44 F. 57 | S.D.N.Y. | 1890
In September, 1871, a first dividend was declared in favor of creditors in the above matter, including the sum of $1,125, to the petitioner’s intestate, Thomas Hare, trustee. Warrants for all the dividends were executed, and most of them delivered. That to Hare, trustee, was not delivered, on account of some difficulty in the proper voucher to be given for it. Some considerable time afterwards the 'United States obtained a judgment for $99,-951 against the bankrupts upon a forfeiture of the value of goods fraudulently imported by them before the bankruptcy, and in January, 1886, commenced suit against Demás Barnes, the assignee, personally, to recover the sum of $32,000, which he had paid out to creditors on the dividend of 1871. On the trial of the case, in February, 1886, in this court, a verdict was directed for the defendant, following the decision of Gresham:, J., in U. S. v. Murphy, 15 Fed. Rep. 589. On a writ of error thereupon taken to the circuit court, the judgment was reversed, in July, 1887, and a new trial ordered. Meantime, in April, 1886, an application by petition was made by Mrs. Hare to this court for an order directing the assignee in bankruptcy to pay her the dividend of $1,125, declared in 1871. In view of the pendency of the litigation respecting the rights of the United States as against the assignee, the motion was denied without prejudice. On a review of this order in the circuit court, in May, 1886, the order was there so modified as to direct the assignee to pay Mrs. Hare the dividend upon her furnishing the assignee an approved bond with surety for the repayment thereof, with interest, in the event of judgment being “recovered against the assignee by the United States in the pending suit." No bond was furnished, and the dividend, therefore, remained unpaid. After the reversal by the circuit court of the judgment below in the suit brought by the United States, the claim was compromised and settled between the government and the executors of the assignee, who had died in the mean time, and the action was thereupon discontinued. The reversal (24 Blatchf. 466, 31 Fed. Rep. 705) was upon the ground that the United States was not bound to come into the bankruptcy court to assert its priority, even as respects the fund being administered by the court; and that the assignee, when chargeable with notice of any existing claim on the part of the government, pays any dividend at his own peril, under sections 3466 and 3467 of the Revised Statutes, notwithstanding any order of the court in bankruptcy for such payment; and that no laches or estoppel can be imputed to the government for the as-signee’s protection. Subsequently to the death of Mr. Barnes a new as-signee was appointed on November 17, 1888, who, upon the order of the court, dated March 18, 1890, paid all the remaining assets, including the fund in question, to the government. In October following the present application was filed for an order directing, the new assignee to pay the same dividend to Mrs. Hare, upon three grounds: (1) That
1. The order to pay Mrs. Hare, on her filing the bond, etc., was evidently a provisional order, intended to secure repayment of the money to the assignee in case the United States should bo held entitled to a priority as respects that money, and to indemnify the assignee for his liability, in that event, to pay the same moneys to the United States. The subsequent decision in the circuit court determined that the assignee was liable for similar payments previously made, and would be liable to the United States for any such payment made to Mrs. Hare. As the order was not acted on, no bond being given, it is immaterial that the language of the condition is not literally applicable in consequence of the suit having been settled by compromise, instead of by entry of final judgment against the assignee. In the memorandum accompanying the decision of the motion, Judge Wallace says:
“It may turn out, however, by the result of the ponding suit between the United States and the assignee, that the former is entitled to priority out of the undistributed estate over the claim upon which the dividend had been declared. In that event the present claim would have no equities against the assignee. ”
The reversal by the circuit court of the judgment below in favor of the assignee was a direct determination that the United States was entitled to priority over the claims upon which that same dividend had been declared. The present claimant, therefore, in the language of Judge Wallace, has “no equities against the assignee.” The adjudication made in the former order was plainly not a final adjudication on the merits, and the reversal of the judgment wholly supersedes its provisions, since it was never acted upon. On application it would be canceled.
2. The order of April 22, 1884, was not an adjudication as respects the rights of Mrs. Hare, or of the United States, to the payment of this
3. No authority is cited for the position, now taken for the first time 20 years after the bankruptcy, that the assets belonging to the different branches of the bankrupts’ business in New York and in Philadelphia shall be marshaled separately for the benefit of the respective creditors of each, or that any such marshaling, even if allowable as respects the different creditors, would prevail against the statutory priority of the United States. For the petitioner it is urged that section 5074, U. S. Rev. St. (section 21 qf the bankruptcy act of March 2, 1867) recognizes the assets of distinct businesses, though carried on by the same identical firm members, as being distinct estates to be wound up as such in bankruptcy, and hence marshaled in favor of their respective creditors. That section is as follows:
“When the bankrupt, at the time of adjudication, is liable upon any bill of exchange, promissory note, or other obligation in respect of distinct contracts as a member of two or more firms carrying on separate and distinct trades, and having distinct estates to be wound up in bankruptcy, or as a sole trader, and also as a member of a firm, the circumstance that such firms are in whole or in part composed of the same individuals, or’that the sole contractor is also one of the joint contractors, shall not prevent proof and receipt of dividend in respect of such distinct contracts against the estates respectively liable upon such contracts.”
Although this section speaks of firms in whole or in part composed of the same individuals, it does not provide under what circumstances the firm estates shall be kept distinct. The argument rests upon implication only, and though the language of this section, considered by itself alone, would seem to furnish an implication that the same identical individuals might compose “two or more firms, carrying on separate and distinct trades, and having distinct estates to be wound up in bank-
This was a single copartnership, though with two branches. The several changes in the firm from time to time affected both branches alike. The bankruptcy was one; and the whole assets have from the