Hobbs v. Bibb

By CHIEF JUSTICE LIPSCOMB. On the trial the Judge charged the jury, “That although the sale might — 57 — Lave been bona fide, and the hiring in good faith, and Hobbs actually have received the wages for which they Were hired, y et, as the possession had never been changcd, it was void, and the property was subject to the execution levied on it.” The correctness of this charge we are now called on to consider. The main question presented is not a new one; it has given rise to much discussion, and a great contrariety of decision. It is whether the possession remaining with the vendor,afteran absolute sale, is afraudjue?’ se, or only prima facie evidence of fraud. Our statute is not materially different in its terms from the 13th Elizabeth: The adjudications of the English Courts may, therefore, be resorted to, and if they have been uniform in the construction of that statute, and correspond with the current of decisions on the same subject in this country, so as to have made a settled rule of law, it would he very impolitic and pernicious in its consequences to disturb it; however much we might be disposed to question its correctness, if it was res integra. Contracts, and the various transactions of mankind in business and trade, are 'supposed to be entered into, with a corresponding view to the law as it has been decided by the- highest judicial tribunals of the country. A sudden subversion of a well estabed rule of law, might materially affect the relations of debt- or and creditor, by dissolving liabilities entered into in the best faith. We will first inquire how far the decisions on this subject havebeen uniform in the English Courts. Those who maintain the affirmative of the proposition, insist, that the statute of Elizabeth is only in affirmation of the com-' mon law; that it is a well established principle of the common law, that possession remaining with the vendor is fraudj3er.se. In Sheppard’s Touchstonea the rule is laid down, that “If a debtor secretly make a general deed of his goods to one of his creditors, and continue in the use and occupation of the goods as his own, the deed is fraudulent and void against a subsequent judgment creditor, notwithstanding the deed was made on good consideration.” There can be no doubt but that the ground of this rule is, that the secrecy of the transaction gave a false coloring to the circumstances and solvency oí the vendor, and that such delusive appearances might well give a credit, that would otherwise be refused. But a previous creditor would not be in the same predicament; he could notbe so much injured if the sale had been for a good consideration, because the debtor had a right to prefer one creditor to another. The — 58 — reasonableness of this rule of the common law seems to be well founded. If, however, the broad ground that possess;on reinaining with the vendor is fraud per se, be correct, it would be void both as to subsequent and prior creditors, whether they had been deluded by false appearances of not; this never has been ruled at common law, all the decisions going that length have been subsequent to the stat-u to of 13th Elizabeth., It is worthy of remark that Twyne’s casea so often referred to, was not a civil suit at common law for the ascertainment of a contested right between two Individuals, but it was a proceeding criminaliter; an information at the instance of the attorney general for a fraud supposed to have been committed by Twync, on the other creditors of Pierce, in setting up and publishing a fraudulent gift of the goods in question; and so far as the 13th Elizabeth sec. 5. could be brought to bear on the prosecution was for his benefit, he attempted to defend himself by' •shewing, that the conveyance from Pierce was protected by the statute, because it was founded on a good consider ation. The sale however had been secret, and Pierce continued to exercise ownership of the property alledged to have been sold, such as shearing the sheep, selling some of them, and marking them in his own mark. The Court however did notiay hold of any one of these circumstances, as sufficient of itself to constitute fraud; but considered that they were ali the livery of fraud, and when taken altogether made the sale a fraudulent one. When it is recollected that the case was at the instance of the attornej? general, on the crown side of the Court, and how seldom the crown failed at that period in a prosecution, I think this case would not have been entitled to much weight,evenif it had have laid down the broad doctrine contended for, which it uoes by no means do, so far from it that it only calls Prepossession with the vendor a badge of fraud. Tnere are many conveyances that would be held fraudu* lent under the bankrupt laws, that would be good under the 13th Jidizabeth. Bankrupt laws are made for the benfit oí traue, and operate on traders only, and not on the mass of the community. The trader carries on his business, and obtains a credit on the faith of his visible stock,, and he is not permitted to make a secret transfer of his property; ini act such a transfer would be an act of bankruptcy, and the property so transferred could be recovered by the assignees of the bankrupt; a man variously indebted may convey ali his property to a particular creditor whose — 59 — debt covers its value without violating the 13th Elizabeth. Butifhe is a trader, such a conveyance will be against the policy of the bankrupt laws, and would be an act of bankruptcy, and void.a In a case arising under the bankrupt act of the 21st the 1st, Lord Mansfield, after the enumeration of many evidences of fraud, and among others the possession remaining with the vendor, uses this emphatic language: “nay, the not taking possession being only evidence of fraud, may be explained.”b There are a great variety of cases,c under the bankrupt laws, sustaining the same doctrine; but not one of them laying down the broad rule, that possession remaining with the vendor is per se fraudulent. The case of Edwards v. Harbend is believed to lie the first case decided under the statute of 13th Elizabeth, in which the ground was assumed by the Court, that on an absolute sale, the possession remaining with the vendor is fraud per se, and not mere prima facie evidence of fraud. This case has been followed by several respectable authorities; but it has been often questioned, and often declared not to be good authority. In Kidd v. Rawlinson,e Lord Eldon ruled, “that possession remaining with the vendor is only prima facie evidence of fraud.” And long afterwards in the case of Lady Arundel v. Phips et al.f he was much displeased that the rule he had laid down in Kidd v. Rawlinson should havebeen questioned, and uses this remarkably strong language: “the mere circumstance of the possession of the chattels, however familiar it may be to say, that it proves fraud, amounts to nothing more than that it is prima: facie evidence of property in the man possessing, until atitle, not fraudulent, is shewn, under which that possession has followed.” Indeed nearly all the modern English decisions seem to question, if not wholly reject the strong rule laid down in Edwards v. Harben. In the case of Stewart v.Lomb,g Chief Justice Dallas sa3>-sthatii has been dissented from often. Park, Justice, admits that doubts have arisen as to the extent of the doctrine of Edwards v. Harben, Burrough and Richardson, Justices, concur that actual pos-, session is not in all cases necessary to the transfer of chattels, and acknowledge the soundness of the rule in Kidd v. Rawlinson, and Watkins v. Birch.h It appears clear from-these cases,'that if the rule in Edwards v. Harben has hot been wholly subverted, it has been much shaken, and is far from being acquiesced in as good authority. The Supreme Court of the United States, in the case ©£• — 60 — Hamilton v. Russell,a acknowledged the authority of Ed* wardsv. Barben, and that decision is considered as settling the law in the Federal Courts. The same rule obtains in Virginia, S. Carolina, Tennessee, Kentucky, Pennsylvania, and N. Jersey. In N. York, possession remaining with the vendor is ruled to be only prima facie evidenceoííva\xñ..-[See Ludlow v. Hurd,b and Bissell v. Hopkins,]c Tf In the last case the point was argued with great ability, and the reporter has with great industry and research, collected all the cases of exception to Harben v. Edwards. The. same doctrine is sustained in Massachusetts, N. Hampshire, and N. Carolina. From all of. which it appears that the question is not well settled in this country, perhaps more unsettled than in England. I have said that if the statute had received a settled construction, that it ought not to be lightly set aside; but as I have shewn, so far from uniformity, there has been a great diversity of decision; so much so, that Chancellor Kent callsit “a very vexatious question,” and says that the history and diversity of decision on this subject, form a curiousand instructiveportionofour jurisprudence.d Such then being the unsettled state of judicial decision on this subject, we are left to the free and unbiased construction of the statute, uninfluenced .and unfettered by previous adjudications. That portion of the statute, material to the investigationofthcquestion under consideration, isas follows: “That every gift, grant, or conveyance of lands, tenements, or hereditaments, goods or chattels, or of any rent, common or profit out of the same, by writing or otherwise, and every bond, suit, judgment, or execution, had or made and contrived of malice, fraud, covin, collusion, or guile,, to the intent or purpose to delay, hinder or defraud creditors of their just and lawful actions, suits, debts, accounts, damages, penalties, or forfeitures, or to defraud or deceive those who shall purchase, &c. shall be void, &c. ” - On reading this statute it does seem that the unsophisticated mind would be much at a loss to imagine, by wliat possible artificial rule of construction invented by the ingenuity of man, a contract entered into with good faith, and for a fair and valuable consideration, could be brought within its proscriptive influence. He would at once say that the statute forbids no honest transaction, it only proscribes fraud. The intention of the parties to the contract is not, nor can it, for a moment, be called a question of law; it is clearly one pf fact to be determined by the jury. — 61 — "How, then, can the Court assume on itself to say that if the possession remains with the vendor, it is conclusive evidence of fraudulent intent, not to be controverted by any testimony to shew the fairness of the transaction? It is •contrary to the genius of our government, and against express legislative enactment, that Courts should encroach on the peculiar privileges of the jury, in determining on the facts of a ease. A long course of practice in England has sanctioned such encroachments in her Courts. It is not Xmusual for the Judges there to arrest a cause from the jury, by declaring that the evidence offered is not sufficient to prove the facts averred and put in issue by the plea, and either direct a nonsuit, or order a subservient jury in the box to return averdict, not on their own conviction of the truth, but according to the wishes of the Judge. Such assumptions of authority render the boasted trial by jury amere farce. This is an evil that has, to some extent, crept into the judicial tribunals of our own country, from too close an adherence to English authority. Its influence has been irresistable in some of the States; and I can but think, with all due respect for the supreme judiciary of the United States, that it has no where been more perceptible than in Hamilton v. Russell. That decision is confessedly based on Edwards v. Harben, a foundation so frail that if it has not been overruled, it has at least been considered very questionable authority, in the very Courts where it was pronounced. This case, so often questioned,, and so often departed from, is the foundation of all the State adjudications that support the. same doctrine. In the ease under consideration, it does not appear that the plaintiff in execution had been injured by the property remaining in the possession of Estell, nor does it appear that the debt had been contracted, and credit gained on the faith of that possession. If Hobbs had permitted his property to remain in the possession of Estell, without using some means to give publicity to his right, and an innocent creditor had been imposed on by the false colours it enabled Estell to hold out, his property in such case might have been subjected to the payment of another’s debt, on the principles of the common law, and the soundest rules of morality. The charge of the Court was so broad, that it would not oven have admitted evidence that Bibb knew of the sale to Hobbs. It rests on the isolated fact, that possession remaining with the vendor, Estell, made the sale void. It should have been in the language of Lord Eldon, that Estell being — 62 — in possession, the law would presume that he was the. owner, but that this presumption would give way to proof that he was not. The proof of the• sale and subsequent hiring should have gone to the jury to determine whether the sale was made with a fraudulent intent or not. Courts can never exercise too much vigilance and zeal, in administering the laws for the preventing of fraud.. But that zeal must not seduce them from tbeir proper sphere of action. If sound policy requires that he who has once owned a chattel shall never have possession of it after-he has sold it, by hire, loan or otherwise, it is a proper subject for the attention of another branch of the government. Courts should never undertake to distort the words of astátute, to effect any object, however salutary. If they doso, Legislation will be at an end, in the constitutional way, and the whole legislative functions will be swallowed up by the judiciary. The legislative and judicial departments have distinct duties to perform. . The Legislature can alone make the law, and it is the exclusive privilege of the judiary to expound it. Let us then not tresspass on the rights and privileges ofa co-ordinate department; butcontent ourselves with expounding what the law is, and not what sound policy requires that it should be. Judgment reversed and cause remanded,. Judge Safford haying presided below, did not sit. Judge Taylor not sitting. Footnotes [a] Page 66. [a] 3 Coke 87* [a] Roberts on. Douglas 282. [b] 1 Burr 484 [c] 1 Va. 343.1 Atk.165. [d] 2 Term R.587 [e] 2 Bos. and Pull. 59. [f] 10 Ves. I4fr [g] 1 Brod. and Bing. 506. [h] Taunt.833, [a] 1 Cran. 309. [b] 19 John. 221. [c] 3 Cowen 166. [d] 2 Kent’s Com. 404,410. [*] See the case of Ayres v. Moore, decided in this Court at January Term, 1330; and the case of Richards v. Hazard, at July Term, 1831.