Carr v. Gale

WOODBURY. Circuit Justice. The questions raised in this case under the motions for — 130 — a new trial, and in arrest of judgment, are numerous; and some of them possess no little difficulty. But harmg been ably argued, the labor of the court in disposing of them will be much lessened. The first ground assigned for a new trial, is, because the verdict is supposed to be against the weight of evidence. I have had occasion to examine fully on the last circuit and to deliver an opinion, laying down what seemed to me, after a full consideration, the true guides or limitations as to this ground for a new trial. See Fearing v. De Wolf, R. I. Dist., Jan., 1847 [Case No. 4,711]. See, also, 16 Me. 200; 19 Me. 402; 20 Me. 349. 1 see nothing in this case which can bring it within the fair exercise of the power of the court over this subject as it has been there defined. There was evidence on both sides to be weighed. Here no great preponderance! existed on either side, if we look to the extraordinary disclosure and disclaimer of Gale, under oath in the trustee suit. At all events there does not appear to have been so clear a mis-trial as to evince plain mistake, or an abuse of poweron the part of the jury. These are considered by me as the true tests. The cases and reasons are fully presented in Fearing v. De Wolf, to show the propriety of refusing to disturb verdicts when thus situated, merely because the judge who tried the cause may think that lie would have decided differently on the matter. had he been in the jury-box, to respond to the facts, instead of being on the bench to respond to the law. But if the weight is so clearly and decidedly in favor of one party as to render it probable that a real mistake has happened, or a wanton abuse of power, it is the duty of the court not to correct the result by deciding the facts differently from- a jury, but to let another jury pass upon the facts, and settle the question whether there has been either a mistake or an abuse of power. In this way clear mistakes and clear abuses can be corrected as such should be, but without the court assuming the province of the jury. They merely permit the second jury to revise the doings of the first one. The next reason assigned for a new trial is the refusal of the judge to nonsuit the plaintiff on motion of the defendant, though against the consent of the plaintiff and after the plaintiff had furnished evidence which he deemed material, and on which he wished the .jury to act. A practice has grown up in some •states for courts to nonsuit plaintiffs against their consent, and after they have presented testimony which they wish the jury to consider, provided the court entertains opinions on the law unfavorable to the plaintiff. But it is not deemed sound practice in the courts of the United States; and, instead of it, the evidence is there allowed to be passed upon by the jury, whenever once admitted as competent. but under instructions to which the defendant can except if not satisfactory to him, and thus obtain all the benefit to be derived from a nonsuit with an exception made by the other side. The cases are mostly collated on this point in Folger v. The Robert G. Shaw [Case No. 4,899]. See, also, [Crane v. Morris] 6 Pet. [31 U. S.] 598, and 1 Pet. C. C. 497 [Conn v. Penn, Case No. 3,104]. The verdict, therefore, cannot be set aside on this ground. Another reason assigned for a new trial, is the admission of improper evidence in Ward’s deposition as to declarations made by Hemmenway, one of the defendants, in a quarrel with Gilman, his principal creditor. But it seems to me that those declarations of H. are competent, which tend to make himself liable in this action, where-he is a party, like the admission of any other party. In that view they might properly be introduced, when had they been offered as to a remote transaction, in order to strengthen the title of the plaintiff as assignee of Hem-menway, and in a suit where H. himself was not a defendant, they probably would be inadmissible. They would then not be made at the time of the transaction. Broom, Leg. Max. 441, 442, 5 Durn. & E. [Term R.] 512; 6 East, 191; 9 Bing. 352. And hence not a part of the res gestae, and they would be in favor of his own interests as in part represented by his assignee. 9 Ves. S3; Greenl. Ev. §§ 189, 190; Eden, Bankr. Law, 361. When w’e consider, however, that here he is personally a defendant, attempted to be charged as a joint trespasser in respect to the property in dispute and to the injury of his creditors, the declarations assume a new aspect and are entirely competent against himself and to help render himself liable in the present suit. The next reason for a new trial is on account of evidence, admitted in respect to alterations in Hemmenway’s books, when the books themselves were in court. This objection is defective on two grounds. First. The evidence did not relate to the contents of the books, with a view to prove by parol, charges or credits existing in them in writing. But they related rather to alterations seen in them and accounts entered as balanced, when in fact they had not been, and this done so as to prevent the assignee from collecting them and to enable the bankrupt to obtain them himself of his debtors by their voluntary payment, in fraud of his own creditors. Secondly. The evidence as tending to show x-eceipts of money by H., and means to buy this property', was competent on that gi-ound, as a general principle; and if any of this evidence was objectionable, because relating to what was in writing, that part should have been separated and specifically resisted, and the rest allowed. For example, allowing proof of the mere i’eeeipt or collection of money by H.. after his first failure, seems unobjectionable. Finally. When this whole evidence was excepted to, and notice given to produce the books, and they were not unconditionally produced, pa-rol evidence of their contents seems of course — 131 — to be admissible. In tbis case, the books were in court on a notice to produce them, but were offered only on condition that the plaintiff should use them in evidence. But I am not aware of any right in a party, under a notice to produce books or other writings, to make conditions to their production The rule is absolute to bring them into court for the benefit of the other side, and to offer them so without reserve; and it is for the other side, after obtaining possession of them, to decide whether it seems expedient or not to use them as evidence. This proceeding, however, would have one effect on the other party, imperatively, or at all events, if the hooks were unconditionally offered. It would prevent the further use of parol evidence by him after written evidence of the same fact is produced and placed in his possession, whether he chooses to use the written or not. Were this objection stronger there is understood to be another answer to it. It seems questionable, on inquiry, whether the judge who tried the case gave any ruling on this point; or if he did, whether any exception to it was then taken, as it must be in order to be available under this motion. [Poole v. Fleeger] 11 Pet. [36 U. S.] 185-211. It is a little extraordinary, also, that the defendant himself did not use the books as he might, if they contained matter disproving what was testified to on the part ■of the plaintiff. Another ruling is objected to, which excluded the defendant, Hemmenway, as a party, from putting in his own explanatory .statements as to the title to the property in controversy, and which were contained in the schedule annexed to his petition. It is stated in connection with this, that the petition itself, without the schedule, was allowed to be admitted. I am inclined to think, that the whole record in the proceedings in bankruptcy was competent evidence, including the schedule annexed to the petition. 1 Mass. 67; 2 Mass. 492; 1 Story, Eq. Jur. § 160; Greenl. Ev. §§ 506, 511; 1 Story, 478 [Bright v. Boyd, Case No. 1,875]; 3 Mer. 667; [Ferguson v. Harwood] 7 Cranch [11 U. S.] 408. But, at the same time, it seems to me that the bankrupt, when a defendant in a suit, cannot be permitted to use in his favor his own declarations as to the title of property which is disputed; and that the judge ought to charge the Jury not to give weight to any such declarations in a suit like this, when obliged to be let into the case as a part of a documentary exhibit. As this view, then, would lead to the same result in respect to the verdict as the ruling at the "trial did, which entirely excluded the schedule, it furnishes no sufficient ground for a new trial. See cases showing that mere technical exceptions are insufficient, if the verdict has probably not been affected by the ruling. Allen v. Blunt [Case No. 217]; Broom, Leg. Max. 156; 12 Adol. & E. 631. He minimis non curat lex. Cro. Eliz. 353. An objection has been alluded to by some of the counsel, as to the calling of Henesey, cne of the witnesses, a second time, and the effect of his cross-examination by opposing counsel, on points not questioned about on the part of the plaintiff. But, as the other counsel waive that, it is not necessary to go into an examination.- Another objection to the verdict grows out of the peculiar situation of the property in controversy, and the alleged want of title or possession, in the plaintiff, sufficient to enable him to sustain trover; the present form of action against any person. But it is to be remembered, that Hemmenway, the bankrupt, was in the actual possession of the property, in June, 1842, the time of the alleged conversion; and, also, in July, 1842, when the goods were, in fact, handed over by him to Gale, the other defendant, and placed in the charge of third persons. This possession was prima facie evidence of title in Hemmenway, as he had bought the goods —had, for some time, controlled them — and had been selling articles out of them, for several months. Standing alone, this possession would have been sufficient to enable the assignee to sustain trover against third persons. But it did not stand alone at the trial; various proofs being offered to show that the possession was had by Hemmenway, as agent for Gale. Nor was the action brought against third persons, but against the agent and principal, who set up the possession to be in behalf of himself, and not the agent; and the title, also, to be in himself. This was a permissible defence; and if it had been made out satisfactorily, would have defeated the action. While, on the contrary, if not so made out, but the jury believed the possession was, in reality, for Hemmenway himself, and the title was in him, so far as regards his creditors, the action by his as-signee, was, in these respects, and, under this objection, well maintained. The great contest before the jury was, therefore, in relation to these points; and they having returned a verdict for the plaintiff, it is conclusive — if no misdirections were given — that due possession and title existed in Hemmenway at the time of the conversion, so as to enable his assignee to protect the property against any wrong-doer. If the court gave any erroneous instructions to the jury, on this matter, they can be pointed out and corrected; but if not, the verdict, while it stands, is decisive against this objection. The instructions are embodied into the report of the case, and are understood to be not excepted to, and hence need not now be reexamined. Next, it is argued, that H.’s interest in the goods was only as a trustee, and that property, held in trust by a bankrupt, does not pass to an assignee; so that no suit, whatever, can be brought by him. But this is not correct. It passes, though held in trust. Yet, a new trustee will usually be afterwards — 132 — appointed, and the property conveyed to him by the assignee. See on this, 6 Geo. IV. c. 16, § 79; 2 Deac. 151; 3 Mont. & A. 487; 1 Spence, Eq. Jur. 501. Here, however, the jury have found the trust in this case to have been a secret and fraudulent one; and the property really belonging to Hemmenway; and in such case, even in England, the property vests in the assignee, absolutely. So it does there, always, when the property was, by consent of the owner, in the possession and control, and disposition of the bankrupt. See cases under 21 Jas. I. c. 10; Cooper v. De Tastet, 2 Moore & S. 714; 1 Deac. 131, 166; Almy v. Wilbur [Case No. 256]. But this last may not be the true construction of our late bankrupt law; and whether it be or not, this objection must, for the other reasons, fail. Another exception has been made, that proper evidence of a conversion, was not offered. But if the jury was satisfied that the property in the goods was in Hemmenway, as principal owner, before becoming a bankrupt, and the pretence of title in Gale was fraudulent; then the removal of this property to another place, by Gale and Hemmenway, jointly, and doing this as if it belonged to Gale, as principal; and if Hemmenway, as his agent, engaged afterwards in using and selling it as Gale’s property, this was a misfeasance and a conversion. If a creditor merely accompany a sheriff's officer to levy on goods, which afterwards prove to belong to another, as here, to the assignees and not to Gale, he is liable in trover, though he took neither the goods into his own custody, nor their proceeds. Menham v. Edmonson, 1 Bos. & P. 369. It is an aiding or abetting in a tort — a co-operation in a removal and use of property, over which no right to do so existed, and that is sufficient to constitute a conversion. See cases cited in Smith v. Smith [Case No. 13,109], Sept. term, 1849, Maine Dist., note. The chief question remaining, is the motion in arrest of judgment. It resolves itself into two objections. One is, that the assignee cannot sustain proceedings like this, as to the property of the bankrupt, except in the district court sitting in bankruptcy; and the other is. that he cannot, in such a case, or, indeed in any case, sustain an action at law against the bankrupt himself. In respect to the first objection, it is manifest, that by the 6th section of the bankrupt law, the district court has jurisdiction, in a summary way, “in the nature of summary proceedings in equity,” over all controversies between an “as-signee and the bankrupt.” 5 Stat. 440. But it is equally clear, that if the assignee chooses to resort to an action at law, rather than “proceedings in equity,” against adverse claimants, the 8th section confers “concurrent jurisdiction” over it. in the circuit court. That section, indeed, goes further, and confers such concurrent jurisdiction in all suits, both “at law and in equity, which may, and shall be brought by any assignee of the bankrupt, against any person or persons claiming an adverse interest.” It is not to be questioned, then, that this action well lies in this court, if the assignee elects to come here against Gale. Lucas v. Morris [Case No. 8,587]. He is. manifestly, a person claiming “an adverse interest.” If these parties lived in different states, so as to give this court jurisdiction on that ground, this subject-matter might, for aught 1 see, be settled in it, as it might be in a state court, if the action be first brought there. And the adjudication first had. either in a bankrupt court or another, will bind as to the right of property, or a lien. Peck v. Jenness, 7 How. [48 U. S.] 612; Ex parte Christy, Justice Catron dissenting, 3 How. [44 U. S.] 292. It is within the language of the bankrupt law to sustain it in action against -Hemmenway, also, if claiming “an adverse interest” as to this property, against his assignee. This he does claim, as an agent of Gale. This he attempted to aid Gale to enforce, and this made him a wrong-doer, if Gale was. It comes, then, within the spirit, as well as words, of the act giving this court jurisdiction. He sought to remove this property from the reach of his creditors. He co-operated in trying to secure the adverse claims of third persons; and he ought, therefore, in justice, as well as law, to be jointly answerable with them for damages, when the title of those third persons appears by the result of the trial to be defective. It is important, in this view, to regard critically the data. Hemmenway was decreed a bankrupt in June, 1842; and by that, ipso facto, all his property, under the express language of the bankrupt law, passed to the assignee. The jury have found this property to have been his; yet the next month after, in July, 1842, he proceeded to aid Gale in removing this property, as belonging to Gale; and in disposing of it as Gale's, rather than the assignee’s, and this to the manifest injury of his creditors; and as the jury have found, with a view to defraud them. The remaining objection to his liability is. that whatever may be the legal or equitable considerations, to charge him, when Gale is chargeable, because he acted jointly with Gale in the conversion; yet no cases can be found and no principles exist, which render a bankrupt himself liable to his own assignee in an action at law. It is true that controversies between a bankrupt and his assignee are generally settled in the bankrupt court. But, as already shown, no principle exists which should limit the jurisdiction over them to tliat court in all instances. As much reason exists for a concurrent jurisdiction here, over suits between them, as for such jurisdiction there, over suits between them and others. Their disputes may be as important in both principle and amount as those in other cases, and hence be as suitable for a court higher than the district court They may, when as — 133 — liere, third persons are joint defendants with the bankrupt, be more appropriately prosecuted in the circuit court, as no reason whatever exists for forcing such third persons into the district court exclusively. Finally, and above all other justifications for sueing here, is the circumstance that H. is not now prosecuted as “a bankrupt,” in which capacity alone the district court has any peculiar jurisdiction over him, but as “a person,” setting up an “adverse claim” on account of Gale; and is prosecuted here, like any other person, for a tort in his private and individual character. In England chancery often has concurrent jurisdiction with a court of bankruptcy. Meggison v. Foster, 2 Younge & C. Ch. 336. Or rather the lord chancellor has. Ex parte Lund, 6 Ves. 782. Nor is there any lack of precedent or principle to make the bankrupt liable to be prosecuted by the assignee in a court of law in ap-priate cases, though the instances are not numerous in the books which seem to be directly in point. But suppose the bankrupt should steal the property after it is in the actual possession of his assignee. He would doubtless be indicted in a court of law for the larceny of it as the property of the as-signee, in his official capacity, for the use of the creditors. It is his in law (9 Ves. 83), and the bankrupt has no more right to take it away, clandestinely or animo furandi, than he had to do this with any other property. Again, if he seizes and converts such property to his own use, either alone or in conjunction with a third person, no principle seems to interpose to prevent his liability to the assignee in an action of trover. He is liable, personally, like any other wrong doer, and not in his capacity of bankrupt. Some error on this point has been caused by the common expression in the books, that a bankrupt is civiliter mortuus. 5 Mad. 289; 3 Mad. 158; 1 Holt, N. P. 172. But this means dead only as to the control of his old property and contracts. His assignee stands like an administrator in respect to these. But ihe bankrupt is still alive for other purposes in law as he is in fact. He is alive to acquire new property — alive to do and receive wrong —alive to commit trespasses or crimes — alive to be prosecuted for either, and to prosecute for either when committed on himself. Eden. Bankr. Law, 255; 7 Durn. & E. [Term R.] 391; 1 Bos. & P. 44. The following show suits at law between the assignee and the bankrupt himself in different forms, which generally were sustained, though not in all cases. Semble on leave perhaps; Benfield v. Solomons, 9 Ves. 83; 1 Hen. Bl. 437, note; Goles v. Barrow, 4 Taunt. 755; 1 Cooke, Bankr. Law (3d Ed.) 518; 1 Eden, 156; 6 Bing. 500, was to try the validity of the commission. The furniture of the bankrupt, reserved originally as well as his property acquired since, if trespassed on by the as-signee, or others, must be capable of being protected by the bankrupt through ordinary suits of law. See Webb v. Ward, 7 Durn. & E. [Term R.] 296; and cases in Kitchen v. Bartsch, 7 East, 57, note; 1 Barn. & Adol. 574; 1 Esp. 140, 170; 4 Taunt. 754; 2 Rose, 277. Another objection urged against these actions is, that a bankrupt has no property of his own to respond with in such cases. But poverty is no defence generally to actions for a tort. Beside this, property, such as furniture, &c., to the amount of $300, may be reserved to the bankrupt by the 3d section of the act. And, moreover, all his earnings and acquisitions, since the decree of his bankruptcy, belong to himself, here (Newhall’s Case [Case No. 10,159]), though it is otherwise under the language of some other bankrupt laws, allowing him to acquire no property till after his discharge (1 Bos. & P. 44, and Kitchen v. Bartsch, 7 East, 53). The bankrupt is also entitled to the proceeds of his personal labor, and consequently can sue and be sued in the protection of them. 3 Bos. & P. 578. Again, it is urged, that the assignee can bring no action which the bankrupt himself could not bring. This may be true as to voluntary assignees. 7 Johns. 161; 6 Har. & J. 61; 10 Paige, 218. The 3d section of the bankrupt law gives some countenance to this view, by investing him with the power to sue concerning the effects of a bankrupt as fully as a bankrupt himself could at the time of the bankruptcy, and from this, it might be inferred, he could sue in no other case. But that inference is a non sequitur. The assignee is expressly clothed with certain powers, such as the bankrupt had. but beyond that, by force of the law vesting in him. “all the property and rights of property of every name and nature, and whether real, personal, or mixed, of every bankrupt,” he may sue fraudulent grantees in order to regain property for the creditor. Though the bankrupt himself would not be allowed in such case to sue and avoid his own conveyances. See cases in Ashby v. Steere [Case No. 576]: and Leland v. The Medora [Case No. 8.237]; Winsor v. Kendall [Id. 17.886]; Wheelwright v. Jackson, 5 Taunt. 109; 1 Doug. 89, 295; 7 East, 544; 4 Burr, 2477; Bayard v. Hoffman, 4 Johns. Ch. 450; 10 Paige, 218; Frothingham v. Hayes, Merch. Mag. May, ’40, 458. The assignee here, then, represents the creditors as well as the bankrupt; is an assignee by law and not a voluntary one, and acts for them and in their behalf, as far as the law permits. 2 Ves. 244; 2 Hen. Bl. 135; Eden, Bankr. Law, 213. Having thus shown, that the bankrupt himself, if joining another person in a trespass on "the property in the assignee's hands, is liable in an action at law for the tort by the assignee in behalf of the creditors, it becomes necessary to decide another question, made under this head, that this objection by the respondents comes too late, after a plea of the general issue and a trial on it. See cases on this, 1 Sumn. 578 [Wood v. Mann, — 134 — Case No. 17,952]; 2 Gall. 325 [Maissonnaire v. Keating, Case No. 8,978]; Conard v. Atlantic Ins. Co., 1 Pet. [26 U. S.] 450; 1 Mass. 159, 483; 3 Pick. 232 ; 8 Johns. 378; 19 Johns. 300; 3 Fairf. [12 Me.] 384; 10 Me. 231. [NOTE. See decision of Ware. District Judge (Case No. 2.434), which apparently was rendered on the same motion. [For denial of a subsequent motion for a new trial on the ground of newly-discovered evidence, see Case No. 2,433.] Both of these motions are overruled.