6 Johns. Ch. 52 | New York Court of Chancery | 1822
This case has been argued with much ability, and .the points raised admit of some latitude of discussion; but they have been rendered quite embarrassing by the complicated nature of the facts, and the distressingly voluminous documents in which they are involved,
1. The first point is, whether Mark continued bound by his personal covenants in the trust deed to Murray, after his discharge as a bankrupt.
His debt of 40,000 dollars to Count De Rotienham and others, contracted in Germany in 1796, and payable there, was a debt which “ might have been proved” under Ms commission of bankruptcy; and his certificate of discharge under the bankrupt act of the United States, in 1800, was, consequently, a bar to that debt. The. bankrupt act of 1800 was general in its terms, and applied to all the bankrupt’s estate, “ whatsoever and wheresoever,” and to “ all^ and every the creditors of such bankrupt who should come jn and prove their debts under the commission and, also, to “ all debts which were, or might have been proved under the commission.” It was suggested, that if an insolvent, or bankrupt statute, did not, by express words, or by necessary construction, extend to extra-territorial, or foreign
There is a wide distinction between a discharge under the authority of the government where the suit is brought, and a discharge obtained abroad, which has no authority here, and is admissible only upon the ground of comity. In the latter case, a wide range is given to the operation of considerations growing out of the special circumstances of the case, or springing from enlarged views of justice and international policy. In the former, we have only to look to the fair and reasonable interpretation of the statute, and. to give effect to its intention.
2. But, admitting Marie to have been discharged from his bond to the German creditors, the next, and the more difficult question is, whether his certificate was a discharge from the covenants contained in his trust deed to Murray.
That trust deed bears date the second day of December, 1799, and is one of the exhibits in the printed case which accompanies the proceedings in this cause. It contains
Mark was discharged under the bankrupt act in October, 1800, without performing either of those covenants; and Murray, the trustee, was obliged, in 1801, after proceedings had been commenced upon the mortgage, to redeem the same with his own moneys, which he did accordingly, and took an assignment of the bond and mortgage. And the debt due Schuyler being demanded, he paid that, also, in 1803, out of his own funds, and took a conveyance of the one twelfth to himself. He also paid the taxes accruing and charged upon the trust lands subsequent to the bankruptcy and discharge of Marks ; and he now claims reimbursement and indemnity out of the trust property.
has^paid WQff encumbrances estate, with his may look"6to the estate, in the first instance, for resnibuisemenq t bound to resort to the covenants of the grantor in the trust deed; but may leave the cestui que trusts to their remedy against the grantor, by substitution.
Assuming that Mark continued responsible upon those covenants, notwithstanding his discharge, yet, I think, the trustee having made these advances in good faith, and for the benefit of the trust estate, is entitled, in equity, to look to that estate for his indemnity, in the first instance, . and was not bound to resort to his precarious remedy agajnst Mark. If any such remedy exists, the cestui que trusts may take the remedy by substitution under the trustee, after they shall have reimbursed him. The assignment of the mortgage, and the deed of Schuyler, are taken to him, in his own name, and he is entitled, under those instruments, to seek his indemnity from the portion of the lands conveyed by those deeds. Nothing can be more obviously just and reasonable. The covenant of Mark to pay those debts, was for a debt certain, or capable of being reduced to certainty, and provable under the commission; and I see no reason to doubt, that Mark’s certificate was a good discharge as to his covenant to pay those debts. Every person who had taken securities payable at a future day, was, by the express words of the act, admitted to prove those debts equally as if they were payable presently. The only remedy of the trustee, is against the land vested in himself by those payments, and by the assignment of the mortgage, and the execution of Schuyler’s deed.
The taxes were contingent debts, not existing ■ at the time of the discharge. They were imposed subsequently, and, consequently, could not have been proved under the commission.
The counsel for the plaintiffs admits, that the taxes were not an existing debt, capable of being proved under the commission; but contends, nevertheless, that as the trust
The bankrupt act of the United States was only a consolidation into one act, of the several English statutes of bankruptcy; and the decisions, and especially the principles settled under those statutes, in respect to their application, must be our rule of construction. From the time of Elizabeth, down to 4 and 5 Anne, the bankrupt continued liable for his debts, and the dividends under the commission were only considered as a payment pro tanto. The statute of Anne, for the first time, discharged the bankrupt in toto, from his debts; but the statute only applied to debts due at the time of the bankruptcy. The stat. 7 Geo. I., extended the statutes to debts contracted before the bankruptcy, though payable afterwards; and the statute of 19 Geo.II., extended the bankrupt laws to certain debts payable on a contingency, as respondentia bonds.
Under those statutes, the following decisions have the greatest bearing on the point before me :
In Funtur v. Graham, (cited in note to 8 East, 317., and S. C. in Barnes’ notes, 69., under the name of Centrel v. Graham,) decided in C. B. in 1736, the defendant rented a house for years on lease, with the usual covenants, and within the time became a bankrupt. He was sued in
This last case applies with some force to the present. The defendant, there, was originally liable for the rent, and was discharged from any action for it, founded on the privity of contract; but he was not discharged from a collateral covenant to pay the rent. The covenant to the plaintiff, in that case, was like the covenant in the present case, a collateral, detached, independent covenant, and he was held answerable, notwithstanding his certificate.
In Wadham v. Marlowe, (cited in 8 East, 314, note,) in the K. B. 25 Geo. III. the Court cited and followed the case of Funtur v. Graham, and held, that debt on the reddendum, would not lie against the lessee for rent accruing after his bankruptcy, when he had ceased to occupy the premises, and they had passed to the assignee, under the commission. But, afterwards, in Mills v. Auriol, (1 H. Black. 433. 4 Term Rep. 94.) the Court took a distinction between debt and covenant for rent in such a case, and
There are a number of cases which establish, that if a surety or bail be fixed in that character, before the discharge of the principal, and are obliged to pay the debt after his discharge, the certificate of discharge is no bar, because the demand of the surety or bail was not provable under the commission, it not being, until payment, a debt due and owing. ( Goddard v. Vanderheyden, 3 Wils. 262. Cockerill v. Owston, 1 Burr. 436. Frost v. Carter, 1 Johns. Cas. 73. Buel v. Gordon, 6 Johns. Rep. 126. Lansing v. Prendergrast, 9 Johns. Rep. 127.) But the case which approaches the nearest in principle to the present one, is that of The Mechanics and Farmers’ Bank v. Capron, (15 Johns. Rep. 467.) The defendant gave a note, discounted by the plaintiff for the benefit of the defendant, and which became due before his discharge under the insolvent act, but was not paid. The defendant endorsed another note, payable in four years, as collateral security for the first note, and he was discharged, within the four years, under the insolvent act. The Court held, that the discharge was no bar to an action upon the second note, because he was not fixed as endorser, at the time of his discharge. The claim on that collateral security, was conditional until then, and it was analogous to personal security, where no liability existed at the time of the discharge. The fact, “ that the note was left as a collateral security for the priof note, due at the time of the assignment, did not prevent the application of the principle.”
How, then, can the certificate of Mark be a discharge in
But this is a question that does not appear to be necessarily connected with the present application of the trustee, to be indemnified for the payment of those taxes out of the very fund in hand. He has his remedy in rem. upon the fund, as well as upon the personal covenant of Mark. A trustee, who acts with good faith, is entitled to' a prompt indemnity for his necessary disbursements and expenditures in the execution of his trust. He has a hen upon the trust property for them; and the cestui que trusts could never call that property out of his hands without first tendering him his indemnity. The payment of the taxes, from time to time, imposed upon the trust property, was indispensable to the preservation of the estate, and he is entitled to ask the cestui que trusts to refund to him, and to prosecute, on their own account, the representatives of Mark, upon a covenant taken essentially for their benefit. The covenant was, in form, a covenant to him, but it was,
Without, therefore, deciding absolutely, for the present, upon the responsibility of the representatives of Mark, I shall afford to the plaintiff the substance of the relief sought by his bill.
It was “ declared, that the amount paid by John Murray, for and in respect of the mortgage given to J. & R. Le Roy, for principal, interest, and costs, be chargeable upon the mortgaged premises, being the one undivided sixth part of the township No. 5., and that they ought to be reimbursed out of the proceeds of the sale thereof. That the amount paid to A. J. Schuyler, for the one undivided twelfth part of the township, be paid and reimbursed out of the same and the proceeds thereof. That the taxes upon the- lands in the trust deed ought to be paid, and what has been paid, reimbursed out of the proceeds of the same, rateably and proportionably upon the respective quantities of interest therein, viz. the one sixth, the one twelfth, and upon the 40,000 acres remaining and mortgaged to the German bond creditors, being the residue of fifteen sixteenths, undivided parts of <i¡e said township. That the defendants, who represent
Decree accordingly.
That case was decidedin October, 1812. In the revised act, passed April 12,1813, (sess. 36. ch. 98. sec. 8. 1 N. R. L. 460.464.) the following exception is introduced. “ Except debts due or owing to credit