31 Mich. 391 | Mich. | 1875
On the 18th of November, 1873, Albert Bow made a voluntary assignment of his property to Eli B. Rogers, for the equal benefit of all his creditors, no preferences being declared. Rogers accepted the trust and took possession.
A few days later the plaintiffs commenced a suit against Bow, in the circuit court, to recover a debt of some three hundred dollars they held against him.
On the institution of this suit, they at once proceeded by garnishee process in the same court against Rogers. And being summoned to appear and make disclosure on such process, he appeared on the 18th of December, 1873, and made a general denial. The plaintiffs then filed a series of special interrogatories to be answered by him, and on the 27th of. the same month he appeared and answered categorically.
From these answers it appeared that Bow had assigned to him, as before stated, that the personal property assigned was estimated as worth several thousand dollars, and the real estate from twelve to fourteen hundred.
On the 27th of July, 1874, judgment was given in the principal suit against Bow for damages, two hundred and eighty-one dollars and thirty-one cents; and thereupon, and on the same day, the garnishee suit against Rogers, Bow’s assignee, was brought on to be tried before the court without a jury, and it was expressly admitted that when Bow-assigned he was indebted for more than a thousand dollars upon claims already due, and that Rogers received into his possession from Bow, under the assignment, and still retained, property exceeding in value the amount of the plaintiff’s judgment against Bow.
The counsel for plaintiffs then prayed a finding by the court, and they likewise presented two propositions of law-in the nature of requests to charge:
First, that plaintiffs were entitled to judgment against Rogers because the assignment was not in compliance with chapter two hundred and thirty-four compiled laws, entitled “Of the powers, duties and obligations of assignees of insolvent debtors under this title;”
Second, that the plaintiffs were entitled to recover, because the assignment was void as contrary to, and not in conformity with, and made under the bankrupt law of the United States.
The court then made a finding of facts upon the disclosure and admissions, and decided as matter of law that the assignment was valid and passed the title of the property to Rogers in trust for Bow’s creditors, and that the possession by Rogers of the property in virtue of the assignment gave no right to plaintiffs as creditors of Bow to maintain garnishee process against Rogers; and that Rogers was entitled to judgment for his costs and expenses, which were fixed at twenty dollars.
The -plaintiffs excepted to the finding, and caused the case to be brought here on writ of error.
The first proposition of law submitted to the court is most properly abandoned. It was without a shadow of force. The second is, however, insisted on, and it is the only point attempted to’be maintained, and an elaborate argument has been submitted in its favor.
Were it not for the.apparent confidence of counsel that it possesses merit, we should dismiss it without a moment’s hesitation and affirm the judgment.
Upon the case as it stands before us, it must be taken as true that the assignment was an honest conveyance to a proper person, and honestly and fairly intended to secure the full payment of all the creditors at the same time and within a reasonable period, if the property should be found sufficient, and if not, then to be distributed equally and ratably within a reasonable time among all the creditors.
Nevertheless the plaintiffs prosecute this garnishee process under the state lato against the assets so assigned and dedicated to all alike; and tinder such process insist upon their right, in the name of the bankrupt law, and as a consequence of its existence, to compel payment out of the assigned effects of their claim in full and without delay, whatever may be the consequence to other creditors having equal equities, and without heed to the fact of sufficiency or insufficiency of the fund to satisfy the just demands of other creditors.
The proposition comes to this:
Before yielding to a proposition so extravagant we should certainly require very convincing proof of its solidity and force.
The argument in its favor is in substance this: It is settled by authority from which there is no appeal, that the existence of a federal bankrupt law, ipso facto, suspends all state insolvent laws; that the common law prevailing in this state, on which voluntary assignments for the benefit of creditors are based, and to which they owe all their legal efficacy, is a part of the state system regulating and governing in cases of insolvency,, and within the principle which causes a bankrupt act to work suspension of incompatible regulations, and hence no voluntary assignment for the benefit of creditors, however right, regular and proper in all respects in the abstract, can have any force or validity whatever, if made whilst a bankrupt law is in existence..
Without stopping to consider whether a garnishee proceeding before a justice or in the circuit-court is a proper one for raising the question, and without pausing to notice several difficulties in the plaintiffs’ case, it suffices to observe, that the second term involved in their px’oposition, and which they cannot dispense with, is fatally infirm.
Insolvent laws are not principles which are the birthright of the citizen and pervade the state as naturally as the right to acquire property and dispose of it; but they are artificial yet positive regulations made by the legislature to exonerate the person or property of the debtor, or both, and to relieve him. from the pressure of creditors.
They neither originate in, nor rest upon any general right in the individual to contract. Neither do they at all depend finally upon any general and independent power of the individual in virtue of his proprietary right to handle his property in any honest way his judgment may dictate. On the contrary, they are provisionary limitations of this power to contract and dispose of property, and such as the legislature consider are justified on the ground of their general utility and advantage. They belong to the same family, and are often nearly, if not altogether, identical with what, by way of eminence, are called bankrupt laws.
They are induced by the same or resembling motives, and operate in the same direction. In short, they are so similar in design, complexion and operation, to laws which may be described as bankruptcy laws, that no court has yet been able to mark any distinct dividing line.
In consequence of this sameness, the common character of the objects, and the identity of the sphere of operations of these differently named laws, and in consequence of the supremacy due to laws made by congress pursuant to the federal provision respecting a bankrupt law, and in furtherance of the policy of that provision, and to avoid conflicting proceedings, it has been considered that the existence
It is to be steadily borne in mind that rve are not inquiring, and are not called upon to inquire, how a federal court would or might regard this assignment if it were regularly brought into question under bankruptcy proceedings against the assignor, and where its force would be directly examinable on an issue distinctly raised on the bankrupt law.
That is a question, as before stated, with which we have no concern. It is one which might regularly arise under the bankrupt act, and in a proceeding calling its energies into play.
The true question here is, not whether the assignment was an act of bankruptcy, but whether the bare circumstance, that the act was standing on the statute book of the union, deprived the owner of all power to convey his property to one in trust for the equal benefit of all his creditors, in perfect honesty and good faith, so that independently of any attempt by any one in any place to put the bankrupt law in motion, his conveyance must be deemed absolutely void, and not even sufficient to give the holding by the assignee any coloring of right in contemplation of law.
The grounds of the argument to uphold the affirmative have, been examined, and they are not satisfactory. No adjudged case sustaining any such view has fallen under 'Observation, whilst on the contrary a good many have been noticed which more or less strongly imply the opposite. Three or .four may be particularly referred to.
In Janes v. Whitbread, property conveyed by one sub
Coate and another v. Williams, was a similar if not stronger case, and the ruling toas the same. — Excheq., 9 E. L. & E., 481. The principle contended for in the case at bar, if sound, was applicable to these English cases.
In Buchanan v. Smith, 16 Wall., 277, a. paper manufacturing company in New York, made a general assignment for the benefit of creditors, and Buchanan & Co., in the face of the assignment, proceeded in the state courts to get judgments against the assignors, and levied executions and secured the appointment of a receiver. Bankruptcy proceedings were instituted against the company, an assignee was appointed, and he filed a bill in the federal court to subject the estate, and remove the obstacles raised by the assignment, and the proceedings on the part of Buchanan & Co. in the state courts. No one pretended that the assignment was void as a consequence merely of the existence of the bankrupt law. The court disposed of it by saying that both sides had conceded that it was repugnant to a certain local law of the state.
In McLean v. Meline, 3 McLean, 199, a bill was filed by assignee in bankruptcy to set aside an assignment claimed to have been made by the bankrupt in contemplation of bankruptcjn The theory of the proceeding was the direct enforcement of the bankrupt act against the assignor and his estate, and it was based on the act itself. It was a specific assertion of the powers of the act in the appointed jurisdiction, against an object of those powers, and not an attempt, through a special proceeding under state laws, to set up the existence of the bankrupt law as enough to defeat the assignment. And I understand the court thought the assignment invalid when thus directly and dis
Now, if the position taken by the plaintiffs in the case at bar is valid, it is remarkable that in the cases cited, and many similar ones, neither court nor counsel should have had any suspicion of it. So plain and ready a ground of decision could not have been overlooked. It must have been taken for granted that the simple existence of a bankrupt law could not render a common-law assignment, ipso facto, void.
I think the point raised is untenable, and that the judgment below should be affirmed, with costs.