Schloss v. His Creditors

California Supreme Court Jul 1, 1866Published

Before: Currey

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Holding. The court held that an insolvent debtor's unexplained failure to produce required commercial books and the inclusion of false estimates of losses in a schedule constitute fraud, necessitating a new trial. Additionally, the court affirmed that proof of publication of notice to creditors may be established by affidavit as a preliminary matter for the court.

Issues

Whether an affidavit is sufficient proof of the publication of notice to creditors in insolvency proceedings.
Whether the evidence supported the jury's verdict regarding the petitioner's alleged fraud in his schedule and failure to produce books.
Whether the court erred in refusing to instruct the jury that an insolvent must strictly comply with the Act.

Disposition. reversed and remanded

Quotations verified verbatim against the opinion

“The proof of the publication of the notice to creditors was a matter preliminary to the trial of the issue joined, and was solely for the consideration of the Court”

“In our judgment the verdict was contrary to the evidence and should have been set aside on the motion for a new trial.”

Synopsis

Evidence and Proof.—Evidence includes the means by which any alleged matter of fact is established or disproved. Proof is the result or effect of the evidence.

Making Proof.—As a general rule, where proof of a fact is required by a statute, and the nature or character of the evidence for the purpose is not specified, the only mode of making the proof is that prescribed by the common law rules of evidence.

Proof of Publication of Notice to Creditors.—One of the exceptions to this rule is the proof of the publication of the notice to creditors in insolvent proceedings. The publication of such notice may be proved by affidavit.

Losses by an alleged Insolvent.—Where the petition of an alleged insolvent states losses sustained by him in trade, and he fails, when made a witness on the stand, to explain how the alleged losses occurred, the inference is that the estimate of losses was not honestly made.

Account Books of an alleged Insolvent.—It is the duty of an alleged insolvent, on or before the day appointed for the meeting of creditors, to deposit in the Clerk's office, for the inspection of his creditors, all the commercial or other books which he may have kept; and his failure to do so, or account for their loss, Aprima facie evidence of fraud to the injury of his creditors.

Question of Law in an Insolvent Case.—Whether one claiming a discharge under the Insolvent Act, has strictly complied with its provisions, is a question of law for the Court, and not one of fact for the jury.

By the Court, Currey, C. J.: The petition of Schloss was in due form. To it was annexed the schedule required by the third section of the Act for the relief of insolvent debtors and protection of creditors, and thereupon the Judge of the Court in which the proceeding was instituted made an order requiring the creditors to show cause,, if they could do so, at a particular time and place, why the prayer of the insolvent debtor should not be granted, and an assignment of his estate be made, and he be discharged from his debts. At the time appointed, several of the petitioner’s creditors appeared and laid .before the Court their written opposition, alleging various acts of fraud against the petitioner by reason of which they prayed the Court that the application of the petitioner might be dismissed and that he might be forever debarred the benefit of the law referred to. The petitioner answered, controverting the charges of fraud. [203]The issue thus joined was afterward tried before a jury who rendered a verdict in the petitioner’s favor, upon which judgment was entered. The opposing creditors moved for a new trial, which was denied, and in due time appealed from both the j udgment and order.

Notice to creditors.

I. At the trial the petitioner offered in evidence his petition and schedule and the order of the Judge for the publication of the notice to creditors, and such notice, with an affidavit of its publication. The counsel for the opposing creditors objected to this affidavit as evidence on the grounds: First, that the statute does not make such affidavit evidence; and second, that the same is not the best evidence. The Court overruled the objection, to which ruling an exception was taken. Thereupon the evidence offered was admitted.

The Act requires that before any other proceeding shall be had upon the trial of an issue of the kind joined between the opposing creditors and the debtor claiming to be insolvent and seeking a discharge from his debts, the Court shall require proof of the publication of the notice to creditors (Sec. 2); but the statute does not provide what shall constitute proof of publication of the notice, nor how the proof shall be made.

Evidence and proof.

There is an obvious difference between the words evidence and proof. The former, in legal acceptation, includes the means by which any alleged matter of fact, the truth of which is submitted to investigation, is established or disproved. The latter is the effect or result of evidence. (1 Greenl. Ev., Sec. 1.) These words are often used indifferently as expressive of the same thing, and in this case it may not be important to observe the distinction between them. As a general rule, where proof of a fact is required by a statute, and the nature or character of the evidence for the purpose is not specified, the only mode of making the proof is that prescribed

Schloss v. His Creditors

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