Jordan v. James, 10 N.C. 110, 3 Hawks 110 (1824)

June 1824 · Supreme Court of North Carolina

10 N.C. 110, 3 Hawks 110

Jordan v. James & Marshall.

1 > From Cumberland. J

[n proceedings, under the act of 1773, for the relief of insolvents,. ( Ch. 100, J¥. Jt.) the single fact to be ascertained, is honest insolvency ; and when this is ascertained, by the mode prescribed, either in the first or third section, the consequence, as to the debt- or, is the same ; be is entitled io his discliarge^from the imprisonment of all creditors, under the 39th article of the Constitution. The judgment of discharge, of a Court o exclusive jurisdiction, on the petition oí an insolvent, until reversed for error or quashed, is conclusive evidence of the discharge, and its regularity cannot be incidentally questioned.

This was a scire facias against the Defendants, as hail for one Mitchell, to which they pleaded “ payment — death of principal — that Mitchell, their principal, had regularly taken the benefit of the act for the relief of insolvent debtors, and was, thereupon, duly discharged to which the Plaintiff replied, “ nul iiel record” On the trial of the cause below, the Defendants produced, as evidence of Mitchell’s discharge as an insolvent, the copy of a record, duly certified, from the office of the Clerk of the County- Court of New-Hano-Ter, shewing a petition of David Mitchell, on 5th June, 1820, to two Justices of the Peace of said county, setting .forth that he was, and had been, for twenty days, in dose confinement for debt, and praying that proper steps should be taken for his discharge, under the act of Assembly for the relief of insolvent debtors $ that the said Justices, on the 16th day of June, 1820, commanded-the- Sheriff of said county to bring before them the said Mitchell, with a list of the process under which he Was confined, which’ was obeyed by the said Sheriff, and the said Justices certified that the said Mitchell, having taken, before them, the oath prescribed' by -law for the relief of insolvent debtors, he was, thereupon, ordered to be discharged on lGth June, 1820. It further appeared, from the said record, that the said Mitchell was not in prison, at the instance of the present Plaintiff though he was notified among the other creditors, eight days before his discharge, but that he was in prison at ihc instance of eleven other creditors, eight of whom were notified on the 11th June, and two on the 10th June, ■that he would apply on the 16th of June, for fiis discharge, at 10 o’clock, A. M. on said day, and the other creditor was served with a notice oil 27th May, of the same purport, except that it did not state the day on which he would make application, but that was blank. "Whereupon, tiic Court, being of opinion that there was such a record, gave judgment against tiie Plaintiff, from which judgment the Plaintiff appealed to this Court.

TV. II. Haywood, jr. for Plaintiff.

The prisoner, Mitchell", was discharged under tiie act of 1773, upon taking what is called the forty-shillings oath. The act, throughout, requires notice to be given to those creditors, at whose instance the debtor is imprisoned and the discharge, under the forty-shillings oath, operates only on their claims. The 39th section of the Constitution, (which was adopted in 1776,) cannot apply to a case like this, and for good reasons.; for, where a debtor surrenders his property to Commissioners, they hold it for the use of all his creditors, who are required to 'be .notified, and they may come in and receive satisfaction according to/their respective claims; but,- under the forty-shillings section, the debtor may pay ail he has, to one creditor, and then fake the oath ; and if the construction, Against which I contend, be correct, he would, thereby, be privileged from arrest by all, and, before the act of 1793, (A'ew Rev. Ch. 380,) would have been discharged of all his debts.

Notice having here been given the Plaintiff, will avail nothing. 1st, because the record shews, .that it was eight days only before the discharge; and 2d, because notice is required to be given to those, only, at whose suit Defendant is arrested, and the other creditors, ia the language of Judge Mall, in Burton v. Dickens, (3 Murph. Rep. 105,) “cannot be bound by a proceeding to which they are no parties;” and this latter remark, I conceive, is an answer to the position, that this Court is bound by the acts of the Magistrates, because of their exclusive jurisdiction, notwithstanding their proceedings may appeal’, on the face of them, to be erroneous.

But if the discharge of a debtor, under the forty-shillings oath, affects all his creditors, then must such discharge be legal and regular; aud here if appears that Mitchell was in prison at the instance of ten creditors; notice was given to eight of .them, five days, only, before the discharge; to one, six days before, and the other notice was twenty days before, but set forth no time when the debtor would make his application. Ten days notice ¡fe the demand of the law, and it must be given. — (l Hatj. Rep. 409.)

These defects, in notice, appear upon the record, so that the presumption of omnia recle acta, in favour of Magistrates’ judicial acts, cannot avail Defendants, the contrary appearing as fully as though the Magistrates had entered the discharge in Midan verbis, without no-lice to any of the ^creditors. — (1 Hay. Rep. 414.)

Hogg, contra.

The record pleaded in this case, is the judgment of a Court of exclusive jurisdiction, and until reversed for error, or quashed, shall be conclusive evidence of a discharge, in all other Courts of Law and Equity, anil its regularity cannot be questioned incidentally. — Gelston v. Hoyt, (3 Wheaton, 246, 315.) Meadows ó¡- wife v. Duchess of Kingston, (Jhnbler, 756.) Rayner wife v. Capehart, (2 Hawks, 375.) Lester v. Thompson, et. al. (1 Johns.' Rep. 300.)

The. discharge of a principal, as an insolvent, is a good defence for his bail. — (1 Caines Rep. 9. — 4 Johns. R. 407.)

But it is said there is a difference in our law, between such as are totally insolvent and such as make a surrender of their properly.

It has been decided in this Court, that a debtor being in prison upon a ca. sa. and obtaining a discharge by surrendering his estate for the benefit of his creditors, by the act of 1773, shall be protected from arrest at the suit of another creditor, to whom he was indebted at the time, and it was held that it was not material that this last creditor should have notice, as the discharge would protect the debtor without it, by reason of the 39th article of the Constitution. — Burton v. Dickens, (3 Murph. R. 103.)

The act of 1773, discharges a debtor, on making a surrender, from the process only on which he was arrested j but the Constitution declares “that the person of a debtor, when there is not a strong presumption of fraud, shall not be confined in prison after delivering up, bona fide, all his estate, real and personal, for the use of his creditors, in such manner as shall, hereafter, be re-. gnlafed by law.” In Burton v. Dickens, the Court decides that the Constitution protects the person of a debt- or, from further arrest, who surrenders his property; and that so much of the act of 1773, as provides for the mode of surrender, is in force by the act of 1778, which enacts the continuance of all acts of the legislature, not inconsistent with the form of government established at the. revolution; and the re-enactment of the law of 1773, is in pursuance of the constitutional injunction, to regulate the mode of delivering up property by an insolvent. Before the Constitution, by the act of 1773, he who is insolvent when arrested, and remains in prison twenty days, may, after due notice to the Plaintiff who confines him, by petition to a Judge or two Justices, be set at liberty, on making it appear that he has no visible property, and by making oath that he has not 40s. money, and that he has not parted with his property to defraud his creditors, and he is discharged from the debt and costs for which he was in execution. By the same act, he who is not insolvent when arrested, but is willing to become so, by surrendering his property by a schedule, verified by his oath, and by continuing in prison twenty days, on any process, may, on due notice to the Plaintiff therein, be discharged from the judgment and execution, on swearing that he has not parted with his property to defraud his creditors. By the act of 177S, then, the only point to be ascertained, was the fact of the prisoner’s insolvency, no matter whether he became so before or after arrest, provided he did not intend to defraud creditors. The fact of honest insolvency ascertained, the relief granted to both insolvents was- the same j a discharge from the debt of the imprisoning creditor, and no more. The Constitution recognized no difference between the two insolvents ; it provided that the person, only, of the prisoner, shouid be discharged; and it intended, also, that a bona Jide insolvent debtor, should be exempt from the arrest of all his creditors, as soon as Honest insolvency was ascertained, whether by his own oath, or by any other mode prescribed by law7. Im-prisomnent was not devised by way of punishing pover* ty ; it w7as intended to prevent a debtor, on slight embarrassments,. or one who had expectancies, from becoming a privileged insolvent; it was to be inflicted for fraud only. It is, therefore, in conclusion submitted, that all insolvent debtors who are, bona fide, unable to pay their debts, and against whom there is no strong presumption of fraud, are protected from the imprisonment of all creditors, by the Constitution; that, by the Constitution, the legislature were directed to regulate the manner, in which such insolvency might be ascertained ; that, in 177S, they did so by re-enacting the law of 1773 ; that it has been decided that the debtor, surrendering by that act, discharges his person from'ithe arrest of all creditors; that he who swears to his insolvency, without such surrender, is also under the protection of the Constitution, if he be, bona fide, insolvent, and there be no presumption of fraud against him ; both of which facts are ascertained by his proceedings under the law of 1773; that, therefore, he also discharges his person from the arrest of all creditors, and that there is nothing now appearing on this record of discharge, before the Court, to render it void.

The opinion of the Court was delivered as follows, by

Henderson, Judge.

It is quite apparent, that a person discharged from imprisonment for debt, either under the first and third sections of the act of 1773, is only liberated as to those demands for which he was then held in confinement, and from the confinement for which he was discharged. The words of the first section are, “and shall stand forever discharged from all such debts so sued for.” The words of discharge under the third section are, “ which warrant of discharge shall be an indemnity to the Sheriff or Jailor for an escape, &c.” And it was decided in the case of Burton v. Dickens, (3 Murphey) that a debtor disCharged under the third section of the act, was exempt ai’iest for any debt, (whether held -in confinement *or it or not,) under the 39th article of our constitution; the words of which, are, that the person of a debtor, where there is not a strong presumption of fraud, shall not be confined in prison after delivering up Iona Jide all ins estate real and personal, for the use of his creditors, in such a manner as shall hereafter be regulated by law, the Court considering the provisions of the act of 1773 as furnishing'the regulations spoken of in the article. It, then, only remains to bo considered, whether there is any essential difference in the effect of a discharge under one or the'other section of the act, the principal in the present case being discharged under the first, or as it is called, the forty shillings section. The injunction, that the person of a debtor shall not be held in confinement, is found where details are not to be expected : fundamental principles only, are there embodied, and in this case, to be carried into execution, (if the words are to be regarded,) by some future Legislature; wcshould therefore,-not construe this article as we would an act of Assembly, and extend it to cases only within its words, but all cases whatever within its spirit, within its operation also. By this article, a mere insolvent is not entitled to a discharge, but an insolvent who has no means of paying. If is the surrender of his property which creates jiis inability, if he had any property to surrender. The fact to be en-qnired into, is this, his utter inability; and when that fact is ascertained, the exemption attaches, no matter whether it arises from a total or partial inability; for if partial inability had made any difference, there most certainly would have been required some proportion between the sum surrendered, and the debts from which he was to be discharged. There could not be such difference in the effect of having a few shillings only, to surrender, and leaving no proportion to the debts to be paid. A person has forty-one shillings to surrender, and owes ten thousand pounds; another has only thirty nine shillings to surrender, and owes one hundred pounds to twenty different men — the person of the first, shall be discharged from the payment of the ten thousand pounds, and the latter, shall be liable to nineteen out of twenty creditors, and may be imprisoned for each debt, successively, if his creditors think proper to sue in successive order. And thus, a person who is entitled to his discharge, under the first section, may, if he thinks proper, by varying'the mode of application, obtain bis discharge under the third section, by surrendering up some trifle, not worth ten cents; and this is the practice under the act, and cannot be objected to. It is not to be presumed, that this great difference in the situation, should be entirely dependant on the will of the debtor, without any merit or demerit on his part; and if the law requires that the sum surrendered up should bear any proportion to the debts to be paid, then the greater privilege would be reasonable; nor does imprisonment seem to be inflicted as a punishment, for then the period of imprisonment would bear some proportion to the amount due, having a regard to the means of payment, and whether insolvency was brought on by misfortune or imprudence, and many other considerations increasing the criminality; or extenuating the misfortune of beiug indebted beyond the ability to pay. As was said before, the total want of means, is the postulatvm of the act; when that is ascertained, there is no difference between a person who has nothing to surrender, and one who has only five shillings, or some other small sum;, their situations may properly be more than equalized by the different sums due from each; and the law omitting to make that an enquiry and criterion, when it could be so clearly expressed if designed, is an evidence that it formed no consideration with the law-makers. I am well satisfied, that this constitutional provision, if extended to one, should be extended to the oilier also. The notice to be given to creditors, which at one time was supposed, might vary the case, upon an examination, will he found to be nothing. The notices spoken of under the third section, as necessary to be given to all the. creditors, are notices to them to come in and prove their debts, and receive their dividends. They are to be given by the clerk; they alfect not the previous discharge. As to due notice not being given to the confining creditor, the Court cannot examine that question. Wc can only look into the discharge, and the jurisdiction of the court or Magistrate which granted it, for it conies before us incidentally or collaterally, and the Magistrate or Court was as competent to judge and to act as this or any other Court, and their proceedings, when within the sphere of their jurisdiction, are as binding and conclusive as those of the highest tribunal of the country, as long as they remain unreversed. The question of notice came before the Magistrate, he passed upon it, decreed it was sufficient, and rendered his judgment. If any person fell himself aggrieved, and could show his interest in the question, and make out a probable cause, the Superior Court would have the procced-ings brought before it, by certiorari, or some, oilier writ; and if contrary to law, would have reversed them, subject to an appeal to this Court; but neither this, or the Superior Court, or any other Court, has the power of examining into the regularity of the proceedings of any Court, when brought into question collaterally and incidentally, if the tiling' done, was within the legitimate powers of the. Court doing it. Only a revising Court, when the question comer before it directly,, has the power t© do it.