3 Barb. Ch. 344 | New York Court of Chancery | 1848
The plea in this case does not contain the necessary averments to show that the defendant, A. Kimball was legally declared a bankrupt, so -as to vest the as
This assignment,' upon its face, shows that it was made in contemplation of bankruptcy. And, as against an assignee duly appointed under the bankrupt act, or those who should claim under him, it would unquestionably be void; as a fraud upon the rights of creditors who should come in and prove their debts under the decree in bankruptcy. " And as congress has the power to establish an uniform system of bankruptcy throughout the United States, I am not prepared to say it has not authority, by the constitution, to prohibit any person, who has become a bankrupt, from assigning his property for the purpose of giving a preference to one class of creditors over another, where he has not the means of paying the whole; so as to leave
This question was presented directly to the supreme court of this state for decision, in October, 1843, in the case of Dodge & McClure v. Sheldon, (6 Hill’s Rep. 9;) and that court held that the assignment not being void by the state laws, and it not appearing that any proceedings had been instituted under the bankrupt act, while it was in existence, the assigned property was improperly seized by the sheriff, as belonging to the bankrupt, upon an execution against him. Indeed, it would be contrary to every principle of equity to permit a trustee, who has received the property of a debtor in trust to apply it to the payment of creditors, to set up the defence of fraud, in making and receiving the transfer for the benefit of such creditors, as a defence to a suit brought by them to compel a performance of the trust; without showing that the fund had been recovered from him by the parties intended to be defrauded, or even that they had ever made any claim to it.
The order appealed from must therefore be affirmed with costs. And the appellant must pay the costs of the appeal and the costs awarded by the vice chancellor, and answer the complainant’s bill within the forty days allowed by the order appealed from, after service of notice of the final decree, or the bill must be taken as confessed against him.