Insolvent debtor

“ Under those principles a collusive transfer placing the property of a debtor out of the reach of his creditors while securing to him its beneficial enjoyment would be invalid. But an insolvent debtor may prefer a creditor, even though the latter has knowledge of such insolvency and the effect of the preference be to delay or disappoint his other creditors. ”

“ In order to give the priority specified in section 3466, there must be a case of an insolvent debtor who makes a voluntary assignment of his property, or a case in which the estate and effects of an absconding, concealed or absent debtor are attached by process of law, or a case in which an act of bankruptcy is committed. ”

“ And thus conferring upon an insolvent debtor the right of absolute choice among his creditors, the law does not require one who is at the same time father and guardian to discriminate against his own flesh and blood, to whom he is indebted as their trustee. ”

“ That policy the court declares to have been the appropriation of the entire estate of an insolvent debtor to the payment of his debts, and, as a means thereto, to favor assignments, and to give them such construction that they may stand rather than fall; that its manifest purpose was to provide a mode by which an insolvent debtor, desiring to do so, may make an assignment simple and yet effective to pass all his property to an assignee for the benefit of such of his creditors as will accept a proportionate share of the said property, and discharge him from their claims ”

“ It must be conceded that on the 30th day of April, when the defendants caused the judgment to be entered, the execution to issue, and the levy to be made, they knew that Dibblee & Co. were insolvent; but that knowledge is not of itself sufficient to invalidate the judgment and execution. A creditor may pursue his insolvent debtor to judgment and execution, with full knowledge of the insolvency, notwithstanding the provisions of the Bankrupt Act, provided the debtor does nothing to aid the pursuit. ”

“ That something more than passive non-resistance of an insolvent debtor to regular judicial proceedings, in which a judgment and levy on his property are obtained, when the debt is due and he is without just defence to the action, is necessary to show a preference of a creditor, or a purpose to defeat or delay the operation of the Bankrupt Act. ”

“ But, unless the creditor takes by virtue of a disposition by the insolvent debtor of his property for the creditor's benefit, so that the estate of the debtor is thereby diminished, the creditor cannot be charged with receiving a preference by transfer. ”

“ It is perfectly clear that no such exception is contained in the statute of limitations, or in the act of Congress concerning insolvent debtors. If it is to be created at all, it must be by implication. It is contended in the first place, that the insolvent debtor, after his discharge, is to be considered in respect to his future property, as a trustee for his creditors; and the statute of limitation does not run against a trust. If he is a trustee for his creditors, is he a trustee for those creditors only who were such at the time he obtained the benefit of the act? ”

“ Assignees in insolvency under the comprehensive rule by which the assignee is vested with all the rights of property belonging to the bankrupt, acquire the same right as creditors to avoid any transactions of the insolvent debtor which were intended to enable a third party to hold his property in trust for his own benefit. ”

“ It is a general principle that every one must be presumed to intend the necessary consequences of his acts. The transfer, in any case, by a debtor, of a large portion of his property, while he is insolvent, to one creditor, without making provision for an equal distribution of its proceeds to all his creditors, necessarily operates as a preference to him, and must be taken as conclusive evidence that a preference was intended, unless the debtor can show that he was at the time ignorant of his insolvency, and that his affairs were such that he could reasonably expect to pay all his debts. ”

“ Insolvent laws are derived from the cessio bonorum of the Roman law, and discharge the person, and not the future acquisitions of the debtor. A judgment, assignment or cession, under that law, does not extinguish the right of action; it has no other effect than to release from imprisonment. A bankrupt law establishes a system for a complete discharge of insolvent debtors. ”

“ Emory, [2] § 3466 covers in terms the case of an insolvent debtor who has committed an act of bankruptcy, and there are few more familiar examples of an act of bankruptcy than the appointment of a receiver because of the debtor's insolvency. ”

“ The whole world is in the position of an insolvent debtor who is so deeply involved that his creditors cannot afford to let him go into bankruptcy, and so keep him out of the Poor Debtor's Court by doling out support from day to day. ”

“ When a person’s financial liabilities are greater than his means of meeting them, he is said to be “insolvent”; but he may nevertheless be able to carry on his business affairs by means of credit, paying old debts by incurring new ones, and he may even, if fortunate, regain a position of solvency without his creditors ever being aware of his true condition. And even when his insolvency becomes public and default occurs, a debtor may still avert bankruptcy if he is able to effect a voluntary arrangement with his creditors. ”

“ In the absence of it there is no rule of law preventing a debtor, even when insolvent, for even that does not take from him the power of disposition of his property, and paying his debts with it, or a portion of his debts, and preferring one or more of his creditors with absolute intent to hinder, delay, or even to defeat other creditors. If the favored creditor receives no more than is due him, and permits the debtor to secure no advantage to himself, the transaction will be upheld. ”

“ Bankrupt and insolvent laws have existed, in various forms, in every age and every civilized and commercial country, as one of the means of securing a fair and impartial distribution of the effects of insolvents among all their creditors, or as a relief which society has found it necessary to extend to the honest debtor, who has become unable from misfortune to satisfy the demands of his creditors. ”

“ Hence the act, very wisely, as we think, instead of making a payment or a security void for a mere suspicion of the debtor's insolvency, requires, for that purpose, that his creditor should have some reasonable cause to believe him insolvent. He must have a knowledge of some fact or facts calculated to produce such a belief in the mind of an ordinarily intelligent man. ”

“ There is to be a forfeiture 'if the tenant shall be adjudged bankrupt or insolvent by any Court.' It is said that 'insolvent' is used interchangeably with 'bankrupt'. But it has long been held that a general assignment is an act of bankruptcy whether or not t e debtor is insolvent. West Co. v. Lea, 174 U.S. 590, 19 S.Ct. 836, 43 L.Ed. 1098. Thus it would seem that 'adjudged bankrupt' and 'adjudged insolvent' do not cover precisely the same ground. Moreover, insolvency in the equity sense has always meant an inability of the debtor to pay his debts as they mature. ”

“ To secure such a debt would be a fraud on the act, as it would work an unequal distribution of the bankrupt's property, and, therefore, the debtor and creditor are alike prohibited from giving or receiving any security whatever for a debt already incurred if the creditor had good reason to believe the debtor to be insolvent. ”

“ It is immaterial to whom the transfer is made if the purpose be to prefer one creditor to another. Like a fraudulent transfer the intent to prefer must be proved, though this may sometimes be presumed, as when the necessary consequence of a transfer or payment made by an insolvent debtor is to liquidate the debt of one creditor to the entire or partial exclusion of others. ”

“ The only objection to the discharge which the evidence would justify is that the mortgage was given when the debtor was in failing circumstances while insolvent and after the creditor's judgment had been entered.
There is nothing fraudulent or wrong, within the meaning of the Act for the Relief of Persons Imprisoned on Civil Process in the giving of a preference knowingly by a person in an insolvent condition.
At common law every man, even when in failing circumstances, has a right to dispose of his property, to pay one honest creditor in preference to another one. ”

“ Ct. 131, it was ruled that a decision by the supreme judicial court of Massachusetts that a creditor of an insolvent debtor, who proved his debt in insolvency proceedings under the state statutes, and accepted the benefits thereof, thereby waived any right he might otherwise have had to object to the validity of the insolvency statutes, as impairing the obligation of contracts, presented no federal question for review. ”

“ For example, it has been said that laws which merely liberate the person of the debtor are insolvent laws, and those which discharge the contract are bankrupt laws. But it would be very difficult to sustain this distinction by any uniformity of laws at home or abroad. . . . Again, it has been said that insolvent laws act on imprisoned debtors only at their own instance, and bankrupt laws only at the instance of creditors. ”

“ So far from establishing these requisites for sustaining the plaintiff's demand, it excludes each and all of them. This evidence proves beyond dispute, a possession and holding by the defendant under an agreement with Robbins, as trustee of Swayne, an insolvent debtor; payment of rent to this trustee in pursuance of such agreement, until a claim was interposed on behalf of the United States, as creditors of the insolvent debtor ”

“ The release of interest or the complete satisfaction of an indebtedness by partial payment by the voluntary act of the creditor is more akin to a reduction of sale price than to financial betterment through the purchase by a debtor of its bonds in an arms-length transaction. In this view, there is no substance in the Commissioner's differentiation between a solvent or insolvent corporation or the taxation of income to the extent of assets freed from the claims of creditors by a gratuitous cancellation of indebtedness. ”

“ To show that the positions taken in these pleas were correct, and the pleas themselves were valid, reference is made to Levy v. Jacobs et al., 12 La. Rep. 109; Messes Syndics v. Yarborough et al., 11 La. Rep. 531. These authorities show that, when a cession is made by an insolvent debtor, all his property and rights are transferred to his creditors, whether they be placed in his schedule or not. ”

“ They They admit that the insolvent debtor was adjudged bankrupt on the day alleged in the bill of complaint, and that the complainant was duly appointed the assignee of the bankrupt's estate, as therein alleged; that an assignment of his estate was in due form made to the complainant, as assignee of the bankrupt's estate, and that the same became duly vested in him as such assignee; that the bankrupt was, on that day, indebted to the respondents in the sum of $1,741.12, for goods, wares, and merchandise which their firm had previously sold to the bankrupt. ”

“ The debtor must be insolvent, or contemplating insolvency, when the alleged preference is given. And he must then have in view giving a preference. He must procure the attachment or the entry of the judgment, the execution, and the levy, with a present intention to prefer the creditor. The unlawful view to a preference must coexist with the procurement. It is not enough that it precedes the entry of the judgment and the levy of the execution, or that it follows. ”

“ It was further said: 'When a company, becoming insolvent, as in this case, abandons all action under its charter, the original mode of making calls upon the stockholders cannot be pursued. The debt, therefore, from that time must be treated as due without further demand.' This means, of course, as between the debtor and the creditor of the corporation. After all, a company call is but a step in the process of collection, and a court of equity may pursue its own mode of collection, so that no injustice is done to the debtor. ”

“ If a debtor who is insolvent, or who is made insolvent through a gift made by himself, should give away a portion of his property, that would be a fraudulent conveyance, irrespective of the debtor's intent, because the necessary effect of the gift would be to hinder, delay and defraud his creditors. ”