McAllister v. Strode

Burnett, J.,

after stating the facts of the case, delivered the opinion of the Court.

The counsel for the defendant, Beard, has filed no brief and cited no authorities, except the opinion of the Court below, as found in the transcript. The counsel for plaintiff, in his brief, refers to the cases of Bainbridge v. Clay, 3 Martin, 262; Herring v. Levy, 4 ibid., 383, and Clark v. Wright, 5 ib., 122. The statute of Louisiana, for the relief of insolvent debtors, was- passed March 25, 1808, and repealed the previous act, passed July 3, 1805, and various amendatory acts were subsequently passed prior to 1827. 1 Deslix’s Digest, 567. The proceedings referred to in the cases cited, were had under the statutes of Louisiana; and the principles settled will apply, in part at least, to some of the questions arising in this case.

The first question naturally arising in this case, regards the rule of construction applicable to our statute. In the first case cited from Martin’s Reports, the learned Judge, in delivering the opinion of the Court, said: The right accorded by law to an unfortunate debtor to cede his property to his creditors, and thereby be relieved from personal arrests and pursuit for debts, may be properly considered a privilege and benefit enacted exclusively for him. To avail himself of such privilege, all the requisites of law should be fully complied with on his part, and so far as he has failed to comply with them, he loses its benefit.”

The same doctrine was laid down by this Court in the case of Cheever against Hays, 3 Cal., 471. In that case, it was held that, “ the Legislature has pointed out the mode by which these persons may escape from the liabilities which misfortune, or their own imprudence, may have brought upon them; to do this, a certain course must be pursued, and unless it is strictly followed, all the benefits of the act are lost.”

From these authorities it legitimately follows—that the rule of strict construction must be applied to the act, and he who asks to enjoy its benefits, must comply strictly with its requisitions. And this rule would seem to be founded in the most manifest justice. When a party asks to be entirely absolved from all future liability upon his honest contracts, and thus to throw upon his innocent creditors the loss occasioned by his own misfortunes, or his own negligence and mismanagement, he should surely comply strictly with the little the law requires him to do. Having enjoyed the result and product of the honest labor of others, and having had all the chances of speculation exclusively to himself, then, when he seeks to throw all the losses upon those who furnished him the means upon which to operate, it is certainly *431his plain duty to comply strictly with the law, which affords him a mode of paying his debts so summary and so easy.

It is evident, from the whole drift and spirit of the act, as well as from its terms, and the nature and reason of the case, that it was only intended for the relief of the honest and bona fide debtor, that it was not its purpose to reward fraud; and for that reason, all the guards provided by the statute to prevent fraud on the part of the debtor, and to protect the just rights of creditors, should be preserved and rigidly enforced by the Courts. These proceedings are novel and extraordinary; are created by statute in derogation of the common law and of common right, and should be strictly enforced.

The only objection we shall notice, is the alleged insufficiency of the description of the debt in the schedule “ A.”

The statute of Louisiana requires the insolvent to give “the names of his creditors” in his schedule; and our statute requires him to give “the names of his creditors, if known.” In the case of Herring v. Levy, the note sued upon was made payable to Isaac Riley, and by him regularly endorsed to Herring. In the proceedings in insolvency, the note sued on was placed to the credit of the original payee, and not to that of the plaintiff. The Court held, “that persons who issued negotiable paper, must take the risk, in case of insolvency, of ascertaining the bond fide holder, and this neglect, in so doing, is not cured by exhibiting the debt due to the original payee when the note has been regularly transferred to another person.” This decision was affirmed in the subsequent case of Clark v. Wright, and seems to be the settled construction of the Supreme Court of Louisiana. In both these cases, the notes were correctly described, but the names of the then present holders were not given.

The third section of our statute requires the names of the creditors, if known, to be given, and this undoubtedly means present, not past creditors. There are only two ways in which the insolvent can comply with this requisition. First, He must give the name, if known ; second, if the creditor be unknown, he must state the debt correctly, and the fact, that the creditor is unknown. In the present case, the petitioner should have simply stated the facts, that Strode made the note to him or order, bearing a certain date, due at a certain time, and for a specified amount, and that he endorsed it in blank, and passed it to Rose, but did not then know who was the bona fide holder. The name of the creditor was not given, and it was not alleged that his name was unknown, and the note was not so described that the real owner could have come into Court without further proof, and obtain his share of the estate of the insolvent, because the bare production of the note itself would not have proved that it was the same note as described in the schedule.

The grave importance of the other points involved, and the *432limited examination given the case by the counsel, render it most prudent for us not to pass upon other features of the case. The Court below will render judgment for the plaintiff in accordance with this opinion.