Court Opinion

ID: 6408428
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:45.842611+00
Date Added: 2024-06-11T15:51:17.421519
License: Public Domain

Shaw, C. J.
The statutes of 1838, c. 163, 1841, c. 124, and 1844. c. 178, on the subject of insolvency, being made in pari materia, and constituting one system of proceedings, must be taken and construed together. Under these statutes, the question is, whether the petitioner, Jordan, was liable to be adjudged an insolvent debtor on the petition of a creditor, under § 19, of St. 1838, c. 163. The St. of 1844, c. 178, §, 9, in addition to the several causes for proceeding in invitum against a person as an insolvent debtor, includes the following ; viz. “ if any person shall make any fraudulent conveyance or transfer of his property, or any part thereof.” It was under this provision that the petitioner was adjudged insolvent ; and the question is upon its true construction.
*295To make one an involuntary insolvent under St. 1844, on l’ie ground of having made a fraudulent conveyance, there, n ust be something more than an intent, on the part of the l „btor, to give a preference. A fraudulent conveyance implies some fraudulent purpose, knowledge or assent, in both parties. Bridge v. Eggleston, 14 Mass. 250. Still, what is to be deemed a fraudulent conveyance, within this statute, is not to depend on the old Sts. of 13 and 27 Eliz., which did not avoid payments or conveyances in satisfaction of an actual debt, but, on the contrary, allowed any preference, provided only that the conveyance was made to satisfy or secure a real debt. They were such conveyances as were intended to defraud all creditors, and to secure the property to the grantor himself, or to some one not a bond fide creditor. But under the present laws of this Commonwealth, a conveyance must be deemed fraudulent, if made to defeat the full and fair operation of the insolvent laws ; and this may be ascertained by the application of these laws, as a test. The St. of 1841, c. 124, § 3, provides 11 that no certificate of discharge shall be granted, or, if granted, it shall be of no eifect, if a debtor, within six months before the filing of the petition by oj against him, being insolvent, or in contemplation of insolvency, shall, directly or indirectly, make any assignment, sale, transfer or conveyance, either absolute or conditional, of any part of his estate, real or personal, intending to give a preference to a preexisting creditor, or to any person who is, or may be, liable as indorser or surety for such debtor, unless said debtor shall make it appear that, at the time of making such preference, he had reasonable cause to believe himself solvent ; ” and such preferences are declared void, and the assignees are authorized to recover the full value of the property transferred, “ provided the creditor, when accepting such preference, had reasonable cause to believe such debtor was insolvent.” Here the avoidance of the discharge is not made to depend on the debtor’s contemplation of proceedings under the insolvent laws, but on the fact of being actually insolvent, unless he had reason to believe himself solvent; of which the *296burden of proof is placed on him. In this respect, this statute has changed the law, since the decision of Gorham v. Stearns, 1 Met. 366. This statute not only avoids the debtor’s discharge under these circumstances, but declares the conveyance void; and this, manifestly, because it is in plain violation of the law, and a fraud upon the other creditors.
The court are therefore of opinion that, in order to authorize the master to issue a warrant against a debtor, on the application of a petitioning creditor, under the St. of 1844, on the ground that such debtor has made a fraudulent convey anee, he must be satisfied of the following facts: 1. That the debtor was insolvent, in fact, or contemplated proceedings in insolvency, at the time that he made the conveyance, and that he did it with a view of giving a preference to a preexisting creditor. 2. That he then had no reasonable cause to believe himself solvent. 3. That the creditor, at the time of receiving the conveyance, had reasonable cause to believe the debtor insolvent.
The burden of proof of the first and third propositions is upon the petitioning creditor, and he must prove them by competent evidence. The allegations in the petition, although sworn to by the petitioning creditor, as required by St. 1844, c. 178, § 9, are not to be received as evidence on the hearing ; the effect of the petition under oath being only to authorize the master to hear the case. And we think the debtor cannot be called on to testify, without his own consent, upon the preliminary question, whether he should be adjudged an insolvent. After the masterhas acquired jurisdiction of the party and of the subject, after the regular institution of the proceedings, he has full power to examine the debtor on oath. As the master appeared to rely, in rendering his judgment, on the allegations in the petition, and the want of a sworn denial by the debtor, the court are of opinion that the issuing of the warrant should be superseded and the proceedings be remitted to the master for further hearing.