Page v. Williamsport Suspender Co. , 191 Pa. 511 ( 1899 )

Opinion by

Mb. Justice Mitchell,

The first question raised by the assignments of error is the constitutionality of the Act of July 9, 1897, P. L. 237. The act is entitled a supplement to the act of March 17, 1869, relative to fraudulent debtors, “ authorizing the courts to inquire into the validity of judgments confessed and alleged to be fraudulent, and providing the practice therefor.”

It is objected that this act is void, first, because the title is not sufficiently explicit and the subject is not germane to that of the act to which this assumes to be a supplement, and secondly, because section 2, which provides that no witness shall be excused from answering as to any matter relating to the inquiry, is in violation of the fifth amendment of the constitution of the United States, and also of section 9 of the bill of rights of the constitution of Pennsylvania.

Neither of the objections is tenable. The subject of the act is entirely germane to the act of 1869. The title of the latter refers to fraudulent debtors and that of the former to fraudulent judgments given by debtors. The subject of both acts is fraud by debtors against their creditors, and the object of both is to enable the creditors to investigate and defeat fraud if it be discovered. The methods and remedies are different but the object is the same. The title to the act of 1897 would have been good if it had ended with calling it a supplement to the act of 1869. But it did not stop at that. On the contrary, it went on and set forth the subject of the act itself with sufficient clearness to meet all requirements, even if it had not been called a supplement at all. The act of 1869 is not referred to or mentioned in any way in the body of the act, and omitting all the words referring to the act of 1869 the title would read “ an act authorizing the courts to inquire into the validity of judgments confessed and alleged to be fraudulent, and providing the practice therefor.” Such a title indicates the subject with entire clearness.

The second objection is equally untenable. The fifth amendment of the constitution of the United States has no applicar bility at all to the matter. As to the constitution of Pennsylvania, if any part of the act transgresses, which has not been shown, it is section 2, which is so distinct and separate that it might be cut off without in any way affecting the body of the act or its object. The act is constitutional and its purpose plain. Previously no creditor could interfere with another creditor’s execution unless he had a lien himself by levy or otherwise. This act was intended to give a general creditor a standing such as he would have had if he had had a lien, and to facilitate his inquiry into the alleged fraud. It is for his benefit, and does not change the settled rule that a judgment, fraudulent as to creditors, is nevertheless good between the parties.

The next question is whether the proceedings are not invalid under the act itself, for failure of the petitioning creditor to file the bond required. The act is mandatory that the bond shall be filed before the rule is granted, and the proceedings, therefore, were irregular and should have been quashed, if the objection had been made in time. The first petitioner, however, by leave of the court, filed a bond nunc pro tunc, and as the objection was not made until the record was in this Court, it may fairly be considered as waived by the respondent in the rule, now appellant, for whose benefit the bond was required The other petitioning creditor who was permitted to intervene has never filed any bond, and the rule as to him was without jurisdiction in the court. He therefore has no standing in the case.

The court below found as a fact that Page advanced the first $500, and gave his note for the second $500, in good faith, and in the honest belief that the money was for the firm. The court therefore found that a judgment for $500 would have been good against creditors, but in regard to the note he held that, as it was in the name of one partner only, Page was put upon notice and chargeable with knowledge that as between the partners, the money raised by the discount of the note was money due to the firm by Case as part of his contribution to the firm capital. As to this sum therefore the court held that it was not a debt of the firm, and being included in the judgment made it wholly void. These deductions however are not sustained by the facts. The representation by Case to Page was that the money was to be raised for the use of the firm by the discount of the note. There was nothing extraordinary in that. One partner may borrow in his own name for the use of his firm, and if he borrows by having his note discounted it is no different. The only effect of the form of the loan is to put on the lender the burden of proof that ho believed the money was for the firm, and that it actually reached it. Both these elements were established in this case. Page thought he was lending to the firm, and the money in fact went to and was used by it. It is true that as between the partners, the money was due by Case as contribution to capital, but it is not at all clear that the form of the note on which it was borrowed was sufficient notice to put Page on inquiry into that fact, in the face of Case’s assertion that it was money borrowed for the firm, and still less that it would support any inference of fraud in including this sum in the judgment. There must be fraud, and the creditor must be party to it, to avoid the judgment at the suit of other creditors. In Meckley’s Appeal, 102 Pa. 536, 543, it was said by our late Brother Clark: “It is doubtless true, as said by Mr. Justice Sharswood in Clark v. Douglass, 62 Pa. 415, that ‘a judgment confessed voluntarily by an insolvent or indebted man for more than is due is prima facie fraudulent within the statute of 13 Eliz. c. 5 ’ but then it is only prima facie fraudulent, and as the auditor has specifically and expressly found from the evi deuce that, in fact there was no dishonest or fraudulent purpose to cheat or defraud, delay or hinder the creditors, that prima facie presumption is by the auditor’s finding fully rebutted.” So here, we do not think the rules of law are to be so applied as to compel us to hold that to be a fraud which the court has on the evidence found to have been done honestly and in good faith. The court below applied the legal presumption too rigidly in view of the actual facts.

Judgment reversed and rule directed to be discharged.