Thompson v. Gordon

Martin, J.,

delivered the opinion of the court.

The defendant having entered into a contract for the purchase of several lots of ground, of the plaintiff, refused to perfect it by the delivery of his notes for the price, on the ground, that since the contract a considerable number of the notes of the plaintiff, who is a merchant, have been protested, and he is in failing circumstances ; whereby the title which he would give to the defendant, might be attacked by his creditors, the defendant annoyed and disturbed, and lose the price, if the plaintiff did not pay it to his creditors.

There was judgment for the defendant, and the plaintiff __who appealed.

We are unacquainted with any law which forbids a mer-J chant, whose notes are protested, and is in failing circumstances, from selling any part of his property, even land; for, if his notes be protested, the presumption is, that he lacks money to take them up ; and the course of business must then be, to sell property to raise the money. The laws of this state make no distinction between the case of a merchant and that of any other individual, nor between real and personal property. The distinction which may exist else*264where, between real and personal property, as an object of commerce, appears of late to have almost vanished ; for vacant lots have been as frequently purchased for the sole and avowed purpose of making profit by a re-sale, as bank and insurance stock, or any other object of commerce.

The principle that the property of a debtor is the common pledge of his creditors, is not peculiar to the commercial law; for as long as the debtor is in possession of his property, and until a surrender, he retains the power, and it becomes his duty, to sell and reduce it to money, for the purpose of discharging his debts. The bond fide purchaser of property from a failing debtor, is in no danger of being disquieted in his title or possession, when no other ground of suspicion exists but the protest of his vendor’s notes.

The principle that the property of the debtor is the common pledge of all his creditors, cannot be said in any manner to be peculiar to commercial law. The legislature has thought fit of late to modify it by repealing that part of the law which related to forced surrenders of property; it has thereby made the debtor the sole and absolute judge of the period when a cession of goods to his creditors becomes proper, in order to enable them by a sale, to pay themselves. Until the cession be thus made, the debtor retains the power, and it becomes his duty, when a proper opportunity offers, to reduce his property into cash, for the purpose of discharging his debts. The purchaser, therefore, who substitutes his money for the property he receives from the debtor, cannot fear to be disquieted when no other ground of suspicion exists, but the protest of his vendor’s notes, and his inability to meet his engagements. This was the ground of the decision of the court in the case of Brown vs. Kenner et al., 3 Martin, 270. Our statute contains also a textual provision to the same effect. 1 Moreau’s Digest, 572, sec 17, proviso.

It is, therefore, ordered, adjudged and decreed, that the judgment of the District Court be annulled, avoided and reversed, and this court proceeding to give such a judgment as in our opinion ought to have been given below ; it is further ordered, adjudged and decreed, that on the plaintiff executing a notarial act of sale for the lots mentioned in the petition, within twenty days after the present judgment shall have become final, the defendant is to comply with the terms of sale, by assuming the payment of a note of Samuel Thompson, secured by mortage on said property, and due on the 14th of April, 1837, for one thousand three hundred and ninety-three dollars and seventy-five cents; to give his notes, bearing mortgage on the property, dated the 20th of Feb*265ruary, 1837, at one, two, and three years, for twenty-eight thousand and six dollars and twenty-five cents; to give his endorsed note or notes, dated the 8th of April, and payable at six months after date, for two thousand dollars; in all, thirty-one thousand four hundred dollars; paying, however, in cash, the amount of such notes, the day of payment of which may have arrived, according to his contract, instead of giving such note or notes, with interest at five per cent, from the time of payment of each instalment; the defendant and appellee paying costs in both courts.