Sample v. . Jackson

Seawell, J. Passing the question of whether section 67 (f) of the Bankruptcy Act of 1898 is available to the discharged bankrupt in avoiding a judgment lien taken within the four months period next preceding the filing of the petition and while he was insolvent, we first consider defendants’ plea of estoppel — the effect as res judicata of the judgment of nonsuit rendered in the former proceeding before Judge Hamilton, which dealt with the subject of the present suit and in which the plaintiff sought the same relief. From the stipulation of counsel there appears to be sufficient identity between the two cases and evidence adduced on the trials to support the plea of res judicata — unless in the allegation and proof in the present case there is some substantial element making for the support of plaintiff’s case which was not present at the former hearing. The plaintiff contends that this element is supplied by the allegation and evidence in the present suit relating to his insolvency at the time the judgments were rendered against him, and insists that Judge Hamilton’s order of nonsuit in the former action must necessarily be referred to the want of such allegation and evidence therein. *339 It may be conceded tbat if tbe provisions of the Act which plaintiff seeks to invoke are available to him in the present proceeding — on the theory advanced by him — the difference in the two snits, if the evidence is really of the character claimed for it, is sufficient to defeat the plea of estoppel. At least such insolvency at the time of the acquisition of the lien is essential to its avoidance under the cited provision of the Bankruptcy Act and must be shown. But the defendant raises the question whether in the case at bar plaintiff’s evidence in this respect is adequate to the issue. The plaintiff’s evidence goes so far as to indicate that he was financially unable to pay his debts at that time; that he was behind with installments at the bank and unable to pay the interest as it became due, and he introduced certain portions of his petition filed in the bankruptcy proceeding nearly four months after the docketing of the judgments, showing from the schedules filed that his assets were much less in value than his liabilities at that time. But neither the filing of the petition nor the adjudication in bankruptcy are evidence of the existence of insolvency at the prior date when the judgments were taken, Liberty National Bank v. Bear, 265 U. S., 365, 68 L. Ed., 1057, 1060; U. S. v. Oklahoma, 261 U. S., 253, 67 L. Ed., 638; and upon the same principle, we do not regard the disclosures in the schedules filed with the petition as tending to prove such condition when the judgments were taken. The testimony of the defendant as to his insolvency indicates no more than that he was unable to meet his obligations as they currently became due. That would constitute insolvency as it is understood in the practice under State law and under earlier bankruptcy acts, Flowers v. Chemical Co., 199 N. C., 456, 154 S. E., 736; Mining Co. v. Smelting Co., 119 N. C., 417, 25 S. E., 954; Wager v. Ball, 16 Wall (U. S.), 584, 21 L. Ed., 504; but as the plaintiff must obtain his relief, if at all, from the Bankruptcy Act, we must observe the 'definitions of that law and conform our proof to its standards. The Bankruptcy Act of 1898 provides that a person shall be deemed insolvent within the provisions of the Act “whenever the aggregate of his property, exclusive of any property which he may have conveyed, transferred, concealed or removed, or permitted to be concealed or removed with intent to defraud, hinder or delay his creditors, shall not at a fair valuation be sufficient iii amount to pay his debts.” Bankr. Act, see. 1 (15) ; 11 U. S. C. A., sec. 1 (15). This definition is based upon a mathematical rule, exact but fairly easy of application. The evidence does not institute such a comparison between the aggregate value of plaintiff’s property and the total of his liabilities on the critical date, and it is therefore insufficient to engender an inference of his insolvency at that time within the meaning of the term as used in the *340 Bankruptcy Act. This has been considered a matter o£ substance, and we do not believe the Court would be justified in overlooking it in the present case. The main proposition presented to us for decision is a matter of first impression in this State and one of importance. We expressly refrain from deciding it until it is presented to us unembarrassed by other pleas which, temporarily at least, preclude its consideration. The judgment of nonsuit is Affirmed.