184 A. 106 | Pa. | 1936
Argued January 6, 1936. Creditors complain of the dismissal of their exceptions to the account of the Secretary of Banking. On October 5, 1931, the Secretary took possession of the United Security Trust Company pursuant to the Act of June 15, 1923, P. L. 809, as amended (7 PS section 1 et seq.).1 There was then on deposit the sum of $51,720.45 to the credit of trustees, and of receivers, of certain bankrupt estates. At that time, too, the clerk of the District Court of the United States for the Eastern District of Pennsylvania held $20,000 United States Treasury bonds, delivered to him by the trust company, as security for the repayment of the deposits. He sold the bonds for $18,892.48 and distributed the proceeds pro rata to the estates, *278 leaving to their credit on the books of the trust company $32,827.97. Two dividends, one of 10% and one of 15% were declared in 1932. In his account the Secretary of Banking allowed dividends only on the amount of the deposits remaining unpaid after crediting them with the proceeds realized by the sale of the collateral, that is, he allowed dividends on $32,827.97, as the balance due, instead of on $51,720.45, the original debt. The common pleas dismissed the exceptions,2 the Superior Court affirmed and an appeal to this court was allowed.
Appellants state their contention as follows: "A creditor of an insolvent estate is entitled to dividends on the full amount of his debt, notwithstanding he has collateral security on which he has or may thereafter receive a partial payment of his debt."
Appellee contends that if a secured creditor elects to prove a claim, he may do so only for the balance due him, i. e., the original amount, less the value of the collateral or what he has realized on it.
Both contentions have been the subject of much familiar discussion. The rule for which appellants contend is known as the Equity or Chancery Rule; that for which the appellee contends, the Bankruptcy Rule. The Bankruptcy Rule originated in bankruptcy statutes; the Equity Rule developed in chancery, though not universally applied even there. The Bankruptcy Rule subsequently found enactment in state insolvency legislation providing for distribution of insolvent estates. Under this rule, the sum realized on the collateral, or its value if unconverted, is treated as payment on account; the balance due is the provable claim. In the three opinions filed inMerrill v. Nat. Bank of Jacksonville,
Section 29 of the Act of June 15, 1923, P. L. 809 (under which the appellee is in charge of the insolvent bank), as amended May 5, 1927, P. L. 762, 767, 7 PS, section 29, provides: "Status of Secretary as Receiver. — Except as herein otherwise provided, the secretary shall, when he has taken possession of the business and property of a corporation or person, have all the rights, powers, and duties of a receiver appointed by any court of equity in this Commonwealth; and he shall be vested, in his official capacity, with all the rights, powers, and duties of such corporation or person and with all the *280 property of such corporation or person, including debts due, liens, or securities therefor, and rights of action or redemption, whether or not the property of such corporation or person, including debts due, liens, or security therefor, and rights of action or redemption, are held in the name of such corporation or person, or in the name of some other corporation or person, but actually the property of the corporation or person of which, or of whom, the secretary has possession.
"He shall be the representative of the creditors of the corporation or person, and entitled, as such, to have vacated and set aside, for the benefit of the creditors, any judgment, execution, attachment, sequestration, payment, pledge, assignment, transfer, conveyance, or encumbrance, which could have been avoided by the creditors or any of them, or by which it is attempted to give any creditor unlawful preference over another."
Proof of claims is dealt with in section 42 as amended in 1927, P. L. 770, 7 PS, section 42, which provides in part: "No claim other than the claim of a depositor shall be allowed unless the claimant, or some one for him if he cannot do so, shall, within four months from the date of such notice, furnish to the secretary a statement of his claim, together with a copy of any book entries pertaining thereto, or any note or other writing evidencing the same, verified by an affidavit in substantially the following form: 'I, (name of claimant) do solemnly swear (or affirm) that the above is a true statement of my claim against (name of corporation or person); that there are no credits or allowances against the same except as therein set forth; that I have not directly or indirectly made or entered into any bargain, arrangement, or agreement, express or implied, to take or receive, directly or indirectly, any money, property, or consideration whatever, to or for myself, or to or for any other person, firm, or corporation whatever, other than my dividend as a creditor; and that there is no collateral security for said indebtedness, or any part thereof, *281 held by me or anyone else other than as above set forth.' "
Allowance of claim and distribution are dealt with in sections 44 and 46 as amended (7 PS, sections 44 and 46). The Act of May 23, 1913, P. L. 354, 7 PS, section 689, provided the order of distribution and gave depositors a preference over "remaining liabilities." See Metropolitan Life Ins. Co. App.,
The obvious purpose was to treat alike all creditors of a given class to provide for equality of distribution and we all agree that equality of distribution among creditors can only be attained by the application of the Bankruptcy Rule.3 *282
We come, then, to appellants' contention that the Equity Rule and not the Bankruptcy Rule has been heretofore applied in this Commonwealth. It is true that the Equity Rule was applied in decisions (cited by appellant) beginning with Morris v. Olwine,
While that act is superseded in its bankruptcy features by the Bankruptcy Act, its severable insolvency provisions are not rendered inoperative by the federal statute; they are in force:Fidelity Trust Co. v. Union Nat. Bank,
In addition to the cases growing out of assignments for creditors, appellants refer to a decision of the Superior Court, Fulton's Est.,
We need say nothing concerning Chambersburg Trust Co. v.Alexander,
Laying aside, then, the cases dealing with assignments for the benefit of creditors, for which the rule is supplied by the Act of 1901, and also Fulton's Est., supra, dealing with an insolvent decedent's property, administered in the orphans' court, a court of equity, we come to a possible third class in which the question may arise: receiverships in equity. No case of this class is cited (and we have found none) in which the question was considered by either of our appellate courts. Rights of creditors are fixed as of the date of the appointment of receivers as creditors' rights are fixed as of the date of the assignment for their benefit: Dean Sons' App.,
While the Insolvency Act of 1901 dealt with assignments for the benefit of creditors, the legislature, in substituting the Bankruptcy Rule for the Equity Rule theretofore applied, made a radical change in the policy of the law. The court may declare the scope of the change affected by the statute. "For although courts sometimes have been slow to extend the effect of statutes modifying the common law beyond the direct operation of the words, it is obvious that a statute may indicate a change in the policy of the law, although it expresses that change only in the specific cases most likely to occur to the mind": Gooch v. Oregon Short Line R. R. Co.,
The order appealed from is affirmed at appellants' costs.