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Vol. II.)

Barney v. LEEDS.

(No. 6.

regarded as the law in this state. This right, of course, is and must be qualified so far as this, — that if the estate is absolutely indivisible, an actual share or part of the premises cannot be given to each. But in the recent case of Crowell v. Woodbury, 52 N. H. 613, 615, it was shown that " long before any court having general chancery powers was established in this state, the concurrent jurisdiction of equity, in making partition of land held in common by co-parceners and tenants in common, had become perfectly established,” and that since 1832, when full equity powers were conferred upon the court, the nearest practicable approach to a literal division of the thing itself may be secured by an application of the modes adopted by courts of equity to effect the object, – that is, by decreeing a sale of the whole and a division of the proceeds, or such other means as are appropriate to the special circumstances and situation of each particular case. This makes it certain that the right to a partition is sustained.

But nothing can be clearer than that an assignment of the whole to one, and an order that he shall pay to the other the estimated value of his share, is no partition at all. It is, in effect, a forced sale of the share of one to the other, - a compelling of one to purchase the portion of the other, whether he wants the property or not, and whether he has the means to buy it or not, at a price which he has nothing to do with fixing.

It is thus observable that serious, and, as it seems to me, insuperable difficulties, both practical and legal, stand in the way of giving to sec. 25, ch. 228, Gen. Stats, a construction whereby such forced purchase is compelled.

Now, in the case supposed of the two brothers, who have inherited an indivisible estate of large value, and who have no other property, the whole being assigned to one against his will, a debt of $10,000 is imposed upon him against his will : how is he to pay or secure it ? He may, perhaps, — not certainly, — if he so chooses, make security by way of a mortgage of the whole. But suppose he objects to the burden of so large a debt, and declines to execute the mortgage : what then? The other party must sue the judgment, and, there being no other property, he must seek security by an attachment of the whole estate which has passed to his brother by force of the judgment upon the so-called partition. A levy of an execution makes the parties tenants in common again, inasmuch as the premises cannot be divided; Gen. Stats. ch. 218, sec. 8; and the parties find themselves at last just where they started, except that they have incurred the expense and annoyance of fruitless litigation. All this is but folly, injustice, and oppression.

We are therefore of the opinion that the statute under consideration (Gen. Stats. ch. 228, sec. 25) is capable of no other construction, when applied to a case like the present, than that the whole estate may be assigned to one party, provided he is willing to take it, he paying the other party the sum awarded by the committee; and that in all cases where division by partition under the statute cannot be made, by reason of the nature and situation of the property, the parties are left to the ample, flexible, and more appropriate remedies of equity, whereby the entire estate may be sold, and the rights of the parties settled and determined upon equitable principles.

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Vol. II.)

SLOAN v. Lewis.

(No. 6.

The plaintiff may, if he chooses, pay to the defendant $500, with interest from the date of the levy, whereby the defendant will receive the value of his homestead right; or, the defendant (who may have the right of election in this matter) may purchase of the plaintiff the surplus of the estate at the price of $100, with interest from the same date.

The report may be recommitted for amendment in accordance with these views, and if the parties act upon the foregoing suggestions, there may be judgment on the report as thus amended. Otherwise this petition Must be dismissed, and the parties left to seek relief by proceedings in

equity.

SUPREME COURT OF THE UNITED STATES.

[OCTOBER, 1874.]

BANKRUPTCY. — ACCRUED INTEREST PART OF DEBT. — PRACTICE.

SLOAN v. LEWIS.

Accrued interest constitutes part of a debt provable against the estate of a bankrupt. Where a record shows jurisdiction, an adjudication can only be assailed by direct pro

ceedings in a competent court.

fenuse the than $his defended appok furth the pets addinged to abovidest

MR. CHIEF JUSTICE WAITE delivered the opinion of the court.

This action was commenced by an assignee in bankruptcy in a state court to set aside certain conveyances made by the bankrupt, in fraud of the bankrupt law, as is alleged. The proceedings in bankruptcy, under which the assignee was appointed, were involuntary, and one of the defences in the action is, that the adjudication of bankruptcy was void, because the record shows that the debt owing to the petitioning creditor was less than $250, and, consequently, the court had no jurisdiction in the premises. This defence presents the only federal question there is in the case. If this is decided against the plaintiff in error, our jurisdiction is at an end, and we need not look further into the record.

The principal of the debt owing to the petitioner, as described in the petition, is a few cents less than $250 ; but, by adding the interest to the time of filing the petition, the indebtedness is increased to an amount far in excess of the requisite sum. The bankrupt act (§ 39) provides for an adjudication of involuntary bankruptcy upon the petition of one or more creditors, the aggregate of whose debts provable under the act amounts to at least $250. It becomes necessary, therefore, to ascertain what constitutes a debt that may be proved. The plaintiff in error contends that it is limited to the principal of a sum of money owing, while the assignee claims that it includes the principal and all accrued interest. To determine this question, we must look, in the first place, to the act itself. If the intention of Congress is manifest from what there appears, we need not go further. Section 19 provides " that all debts due and payable Vol. II.]

SLOAN v. LEWIS.

(No. 6.

from the bankrupt at the time of the adjudication of bankruptcy, and all debts then existing but not payable until a future day, a rebate of interest being made when no interest is payable by the terms of the contract, may be proved against the estate of the bankrupt.” And again: “All demands against the bankrupt, for or on account of any goods or chattels wrongfully taken or withheld by him, may be proved and allowed as debts to the amount of the value of the property so taken or withheld, with interest."

There is certainly nothing here which in express terms excludes interest from the provable debt. On the contrary, there is the strongest implication in favor of including it. The object is to ascertain the total amount of the indebtedness of the bankrupt at the time of the commencement of the proceedings, and also the amount of this indebtedness owing to each one of the separate creditors. Accrued interest is as much a part of this indebtedness as the principal. It participates in dividends when declared precisely the same as the principal. One has no preference over the other, and for all the purposes of the settlement of the estate the bankrupt owes one as much as he does the other. Creditors prove their debts in order that they may participate in the management and distribution of the estate. Their influence in the management and their share on the distribution depend upon the amount of their several debts which have been proven. Hence, in order to fix the equitable representative value of a debt not due, provision is made for a rebate of interest. But if interest is to be rebated on debts not due, why not, upon the same principle, add it to such as are past due ?

The provision for adding interest to the value of goods wrongfully taken and converted is equally significant. Certainly no good reason can be given for withholding interest in cases arising upon contract and allowing it in cases of tort; and because it is expressly given in the last, and no provision is made for it in the first, the conclusion is irresistible that it was expected to follow the contract as part of the obligation.

We are all, therefore, clearly of the opinion that accrued interest constitutes part of a debt provable against the estate of the bankrupt; and if it does, it is necessarily part of a debt which may be used to uphold involuntary proceedings. It is only necessary, upon this point of jurisdiction, that the petitioning creditors should have owing to them from the debtor they wish to pursue, debts provable under the act to the required amount. The English cases referred to in the argument, in our opinion, have no application here. They are predicated upon the English statutes and the established practice under them. Our statute is different in its provisions, and requires, as we think, a different practice.

This is conclusive of the case. The petition filed in the bankrupt proceedings distinctly averred that the debts due the petitioner exceeded the sum of $250, and, if interest is added, the particular indebtedness specified amounts to more than that sum. The court found this allegation true. That finding is conclusive in a collateral action. We have so decided in Michael v. Post at the present term.

Where the record shows jurisdiction, an adjudication of bankruptcy can only be assailed by a direct proceeding in a competent court. Evidence, therefore, to show that payments had been made which reduced

Vol. II.]

[No. 6.

MAITLAND v. The CITIZENS' NATIONAL BANK OF BALTIMORE.

the indebtedness below the required amount was inadmissible under any form of pleading in an action like this; but it is especially so in this case, because there is no averment in the pleadings contradicting the record. The sole objection is, that upon the face of the record the error is apparent. A record cannot be impeached without previous notice by proper form of pleading.

The judgment is affirmed.

COURT OF APPEALS OF MARYLAND.

(To appear in 40 Md.)

EVIDENCE. - CORROBORATION OF WITNESS BY HEARSAY PROOF OF

PREVIOUS UNSWORN STATEMENTS. — LIABILITY OF MAKER OF ACCOMMODATION NOTE GIVEN AS COLLATERAL SECURITY FOR PREEXISTING INDEBTEDNESS. — HOW FAR HOLDER OF SUCH NOTE CAN BE AFFECTED BY FRAUDULENT TRANSFER TO HIM FOR PURPOSE NOT CONTEMPLATED BY MAKER. — BURDEN OF PROOF TO ESTABLISH SUCH FRAUD, — MEASURE OF RIGHT OF RECOVERY ON SUCH NOTE, AND UPON WHOM BURDEN OF PROOF LIES TO SHOW AMOUNT DUE.

MAITLAND ». THE CITIZENS' NATIONAL BANK OF BALTIMORE.

The firm of P. & M. kept an account with a bank in Baltimore and received from it dis

counts of drafts or bills to a considerable amount. While the account was still running, the bank instructed G. its cashier to call upon M., a member of the firm, for collateral security. G. did so on the 10th of January, 1872, and suggested the giving of the note of M.'s father as such security. M., the father, upon the request of his son, gave him his promissory note in favor of the firm for $10,000, which was indorsed by the firm and delivered to the bank. P. & M. failed on the 15th of January, 1872, owing the bank, on account of drafts discounted on and after the 10th of January, $5,681, and on account of drafts discounted prior to said 10th of January, $15,000. In an action brought by the bank against M., Sen., on the note for $10,000, one of the questions raised was whether or not this note was given as collateral security for the payment only of the drafts discounted, on and after the said 10th of January, 1872, or was also intended to cover drafts discounted prior to that day: G., the cashier, testified that the demand which he made was for collateral security, for all drafts then held by the bank, as well as for all others that might thereafter be discounted for the firm. On the other hand, it was testified on the part of the defendant, that security was only required, and therefore only given for drafts thereafter to be discounted, including the drafts discounted on the 10th of January, 1872. The plaintiff then, in order to corroborate the testimony of G., offered to prove by its president and two of its directors, that G., a few days after the 11th day of January, 1872, and before the failure of P. & M., stated to the board of directors, that he had obtained from P. & M. the defendant's note for $10,000,” which was to be held by the bank as collateral security for all drafts which it was carrying; that is, which it had discounted at the date of said note, as well as for all drafts which should be discounted by it for said house subsequently to the date of said note." Held, that this evidence was inadmissible, on the ground that there was no real or substantial similarity in facts and circum

stances between the unsworn and the sworn statements of G. An indorsee of a negotiable promissory note made for the accommodation of the indorser,

taking the note in good faith as collateral security for an antecedent debt, and withVol. II.]

MAITLAND v. The Citizens' NATIONAL BANK OF BALTIMORE.

(No. 6.

out other consideration, is entitled to the position of holder of such paper for value, and therefore not affected by the defence of the want of consideration to the maker. It is no defence that the note sued on was known to the plaintiff to be an accommodation

note between the maker and the payees, provided the plaintiff took the note for value

bonâ fide before it was due. Where the payee of the note received it from the maker, with authority to use it as col

lateral security for a specified indebtedness, and the payee exceeds his authority, and transfers it to the indorsee as collateral security for a larger indebtedness, the latter is not to bear the consequence of this excess of authority, unless it be shown that it

was taken with knowledge of the fact, that the payee had so exceeded his authority. But if the fact of such knowledge be established, the indorsee would be affected by it,

and could have no right to recover, except for amounts due on the indebtedness for

which the note was authorized to be pledged. Where the maker of the note, in an action against him brought by the indorsee, seeks to

avail himself of the defence of such excess of authority, it is for him to prove it. In such action in order to make the defence effectual, on the ground of the want of au

thority in the payee to pledge the note for past discounts, there should be such proof as would justify the conclusion, that the indorsee had actual knowledge of the limited purpose for which the note was made, and consequently of the excess of authority by the payee in applying it to a different purpose. The plaintiff was not bound to make inquiry, and mere negligence however gross, not

amounting to wilful and fraudulent blindness, while it may be evidence of mala fides,

is not the same thing. The question whether the plaintiff had such knowledge or not is one of fact for the jury. Where prayers are objected to because some of the propositions of fact contained in

them are not supported by the evidence, the objection ought not to prevail, where the defects pointed out by the objection amount to nothing more than discrepancies between the evidence of the witnesses, and the facts stated in the prayers in regard

to immaterial matters. In an action against the maker of a promissory note, brought by the indorsee to whom

it was passed as collateral security for the payment of notes discounted by the indorsee for the benefit of the indorser, the measure of the plaintiff's right of recovery is the amount due on the debts embraced by the security. And it is incumbent on the plaintiff to show what debts were intended to be secured by the note, and the amounts remaining due in respect thereof.

APPEAL from the superior court of Baltimore city.

The suit in which this appeal is taken was brought by the appellee against the appellant on an accommodation promissory note. The case is stated in the opinion of the court.

First exception. Stated in the opinion of the court.
Second exception. The plaintiff offered the following prayers :-

1. If the jury shall find from the evidence, that the plaintiff had been in the habit of discounting drafts for the firm of Phillips & Maitland, prior to the 10th of January, 1872, and that upon that day the said firm applied to the plaintiff to discount two drafts which the plaintiff declined to do, unless the said firm would furnish them with security, to the amount of $10,000 or $15,000, to cover any drafts which had theretofore been or should thereafter be discounted by the said plaintiff, for or on account of said firm, and that Burgwyn Maitland, being a member of the said firm, stated to the cashier of the plaintiff that the said firm was anxious to obtain the money on the said drafts on that day, and that if the said plaintiff would discount them, he would bring the defendant's note for the amount named as such security on the next day; and shall further find that the said plaintiff did discount the said drafts on the faith of the said promise, and that on the following day the said Maitland brought and delivered to the plaintiff the note offered in evidence by the plaintiff,

said firm, state in the money for her, he would

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