Hickley v. President of the Farmers & Merchants' Bank , 5 G. & J. 377 ( 1833 )

Buchanan, Ch. J.,

delivered the opinion of the court.

/ By the common law, and apart from the provisions of the / insolvent laws of this State, (the bankrupt laws of England not being in force here) a debtor may secure one creditor to the exclusion of others,? either by payment or a bona fide (transfer of his property. The 9th section of the insolvent act of 1805, ch. 110, denies the benefit of that act to ' any debtor found guilty of having given to any creditor or security, an “undue and improper preference,” leaving doubtful what constituted an undue and improper preference. And to remove that doubt, the act of 1807, sec. 2, provides that any deed, &c. made by any person, to any creditor or security, with a view, or under an expectation of being, or becoming an insolvent debtor, shall be taken to be an undue and improper preference to such creditor or security, within the meaning of the original act of 1805. Neither the original act of 1805, nor the supplement of 1807, renders void or inoperative a deed, &c. given bona fide by a debtor, to secure a favored creditor or security, but they rather virtually recognize the validity of such a deed. The act of 1807, only declaring what shall be deemed an undue and improper preference, and the act of 1805, doing no more than by way of punishment, denying to a debtor giving such preference, the benefit of its provisions, without impairing the rights of the preferred creditor under such deed, and leaving it to its operation at common law.

But the acts of 1812, ch. 77, sec.I, and 1816, ch. 221, sec. 6, the latter relating to the city and county of Baltimore, provide, that any deed, &c. made to a creditor, or security, by any person, with a view or under an expectation of being, or becoming an insolvent debtor, and with intent thereby, to give an undue and improper preference to such creditor or security, shall be void, and that the title to the property shall vest in the trustee of such insolvent debtor. Thus for the first time making void such a deed of preference, given with a view, or under an expectation of being or becoming an insolvent debtor; which would have been supererogation, if such deeds had been considered void before. Under the settled construction of those acts, the words, “with a view, or under an expectation of being or becoming an insolvent debtor,” are held to mean, with a view, and under the expectation of taking the benefit of the insolvent laws; and if the judgment confessed by Thomas J. Clagett, who was a resident of the city of Baltimore, could be considered as within the intent and meaning of those acts, and had been given with a view, or under an expectation of taking the benefit of the insolvent laws, and with an intent thereby to give an undue and improper preference to the Bank, it would have been null and void, and the property taken under the execution sued out upon it, would have vested in his trustee.

But the appellant thought proper to make Thomas J. Clagett a witness, and to examine him as such, and he has positively, and unequivocally sworn, that he did not confess the judgment with a view, or under an expectation, or intention to take the benefit of the insolvent laws; and there is no evidence in the record, to control his showing the existence at the time, of any such view or expectation. It is therefore a transaction wanting the ingredients of such an undue and improper preference, as is declared by the insolvent laws to be void; and is consequently left to its operation at common law, by which, being bona fide, and for a sufficient consideration, it is sustained.

The act of 1827, ch. 70, sec. 7, provides that the voluntary confession of a judgment in favor of a creditor, or security by any person, with a view, or under an expectation of being or becoming an insolvent debtor, shall he an undue and improper preference, within the intent and meaning of the act of 1805; with a proviso, in the 9th section, that it shall not extend to the city and county of Baltimore. Thus showing, that before that time, such judgments had not been considered as being within the meaning of the act of 1805; and by the proviso, giving validity and effect to such judgments in the city and county of Baltimore.

But by the act of 1830, ch. 65, a judgment so confessed in the city or county of Baltimore, is declared to be an undue influence, an improper preference, and null and void. And by the act of 1831, ch. 316, sec. 5, the provisions of the 7th section of the act of 1827, ch. 70, are extended to the city and county of Baltimore,—so that the judgment in this case, which was confessed by Thomas J. Clagett, in the city of Baltimore, on the first day of May, in the year 1829, before the passage of the acts of 1831, is protected by the proviso in the 9th section of the act of 1827, and would not be void under the provisions of the insolvent laws, even if it had been confessed with a view, or under an expectation of being or becoming an insolvent debtor.

DECREE AFFIRMED WITH COSTS.