Corey v. Ripley

| Me. | Jul 1, 1869

Dickerson, J.

Assumpsit on account annexed to the writ. The defendant pleaded a discharge in bankruptcy in bar of the further maintenance of this suit. Tlie plaintiff alleged, in his replication, that the defendant’s discharge is invalid for the reasons set forth in § 29 of the bankrupt act of 1867.

According to the agreement of the parties, the law court is to decide whether the defendant’s discharge in bankruptcy can be impeached in this court for any cause which would have prevented the granting of the discharge, under the bankrupt act, or would have been sufficient ground for annulling the discharge in the United States court, as provided in that act.

Section 29 of the bankrupt act of 1867, specifies the grounds which will prevent the granting of a discharge, or render one invalid when granted. After enacting that a discharge duly granted under this act shall be a full and complete bar on all suits, . . . and that the certificate of discharge shall be conclusive evidence of the fact and the regularity of such discharge, § 34 contains the following proviso : “ Any creditor or creditors of said bankrupt, whose debt was proved or provable against the estate in bankruptcy, who shall see fit to contest the validity of said discharge, on the ground that it was fraudulently obtained, may, at any time within two years from the date thereof, apply to the court which granted it, to set aside and annul the same.”

The question presented in this case did not arise under the bankrupt act of 1841, as that act made the bankrupt’s discharge conclusive “ in all courts of justice ” (§ 4), unless it should be impeached for one of the causes stated in the act itself, and no tribunal was designated for testing its validity. This provision of the act of 1841, however, was held to restrict the action of courts, in impeaching the validity of the discharge of a bankrupt, to the causes and the manner therein specified. Chadwick v. Starrett, 27 Maine, 138. Coates v. Bush, 1 Cush. 564. Humphrey v. Swett, 31 Maine, 192.

By parity of reasoning, the mode of impeaching the validity of a discharge prescribed in the act of 1867, excludes all other modes; and such, we think, is the true construction of that act. The proceedings in bankruptcy are statutory proceedings. The powers exercised and the remedies provided in bankruptcy, are given by statute. The impeaching tribunal is specified, and this designation, according to well-established principles of interpretation, forms a part of the remedy, and excludes all others. Dudley v. Mayhew, 3 N. Y. 10. Stevens v. Evans, 2 Barr. 1157. City of Boston v. Shaw, 1 Met. 130.

The act of 1841 made the bankrupt’s discharge “ full and complete evidence of itself, in favor of such bankrupt . ... in all courts of justice . . . unless the same should be impeached,” for the causes and in the manner stated. That act, moreover, contains no such provision for determining the validity of a discharge in •bankruptcy, as is provided in the act of 1867. The difference in the phraseology and the provisions of the two statutes is quite significant, and precludes the construction, so ingeniously contended for by the learned counsel for the plaintiff, that the same mode of testing the validity of the bankrupt’s discharge obtains under both acts. Instead of subjecting the bankrupt to the liability of having the validity of his discharge called in question, in any and all suits that should be brought against him, on his debts proved or provable under the bankrupt act, for an indefinite time, the proviso, in the 34th section of the act of 1867, was intended to limit all contestants to the period of two years from the date of the discharge, and to the tribunal therein specified, in respect to the time and mode of annulling his discharge. The act in effect says to all such, “You have had an opportunity to prove your claims, and to show cause why your debtor should not receive his discharge in bankruptcy: you are allowed two years to impeach that discharge, before the tribunal that granted it: at the expiration of that period, you will.have had your day in court, and must thereafter be forever silent,” interest reipublicce est sit finis lititium. There is but one way of impeaching a discharge in bankruptcy, under the bankrupt act of 1867, and that is the mode expressly provided in the thirty-fourth section of that act. It is by no means improbable that the experience of contesting the validity of such discharges before the State courts, taught congress the wisdom of restricting the jurisdiction over this subject to the federal courts.

But there are still more serious objections to the construction contended for by the plaintiff’s counsel. The constitution of the United States confers upon congress the power to establish a uniform system of bankruptcy. This grant of power carries with it jurisdiction over the person and property of the bankrupt, and authority to provide courts, and all other instrumentalities necessary and proper to carry into effect the general purpose of a bankrupt law. The authority of congress over this subject being paramount to State authority, where it has provided a mode of dealing with a bankrupt’s estate, that mode only can be pursued, and it would be an infringement of the paramount law, if State courts should adopt another and a different mode. The authority conferred by the bankrupt act of 1867 upon United States courts, to set aside and annul a discharge in bankruptcy, is incompatible with the exercise of the same power by a State court. If the validity of a discharge in bankruptcy may be impeached by a State court, this may be done, though such discharge had been declared valid, in the mode provided in the bankrupt act; and the anomaly would be presented of a discharge, recognized as valid by the courts of the United States, and invalid by a State court. Sturgess v. Crowningshield, 4 Wheat. 196. Stetson v. City of Bangor, 56 Maine, 286.

The distinction made by the counsel for the defendant, between actions brought before the debtor petitions to be admitted a bankrupt, and those brought afterward, is unsound. The authority of congress over the subject-matter is the same in both cases; and it has ever used that authority appropriately to reach that class of cases. In respect to the question at issue in the case at bar, the same principles govern in either case.

According to the agreement of the parties there must be—

Judgment for the defendant, for his costs in the law court only.

Arpueton, C. J.; Cutting, Walton, Barrows, and Dan-forth, JL, concurred.