E. N. Gardner & Co. v. Gambrill

Bryan, J., delivered the opinion of the Court. On the ninth day of June, eighteen hundred and ninety-seven, Gardner and Company filed a petition in insolvency against James H. Gambrill. It was alleged that the petitioners on the fifth day of February, eighteen hundred and ninety-seven, accepted an accommodation draft drawn on them by the respondent for the sum of nine hundred dollars, payable sixty days after date, and that the petitioners have paid the same. It was further alleged that on the fourteenth day of January, eighteen hundred and ninety-seven, the respondent drew an accommodation draft on J. H. Sherbert and Company in favor of the Central National Bank of Frederick, for the sum of one thousand dollars, payable sixty days after date, and that Sherbert and Company accepted the same, but that neither Sherbert and Company nor the respondent have paid it, although more than twenty days have elapsed since its maturity.

The answer sets forth that ⁶⁶⁰ Gambrill, on the fifteenth day of March of the same year, executed to certain trustees deeds of trust conveying all his property for the benefit of his creditors without any preference or priority, and the said deeds were executed and delivered about ten o’clock in the morning. This was on the day when the Sherbert draft fell due. The case was heard by the Court on petition and answer. It was dismissed by the Court.

The defence maintains the theory that Gambrill had ceased to be a merchant and trader when he made the defaults alleged against him, and that he was not therefore subject to the provisions of the twenty-second section of the insolvent law, as amended by the Act of 1896, chapter 446. This section enacts that if any merchant or trader (or other person named therein but not necessary now to mention) shall suspend payment of his negotiable paper and fail to resume the same within twenty days, he shall be deemed to have committed an act of insolvency. The twenty-third section make such merchant or trader liable to an adjudication of insolvency at the suit of any ci'editor whose debt shall amount to two hundred and fifty dollars, provided he shall file his petition within four months after the act of insolvency. The same section contains a provision that if a banker or broker shall fail for twenty days to pay any depositor, on demand lawfully made, he shall be deemed to have committed an act of insolvency.

It was the object of this section to place these classes under severe penalties for their defaults, so as to compel them to comply punctually with their duties in the respects which are mentioned. It could not have been intended that a banker who had received a depositor's money should have the power of evading the penalty of his misconduct by the simple act of retiring from business. If such be the construction of the statute it affords to the depositor a very precarious protection. It might also be said to be merely illusory.

And the same may be said in reference to merchants and traders. They are embraced in the same section, and are evidently to be ⁶⁶¹ dealt with in the same manner. The penalty is imposed on the persons included in these classes, because of a failure to discharge commercial liabilities. Gambrill, when he drew the accommodation bill on Gardner and Company, by so doing entered into a contract with them that if they would pay it, he would reimburse them.

And when he drew a bill of the same character on Sherbert and Company, and had it discounted by the bank, his contract with the bank was that he would take it up, if Sherbert and Company should fail to pay it. The obligation of these contracts was in no manner impaired by the circumstance that the contracting party had ceased to be a merchant. The twenty-second section of the statute was intended to compel the prompt performance