McAllister v. Richards

Coulter, J.,

(after stating the case.) — The opinion of the. court below was, that Richards was not'guilty of a fraud on the bankrupt law, and that the debt to Finney being due bona fide, he was entitled to the amount due by McAllister,'and rendered judgment accordingly.

In this opinion the court were undoubtedly in error. If a person altogether and irretrievably insolvent, and himself conversant with the fact at the time, could lawfully transfer all the property, of any value, which he possessed, to one of his creditors in preference to the rest, a few days before his application for bankruptcy, the bankrupt act would be useless and of no value whatever, except to give colour of law to the very preferences it was designed to prevent. The intent and operation of that law was to apportion and distribute the effects of the bankrupt among his creditors equally, and to break up just such preferences as was given in this case. If the bankrupt had, by any act done bona fide, two months before filing his petition in bankruptcy, preferred a creditor without knowing he was insolvent; such act would have been valid, unless the nature of the act was such as to wear upon its face the unequivocal marks of a design to evade the provisions of the bankrupt act, and which necessarily implied and indicated a belief that he was bankrupt or insolvent, in the usual sense of the words: such as the voluntary transfer of his whole estate to a creditor, thus depriving himself of the means of continuing his business, and making no effort for the benefit of his general creditors.

The principles applicable to transactions of this kind were pretty fully considered by this court in Wilkinson’s Appeal, 4 Barr, 284. I do not consider it necessary, therefore, to enter at large upon their consideration in this case.

The argument of the counsel of Finney, arising but of the nature of the occupation of Richards, which required but small means to carry it on, though pressed on the court with great ingenuity, is not of sufficient weight to take the case out of the general rule. It may be added, however, that he was, in addition to his trade, engaged in the lumbering business. But all who seek relief under the bankrupt law must comply with its requisitions, and be subject to the same rules of law, no matter what their occupations may be. The bankrupt act cannot be graded by any system of minimums in its application to the various trades, professions, and callings of individuals.

Richards having voluntarily transferred his whole estate of any value to one of his creditors, ten days before his application to be declared a bankrupt when he was hopelessly insolvent, committed by that preference a legal fraud on the bankrupt law, and the assignee in bankruptcy is entitled to that estate, whatever it may be.

Judgment reversed, and judgment directed to be entered for defendant below, according to the special verdict.