Castleberg v. Wheeler

Alvey, C. J., delivered the opinion of the Court. The appeal here is from the rulings of the Court of Common Pleas of Baltimore City, in a proceeding of involuntary insolvency. And being an appeal in a matter of insolvency, no question is open for review in this Court, except such as may be certified in the manner prescribed by law, (Code, Art. 5, sec. 13,) the statute providing that “no question which shall not appear by such certificate to have been raised in said Court shall be considered by the Court of Appeals.” A bill of exception, however, regularly signed by the Judge, taken to any particular ruling made in the course of the trial, is a certificate within the object and purview of the statute. It appears that certain creditors of Jacob Castleberg, a merchant doing business in the City of Baltimore, filed their petition against him, under the provisions of the Act of 1886, cli. 298, to have him adjudicated an insolvent under that statute.

In the petition it is alleged that the defendant was a merchant in the City of Baltimore, and, by separate paragraphs, the petitioners charged the commis ²⁷² sion, by the defendant, of several acts of,insolvency, within the terms of the statute. Referring only to those paragraphs by number that appear to be material to the questions on this appeal, the petitioners charged— 2. That Oastleberg, the defendant, had, within four months before the filing of the petition, assigned, given, sold, conveyed and transferred a part of his estate, with intent to delay, hinder and defraud the petitioners and his other creditors. 3. In this paragraph the same charge as .that in paragraph 2 is repeated, with a specification of the persons to whom the defendant had “assigned, given, sold and transferred” his property, with intent to hinder, delay and defraud the petitioners, and his other creditors, while he was insolvent, and in contemplation of insolvency. 4.

That the defendant, being insolvent, and in the contemplation of insolvency, had, within the time aforesaid, conveyed and paid away part of his property and assets to various persons to whom he was indebted, to wit, Nathan Lehman, and to some or all the persons named in the preceding paragraph, with the intention and for the purpose of giving and making unlawful preferences among his creditors. In the answer of the defendant, he admitted that the petitioners were his creditors to an amount more than sufficient to entitle them to take the proceedings against him. But he denied the various acts of insolvency charged against him;-and in the answer he required that the issues of fact, which arose upon the petition and answer, should be tried by a jury. After filing the answer and making the demand for a jury trial, but before the case was called for trial, the defendant moved the Court to dismiss the proceedings in the cause, because there was no replication filed to the answer of the defendant.

This motion the Court overruled ; and the case proceeded to trial. The jury, by their verdict, found .for the defendant on ²⁷³ the first issue; and, on the second, third and fourth issues, they found for the petitioners. And upon this finding the Court adjudicated the defendant an insolvent. Much of the argument, in this Court, on the part of the appellant, was addressed to the question of the supposed illegality of the proceedings of the Court below.

It is contended that the motion to dismiss the proceedings for want of a replication ought to have prevailed ; that there were no such issues formed as could be fairly tried by a jury; and that, by reason of the omission to frame such proper issues of fact as could be passed upon by a jury, there was a mistrial. We do not think the Court was in error in refusing to dismiss the proceedings for want of replication. A replication does not seem to be contemplated in insolvent proceedings, either by the terms of the statutes, or according to any established practice upon the subject. We are of opinion, however, that clear and definite issues should, in all cases, be framed, based upon the material allegations of fact really involved in the contest.

By framing such issues, the material is separated from the immaterial matters alleged, and the verdict rendered upon such issues is made intelligible, as to the special facts found or not found to exist. To frame such issues to be tried by a jury, has been the long established practice in the Courts of this State. By the Act of 1805, ch. 110, sec. 9, it was provided that when allegations were filed against an applicant for the benefit of the insolvent law, charging fraud or undue preferences, the creditor could either examine the.applicant upon interrogatories, or, upon request, the Court was required to direct an issue or issues, in a summary way, without the form of an action, to determine the truth of the allegations; which issues were to be tried by a jury. The same provision, substantially, has been incorporated into all subsequent insolvent systems adopted in this State, ²⁷⁴ It was incorporated into the Act of 1854 ; and, in section 19 of article 48 of,the Code, still in force as part of our present insolvent system, it is provided that the creditor, making allegations against the applicant,“ may have an issue made and tried by a jury.” And in reference to this last provision, the Court of Appeals, in Jaeger vs. Requardt, 25 Md., 232 , said that, upon allegations filed, the simple duty of the Court was to direct the framing of issues, and to determine whether the facts presented, if found by the jury, would convict the applicant of a violation of the insolvent law.

In view of this long established, practice, it can hardly be doubted that the same course of practice was contemplated by the Legislature, in the enactment of section 24, of Article 48 of the Code, by the Act of 1886, ch. 298, whereby it is declared, that “upon any issue of fact which • may arise out of said petition and answer, either party shall be entitled to a trial by jury; but the parties to said cause may waive the jury trial and be heard by the Court on the issue in fact,” etc. There can be no good or sensible reason suggested why the’ mode of procedure under section 24 of Article 48 should be different and less precise and certain than the mode of procedure under section 19 of that Article. But, however irregular the mode of proceeding in this case may have been, such irregularities are not presented in a form to justify this Court in making them the ground of reversal. It does not appear that any objection was made to swearing the jury, upon the ground that no issues had been framed ; and if such objection had been made and overruled, such ruling should have been made the subject of an exception. Under the statute allowing appeals in such cases, no question can be entertained in this Court to affect the judgment of the Court below, unless it be certified as the statute directs.

There is but one exception in the record, and that was taken to the rulings upon the prayers that were offered for ²⁷⁵ instruction to the jury. The questions raised by those prayers are the only questions open on this appeal. Before proceeding to notice the prayers, it is necessary, to a proper understanding of the positions taken by the parties, that we advert to the provisions of the statute in reference to which the prayers were drawn. That statute is the Act of 1886, eh. 298, passed to repeal and re-enact certain sections of Article 48 of the Code, with amendments.

Section 13, as thus re-enacted, has application only to persons engaged in certain designated business pursuits, ■and is intended to declare the legal effect and operation of certain acts and transactions of such parties, they being at the time either actually insolvent, or in contemplation of insolvency. By the common law, transfers, conveyances and charges, by a debtor to or in favor of bona fide creditors, are valid, though the debtor may be at the time, or intends soon to become, utterly insolvent, and makes the transfer or creates the charge for the sole purpose of giving a preference over his other creditors, who may not be able to realize any part of their claims. This right by the common law, so often abused to the prejudice of all but a few favorite creditors, it was the purpose of the Legislature, by this section 13, to restrain, as to the class of persons mentioned. Hence this section 13 provides, that “No deed or conveyance executed, or lien created, by any banker, stock-broker, merchant, manufacturer or trader, being insolvent, or in contemplation of insolvency, shall be lawful or valid, if the same shall contain any preferences, save such as result from operation of law, and save those for wages or salaries to clerks, &c.; and all preferences, with the exception-aforesaid, shall be void, howsoever the same may be made ; provided, the grantor or party creating said lien or preference shall be proceeded against under section 24, or shall apply for the benefit of this Article under section ²⁷⁶ 1, within four months after the recording of the deed or conveyance, or the creation of said lien or preference, and shall he declared, or shall become, under the provisions of this Article, an insolvent.” Of course, such conveyances and transfers as are here provided against, if in all other respects valid, are perfectly good, if the debtor be nótproceeded against, or he does not become an applicant,, under the insolvent law, within the time prescribed, and is not declared an insolvent.

Section 23 of’Article 48 of the Code, as re-enacted by the Act of 1886, ch. 298, declares what acts of the debtor shall