Plympton v. Preston

of the court was Siideli,, J. In 1844, Preston gave a mortgage in fovor of &. TV. Boyd, for $8000. This debt was reduced by payments to $3,500-; and, in August, 1847, Boyd transferred the debt and mortgage to Plympton. Preston having refused to pay the accruing interest, Plympton brought suit against him in the district court of Jefferson. The defendant ajvswered that, Boyd had made a cessio bonorum, in 1820; but, having subsequently come to better fortune, his creditors had instituted proceedings against him to compel a new surrender, had obtained an order appointing the sheriff syndic, and had cited Boyd, by service upon his agent Florance, in March, 1847: that, in 1848, the creditors had procured, in the district court of New Orleans, an order to sequester all Boyd’s property, under which notice of seizure had been served upon Preston ; that other creditors of Boyd had seized She debt in Preston’s hands, under attachment; that [357] the transfer to Plymptonvi as without legal consideration, and was simulated, and was made for the purpose of defeating Boyd’s creditors. Plympton, before being met by this defence, brought a second suit in the parish of Orleans, in which the syndic, the suing creditors, and Preston, were made parties. He alleged the validity of Boyd’s transfer, and the invalidity of the pretensions of the defendant. He also obtained, upon giving bond, an injunction against the defendants, which he prayed might, after due proceedings, be made perpetual. Our attention will be first directed to. the character of the transfer made by Boyd to Plympton the reality and good faith of which have been attacked. Plympton was a resident of Boston, where he owned real estate. He employed Iiawkes, a real estate broker, to find a purchaser for his properly; and Hawkes, having learned that Boyd, who was then in Boston, desired to purchase real estate there, brought him and Plympton together, and conducted a negotiation, between them. This resulted in a written agreement, signed on the 3d July, 1847, by which Plympton agreed to convey his real estate to Boyd in exchange for two mortgage claims in Louisiana, one of them bearing eight and die other ten per cent interest. One of these claims was the Prestan debt. It was a condition of the agreement, that Plympton should satisfy himself of the security of these, claims; and, for that purpose, Hawkes addressed a letter of inquiry to Florance„ a resident of this State, who had been Boyd’s agent. On the 16th July, Florance replied, giving a detailed statement of the nature of the claims, and expressing his entire confidence in the safety of the investment. The agreement was then closed at Boston by Plympton and Boyd. The former made conveyances of thereal estate, which were recorded, and possession was given. The latter forwarded instructions to Florance to make a notarial transfer of the mortgages claims to Boyd ; and a blank power was forwarded to him, signed by Plympton, constituting an agent to accept the transfer. This power was filled up with the name of a respectable member of the bar, who was employed to superintend the execution of the. notarial transfer. The transfer is dated in August, 1847. A notice was served by the notary on the other debtor a day or two after the act of transfer was signed and upon Preston, in the early part of October following. After a careful scrutiny of the, correspondence, the. testimony of the broker and Florance, and the documentary evidence connected with this transfer, we have not found any thing which could authorize the belief that it was simulated, or which could casta suspicion upon the-go.od faith of Plympton. He must be,, therefore, regarded, as a purchaser in good faith, and for a valuable consideration. It was argued that Florance’s knowledge of tho institution of a suit to compel \ a new surrender, whichknowledgehederivedfromthe service of citation upon him \ as the attorney of Boyd, must be deemed, by legal constrtruetion, the knowledge of Plympton, who, upon closing his bargain with Boyd, constituted Florance his agent to take charge of the mortgage claims for him when transferred, and to superintend the preparation and execution at New Orleans of the notarial transfers. The legal effect of the institution of suit by Boyd’s creditors will be hereafter considered; but whatever its effects, so far as the good faith of Plympton and the question of notice are involved, we are of opinion that the knowledge of Floronce does not effect Plympton with constructive notice. The notice did not come to. Florance while he. was concerned for Plympton, but before his agency for Plymp-. • ton began. See Stoiy on Agency, p. 140. Stray’s Equity, p. 408. Livermore. ( on Agency, vol. 2, p. 237. Russell on Factors, 95. / [358] For the purpose of giving validity to this transfer, as against third persons, it was necessary that notice of the transfer should be given. This, we think has been sufficiently done. The notice delivered to Preston by the notary, on the 9th October, 1847, is in the following words: New Orleans, 24th August, 1847. Sir : I am requested to inform you that, by an act passed before me on the 13th August instant, Mr. B. Florance, acting as the agent of Geo. W. Boyd, sold and transferred unto Ralph Plympton, of Boston, Massachusetts, the balance of a mortgage executed by you in favor of said Boyd, before F. Barnett, notaiy, in this city, on the 28th June,.1844, for twenty-five hundred dollars. Your ob’t servant, D. I. Ricardo, Not. Pub. To I. T. Preston, Esq. Giving the defendants the benefit of the strict grammatical construction of the letter, we will consider the words “twenty-five hundred dollars,” as referring to the amount of the mortgage. Construed in this sense, there is a descrepancy between the notice and the mortgage, which was for $8000 originally, and was reduced, at the time of the transfer, to $5,500. Considered with reference to the contents of the letter as a whole, the mistake is not of such importance as to affect the validity of the notice. The Code requires that notice of the transfer should be given to the debtor (art. 2613), but has not prescribed any particular form. In Thomas v. Callihan, 5 Mart. N. S. 182, it was said that a notice of assignment of debt may be fairly assimilated to the notice which must be given to endorsers of promissory notes, although the same exactness and promptitude may not be required in the former case as in the latter. In Gillett v. Landis, 17 La. 472, the court said: “We are not aware that any particular form is required in giving notice of a transfer. The principal object of the law appears to be to prevent an improper payment after the debt has been transferred, and to protect the rights of the transferee. It matters not in what manner knowledge of the transfer is brought home to the debtor, provided it be clearly shown that he knew his former creditor was divested of all his rights to the debt assigned, and that such knowledge of the fact was derived from the transferee, or from his agent. In looking to the analogy of notice in the case of promissory notes, we find that the doctrine rests on a practical and common-sense view of the rights of the parties. As the object of the notice is to put the party in possession of the material facts on which his liability is founded, so as to secure the liability of others over to him, the law requires a sufficiently definite description of the note to enable him to know to what one in particular the notice applies; for an endorser may have endorsed many notes, of very different dates, sums, and times of payment, and payable to different persons, so that he may be ignorant, unless the description in the notice is special, to which it properly applies. But a misdescription of the note in the notice will not vitiate, if it does not mislead the party to whom it is addressed, and is not calculated to mislead him, whether the misdescription be in the date, or the form, or the names of the parties, or otherwise. Story on Notes, § 349. And so in Mills v. The Bank of the United States, 11 Wheaton, 431, a notice which was full and accurate in other respects, but omitted the name of the holder, and stated a" wrong date, was held good, there being no other note of like drawer, endorsed by the party. The variance, it was said, could not mislead him, and was not material to guard his rights. Applying this reasonable standard to the present case, it is impossible to say [359] that the defendant was misled, or could have had any doubt, as to the party to whom he was to hold himself liable. A demand of payment by Boyd, after the notice, would undoubtedly have been met by a refusal. As the attachments and sequestrations were all posterior to this notice, they could not in themselves retroact so as to defeat the rights of a bond fide purchaser. So that we are thus brought to the main question in the cause; and that is, whether the institution of the suit, prior to the transfer, for the purpose of compelling Boyd to make a new surrender, created a legal incapacity on his'part, from that date, to alienate his property in favor of a bond fide purchaser. In the argument of this question it has been strenuously urged by the plaintiff that, G. W. Boyd was not a party to the insolvent proceedings which, in the year 1820, were instituted in the district court of New Orleans, under the title of Wm. Boyd 8f Son v. Their Creditors. It is in evidence, that G. W. Boyd was the son of Wm. Boyd, and a partner of the house of Wm,. Boyd Son. The petition in that case describes William and G. W. Boyd as tire petitioners, and is signed by a member of the bar, who describes himself as attorney of the petitioners. The oath, however, was taken by Win. Boyd alone; there is no schedule of the individual assets of G. W. Boyd ; nor did he appear- at the me’eting of the creditors. We will concede, however, for the purpose of the present enquiry, and in the absence of proof that the attorney at lawnvas not authorized to appear, that G. W. Boyd was a party to the insolvent proceedings, and by reason thereof became discharged from his partnership liabilities, subject to the legal condition óf a future liability in the event of his coming to better fortune. This contingent liability is, defined by the act of 1817, which was the law in force when the alleged discharge was granted. “ The surrender of property shall only exonerate the debtor to the amount of the property surrendered; and in case the said property should have been insufficient, if he acquires some other in future, he shall be bound to abandon it until final payment; provided, however, that the creditors to whom the debtor might have became indebted since his failure shall be preferred to the former creditors for then- payment on the new property acquired by the debtor, and that means of subsistence shall be left to the debtor and his family.” W aiving the consideration of the question, whether Flor anee, who disclaim'ed, on record, the right to represent Boyd, was competent, under his power of attorney, to be the medium of the citation óf his absent principal in a suit of this extraordinary character, we will proceed to consider the effect of the suit as though Boyd himself had been personally cited, in March, 1847. The law of 1817 was certainly conceived as much in a spirit of mercy to the debtor, as of justice towards, his creditors. The policy of the law must undoubtedly be respected in the one case as well as the other; and it seems tons that the doctrine contended for by the defendants that, on the mere filing of the petition, an incapacity to alienate at once attaches, and that the'newly acquired property of the insolvent is deemed to be thenceforth¿ra custodia legis, is repugnant to the spirit of the act and to general principles. Until a judicial investigation is had, and a decree pronounced, the new' liability of the discharged insolvent is a matter en pais. lias he acquired means-more than sufficient for the subsistence of himself and hi's family 1 If he has, the court will order him to surrender the excess When judicially ascertained, and will compel obedience by distringas or other proper process. If he has not, the man is still free. To say that, a creditor, by taking this fact for [360] granted alid filing a petition, may at once tie the debtor’s hands, is to defeat the policy of the law, which intended, by discharging the unfortunate debtor, to leave him at, liberty to apply his industry to the support of himself and his family, and to open the door to the bettering of his condition. But no man would dare to have dealings with a discharged insolvent, his industry would be paralyzed, and his hopes of better fortune be cut oft', if the ex parte declaration of a creditor could, per se, operate a legal sequestration of the insolvent’s earnings. The legislature might, undoubtedly, enact a law Which would accomplish such a result; but a court cannot recognize such a rule, unless it be written down in clear terms in the Statute book. The doctrine of relation in bankruptcy, which is found in the english jurisprudence, is the creature of statute. At first, under the of statute Elizabeth, it was very severe, and from the moment of committing an act of bankruptcy, Without judicial process, the trader was deprived of all power of charging, or disposing of his property, to the prejudice of his creditors. But this severity was found to be disadvantageous to commerce, and pregnant with injustice to innocent third persons; and Was, therefore, much relaxed by subsequent enactments. No one can doubt that the existence of this doctrine of relation at all is solely owing to legislation, without which it would have had no place in the english jurisprudence, These views are strongly corroborated by a consideration of the second section of the statute of 1826, p. 136. The point in question was not before the court in the case of Quemper v. Bierra, 8 Rob. 204: nor do we find any thing in that opinion which conflicts with the views which we now express. The language of the court seems to us, on the contrary, unfavorable to the defendants: “Whenever the debtor is required to make a new cession thereof, this must take place after having ascertained the amount of his new debts to be first satisfied, and the extent of his means of subsistence.” We do not concur with the district judge in the applicability to this case, by analogy, of that rule of universal jurisprudence, which is consecrated by article 2428 of the Code. This was not the case of the revendication of a specific thing. See Civil Code, arts. 2420, 2423. Tous ceux auxquels la loi ne l’interdit pas, peuvent ácheter ou vendre.