Jones v. Horsey

| Md. | Dec 15, 1853

Eccleston, J.,

delivered the opinion of this court.

The counsel for the appellants contends, that the recommendation of O. Horsey, as the permanent trustee of Wiggins, even if the recommendation had been made by the plaintiffs in person, was not such a recognition of, or assent to, the proceedings in insolvency as could deprive them of their right to attach the fund in controversy, they being foreign creditors. He assumes, “that nothing short of taking a dividend under the insolvent laws, can so bring a foreign creditor under the operation of such laws as to affect his debt.” In this we think he is certainly mistaken. He refers to Van Hook vs. Whitlock, 26 Wend., 43. McCarty vs. Gibson, 5 Grattan’s Rep., 307. Norton vs. Cook, 9 Conn. Rep., 314, and Phillips vs. Allan, 8 Barn. and Cres., 477, as sustaining his view of the subject. But in neither of these cases was there an act on the part of the creditor which could be construed into an assent to the proceeding; on the contrary, in each case the creditor opposed the discharge of the applicant and did nothing else', so far as the reports inform us.

In Clay vs. Smith, 3 Peters’ R., 411, the creditor received a dividend of the insolvent’s assets, and that was held to be such an assent to the insolvent laws of the State, as amounted to an abandonment of the extra-territorial immunity of the foreign creditor. And this is a leading case, which has since been referred to in various decisions. But we have never understood it was supposed to establish the doctrine, that nothing less than the actual receipt of a portion of the assets could have a similar effect upon the creditor’s claim.

The effect of an insolvent’s discharge being under consideration in Van Raugh vs. Van Arsdaln, 3 Caine’s Rep., 155, Chancellor Kent, in giving the decision of the court, declined expressing any opinion as to the operation of such a discharge, provided the case had been presented in either' of several enumerated aspects, among which are, “if the plaintiff had given his assent to the proceedings under the' insolvent law, or accepted any dividend of the defendant’s estate.” It is very true the learned chancellor does not here decide what would be the effect either of assenting to the proceedings or of taking a dividend; but it is equally true, he seems to consider these alternatives as standing upon equal grounds; and, at all events, we cannot believe he entertained the opinion, that receiving a portion of the estate was the only acquiescence in the proceedings which could take from a foreign claimant his rights, as such, in opposition to the discharge. There is no necessity, however, to rely upon the inference to be drawn from this language of Chancellor Kent, for a decision of the present distinguished chief justice of the United States, in White, Warner f& Co., vs. Winn and Ross, establishes clearly, that the rights of a foreign creditor, in opposition to the discharge of an insolvent and in preference to the claims of domestic creditors, may be lost by other means than taking a dividend of the assets. This decision may be found in 8 Gill, 499, and is also mentioned in 2 Md. Rep., 468. In the case alluded to, an attempt was made in behalf of the plaintiffs, (who were foreign creditors,) in an attachment, laid in the hands of the trustees of an insolvent, to set aside a deed as fraudulent under the statute of 13 Eliz. In the progress of the cause the court were satisfied, that under the English statute, and independently of our insolvent laws, the deed was valid. And the court put the plaintiffs in the predicament of being obliged to decide, whether they would submit to a non suit in consequence of the validity of the deed, if they intended to deny the validity of the proceedings in insolvency; or whether they would insist upon avoiding the deed under our insolvent laws. By adopting the latter alternative, they could claim under the permanent trustee such interest only as the insolvent laws would award them. So that they were forced to elect between a non suit or taking a dividend of the fund in the hands of the trustees. This, it will be seen, was not a proceeding in a State court, having jurisdiction over cases of insolvency, but in the circuit court of the United States. And there the foreign creditors were held hound to submit to the effect and influence of our insolvent system, if they claimed the benefit of that system for the purpose of invalidating a deed, which otherwise would have defeated their entire claim, so* far, at least, as the property included in that deed was concerned. Voluntarily calling in aid the insolvent laws to avoid the deed otherwise valid, is then such an acquiescence in those laws as places a foreign creditor upon the same level with domestic creditors, and compels him to take a dividend of the assets as.they do. We see no just reason why voluntarily coming forward and uniting in the recommendation of a trustee, especially when that trustee is the attorney of the claimant, should not produce a-similar effect.

Admitting this conclusion to be correct, the appellants' coünsel insists, that the recommendation of the trustee in the* present case being the act of the attorneys and not of the parties, they cannot be affected by it. The authorities cited in support of this position do not, in our opinion, establish the principle contended for. They are in relation to the' inquiry, whether an attorney can enter a retraxit, or can release or compromise h,is clientes claim. But'this is neither a retraxit, a release, or a compromise.

In Holker vs. Parker, 7 Cranch, 449, it was contended that an attorney could not, without the consent of his client, transfer a cause to other judges than those appointed by law, aind place it before a tribunal distinct from the' one before which the party himself had chosen to place it. But the Supreme Court, in the opinion delivered by the chief justice, denied the correctness of the position, and held “it to be the practice throughout the Union for suits to be referred, by consent of counsel, without special authority.” And in- the Alexandria Canal vs. Swann, 5 How. S. C. R., 89, a question arose, whether the reference was authorized by the corporation in the manner or by the persons having the right to' do so. The court would not inquire what members of the corporation had the power to direct the proceedings in the suit and assent to the reference. And they say, “the corporation, however governed in this particular, was the- party defendant in court and was represented by its counsel, and his acts are presumed to be authorised by the party in conducting the suit. This has long been the settled law of Maryland-, which is thé law of Washington county.”

From those two cases it is perfectly plain, that an attorney having charge of a claim may transfer it from the action and decision of such judges as the client has selected in the first instance, and submit it to the decision of other persons. And in the absence of proof to the contrary the legal presumption is, that in so doing the attorney acted by the authority of the client.

It is admitted here, that -when Messrs. Brent and Horsey signed the recommendation, they were attorneys of the plaintiffs for the prosecution of their claim. And we find no proof in the record of any restriction or limitation upon their authority.

The case of White, Warner & Co., vs. Winn and Ross, shows there may be instances in which it would be exceedingly beneficial to a foreign creditor that his attorney, on the spot, attending to the management of his claims, should be clothed with power to acquiesce in the proceedings in insolvency. It has not been and we do not presume it will be seriously contended, that if from assenting to the insolvent laws by an attorney, the interest of the client would be promoted, the assent would not then be valid and binding. If binding in such a case, there wrnuld be great injustice in holding, that the result of the matter is the only test of the validity of the act, in regard to its influence on the client. If, in the beginning, the effect on the claim should be uncertain, but in the end prejudicial, the client would have the full benefit of the experiment, without its having any injurious influence upon his extra-territorial rights. The law, as it now stands in regard to those rights, is exceedingly hard and oppressive upon the claims of domestic creditors, and we feel no inclination to increase the hardship.

The commissioners in insolvency, under the laws relating to the city of Baltimore, were legally authorised to perform acts having a material bearing and effect in the settlement and final adjustment of claims against the estate of insolvents. Perhaps few, if any, of their acts were more important, as regards creditors, than the selection of trustees. Beyond the limits of Baltimore city, the county courts, in regular session, !had the power to appoint trustees where the insolvents made application to the court. In the recess, a judge of the county court or orphans court could make the appointment.

By the selection of an active and thoroughly competent person, the assets might be much increased beyond what they would be under the management of a man of the opposite character, and it might very well happen that a foreign creditor, by taking a dividend from the efficient trustee, would actually receive a larger share of his claim than he could get by means of an attachment laid in the hands of a trustee, regardless of his duty or incompetent to perform it. And this is a good reason why an attorney should have the authority, at his discretion, when not prohibited by his client, to unite in the recommendation of a trustee. If such an act is within the limits of his authority, (which we think is the case,) then, when done, it is presumed to be with the approbation of his client, unless proof to the contrary is given. Therefore, the recommendation before us must be considered as having the same effect upon the appellants as if it had been their own act. See the cases of Henck vs. Todhunter, 7 H. & J,, 275, and Kent vs. Ricards, 3 Md. Ch. Dec., 392.

Approving the decision of the court below on both prayers, the judgment will be affirmed.

Judgment affirmed.