In re Watson ( 1854 )

Woodruff, J.

I think the judge at special term was correct in holding that a debtor who is largely insolvent, who, knowing that fact, converts his property into money, and with intent to avoid his creditors and place himself and his property beyond their reach, or so far beyond their reach that they must send two thousand miles to a new and unsettled country to reach the one or the other, clandestinely and deceitfully departs and takes his property with him, and there wastes it, either in profuse expenses, gambling, or adventures of any kind, including a large sum employed in litigation, to prevent his creditors reaching him, is not entitled to Ms discharge as an insolvent, when such discharge is resisted on these grounds. His proceedings since his insolvency are altogether unfair, and tend, in every step, to injustice and wrong. Such a man is not the object of that protection and relief the statute has provided for an unfortunate but honest debtor. In every proper sense of the terms, he is, in my judgment, guilty of disposing of his property to defraud his creditors, not because he has taken it from the jurisdiction of the court, but because, for the very purpose of preventing his creditors from recovering their debts and obtaining that property which belonged to them as his creditors, he has taken it two thousand miles from them—by a journey it required five thousand miles of traveling to reach—and then, in fact, disposed of it to suit his own pleasure.

In this view, it is quite immaterial whether California is within the United States or not. I cannot persuade myself that a man may, for the express purpose of defrauding his creditors, hinder, delay and prevent their collecting their debts, go to a remote part of the country—for example, among the Indians—take all his property with him, and if then, by expenses of living or unforeseen losses, or even by inevitable calamity, he loses his money, return here and ask his discharge, without being liable to the charge of having disposed of his property with intent to defraud, &c.

Disposing of his property does not necessarily import its destruction or giving it away; if, with a fraudulent intent, he places it beyond the reach of creditors effectually, and in doing so loses it himself, it is enough. Nor can I doubt, that when the legislature forbade a discharge, if it was made to appear that the debtor’s proceedings were not just and fai/r, they meant to embrace the case of an insolvent who knowingly and intentionally had been guilty of acts like these. The statement of the debtor, that he hoped to make money enough in California to pay his creditors, by the use of the money, a use which was, of itself, under such circumstances, fraudulent and unjust as to them, ought not to be allowed to avail him.

I think the order of the special term should be affirmed.