Wiggin v. Bush

Yates, J., delivered the opinion of the court. The plaintiff, in this cause, was properly nonsuited. The note in question was given to prevent the opposition of Forsaith, the payee, against the insolvent’s obtaining the benefit of the act of the 11th of April, 1811, and, in my opinion, un» [309] der circumstances of fraud; for it is expressly stated, that the defendant, in conversation with him on the subject, admitted that he had not made a fair exhibit of his debts to the recorder. It became, therefore, a subject of inquiry, whether he had committed perjury, in not rendering- a just and true account, according to the oath taken by him, as prescribed by the statute under which the proceedings were conducted. Other reasons, besides, might have been shown by Forsaith to prevent his discharge, not susceptible of detection afterwards; so that the transaction, from its very nature, must operate fraudulently, and ought not to be countenanced. Not only true policy, but the spirit of this statute, as well as every statute I have seen on the same subject, forbids such transactions. It is at all times intended by the legislature, to effect an equal distribution of the insolvent’s estate, and secure equal advantages to the creditors; and although the giving of this note, and the payment tif it afterwards by the insolvent, would not, as to that amount, lessen their distributive shares in his estate; yet, the suppression of facts producing such a result, which might be the case, is alone, in my view, sufficient to prevent the recovery now sought for. The act never can be construed, so as to authorize the insolvent to silence an opposing creditor, by a written promise of future payment of his debt, or by giving a reward to any person, whether agent for a creditor or not, to withdraw his opposition. It appears to me incorrect and unjust, and might be attended, in either case, with the grossest imposition on creditors. It must be admitted, that laws of this description, although necessary to relieve unfortunate debtors, always operate hard on creditors; and it is the province of courts of justice, in cases like the present, to interfere, and to close the remotest avenues leading to fraud or imposition on them, by persons claiming the benefit of such laws. The case of Cockshot and another v. Bennet and another, (2 D. & E. 763.) could not have interfered with the distributive share of a creditor; yet the court decided, that the note given by the bankrupt was void. In that case, all the creditors of the insolvent consented to accept a composition for their respective demands, upon an assignment of his effects by a deed of trust, to which they all \yere partiesand one of them, before he executed the deed, obtained from the insolvent, a promissory [310] note for the residue -of his demand, by. refusing to execute the deed, until such note-was made. The note was declared void in law,' as a fraud on the rest óf the creditors ;' and the court decided, that a. subsequent promise to pay it, was. a promise withoht consideration, which would not maintain an action. In Payne v. Eden, (3 Caines' Rep. 213.)it was necessary for the insolvent to obtain, the assent of a certain portion of bis creditors and he had a sufficient number without the payee of the note; but the note having been given in' consideration of his signing the insolvent’s petition, .it was adjudged void. ’ .If the security in the above cases was deemed' void, . the reasons against the validity of the noté, in this cause, are certainly more cogent and conclusive ; but it is, notwithstanding", contended, that this is a defence set up against third persons, who are subsequent holders for a valuable-'consideration,' and' without notice. . This, according to the. view before taken of the subject, cotild not give validity to the note, if void 'ah inicio. Jt cannot, however, be made a question in the .present case ; because it does not satisfactorily appear, that á consideration had been given for the note by the'holders; and, because, they'had sufficient notice of the manner in which it Was', originally obtained by the payee, as their agent. It appears that the plaintiffs still hold the former notes given by Rice & Bush to them, and endorsed hy Forsaith, the payee of the note in question; who, without making any arrangement at the time it was so transferred, to deduct from that debt the amount of thisvnote,-Which debt ivas also stated on the'defendant’s schedule- delivered in td the recorder, and for the payment of which, the same liability exists; so that the whole demand remained in the same situation, without affording any be•nefit to Forsaith, the. endorser of this note. To say the least, therefore, it is extremely questionable,' whether any consideration can even be presumed to have passed to Forsaith, from the plaintiffs, for the note. - , x By the endorsement on the note of the real daté, the plaintiffs had such information as ought to have led'tó an inquiry into the manner the; payee, had obtained it. • The post-dating of the note which was endorsed, was an extraordinary.circumstance, and must have created suspicion. The neglect of the plaintiffs, to make any inquiry, ought to subject them to the consequences of the transaction between the defendant and Forsaith, the iia. [311] Mediate, or original parties; and, as between them, it is decidedly an illegal consideration. It is, however, manifest, from the face of the transaction, that Forsaith, the payee and endorser of this note, acted as the agent of the.plaintiffs ; they, of course, are bound by his acts, and are subject to the samé consequences, as if the whole had been conducted by themselves; go that, independent of other reasoning on the subject, this alone is sufficient to prevent a recovery. The motion for a new trial must accordingly be denied. Motion denied.