12 F. Cas. 1079 | U.S. Circuit Court for the District of Rhode Island | 1842
This case has, from accidental circumstances, remained for consideration a longer period than has been usual in bankruptcy. The arguments have been very elaborate, and have exhausted the subject. The case, however, after all, lies within a narrow compass; and mainly turns upon the true construction of the second section of the bankrupt act of 1841, c. 9 [5 Stat. 442], That section declares, that “all future payments, securities, conveyances, or transfers of property, or agreements, made or given by any bankrupt, in contemplation of bankruptcy, and for the purpose of giving any creditor, indorser, surety, or other person any preference or priority over the other creditors, and all other payments, securities, conveyances, or transfers of property, or agreements made or given by such bankrupt, in contemplation of bankruptcy, to any person or persons whatever, not. being a bona fide creditor or purchaser for a valuable consideration, without notice, shall be deemed utterly void, and a fraud upon this act.” The section further provides, that “in case it shall be made to appear to the court, in the course of proceedings in bankruptcy, that the bankrupt, his application being voluntary, has subsequent to the first day of January last, or at any other time, in contemplation of the passage of a bankrupt law, by assignment, or otherwise, given, or secured any preference to one creditor over another, he shall not receive a discharge unless the same be assented to by a majority in interest of those of his creditors who have not been so preferred.” The seventeenth section of the act declares, that this act shall “take effect from and after the first day of February next.” The act passed and was approved on the nineteenth day of August, 1841. Now, the question adjourned by the district court, is, whether the assignment of Taylor & Co., (stated in the case) being an assignment in trust of all their property, made on the eighteenth of December, 1841, (some months after the passage of the act, but before it was to go into operation,) securing to certain creditors of Taylor & Co., a preference and priority of payment over their general creditors, be an act of bankruptcy within the first section of the act, which declares, that whenever any person being a merchant, &c., shall among other things, “make any fraudulent conveyance, assignment, sale, gift, or other transfer of his lands, tenements, goods or chattels, credits, or evidences of debt, &c.,” he may, upon petition of any one or more of his creditors, &c., be declared a bankrupt. Now, 'under the English bankrupt laws, it has been settled, for at least three quarters of a century, that an assignment of the nature stated, made by any jierson within the scope of the bankrupt laws, is a fraud upon those laws, and of itself an act of bankruptcy. The cases cited at the bar, are conclusive as authorities upon this point; and put it upon the ground, that it is against the whole policy and objects of those laws, and must supersede their operation. See Linton v. Bartlet, 3 Wils. 47; Butcher v. Easto, 1 Doug. 294; Eckhardt v. Wilson, 8 Term R. 140; Ex parte Bourne, 16 Ves. 145; Wbrseley v. De Mattos, 1 Burrows, 467, 477; Wilson v. Day, 2 Burrows, 827; Alderson v. Temple, 4 Burrows, 2239; Harman v. Fiskar. Cowp. 117, 123; Rust v. Cooper, Id. 629, 633; Tappenden v. Burgess, 4 East; 230; Newton v. Chantler, 7 East, 138, 143. Our bankrupt act of 1841, c. 9, §§ 2, 4, demonstrates, that congress had an earnest intention to prevent all preferences and priorities in favor of particular creditors, and to secure the assets of all persons, falling within the purview of the act, for distribution equally among all their creditors pro rata. This is the main scope, and object and policy of the act. It would, therefore, be a matter of surprise, if the act had permitted preferences and priorities to particular creditors, going even to the extent of sweeping away all the property of the debtor, to the exclusion of his general creditors, in cases like the present case, without rebuke or prohibition.
The whole question, therefore, turns upon the language of the two first clauses of the act. The first declares all future payments, securities, conveyances, or transfers of property, made in contemplation of bankruptcy, and to give a preference or priority to par
But if this were not the natural or necessary interpretation of the language of statutes generally, no one can doubt, that it is competent for congress to provide, that particular provisions shall be in force or efficiency from the passage of any act, if such is its pleasure, although the general operation of the act is suspended until a future time. The very clause of this section, respecting assignments made since the first day of January, 1841, (long before the passage of this act,) demonstrates this; and no one can deny, that it must, from the passage of the act, be deemed to have possessed and retained its full potency, and virtue, and designed operation. It is true, that if the bankrupt act of 1841 had never gone into operation, there could have been no such proceeding as that of the present petitioner against Taylor & Co., in invitum, to be declared bankrupts. •But it is equally true, that having gone into operation, all its provisions are to be deemed to be equally in force, and to have due effect, according to the language and intent of the act. Now, to me, at least, it seems impracticable, consistently with the known objects and policy of the act, to give any other interpretation to the word “future,” in the connection, in which it stands, than that it means “future” to the passage of the act, not “future” to the act’s going into operation. If the latter had been the intent of congress, similar language would have been used to that used in the bankrupt act of the fifth of April, 1800, c. 19, § 1, addressed to the same subject, of fraudulent conveyances; where it is said, “that from and after the first day of June next, if any merchant,” &c., “shall make, or cause to be made, any fraudulent conveyance,” &c. See Wood v. Owings, 1 Cranch [5 U. S.] 239. So here, the language in the bankrupt act of 1841, could have been, not “future,” generally, but. “from and after the first day of February next,” or, “from and after this act shall take effect,” all payments, securities, conveyances, or transfers, &c., made in contemplation of bankruptcy, &e., shall be deemed utterly void, and a fraud upon this act. What would be the effect of giving to the bankrupt act of 1841, the construction contended for by the respondents’ counsel? It would be to enable every debtor, at any time, between the nineteenth of August, 1S11, and the first of February, 1S42, in contemplation of bankruptcy, to make all such payments, securities, conveyances, or transfers, which he might choose, giving preferences and priorities, which the very act would treat as a fraud, and thus enable him to strip himself of every dollar of his property, in favor of his preferred creditors, and leave all the rest of his creditors without any payment or dividend. Now, if the act imperatively required such
The certificate was as follows:
Circuit Court of the United States, Rhode Island, September, 1842. In the Matter of Theodore Hutchins, Petitioner, v. George W. Taylor, and Another, in Bankruptcy. It is ordered by this court, that the following answer be sent to the district court upon the question adjourned by that court into this court, namely. It is the opinion of this court, that the assignment of the said George W. Taylor & Co., referred to in the question, being an assignment in trust, of all their property, made on the eighteenth day of December, A. D. 1841, and securing to certain creditors of the said George W. Taylor & Co., a preference and priority over their general creditors, is an act of bankruptcy within the true intent and meaning of the bankrupt act of 1841, chapter 9, and as such, will authorize the district court, agreeably to the prayer of the petition of the said Theodore Hutchins, to declare them bankrupts. Joseph Story, One of the Justices of the Supreme Court of the United States.