⚫209

found in both the sections we have mentioned, in direct context with the one under consideration, are of a positive and affirmative character, and are evidences of an active desire or wish to prefer one creditor to others. Why, then, should a passive indifference and inaction, where no action is required by positive law or good morals, be construed into such a preference as the law forbids? The construction thus contended for is, in our opinion, not justified by the words of either of the sections referred to, and can only be sustained by imputing to the general scope of the bankrupt act a harsh and illiberal purpose, at variance with its true spirit and with the policy which prompted its enactment."

tend a wrongful preference at the time a judgment is obtained against him, when he knows nothing of the judgment? That years before he may have contemplated the possibility that thereafter a judgment might be obtained against him; that long before he may have given a warrant of attorney to confess a judgment, or by a written confes sion, as in this case, have put it in the pow er of his creditor to cause a judgment to be entered against him without his knowledge or subsequent assent,-is wholly impertinent to the inquiry whether he had in view or intended an unlawful preference at a later time, at the time when the creditor sees fit to cause the judgment to be entered. For, we repeat, it is a fraudulent intent existing in the mind of the debtor at this later time which the act of Congress has in view. The preference must be accompanied by a fraudulent intent, and it is that intent that

ment and execution are not void.

The principles of this case were approved and applied in Clark v. Iselin, 21 Wall. 360, 22 L. ed. 568, where it was held that the giving by a debtor, for a consideration of equal value, passing at the time, of a war-taints the transaction. Without it the judgrant of attorney to confess judgment, is not an act of bankruptcy, though such warrant or confession be not entered of record, but be kept as such things usually are, in the creditor's own custody, and with their existence unknown to others; that the creditor may enter judgment of record thereon when he pleases, even upon insolvency apparent, and issue execution and sell; and that his action is valid and not in fraud ofted, it is not perceived that it has any lethe bankrupt law, unless he is assisted by the debtor.

The facts of that case were, in respect to the question before us, similar to those of the present. In the opinion Mr. Justice Strong, after citing with approval Wilson 7. City Bank, said:

"It has been suggested, in opposition to the view we have taken, that if a creditor may hold a confession of judgment by his debtor, or a warrant of attorney to confess a judgment, without causing it to be entered of record until the insolvency of the debtor appears, the debtor may thereby be able to maintain a false credit. If this be admit

gitimate bearing upon the question before us. The bankrupt act was not aimed against false credits. It did not prohibit holding judgment bonds and notes without entering judgments thereon until the debtors became embarrassed. Such securities are held in some of the states, amounting to millions upon millions. The bankrupt act had a very different purpose. It was to secure equality of distribution of that which insolvents have when proceedings in bankruptcy are commenced, and of that which they have collusively with some of their creditors attempted to withdraw from ratable distribution with intent to prefer some creditors over others."

Similar views prevailed in Tenth Nat. Bank v. Warren, 96 U. S. 539, 24 L. ed. 640, where it was held that the mere nonresistance of a debtor to judicial proceedings in which a judgment was rendered against him, when the debt was due and there was no valid defense to it, it is not the suffering and giving a preference under the bankrupt act, and that the judgment is not avoided by the facts that he does not file a petition in bankruptcy, and that his insolvency was

"Now, in a case where a creditor holding a confession of judgment perfectly lawful when it was given causes the judgment to be entered of record, how can it be said the debtor procures the entry at the time it is made? It is true the judgment is entered in virtue of his authority, an authority given when the confession was signed. That may have been years before, or, if not, it may have been when the debtor was perfectly solvent. But no consent is given when the entry is made, where the confession becomes an actual judgment, and when the preference, if it be a preference, is obtained. The debtor has nothing to do with the entry. As to that he is entirely passive. Ordinarily he knows nothing of it, and he could not prevent it if he would. It is impossible, therefore, to maintain that such a judgment is obtained by him when his confession is placed on record. Such an asser-known to the creditor. tion, if made, must rest on a mere fiction. As, then, the power of attorney given by And so it has been decided by the supreme court of Pennsylvania. Sleek v. Turner, Legal Intelligencer, Sep. 25, 1874 [76 Pa. 142]. "More than this, as we have seen, in order to make a judgment and execution against an insolvent debtor a preference fraudulent under the law, the debtor must have procured them with a view or intent to give a preference, and that intent must have existed when the judgment was entered. But how can a debtor be said to in22 S. C.-6.

Nelson to Mrs. Johnstone was a valid security, customary under the law of Wisconsin, as it was given long before the passage of the bankrupt act of 1898, and therefore necessarily without regard to the provisions of that act and without any intention to prevent or defeat their operation, and as the entry of the judgment and the levy of the execution are conceded to have been without the knowledge or consent of Nelson, it is undeniable that, under the provisions of the

*211

bankrupt act of 1867, and within the prin- and voluntary act. It would naturally be ciples laid in Buckingham v. McLean, Wil-presumed that the same quality of act son v. City Bank, Clark v. Iselin, and would be required by clause 3. The section Tenth Nat. Bank v. Warren, Nelson was un- consists of a single sentence in which the sevder no obligation, legal or moral, to bring eral clauses all depend upon the leading upon himself the ruin necessarily occa-phrase, "acts of bankruptcy shall consist of sioned by a decree of bankruptcy, by filing having done the several things enumerated a voluntary petition, and that the questions in the dependent clauses." An act is decertified to us by the circuit court of ap- fined in the Century Dictionary as "an exerpeals should be answered in the negative. tion of energy or force, mental or physical; But it is claimed that, having regard to the anything that is done or performed; a doing phraseology of the act of 1898, and although or deed; an operation or performance.' the warrant to confess judgment was given And in the same work "an act of bankrupt by the debtor before the passage of that act, cy" is defined to be "an act the commission yet, being irrevocable and continuing in of which by a debtor renders him liable to force, the debtor thereby, without any fur- be adjudged a bankrupt." In Anderson's ther act of his, suffered or permitted a judg- Law Dictionary the word "act" is defined to ment to be entered against him within four be "a thing done or performed; the exercise months before the filing of the petition in of power; an effect produced by power ex bankruptcy, and that he confessed that he erted;" and it is said "act' and 'intention' was hopelessly insolvent, and consented to may mean the same as 'act' alone, for act the preference that he failed to vacate, by implies intention, as in the expression, failing to file a voluntary petition. 'death by his own act or intention.""

Such a contention, in view of the various Black's Law Dictionary describes "an act" decisions of this court and hereinbefore as follows: "In a more technical sense, it cited, could not have been heretofore main- means something done voluntarily by tained, and it is therefore imperative that person, and of such a nature that certain those who now urge it should be able to legal consequences attach to it. Thus, a point to some clear and unmistakable dec-grantor acknowledges the conveyance to be his Îaration in the existing statute. So import-act and deed,' the forms being synonymous." ant a change in the policy of the bankrupt Independently of dictionary definitions, it law must be manifested by explicit language, and cannot be, safely and with due regard to sound principles of interpretation, made to depend upon conjecture and inference based upon a mere difference in phraseology between the present and prior acts of bankruptcy. In other words, the question before us must be decided by a consideration of the language actually used in the act of 1898, interpreted in the light of the previous decisions of this court.

We are concerned in the present case with § 3 of the act of 1898, which deals with and describes acts of bankruptcy. The section is headed "Acts of Bankruptcy," and then sets forth what are deemed to be the acts of bankruptcy, as follows:

may be safely said that, in common usage and understanding, the word "act" signifies something done voluntarily, or, in other words, the result of an exercise of the will.

In view, then, of the plain meaning of the language of the clause and of its association, in the section, with other acts which require affirmative and voluntary proceedings on the part of the debtor, it would seem to be clear that mere failure by a debtor, even if insolvent, to file a voluntary petition in bankruptcy, is not in itself, under the facts conceded to exist in this case, an “act of bankruptcy."

Indeed, it seems quite clear that if § 3 of the act of 1898 had been the first enactment by Congress on the subject, no one "Acts of bankruptcy by a person shall would ever have suggested the contrary consist of his having (1) conveyed, trans-view. The contention is mainly, if not whol ferred, concealed, or removed, or permitted ly, founded on the omission of several to be concealed or removed, any part of his words used in the previous statutes, or rathproperty with intent to hinder, delay, or deer in the substitution of different words in fraud his creditors, or any of them; or (2) § 3 for those used in the corresponding seetransferred, while insolvent, any portion of tions of the earlier laws. Those changes his property to one or more of his credit- may be made best to appear by presenting ors with intent to prefer such creditors over them in parallel columns: his other creditors; or (3) suffered or permitted, while insolvent, any creditor to obtain a preference through legal proceedings, and not having, at least five days before a sale or final disposition of any property affected by such preference, vacated or discharged such preference; or (4) made a general assignment for the benefit of his creditors; or (5) admitted in writing his inability to pay his debts and his willingness to be adjudged a bankrupt on that ground."

...

ACT OF 1898: Sec. 3. Acts of bankruptcy by a person shall consist of his

ACT OF 1867: Sec. 39. That any person who, being bankrupt or insolvent, or in contemplation of having... suffered or bankruptcy or Insolvency, shall .. procure or suffer his property to be taken on legal process, with intent to give a preference to

one or more of his
creditors, or with

...

It is obvious that Congress here had in the intent by such die view voluntary acts of the debtor,-"acts position of his propof bankruptcy by a person." Concededly erty to defeat or delay dauses 1, 2, 4, and 5 require an affirmative the operation of this

permitted, while insolvent, any creditor to obtain a preferencs through legal proceedIngs, and not having, at least five days be fore a sale or final diserty affected by such position of any proppreference, vacated on discharged such pref

erence

⚫214

act,

shall be deemed to have com

ruptcy.

Sec.

60. A person in a state court, a lawful remedy on a lawshall be deemed to ful security given and received before the mitted an act of bank- have given a prefer- act of bankruptcy was passed, and without ence, if, being insolvent, he has procured any knowledge or consent by the debtor to such suit or proceeding, is not an act of bankruptcy, it is now contended that a different conclusion must be reached under the provisions of the act of 1898.

Sec. 35. That if any person, being insolvent or in contemplation of insolvency, within four months before the fling of the petition by or against him, with a view to give a preference to any creditor or person having 8 claim against him, or who is under any liability for him, pro

eures any part of his property to be attached, sequestered, or seized on execution, or makes any payment, pledge, assignment, transfer, ог conveyance of any part of his property, either directly or indirectly, absolutely or condi

or

con

tionally, the person
receiving such pay-
ment, pledge, assign-
ment, transfer or con-
veyance, or to be bene-
fted thereby, or by
such attachment [pay
ment, pledge, assign-
ment or conveyance],
having reasonable
cause to belleve such
person is insolvent,
and that such attach-
ment, payment, pledge,
assignment,
veyance is made in
fraud of the provisions
of this act, the same
shall be void.
Sec. 29. No dis
charge shall be grant-
ed. if the bank.
rupt within four
months before the com-
mencement of such
proceedings, . . has
prooured his lands,
goods, money or chat-
tels to be attached, se-
questered or seized on
execution.

...

himself

in

or suffered a judgment
to be entered against
favor of
any person, or made a
transfer of any of his
property, and the ef-
fect of the enforce
ment of such judgment
or transfer will be to
enable any one of his
greater percentage of

creditors to obtain a

his debt than

any

other of such creditors

of the same class.

Sec. 67. ... A llen
created by, or obtained
in, or pursuant to, any
suit or proceeding at
law or in equity, in-
cluding an attachment
upon mesne process, or
a judgment by confes
sion, which was begun
against a person with-
in four months before
the filing of a petition
in bankruptcy by or
against such person,
shall be dissolved by
adjudication
the

Examination and comparison of the above contrasted provisions will show, as I think, that no change was made by the latter enactment in the vital and decisive purpose that no person shall be visited with the penalty of involuntary bankruptcy, unless he has brought himself within the denunciation of the law by some intentional and voluntary act, and that, this being so, the decisions under the previous act, that merely failing to file a voluntary petition is not such voluntary and intentional act in fraud of the statute, are applicable and decisive of the present case.

Arguments based on supposed differences between "permit" and "suffer" and "procure" are too uncertain on which to find that. a great and important change in the theory of the bankrupt law was intended by Congress. Such an intention would have been directly and clearly expressed, and not left to uncertain inferences. That such inferences are uncertain plainly appears by the opposite conclusions reached, in respect to the meaning of the clauses in question, by the learned judges of the district and circuit courts. See Re Moyer, 93 Fed. 188; Re Thomas, 103 Fed. 272; Re Nelson, 98 Fed. 77; Duncan v. Landis, 45 C. C. A. 666, 106. Fed. 839.

of such person to be a bankrupt, if (1) it appears that said lien was obtained and permitted while the defendant was insolvent, and that its existence The case of Pirie v. Chicago Title & T. and enforcement will Co. 182 U. S. 438, 45 L. ed. 1171, 21 Sup. work a preference, or Ct. Rep. 906, the most recent decision of (2) the party or par- this court under the act of 1898, arose unties to be benefited der another clause of the act, and is not dithereby had reasonrectly applicable to the question we have able cause to believe the defendant was in- here considered, but, so far as it has any solvent, and in con-bearing, sustains the views herein expressed. templation of bank- The question there was under § 60, and it ruptcy, or (3) that was held that where a payment or transfer such lien was sought was made by an insolvent debtor, within four and permitted in fraud months prior to the filing of a petition in of the provisions of bankruptcy, to a creditor who did not have this act.... cause to believe that an unlawful preferThat all levies, judg-ence was intended, the creditor may keep ments, attachments, or the payment or transfer, even though the amount of such payment or transfer was thereby withdrawn from the administration of the bankrupt court and satisfaction in full was received by the creditor, but that if such payment was only a partial discharge of his debt the creditor cannot prove, under the distribution in bankruptcy, for the bal ance of his debt, unless he first surrenders to the trustee the amount of the partial pay

other liens obtained

through legal proceed-
ings against a person
who is insolvent, at
any time within four
months prior to the
filing of a petition in
bankruptcy against
him, shall be deemed
null and void in case

he is adjudged a bank-
rupt.

It having been repeatedly ruled in the cases cited that, under these provisions of the act of 1867, no person shall be deemed guilty of an act of bankruptcy except by reason of some affirmative and intentional act intended to defeat the purposes of the act, and that failing to file a voluntary petition bankruptcy where a creditor is pursuing,

ment.

The conclusion warranted by the words of the statute, interpreted in this light of our previous decisions, is that the questions certified to us by the circuit court of ap peals should be answered in the negative.

The Chief Justice, Mr. Justice Brewer and Mr. Justice Peckham concur in this dissent.

(183 U. S. 563)

MCKINLEY CREEK MINING COMPANY | ship, but denied the citizenship of plaintiffs et al., Appts., on the ground that the defendants had not sufficient knowledge to form a belief thereto,

v.

et al.

ALASKA UNITED MINING COMPANY and traversed in like manner or absolutely the other allegations of the bill, and alleged title by reason of prior discovery by memAppeal in equity-error in instructions-bers of the company. The answer also alfinding of fact-notice of mining claim-leged prior possession by members of the location by alien.

1.

Assignments of error based upon the refusal of instructions in a suit in equity in which the verdict is only advisory to the court cannot be entertained on appeal.

2. A finding by the court on a question of fact upon which the evidence is conflicting cannot be rejected on appeal.

company, from which they were dispossessed by the plaintiff, and claimed that as to the controversies thus arising "defendants are under the law and practice of this court entitled to a jury trial for the trial of the title to said claims and each of them, and to that end and purpose have commenced in this honorable court a suit in ejectment 8. A sufficient location of placer mining claims for the trial and determination of the title is made by notices upon a stump in a creek, of to said property in an action at law and aca claim running 1,500 feet along the creek cording to the usage and practice of this bottom and extending 300 feet each way from court, and until the trial and determination the center of the creek, adding that it is an of such trial at law by this honorable court extension of another claim named, a certain the defendants are entitled to a restraining distance from the first falls on said creek. order against said plaintiff company and its 4. The location of a mining claim by an alien, individual members restraining them and and the rights following therefrom, are vold-cach of them from the commission of the able, not void, and are free from attack by wrongful acts herein complained of."

anyone except the government.

[No. 37.]

Argued April 15, 16, 1901. Decided January 6, 1902.

A temporary injunction was prayed against plaintiffs (appellees).

APPEAL from a judgment entered ontydence and receiving instructions from the verdict for the plaintiffs in an equity case to establish title to placer mining claims. Affirmed.

Statement by Mr. Justice McKenna: This is a bill in equity brought by the appellee company, who was plaintiff below, to establish title to two placer mining claims, against a like claim of appellant company to the same ground.

There was a reply filed to the new matter of the answer and to the cross complaint. A jury was impaneled to try the case on motion of plaintiffs, no objection being made by defendants, and, after hearing the evicourt, the jury rendered a verdict for plaintiffs, as follows: "We, the jury in the above-entitled and numbered cause, find for the plaintiffs, Peter Hall, Wm. A. Chisholm, Dan. Sutherland, James Hansen, and John Dalton, partners under the firm name and style of the Alaska United Mining Company, the claims in controversy."

The defendants in due time moved for judgment notwithstanding the verdict, upon the ground that on the evidence the defendants were entitled "to a judgment in their favor for the possession of the mines and property in controversy." The motion was denied.

The bill alleged that "Peter Hall, William A. Chisholm, James Hansen, John Dalton, and Dan. Sutherland, partners under the firm name and style of the Alaska United Mining Company, bring this their bill of complaint against C. G. Lewis, Bert Woodin, Subsequently defendants moved for a new Edwin Hackley, Alex. McConaghy, Carl A. trial (1) upon the testimony in the cause, West, W. S. Hawes, Chas. P. Leitch, and C. the rulings therein and exceptions taken, P. Cahoon, partners under the firm name and upon the pleadings and proceedings in of the McKinley Creek Mining Company, cause No. 967; (2) the insufficiency of the and show to the court that the said par- evidence to justify the verdict; (3) error in ties, both plaintiffs and defendants, are citi-refusing to give certain instructions re zens of the United States and residents of the district of Alaska."

quested by defendants (appellants).

The motion was denied, and the following judgment was entered:

The bill also alleged ownership of the claims by reason of location, exploration, "This cause came on to be heard at this and discovery of precious metals, and the term upon the bill, the answer and cross bill compliance with the local rules and regula- of defendants, and the replication thereto tions of the mining district. Also possession of plaintiffs, and the proofs in the case, and of the claims and the erection of valu- upon the request of defendants, duly made able improvements thereon, and forcible en- by their counsel, Messrs. Winn & Weldon, try upon that possession by defendants (ap- the issues arising upon said pleadings and pellants) with an attempt and avowed pur-proofs were submitted to a jury of good and pose to drive plaintiffs (appellees) there from, and unless restrained they would proceed to the execution of said threats. An injunction was prayed for.

The defendants admitted their citizen

lawful men, duly selected, impaneled, and sworn, to wit, J. Montgomery Davis and eleven others, who, having heard the said proofs adduced in the case, and having been 'instructed by the court as to the law, and

*564

“We, the jury in the above-entitled and view the rulings of the court upon the adThe assignments of error present for renumbered cause, find for the plaintiffs, Peter mission of testimony, the correctness of the Hall, William A. Chisholm, Dan. Suther-court's instructions to the jury, and the sufland, Jas. Hansen, and John Dalton, part ficiency of the evidence to justify the judgners under the firm name and style of the Alaska United Mining Company, the claims in controversy.

*Provisions were furnished the party, and they started out on the 4th of October, 1898, and met on the creek (subsequently given the name of McKinley) certain members of the appellant company. Gold was discov. Messrs. S. M. Stockslager and George ered, and Cahoon wrote notices of location C. Heard for appellants.

899.