Spalding v. Dixon

21 Vt. 45 | Vt. | 1848

The opinion of the court was delivered by

Kellogg, J.

The only question raised in this case is, whether the notes in suit are barred by the defendant’s certificate of discharge in bankruptcy.

It is urged by the plaintiff) that the certificate relates back to the time of filing the petition in bankruptcy, and is only a bar to such debts, as then existed against the bankrupt. If this proposition be admitted, it would necessarily follow, that the certificate would not be a bar to the recovery of the notes in suit; for there is no pretence, that they had any existence anterior to the sixth of June, 1842, — which was subsequent to the filing of the petition in bankruptcy. The act of Congress, providing for the granting of certificates of discharge to bankrupts and prescribing the manner in which they might he obtained, does not, in terms, declare the time, to which the certificate shall extend and be a bar to the debts of the bankrupt. It seems to be admitted in the argument, and so are the authorities, that the certificate is a bar to all debts of the bankrupt, (excepting those of a particular character, which are excluded from its operation by the act of Congress,) which were proveable under the commission.

There are some authorities, which appear to countenance the idea, that the operation of the certificate is limited to such debts as existed at the time of the filing of the petition in bankruptcy. Such are the cases of Crouch v. Gridley, 6 Hill 252, and Thompson v. Hewitt, 6 Hill 254; and if the dicta of the court in those cases are to be regarded as sound, it would seem but reasonable, that the acquisitions of the bankrupt, subsequent to the filing of his petition, should be exempt from the operation of the act and secured to him, to meet his accruing liabilities during the same period. This proposition has been pressed upon the court in the argument, and it was said to have been countenanced by the late Mr. Justice Story in the cases of Grant and of Cheney. An examination, however, of the cases of Grant and Cheney, we think, will hardly warrant that conclusion. But if any such intimations were made by Judge Story, they are in direct conflict with the third section of the act of Congress; which declares, that all the property, of every name and nature, of every bankrupt, who shall be declared a bankrupt by the proper court, shall, by mere operation of law, ipso facto, from the time of such decree, be deemed to be divested out of such bankrupt, and the same shall be vested, by force of the same decree, in his assignee. The language of this section would seem to leave no room to doubt, that all the property of the bankrupt, at the time he was decreed such, became vested in the assignee. And such, subsequently, appears to have been the opinion of Judge Story, when the case of Newhall, ex parte, assignee of Brown, was before him. Inasmuch, then, as the property acquired by the bankrupt in the interval between the filing of his petition and his being decreed a bankrupt passes to and vests in the assignee for the benefit of his creditors, it is but reasonable, that his bona fide debts, contracted during the same period, should share in the fund thus increased by his subsequent acquisitions, and be subject to the operation of his certificate. And such, we believe, to be the true construction of the law, and consequently, that debts originating after the filing of the petition, and which existed at the time he was declared a bankrupt, were proveable under the commission.

The defendant was decreed a bankrupt on the eighth of July, 1842; and the inquiry arises, were the notes of the sixth of June, 1842, then debts of the bankrupt and proveable under the commission ? To answer this inquiry, reference must be had to the facts in the case. The notes did not pass, directly upon their execution, to the hands of the plaintiff, but were deposited with a third person, together with the old notes, which formed the consideration of the notes in suit, and the other papers made and forming part of the arrangement of the sixth of June, 1842, there to remain until the first of October following, to await the election of the plaintiff as to whether the arrangement of the sixth of June should he carried into effect, or vacated, and the papers recalled. On the first of October, in the event that the written contract was not defeated, or rescinded, according to some of its provisions, but went into effect according to its terms, Hill, the depositary, was to deliver the notes of the sixth of June to the plaintiff, and the old notes to the defendant; and he did so deliver them. By recurring to the written contract executed by the plaintiff and Fletcher, and deposited in the hands of Hill with the other papers, it appears, that the plaintiff’s right to defeat and put an end to the contract between him and Dixon of the sixth of June, 1842, existed only in the .event that the outstanding claims against the firm of L. M. Dixon & Co. should be found, when added to those enumerated in the bond of indemnity executed by Smalley., to exceed the sum of $4000, — and not even then, provided Fletcher should elect to become responsible for such excess. It does not appear, that the defendant had any power to defeat the arrangement, ■or any interest in having the papers deposited with a third person, instead of being delivered to the respective persons in interest at the time of their execution. The course pursued would seem, therefore, to have been adopted for the sole purpose of enabling the plaintiff to determine, whether he would elect to defeat and vacate the contract and thereby repossess himself of his original securities and restore those which had been substituted for them.

The question still remains, how are the notes in suit to be regarded during the interval between the sixth of June and the first of October following, when they were delivered into the hands of the plaintiff and the old notes were surrendered to the defendant by the depositary? We think it quite obvious, that, upon the execution of .the notes and the deposite of them in the hands of Hill, under the agreement which appears in the case, they became and were valid and binding upon the defendant, and that the interest and property in them then vested in the plaintiff, subject, however, to be defeated by the plaintiff, upon the happening of the contingency before mentioned. Such we believe to b.e the fair conclusion to be drawn from the facts presented in the case. Nor does the contingent character of the notes constitute an objection to their being proved under the commission. Upon recurring to the fifth section of the act of Congress, it is apparent, that the contingency, to which the notes were subjected, interposed no obstacle to their proof. It expressly provides for the proving of uncertain and contingent claims.

Inasmuch, then, as these notes might have been proved against the defendant under the commission, we think the county court were right in holding that they were barred by the certificate, and .consequently the judgment of that court is affirmed.