintiff must prove the" actual possession of the article converted by the defendant to his use. The last, the special property, is not here pretended, and the first, the general property, we have said, remains with the insolvent.
Neither .is the power to possess himself by suit against third persons, of the insolvent’s effects, incidental, in the *409Opinion of the court, to the office of this trustee, nor doés it grow out of the nature of his triist.
The trust is to continue’, it is admitted, until a permanent trustee is chosen, which the act contemplates to be done, and which ought to be doné, iii a short time after the application of the insolvent for the benefit of the lav/, but while it continues, it is a power 'only to possess and preserve for the benefit of the creditors;
For the protection of these rights* he may sue, if his possession.is invaded* but his action would bé grounded on his possession, derived from the insolvent, and on his special property consequent thereon, and may be prosecuted by him, without naming himself trustee. Very different is the action brought on this occasion. It must be supported on the general property of the plaintiff, which is always followed up by the legal possession, and agreeably to the opinion of the court already expressed, it is not iti this Case in the provisional trustee, or the plaintiff* who was only appointed provisional trustee. In this it is Unlike the cause of the administrator durante minoritatv. The title of the property of the intestate vests in him* and he may bring suits in relation thereto, or may be sued, as the intestate himself could have been, although his office is continued for a limited time only.
But if it was concédéd* that the provisional trustee had power to sue third persons generally, for the purpose of possessing himself of the property of the insolvent, we Should nevertheless think the action in this case could not be maintained. It is a suit against a creditor of the insolvent, to recover damages for the wrongful conversion of certain promissory notes, which, it is admitted, were delivered by the insolvent himself, before his actual insolvency, to the defendant, to discharge a just debt due to him. Where a transfer of this kind is vacated, the property vests in the permanent trustee alone, by the act tof 1816, ch. 221, sect. 6, and he alone can maintain a suit for ii; Whatever then may be the power of the provisional trustee, over the property in the schedule of the insolvent, and this we have attempted to define, we can have no doubt, he is unable to sue for property which has been transferred to a creditor, as these promissory notes have been;
*410Many other points were pressed by counsel in the argilmeat of this case, upon which the court do not deem it ne3 1 ; cessary to express an opinion. We will, however, further barely state, that in our judgment, the question involving the invalidity of the assignment of the notes by Abbot to Boggs, cannot be regularly examined, until a permanent trustee is appointed, as he alone can assert the rights of the creditors of the insolvent in this particular-. We venture no opinion as to the character of this transaction, but if this assignment is to be considered null and void, it is to be vacated only for the purpose of vesting the property in the permanent trustee, to be distributed among all the creditors of the insolvent; and this cannot be done, where ho such trustee has been appointed.
The court below assigned no reasons for the opinion they gave; and we know not what views they took of this subject; We believe, however, they had ample ground to refuse the instruction to the jury prayed for by the plaintiff, and we therefore affirm their judgment.
Chase, Ch. J.
The facts stated in this case on which the prayer to the court below was founded, were not legally sufficient to warrant the court in giving the direction prayed, and the court did right in refusing to give the direction.
The prayer is, that the court should direct the jury that if they believed the above mentioned notes were delivered to the defendant by Abbot with a view or under an expectation of being or becoming an insolvent debtor, that the plaintiff was entitled to recover.
The material fact in the case is, that oh the 5th of December 1817, while under arrest and in the custody of the' sheriff on the ne exeat, Abbot directed Bosley to deliver to the defendant, in discharge of the debt due to him, the two promissory notes for which this suit-is brought. On the 29th of November 1817, Abbot had sold all his goods and stock in trade, and had given a preference to- Bosley and Jarrell, by depositing the promissory notes with them’ to pay themselves, and apply the residue as Abbot should direct.
The payment to the defendant was not a voluntary payinéiif, hut was made under the constraint and coercion of the law, and against the will of Abbot. • The *411cause of the ne exeat was the preference Abbot had given to Bosley and Jarreit in the preceding November, and Abbot’s unwillingness to pay or secure the debt due to the. defendant
So far from Abbot’s manifesting an intention to give am undue preference to the defendant, he evinced a strong desire to prevent his being paid, and was compelled to deliver the promissory notes by the proceeding under the ne. exeat.
The prayer is defective in not having inserted the words, ‘.‘and with intent thereby to give an undue and improper preference.” To avoid the deed or assignment it must be made with the view and under the expectation of becoming an insolvent debtor, and with an intent thereby to give an undue and improper preference. There must be -the concurrence'of-both circumstances to render the deed null-and; void, and-the jury must so find:
On the 19th' of December 1817, Abbot applied for the. benefit of the insolvent laws. When does a person become an insolvent debtor under th^insolvent law? I know1 no criterion by which it can be so well and certainly ascertained as the time of filing his petition. It is then he acknowledges his inability to pay his debts, and applies fon. relief.
The assignment was made 13 or 14 days prior to the. time of Abbot’s filing his petition, and when made it was not a voluntary but a compulsive act, produced by the coercion of the law5i which precludes the circumstances oF undue and improper preference.
It is stated in the case,, that on the 16th of April 1818, Abbot was finally released, and that on the 10th of March 1818, this suit was instituted-. This suit was brought be-, fore the final release was. obtained;.
Before a final release or discharge can be obtained, the-. trustee must certify to the court that he has received all the property contained in the schedule belonging to the insol-, vent debtor. No such certificate appears in this case.
If there wras no final discharge, which was admitted in. argument, (indeed there could not be without the certificate of the trustee that he had received all the property specified in the schedule,) then the petition of the insolvent debtor, and all the proceedings under it, became ineffectual and a nullity, and the property will be divested out *412of the trustee, and revert to the insolvent debtor, and vest' in him by operation of law as a resulting trust, the original object of the trust having failed, and the property will be liable to be operated on and affected under the general laws as the property of- the insolvent debtor.
I am of opinion that the judgment of the court below be affirmed.
JUDGMENT AFFIRMED.