
    No. 801.
    Pierre Longis v. His Creditors et als.
    Where proceedings have been commenced in the State Courts under the State insolvent laws, they stand unaffected by the United States Bankrupt law, enacted since the proceedings were commenced.
    “Where the penal clauses of the State insolvent laws can be made operative, effect must be given to them. The insolvent laws of the State of Louisiana provide that, an insolvent debtor convicted of fraud shall forever be deprived of the benefit of laws passed in favor of insolvent debtors in this State, and shall be sentenced to imprisonment for a term not exceeding three years. Act of loth March, 1855. sec. 27.
    The passage of the Bankrupt law by the United States repealed all State insolvent laws, and they have no vitality, except for such cases as were pending in the State Courts at the time of tho passage of the law.
    * PPEAL from the Third District Court of New Orleans, Hiestand, J. Ljl
    
    
      JE. W. Huntington, for insolvent and appellee.
    
      O. Roselius, J. L. Tissot, J. Magne and O. H. Schmidt, for opponents and appellants.
    
      
      Brief of appellee.
    
    Opposition is made to the discharge of the insolvent on tiie ground that he is a fraudulent debtor.
    Tiie only acts specified in the petition which the law declares fraudulent are the following:
    1. That Longis failed to account in his schedule for certain assets of the firm, of S. D. Gratiaa & Co.
    2. That he took away important documents and books of the firm of S. 1). Grat.a-i & Co.
    The evidence shows that all the property that Longis possessed, at the time of his surrender, was placed on liis bilan, except some bills receivable which were subsequently delivered up to the syndic of the creditors. (See testimony of Herr, R. pp. 2, 104, 105, et seq.) The cash on hand belonging to the firm and money collected for its account by Longis in 1863, wore not declared in his schedule, because they were not in his possession or under his control when the schedule was prepared. The opponents complain that these assets were converted by Longis to Ms own use and benefit. Be that as it may, the fact does not constitute fraud within the purview of the act of 1855.
    As to the bills receivable and blotter taken away by Longis, it is clear from the evidence that these were not withheld with an intent to defraud the creditors. The testimony of Loze, Herr, Levy and Oamors shows that neither the blotter nor the mortgage notes were concealed. On the contrary, all these witnesses were informed by Longis that these effects were in his possession and that he had retained the bills receivable, because ho was afraid that, if given up, they would be lost to the creditors through the management of Gratiaa in whom, according to the evidence, he had no t the least confidence.
    Again. The notes in question were surrendered by Gratiaa to the creditors of Gratiaa & Oo., and Longis & Oo., several months before the institution of this suit. By virtue of this surrender, they became the property of the credit ors, and Longis had no right to place them on his hilan. Had he dono so, he would have violated the provisions of the insolvent act, which requires that the debtor shall present to the Court a correct statement of his assets.
    The opponents have failed to establish, as they were bound to do, that the acts charged in their petition were committed by the insolvent with a fraudulent intent. On the other hand, the evidence adduced on the part of Longis justifies the conclusion that the measures taken by him respecting these bills receivable, were adopted with the view to protect and not to defraud the creditors.
    In order to constitute fraud, two conditions are legally necessary: There must be the intention of defrauding, consilium fraudis, and the event or the effective and actual loss sustained by the creditors evenlus damni; if one of these requisites does not exist, there is no fraud. Montolly v. Creditors, 18 L. 388; Beste v. Creditors, 14 A. 516; Campbell v. Creditors, 16 L. 348; Acts, 1855, p. 435, sections 19, 20.
    In all the cases above cited, it was proved that the insolvent had omited to place some of his property on his schedule, and in one of them that the book of the debtor had not been surrendered, yet the Court were of opinion that inasmuch as no intention to defraud was proved the charge should be dismissed, and judgment was rendered accordingly.
    
      Brief of appellants,
    
    * * * Were it not that the opinion of the Judge a quo generally) carries with it a certain weight against the party who appeals to this tribunal for relief, we would here close our remarks. But in justice to our clients, we must briefly notice the reasons given by the Judge for dismissing the opposition, and declaring Longis entitled to the full benefit of laws intended solely for the relief of honest though unfortunate debtors.
    The Judge (R. page 132) admits that Longis took some $23,000 cash ($17,000 in Confederate notes) some $15,000 in mortgage notes, and considerable merchandise, and that all these assets do not figure in his schedule, but adds that a portion of these assets, viz: the mortgage securities were afterwards delivered to the syndic.
    When were they so returned? After Longis had been incarcerated seven months, when the drawers of the notes and the public generally were so well aware of the charges brought against him, that he could not have ob1 ained payment of the notes.
    Can a man exhibit greater obduracy in crime than this insolvent, who was nearly seven months in jail, before he would give up any part of his plunder ? And yet, the fact that he returned those notes is stated by the Judge, as if it afforded a complete proof of Longis’ innocent intentions, so far as related to those particular assets.
    The Judge asks:
    1. Whether the facts proved are such as the law declares fraudulent?
    And in a very few lines he disposes of the question, saying, that there is no fact in evidence from which it can be inferred that Longis concealed the property he took, with an intention to keep it from his creditors.
    Why, what has he done then with all the property he took? Has he ev er returned any portion of it, save the notes which he could no longer use? >
    Mr. Herr, who says he was intimate with Longis, and who had frequently acted as his agent, says that he does not know what Longis did with the assets he took.
    In the second place, the Judge asks:
    Were these acts of Longis committed with a fraudulent intent?
    And with equal brevity the Judge also answers this question in the negative, saying, in substance, that Longis feared the designs of his partner, and therefore, in his anxiety to protect the creditors, pocketed the assets; that if the creditors suffered by this mode of protection, it was simply owing to the stupidity and ignorance of Longis, not to a desire on his part to defraud them.
    It seems to us that the Judge has allowed a spirit of charity to prevail over the inexorable logic of facts and the stern behests of the law; and that without rendering ourselves amenable to the charge of being devoid of “the milk of human kindness,” we may say, that if ever a case coming more clearly within the provisions of the sections 19, 20, 22, 24, of the act relative to voluntary surrenders (Sess. Acts 1855, pp. 435, 436) has been presented to our Courts, or one which more palpably demonstrated the necessity of enforcing those laws, we have not found any such in our Reports.
    Section 24 of the Act of 1855, provides, “ in case the jury or court shall find the charges unfounded,” etc., evidently contemplating that the courts may, without the assistance of juries, pass upon such charges of fraud.
    It is, we presume, unnecessary for the appellants to ask for the setting aside of the interlocutory order granted ex parle, amending the original order of arrest, and admitting the insolvent to bail in the sum of $10,000, as we trust this Court will render a final judgment in this case, which has been pending so long, and inflict upon the insolvent the punishment which his deeds have so richly deserved, so that others may be deterred from following his evil example, by the assurance that the laws against insolvents guilty of like frauds, will not remain a dead letter on our statute books, but be rigorously enforced.
   Idsley, J.

On the 26th day of February, 1864. Pierre Longis made a cession of property to his creditors, and those of the commercial firms of S. D. Gratiaa & Co. and P. Longis & Co., of which he was a member.

At a meeting ordered by the Court, in which the surrender had been made, the creditors who appeared, opposed the proceedings in insolvency, and charged Longis with fraud, and a few days thereafter, these creditors, viz: J. D. Castillo, Sazerao & Co., George Milne, F. A. Boilevint & Co., Victor Wilbieu, Sos'tliene Thomas, Constant Lecoultre, Widow Prin, Lacave & Echecopar, and Widow Rozier, whose claims in the aggregate exceeded $20,000, filed in Court an opposition to the surrender made by Longis, alleging and charging:

That about the first of September, 1862, after fraudulently excluding his partner, S. D. Gratiaa, from any participation in the administration and liquidation of the firm of S. L. Gratiaa & Co., he took possession of all its assets, and within less than two months from that date, between the 1st September, 1862, and the 29th November, of the same year, concealed and fraudulently sold a large amount of goods of the firm, and took away all the cash, so that it became necessary in order to stop his further depredations, to obtain a judicial sequestration of the remaining property of the firm.

That he had failed to account in his bilan, for certain property and assets of the firm of which a detailed statement is furnished by the opponents, and which amount in the aggregate to the sum of $50,163, the opponents charging that he had fraudulently concealed the said assets, and appropriated them to his own use and benefit.

That in order the more effectually to conceal his frauds, he had taken away important documents and books of the firm, among others the blotter,” on which the last sales of goods were noted, and not posted up in the journal and ledger.

The opponents therefore prayed that Longis be declared guilty of fraud, and forever deprived of the benefit of the insolvent laws, and that he be subjected to the penalties provided by the 19th, 20th, 21st, 22d and 21th, sections of the act relative to voluntary surrenders, approved March 15th, 1855, and they further prayed that he be arrested and imprisoned, until he should give bond in conformity with section 22d of the said act.

The Court ordered that the insolvent be arrested, until he should give bond in the sum of $60,000, conditioned that he should appear to answer the charge of fraud, and abide the final order of the Court thereon.

Longis was accordingly arrested and takeninto the custody of the sheriff. Shortly after, he took a rule to have the arrest set aside. Failing in this, in July, 1865, he presented a petition to the Court, no longer presided over by the Judge who had issued the order of arrest, and alleging that he had been imprisoned some fifteen months, and that the bail of $60,000 required of him was excessive, asked that it be reduced to $10,000. This request appears to have been granted ex parte, and Longis having furnished a bond for the said sum, was released from custody.

On the 14th November, 1865, he waived the jury, and proceeded to trial.

It appears from the evidence adduced by the opponents, that on the 29 th November, 1862, S.D. Gratiaa filed a petition against Longis, alleging that his partnership with the latter had expired on the 1st September, 1862; that since that date Longis had unjustifiably excluded him from any participation in the administration and liquidation of the firm, and had taken exclusive possession of all the assets, and books and papers of the firm, and had already appropriated a large portion of the assets to his own personal use and benefit, to the detriment and injury of petitioner and the creditors; that he had published in the newspapers that he was the sole liquidator of the firm, and alone entitled to collect and receive what was due to it; that in order to protect the partnership property from further depredations, it was necessary that a liquidator be appointed, and that the remaining assets and the books of the firm be sequestered.

The writ of sequestration accordingly issued, and an inventory of tho property sequestered was, by order of Court, taken by a notary and two appraisers, which showed goods and merchandise to an amount of $9,986, a portion of which goods appears to have been returned to parties who had sent them to the firm to be sold on commission.

It seems that five or six days after the writ of sequestratiou had issued, Longis disappeared, so that the creditors knew not what had become of him.

One of the witnesses who had formerly been his partner, declares that “ although he was very intimate with Longis, the latter did not tell him that he was going away.”

Still, exceptions were presented by counsel in his behalf, with a view of having the sequestration set aside.

Among the reasons given by the Judge for dismissing the exceptions, he says: “It is also proved that since the institution of this suit, the defendant has absented himself, and has not since been seen.”

After the dismissal of his exceptions, Longis filed no answer, and on the motion to confirm the default, the Court on the 17th March, 1863, declared the allegations in the petition of Gratiaa to be fully proved by the testimony adduced, and accordingly appointed a liquidator to the partnership.

Meanwhile an attempt was made by one E. Goss, who filed a third opposition to have a considerable portion of the goods sequestered delivered up to him, pretending that he was the owner of the same.

The Judge, in passing upon this opposition, says: “ Erom all the facts and circumstances disclosed by the evidence, I am forced to the conclusion that the pretended sale set up by him, (Goss) is only an attempt to assist Longis in concealing the property of the partnership from the pursuit of his partner, as well as from the creditors of the firm.”

Longis appears to have remained absent about thirteen months. He returned to this city in January, 1864, and shortly thereafter, filed his bilan.

It is shown that there were about $20,741 in the iron safe of the firm at the time Longis took exclusive possession of the assets in September, 1862; $16,780 wore in Confederate notes; and that he also took possession of some $15,000 worth of mortgage notes. None of these assets were carried on his bilan. After an imprisonment of seven months, the insolvent requested his friend, Comors, to whom he had confided the keeping of the mortgage notes, to deliver them up to the attorney of the syndic, and they were accordingly handed over to the latter.

On or about the 3d May, 1865, the syndic having been informed that Longis had on the trial of a case in the Second District Court, produced, by order of the said Court, one of the books which he had withheld from his creditors, to wit: the blotter, mentioned in the petition of the opponents, procured a writ of sequestration, by virtue of which the sheriff took possession of the said blotter.

An examination of this book shows that the entries therein, from the 14th to the 30th November, 1862, those from A. to H., were not carried into the journal or ledger.

These entries are as follows:

On the 14th November, 1862, cash received from A. Bias. 5 20 25

Cash received from J. J. Clark........................ 25 30

Cash received from J. Hawkins....................... 819 00 $ 864 55

On the 15th November, cash from Denechaud................. 28 00

On the 17th November, cash received from Citizens’ Bank..... 6-14 00

Cash received from Lapeyrollerie............................. 600 00

On the 20th November, cash received from same.............. 1123 00

On the 25th “ “ “ “ Galpin............. 36 00

On the 29thBovember, cash received from Lapeyrollerie.......57,000 00

Making total amount from 14th to 25th November----•......54,295 55 And on the next day, the 30th, are the following entries:

Cash taken out by P. Longis................................. 4,295 55

Cash taken out by P. Longis, in Confederate notes............ 16,780 00

Total amount taken by Longis on the 30th November, 1862... .521,075 55

Letters of Longis, written a short time previously, show that these Confederate notes were from 35 to 40 per cent, below par.

It no where appears that his creditors, the wine and liquor merchants, who forwarded their merchandise to be sold by the firm, authorized the sale of their goods for Confederate notes; and it is urged that to allow Longis to go unpunished after taking these Confederate notes, and using them for his own benefit, as he appears to have done, without giving any account of the same to his creditors, when he himself declared them to be worth, at the time, at the least sixty cents on the dollar, would be to hold out a reward to dishonesty and bad faith. !

The creditors, who are blameless, it is urged, cannot be punished for his illegal acts, and in support of this position against Longis, the case of Mrs. Luzenberg against Cleveland, lately decided, is relied upon; the doctrine therein taught we adhere to, and could apply, if this wore a suit against Longis for the recovery of the amount of property sold by him ■without authority for that kind of currency.

But as this Court lately hold in Cockburn v. Wilson, we do not consider that Confederate notes, and the abstraction or conversion to her use, of any such an illegal issue, can in law be deemed a fraud.

A careful examination of the record has satisfied us that the charges of fraud against Pierre Longis, have been otherwise abundantly proved; and as the case was, at the request of the defendant, Longis, tried by the Judge of the lower Court, and not by a jury (see page 256, R. S., section 27,) we might, if the law under which the proceeding is had, is not repealed by the National Bankrupt law, finally dispose of the case.

On this point, we adhere to our decision in the case of Meekins, Kelly & Co. v. Their Creditors, not yet reported, in which we held that where proceedings had been commenced under the State insolvent laws, they stood unaffected by the United States Bankrupt law; and we now hold, that where the penal clauses of the State insolvent laws can be made operative, effect must be given to them.

The penalties prescribed by the 27th section of the ‘"'act relative to voluntary surrenders,” approved March 15th, 1855, R. S. p. 256, are that the insolvent debtor convicted of fraud, shall forever be deprived of the benefit of laws passed in favor of insolvent debtors in this State, and shall be sentenced to imprisonment for a term not exceeding three years.

This State insolvent law has no vitality, except for such cases as were pending under it, in the State Courts, before the passage of the United States Bankrupt law, which, otherwise, repealed all State insolvent laws.

It would be, therefore, a vain thing to do more than to deprive the defendant of the benefit of the insolvent law of 15th March, 1855, in tho present preceeding, which he has no legal right to invoke. It is otherwise with the second penal clause, which under the said State law, can be legally applied by the Court.

In the exercise of its legal discretion, the Court will mitigate the sentence of imprisonment.

It is therefore ordered, adjudged and decreed that the judgment of the lower Court be annulled, avoided and reversed; and proceeding to give such a judgment as should have been rendered by the Court below, it is now ordered, adjudged and decreed that the said Pierre Longis, having been guilty of fraud under the sections 19 and 20 of the act relative to voluntary surrenders, approved 15th March, 1855, that he be deprived in this proceeding of the benefit of that law, and that he be imprisoned in the parish jail of Orleans for the term of six months, and that he pay the costs of opposition in both courts.

Rehearing refused.  