Alexander v. Gibson
Alexander v. Gibson
Concurring Opinion
delivered Ms opinion, as follows:
I concur in the opinion that has been delivered by my brother Col-cock, that a new trial ought to be granted in this case. But I have taken a view different from that expressed by him on some of the points submitted to the Court. Whether the Constitution of the United States supercedes the power of the States, to pass bankrupt laws, is a question on which I consider it unnecessary to give an opinion, at this time. I
Lord Coke says, “ a bankrupt signifies, generally, either man or woman, that living by buying and selling, has gotten other men’s goods into his or her possession, and hideth himself in places unknown, or in his own house, in order to deceive his creditors.” 4 Inst. 177. And Mr. Justice Blackstone defines one to be “ a trader who secretes himself, or does certain other acts tending to defraud his creditors.” 2 Black. 471. The same author further says, that the benefit of the laws of bankruptcy is allowed to none but actual traders. Do. 473. The first English statute on the subject does not appear to limit it to persons employed in *trade, though that seems to have been its principal object. But by the 13th Eliz. c. 7, the operation of the bankrupt laws is confined to each persons only as have “used the trade of merchandise.” There can be no doubt but that the British Parliament has the power to extend their bankrupt laws to all descriptions of persons, and to make every insolvent man in the kingdom a bankrupt. But they have not done so. And long before the adoption of the federal constitution, the word “ bankrupt” had acquired a precise and definite meaning; and was as well understood, as defined by Lord Coke, and Mr. Justice Blackstone, as any word in the English language. When therefore it was introduced into our constitution, it is to be presumed, that it was intended to be used in the same sense in which it had been understood for centuries before. And I do not think, that, according to the tenor and spirit of the constitution, we can give it any other meaning. The powers of Congress are limited to subjects involving the interest of the United States generally. Why was power given to Congress to regulate commerce ? Obviously, because that was a source from whence collisions between the several States, and with foreign nations, might be expected to arise. If commerce had been confined to the individual members of each State, and within the limits of the State, no such power would ever have been delegated to Congress. And the power to pass uniform laws of bankruptcy seems to have been granted as a necessary incident to the power to regulate commerce. In any other view it was unnecessary ; for each State was unquestionably competent to regulate its own internal commerce. The two clauses of the constitution therefore may read together, as one, in the following manner : “ Congress shall have power to regulate commerce with foreign nations, and among the several States, and with the Indian tribes, and for that purpose, may establish uniform laws on the subject of bankruptcy, throughout the United States.”
It is only to cases of a commercial nature that the ^operation of the bankrupt laws of the United States can extend. There, then, remains a numerous class of cases to which insolvent laws may be extended, over which Congress has no control, and over which the individual States alone have jurisdiction. It may, nevertheless, be made a question, whether the benefit of an insolvent law may be allowed to one who is also subject to the laws of bankruptcy. It is necessary, therefore, to look a little further into the distinction between those two descriptions, of laws.
Bankrupt laws, according to the definition above given, are founded in fraud; insolvent laws in misfortune. Bankrupt laws are intended for
1 am of opinion that a new trial ought to be granted on the last ground mentioned in the opinion of my brother Colcock.
Dissenting Opinion
I dissent: being of opinion that notice alone to creditors is required; and provided this be duly given, the intention of the laws is fullfilled.
Opinion of the Court
The opinion of the Court was delivered by
It was contended, that the defendant could not be discharged according to the provisions of the Act of 1759, P. L. 247, Brev. Dig. 148,
But as sueh laws have been considered by gentlemen of distinguished talents, both on the bench and at the bar, as bankrupt laws, it may be. necessary to determine, whether, if our Act be so considered, it follows, that it is unconstitutional: and I am of opinion, that if it be considered as a bankrupt law, it still is not unconstitutional.
1. Because the power given to the general government is not exclusive ; and.
2. Because it can only be considered exclusive, when Congress do exercise it.
In determining this part of the case, it is believed that better authority cannot be had than those numbers written by Publius, commonly called The Federalist, which have always been atributed to gentlemen of *the first talents, in our country, and who were members of that convention which framed the Constitution. It is said, that there
1. Where it is so in express terms.
2. Where the States are prohibited from exercising the power granted to the general government; and,
3. Where the exercise of a like power, by the States, to that which is granted to the general government, would be absolutely and totally contradictory and repugnant.
It is clear that the power given to the general government, on this subject, is not comprehended in either of the two first cases; but, it is said, it is embraced in the last. Suppose the individual States should so legislate on this subject as not to interefere with the only uniform system which might be established by the general government, could it be said that the exercise of a similaar power would, under such circumstances, be absolutely and totally contradictory and repugnant ? I presume not. Suppose a bankrupt law to be confined (as it is conceived by many it ought to be) to traders, and their associates, and the State should pass a law of the same kind, or even in the same words, and ■ extend its operation to all classes of citizens, would there be any contradiction or repugnancy in these laws, so as to prevent them from being both carried into operation at the same time ? Surely none. Then the power given is not wholly exclusive, but a similar power may be exercised by the individual States. This construction is supported by the words of the Constitution, “ shall have power to establish uniform laws,” &e. Now in this grant, it is certainly submitted to Congress, to decide whether a uniformity of law on the subject is expedient, if practicable ; and I think we are at liberty to say they have determined that it is not. I suppose the Convention to have held this language: “ Laws for the relief of insolvent debtors are necessary to the well being of a government, and we conceive there should be some uniformity on the subject throughout the bTnited States; and *we give you the power to establish such uniformity, if it shall appear expedient; if not, the States may exercise the power as they now do.” This would imply a condition, and so far is opposed to the idea of exclusion, but admits, that when the power is exercised by the general government, the States shall not interfere. Can it be believed, that it was intended to place the people so absolutely under the control of the general government, as to enable it to say to them, there shall be no law on this subject ? Is not the grant of the power to Congress to legislate on the subject, an expression on the part of the people, of their opinion as to the necessity of such laws ? If so, the condition not being fulfilled, the power is not divested from the States, but remains as it did before the passing of the Constitution. I consider the federal government as the great political agent of the people, for certain purposes ; and when an agent fails to act on a subject within his power of attorney, it is clear that the principal may do so. And this analogy is supported by the nature and construction of federal government. They do not necessarily possess all the essential rights of sovereignty, but only such a portion of them as is expressly delegated, and these are always defined with great accuracy. This view of the subject would preserve the harmony of our government; whereas, the construction contended for by the plaintiff’s counsel would lead to the most
The opinions of the Judges, who have determined cases in which this question has been discussed, may be said to be unanimous.
Mr. Justice Livingston, in the ease of Adams r. Story (6 Hall’s Am Law. Journ.,) is of opinion that the power is not exclusively given to the general government.
Chief Justice Tilgham, in the case of the Farmers’ and Mechanics' Bank v. Wm. W. Smith, (6 Hall’s Am. Law Journ. 547,) although he considers the Act of ^Pennsylvania a bankrupt law, declares, that it is not in violation of the power delegated to the general government; and says, that his brother Mr. Justice Duncan, concurred with the Court.
Mr. Justice Washington, in the case of Golden v. Prince, (5 Hall’s Law Journ. 502.) declares, as his opinion, that the power is exclusive as to bankrupt laws, but says he gives no opinion as to insolvent laws.
Mr. Justice Johnson, in the case of Hannay v. Jacobs, thinks there is no legal distinction between bankrupt and insolvent laws ; but does not think the power is given exclusively to Congress.
Another objection to this law is, that it is unconstitutional, as it “impairs the obligation of contracts,” contrary to the 1st Art. 10th Sec. of the Constitution. This ground was rather touched than relied on by the plaintiff’s counsel; and I, therefore, shall not go at large into the consideration of it. In giving a construction to that part of the Constitution, it is necessary to take a view of the state of things which existed at the time of its adoption, and of the particular Acts which had been passed by many of the States during the struggle for our independence. From the difficulties which had arisen during the war, it was found to be impossible for debtors to satisfy the demands of their creditors. The value of property had diminished. There was little circulating medium in the country. And hence had orignated “pine-barren Acts,” “ instalment laws,” and other acts of similar character, impairing the obligation of contracts, and thereby destroying credit. Many of these laws were then in operation, and to guard against the continuance of them, was the avowed object of this clause in the Constitution. That it was not intended to affect either bankrupt or insolvent laws, is most obvious, when it is recollected that the Constitution itself contained the section which has just been made the subject of consideration, and the provision for the establishment of a uniform system of bankruptcy. The very able exposition of Mr. Justice Livingston, in his opinion in the case of B. and *C, Adams v. Augustus Story, (6 Am. Law Journ. p. 475,) renders any further observation, on this point, unnecessary. Indeed, it did not appear to be much relied on by the plaintiff’s counsel.
I come now to the examination of the third and fourth grounds, as I shall leave the second to be last examined. The third ground is presented in the strongest possible view against the defendant, by assuming the position, that the assignment made to his creditors in England, was made in contemplation of an application for the benefit^of the Insolvent Debtor’s Act of our State. This may have been presumed from all the circumstances of the case, but there was nothing like positive proof on the
It was also urged as an evidence of fraud in the defendant, that his co-partner, Mr. Bogue, had received of Mr. H. Smith 3 or $1000, which had been assigned to his creditors in England; but this was received here, and in March. The assignment was made in England, in February, and defendant arrived here 3d May. It cannot be considered as any exercise of ownership by the defendant over the property assigned. It is said, in the last ground, that the facts proven afforded positive evidence from which the jury might infer fraud; and that the Court misdirected the jury in applying to those facts the maxim of law, that fraud is never to be presumed. The facts have all been examined, and were examined on the trial below, and after having arrived at the conclusion, that they did not support the charge, it was then observed, that the jury were not to presume fraud. No inference of fraud could be deduced from the making of the deed ; because the law allowed it, unless done mala fide ; which, if it was, it was incumbent on plaintiff to prove. No fraud can be inferred from the entering into the copartnership with Mr. Bogue : none from the circumstance of his having received the money from Mr. Smith, as has been shown. The verdict of the jury is then correct.
But on the second ground, that the notice of ten days was insufficient, the law requiring three months notice, the Court are of opinion that a new trial must be granted.
For twenty-five years past, the practice of the Court in Charleston has been to admit applicants to the benefit of the Insolvent Debtor’s Act, on
The motion is, therefore, granted on this ground.
delivered his opinion as follows:
There is one question in this case on which I wish to give my reasons for concurring in the opinion of the Court. It is, whether the Insolvent Debtor’s Act, as it is generally called, under which the defendant was discharged, be constitutional or not ? This general question, to meet the views which have been hitherto taken of the subject, divides itself into three questions.
1.. Whether the power of Congress to establish uniform laws of bankruptcy be exclusive or not ?
2. What is a bankrupt law ?
3. What is an insolvent law ?
The subject properly presents itself in the order in which these questions are stated ; but I think it will be best developed by inverting their 'order. I will, therefore, consider, 1st. What is an insolvent law ? I think it may be defined to be a law which may properly be considered a part, and which does not exceed the limits of the Lex Fori. An insolvent law may discharge a debtor from imprisonment. Imprisonment of Person °f the debtor forms no part of the Lex Contractus. Imprisonment of the person, as a satisfaction of the debt, has not formed a part of the code of all nations, and need not form a part of any code. The Legislature of this, or any other State,
1. Is the discharge of the debtor from his obligations to creditors, who have not arrested his person, but have sued in the tribunal which administers the benefit of the Insolvent Act, within the principle of the Lex Fori ?
I think, from the examples which we have discussed, we are prepared to say, the remedy, if not the debt, may be extinguished by this law, not only in the particular tribunal, but in every other tribunal, and in every other country. Let us now seek for the reason of the principle. Is it not the voluntary submission of the creditor, who, by his own unbiased act, comes into the tribunal and asks justice, according to its known laws ? It surely is ; and it shows the principle to be founded in the strictest justice. It is his contract. It is, too, a reasonable contract.
It may be admitted, though it is certainly not in the spirit of modern times, and especially of commercial countries, that it is a part of the original contract of a debtor, that his present property, and the future acquisitions of his whole life, are liable to the satisfaction of the debts he contracts. Is it unreasonable, inequitable or unjust, if the laws refuse him a remedy to enforce such a contract to its fullest extent ? Is it not enough to give him all that will generally be beneficial to him, which will be what the debtor possesses when he seeks his remedy ; for an insolvent debtor, unreleased, struggles merely to exhaust his strength without the hope of benefittingjiis creditor ? I confidently answer it is.
If the foregoing reasoning be correct, I have proved, and have a right to conclude, that a debtor may be released from the demands of all creditors, who have impleaded him in the tribunal of the State to which he resorts for the benefit of an Insolvent Act.
2. The next provision of the Act of this State is, that the debtor shall be discharged from the demands of those who shall accept a dividend of his estate.
Of the validity of this provision there can be no doubt. The effect of it is no greater than that of a private deed of composition ; and its obligation arises in the same way, from the voluntary consent and agreement of the creditors.
3. The next, and last provision of the Act does not come so clearly within the spirit and range of our principle. It is, that no creditor, who is such when the debtor applies for the benefit of the law, shall implead the debtor, so as to charge his person, in less than twelve months from the time of his release under the Act.
This provision, limited as it is in point of time, is unimportant in itself; an<^ as ^ depends on a question *not necessarily connected with our subject, namely, how far a State may close its tribunals ? I will not increase the necessary length of this discussion, by examining it. Giving the definition and extent of operation to insolvent laws, which I have thus attempted to establish, all the power will remain in the Legislatures of the States, and may be exercised by the Courts of the States, which humanity or necessity requires. Arguments of general expediency, if it should be supposed that any exist, alone and unaided by more cogent reasons, drawn from the terms of the constitution, will be entitled to little weight, in an attempt to subvert what shall appear (if that shall be the result,) to be a plain and obvious construction of the constitution, on the point before us. But without entering into an enumeration of them
The next question I will consider is, what is a bankrupt law ?
*1 think a bankrupt law may be defined to be any law for the relief of insolvent debtors. By insolvent debtors, I mean here, and throughout this opinion, those who either from absolute deficiency of funds or temporary embarrassments, are unable to meet their engagements, and shall in consequence be brought within the operation of insolvent or bankrupt laws. It may be supposed that this definition is deficient, inasmuch as one of the most frequent objects of a bankrupt law is a compulsory cession, by the debtor, for the benefit of the creditor, of his estate and effects. This is true in point of fact, but it is only a part of the policy of the particular law, and not essential to the character of a bankrupt law generally, which seems to me to be founded entirely on the idea of relieving the debtor, though one of its best effects is the security which it generally gives to the creditor. It may be objected to this definition, that what we have defined to be an insolvent law also comes within the definition given of a bankrupt law. It certainly does, but yet I conceive there is no inconsistency produced by this fact The converse of the proposition is not true. An insolvent law, as before defined, will not embrace a bankrupt law, as we have just defined it. The terms are in a great measure arbitrary, and there is nothing in the original meaning of the words which would prevent them from being made convertible terms. We have, however, found them in use with distinct, though badly defined significations, and so we must discuss them. But I think it cannot be doubted that Congress, under the power to establish uniform laws of bankruptcy, has the power to enact any other provisions of the bankrupt law of England ; for example, for the relief of debtors, without being under the necessity to enact the other provisions. Whatever provision it enacts must be uniform throughout the United States, and for the relief of the debtor ; but no more is necessary to constitute it a bankrupt law, under the constitution. The general features of a bankrupt law, as we have been accustpmed to contemplate it, are the compulsory
3. I proceed now to inquire, whether the power of Congress to establish uniform laws of bankruptcy is exclusive or not ?
I suppose I have shown, that insolvent laws, which will discharge the debtor in all cases in which he has been impleaded, will have effect, as a part of the Lex Fori, and by the voluntary submission of the creditor. Such laws are then consistent with the exclusive right of Congress to pass uniform laws of bankruptcy; because their operation depends on the voluntary submission of the creditor, who may as well in this way discharge his debtor, if he chooses, as he may by a release. But here I think the power of the State authorities end. I think the power of Congress to establish uniform laws of bankruptcy is exclusive, and *^en*es to States all power on the subject, except that which shall have its operation as a part of the Lex Fori. On the exclusive power of Congress, I do not desire to add a word to the admirable, and, in my opinion, perfectly conclusive argument of Mr. Justice Washington, in the ccse of Golden v. Price. Then, to apply these results to the case before us. The plaintiff sued the defendant in the Courts of this State, and subjected himself to the Lex Fori, under which the defendant was entitled, as against the plaintiff, to the benefit of the Insolvent Act of this State, upon complying with the provisions of it. I concur with my brother Colcook, that a notice of three months was necessary, under the Act, for the reasons he has assigned; and I give no opinion on the other points in the case, as it is unnecessary to do so.
4 Stat. 56.
5 Stat. 78. See 5 Rich,. 293; 2 Strob. 140 ; 10 Rich. 237.
MeC. 339.
1 Rich. 192; 1 Strob. 101
See Carpenter v. Kennedy, 2 Brev. Dig. 157, note.
1 Brev. Rep. 25.
3 MeC. 97.
*It is interesting to observe the analogy in the effects which a cessiobonorum has in most of the codes and laws of the civilized world. By the Julian law of the Romans, the debtor assured the liberty of his person by making an entire cession of all his goods to his creditors; 5 Code Civil of Napoleon, 171. But his future acquisitions were liable ; Wood’s Civil Law, 384; Brown’s Civil Law, 254. 1 Domat’s C. L. b. 4, tit. 5, sec. 1; Cooper’s Just. 348, but see note 642.
In Holland, and England, up to the 4th and 5th Ann, it worked a discharge of the person, but not of the future acquisitions; 1 Atk. 256.
In France, it has the same effect, under Napoleon’s Code, (“La cession judicial-e n’eteint point Paction des creanciers sur les biens quele failli pent acquerir par lasuite; elle n'a d’autre effect que de soustraire le debiteur a la contrainte par corps.”') Code de Commerce, 136, sec. 568. See also, Dictionnaire des Sciences, art. Cession.
In the United States Court it is the same: Sturges v. Crowninshield, 4 Wheaton, 198. And for the English cases, and those of the different States, see Judge Cooper’s note to his Justinian, 622. R.
2 N. & McC. 229.
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