Nelms v. Pugh, 5 N.C. 149, 1 Mur. 149 (1807)

July 1807 · Supreme Court of North Carolina

5 N.C. 149, 1 Mur. 149

Nelms and M’Culloch, Assignees of Baker, a bankrupt, vs. Pugh

FromHalifax district.

The Jurv found a verdict for the plaintiff subject to " ' J opinion of the Court upon the following case.

The bankrupt, Henry Baker, on the 24th dav of A q. , . „ , „ _ ' „ . g' st, 1803. was arrested on a writ of capias ad satisfacien-(him, hearing teste the third Monday of August, and com-miffed io tail. Two days afterwards a writ of fieri facias, ° ’ bearing equal teste with the aforesaid writ of Ca. Sa, deliveied to the said sheriff, who levied the same upon OF goods, Ac. of the bankrupt, Bak^r, at the instance of defendant, Henry Pugh ; and before two months expired after Baker was arrested, sold the said Goods, &o. Bak'-r remained injail upwards of two months, and was afterwards duly declared bankrupt, on a petition and commission founded on the said imprisonment, and continued in prr * 1 son, and proof made thereof. On the sixth day of April, 1803, for a debt then due by the bankrupt to Marmaduke Norfleet, he by deed conveyed to said Norfleet all his rea! estate ; the suits of John and William Bell, of Andrew , I1 lemming» &e. and the present defendant, then pending in Halifax County Court, ia which suits judgments were ob-taincd at the August terra aforesaid, and the bankrupt was indebted at that time more than he was worth,

Under tne bankrupt u'sfthe’ arres?and imprison-ofthe both neces” which act is píete, w»tH rae!itl>rf' scribed by few he com* i)lctcd rhe court ^orit/Tó esti,b*isl> a* ny other act as an act of thantheone "¿h'wiiieh"' the com-iued,

Cameron, for the plaintiff, ■

contended that they were en- • titled to judgment upon either of two grounds stated in the cagp_prgf that Baker being arrested on the 24th of An-gust, 1808, and having continued in jail for two months* and more, his imprisonment relates back to the time of the arrest, and makes the act of bankruptcy take place on the 24th day of August, so as to overreach and make void all intermediate acts before the two months were completed— the writs of fi.Ja. under which the goods of the bankrup were sold issued two days after Baker had been arrested*, and while he was confined in prison, and consequently when the bankruptcy bad commenced, which was completed by his continuing in jail for two months afterwards. — .That the bankruptcy dates from the first arrest, he cited King vs, Keith^* 1 Rae. ab. title bankruptcy — the act of Congress relating to bankruptcy should receive the same construction that has been given to the British statutes upon this subject. The reasons given in l Burrows 474, 483, for the construction of the bankrupt laws in England, apply in their fullest force to the bankrupt law of the United States ; and were the act of Congress to receive the construction contended for on the part of the defendant, it could not produce that perfect equality which it intends between the bo-na fule creditors of the bankrupt, or of restraining one creditor from acquiring a preference over another equally meritorious. At the time the several judgments mentioned in the case were obtained in the County Court of Halifax, it is certain that the trader was in a state of insolvency, and unable to pay all his creditors to the full amount of their respective demands. Justice and the true spirit of the bankrupt law required that whatever funds the unfortunate trader had, should be equally apportioned among those persons who liad placed their property in his bauds to trade upon for their common benefit; and yet while the trader was imprisoned, and the bankruptcy progressing to maturity, one creditor by means of an execution possesses himself of the whole of the, trader’s effects, before the expiration of the two months — this is an advantage never intended by the bankrupt law, to any individual creditor. To avoid this advantage the act. must receive the construction contended for by the assignees, namely that the bankruptcy (the two months having expired) must relate to the first arrest — if so, Baker was a bankrupt on the 24th day of August, 1803» his estate vested in the assignees from that moment, and they arc entitled to judgment on this ground.

Secondly — On the 6th day of April, 1803, Baker being then indebted more than he was worth, conveyed all his real estate to Norfleet, one of his creditors, the suits of the Bells, Flemming & Co. and of the present defendant, then pending against him. The conveyance was a dear and unequivocal act of bankruptcy : it was giving One creditor a preference at the expense of all his other creditors, l Bur. AG7. 2 Bur. 829. 4 Bur. 2174. 3 Wills 47. Cowper 629. 1 Brown Ch. Caaes 99. Doug. 91. These cases also shew that every conveyance by deed in contemplation of bankruptcy, is an act o f bankruptcy ; nor does it matter how meritorious the creditor may be — But it is said that this act of bankruptcy cannot avail the assignees in this action, because it was not the act of bankruptcy in which the commission issued. To this it is answered that it is wholly immaterial on what particular act the petition andcommis. sion may be founded. There may have been many acts of bankruptcy committed by the trader before any application made by the petitioning creditor for a commission. But when the commission does issue, the assignees have a right to recover in any property which belonged to the trader at any period when he was insolvent, and in contemplation of bankruptcy committed an act which in law amounts to bankruptcy — All the creditors of a trader ought to be con-sidercd as his partners, and if a loss must be sustained, all the creditors should bear a proportional share of it. '

* 3 Term Hep. 141-

STONE —Judge

the opinion of the Court.

The question, whether the bankruptcy shall relate buck to the arrest so as to avoid all intermediate dispositions' of the bankrupt, effects between the time of the arrest and the completion of the term of imprisonment, considered by the law as amounting to an act of bankruptcy, can only be settled by the statute itself. That declares, the arrest and imprisonment are both necessary to constitute the act of bankruptcy, and not that either independently of ih<* o-her shall be sufficient: and they do rxi both exis. un:i? the ferns of imprisonment limited for tkav purpose by (»e statute has expired, The authorities fioia the. Regis*': boohs introduced to shew that the bank^Mptcy is in EugL'tni -,<( de in relate back to *’ e arte::!, , n* aiisweml by the statutes of bankruptcy themselves. A statute subsequent to that of 5th Jac. Op. 15. vid. the statute of 2i. Jac. 1. Rap. it). expressly declares that the bankruptcy shall relate back to the arrest. — The act of Congress contains no such provi» cion.

The second point made, that a precedent act of hack, iuptcy existed, cannot differ the iníerente above ; because we have no authority for establishing any other act as an act of bankruptcy, than the one- on which the commission issued. — >0 udgment tor the Defendant.