Harbaugh v. Costello

• Decision Date: 19 February 1900
• Citation: 184 Ill. 110,56 N.E. 363
• Parties: HARBAUGH v. COSTELLO et al.
• Court: Illinois Supreme Court

184 Ill. 110

56 N.E. 363

HARBAUGH

v.COSTELLO et al.

Supreme Court of Illinois.

Feb. 19, 1900.

Appeal from appellate court, Second district.

Proceeding by Frank Harbaugh, as assignee of Alexander White, against John M. Costello and others. From a judgment of the appellate court (83 Ill. App. 29), reversing, without remandment, the judgment of the county court in favor of plaintiff, he appeals. Affirmed.

Geo. E. Waite and Geo. W. Shaw, for appellant.

Graves & Brown, for appellees.

This is an appeal from a judgment of the appellate court reversing, without remandment, an order of the county court entered in a proceeding under the insolvent act, requiring the appellees to surrender property to the appellant as assignee of one Alexander White, an insolvent. On July 16, 1898, Alexander White made, and on July 18, 1898, caused to be filed, in the office of the clerk of the county court of Henry county, an assignment for the benefit of his creditors to the appellant, Frank Harbaugh. On July 16, 1898, the assignee took possession of the property assigned,-a stock of hardware in a store in Geneseo. On July 18, 1898, he filed his bond as such assignee. On the latter date the appellee John M. Costello, a constable, took possession of said goods under a landlord's distress warrant, issued by the appellee D. F. Sargent, for $531, due to him from White for rent. Costello also had an execution issued by a justice of the peace of said county on a judgment rendered against White in favor of J. W. Stewart for $132.40 and costs. On August 1, 1898, the appellant, the assignee, filed his petition, presenting the facts to the county court, citing the appellees Costello and Sargent to show cause why an order should not be entered requiring them to surrender the property to the assignee. Costello and Sargent demurred to the petition. Their demurrer was overruled, and they elected to stand by the same, and did not answer further. Default was rendered against them, and the court entered an order for the return of the goods. The appellate court has granted a certificate of importance.

MAGRUDER, J. (after stating the facts).

The petition of the appellees to the county court was demurred to upon the ground that the voluntary assignment law of this state had been superseded by the bankrupt law passed by congress on July 1, 1898, and that, therefore, the county court had no jurisdiction to make the order entered by it. The only question necessary to be considered is whether the county court had jurisdiction to proceed under the state assignment law, and make an order for the return of the property to the assignee, in view of the passage by congress of the bankruptcy act of July 1, 1898.

It is provided in section 8 of the first article of the constitution of the United States that ‘congress shall have power * * * to establish * * * uniform laws on the subject of bankruptcies throughout the United States.’ In interpreting this provision of the constitution, it has been held that the power to pass insolvent or bankrupt laws was not thereby taken away from the states until congress itself should exercise the power thereby conferred by the passage of a bankrupt law. When, however, a bankrupt law is passed by congress, any state law upon the subject which may exist is suspended in its operation. As soon as a national bankruptcy act goes into effect, state insolvency laws are suspended, and become inoperative, at least so far as they conflict with the act of congress upon the subject, and so far as they embrace the same subject-matter as is embraced in the act of congress. Sturges v. Crowninshield, 4 Wheat. 122, 4 L. Ed. 529;Ogden v. Saunders, 12 Wheat. 213, 6 L. Ed. 606;In re Klein, 1 How. 277,11 L. Ed. 130;Tua v. Carriere, 117 U. S. 201, 6 Sup. Ct. 565, 29 L. Ed. 855;Chamberlain v. Perkins, 51 N. H. 336; In re Damon, 70 Me. 153. In Tua v. Carriere, supra, it was said by the supreme court of the United States that if the insolvent law of Louisiana, there under consideration, had been enacted before the passage of the bankrupt act, it would have been valid, and that the effect of the bankrupt act would have been to suspend it only while the bankrupt act remained in force, and on the repeal of the latter act the insolvent law would have revived. A national bankruptcy law, so long as it is in existence, suspends all state laws on the same subject. The doctrine is thus stated by Black in his recent work on Bankruptcy (on page 271): ‘The passage of a national bankruptcy law by congress renders it supreme. The state laws in force must yield to it, and can no longer operate upon persons or cases, within the purview of the federal statute. The latter does not, indeed, repeal or destroy the state laws on the same subject, but it suspends their operation. If the state law and the federal act operate upon the same subject-matter, upon the same property, upon the same rights, and upon the same persons, creditors as well as debtors, or may so operate, they cannot go together without direct and positive collision, and in such case the federal enactment suspends or supersedes the state law.’ The weight of authority is in favor of the doctrine as thus announced, although there are some cases which hold that the state insolvency law only becomes suspended as to a particular debtor when the bankrupt court adjudges such debtor a bankrupt, and seeks to distribute his estate among his creditors. The cases upon both sides of the question may be seen by reference to the text-books upon the subject of bankruptcy. Bump, Bankr. (11th Ed.) pp. 96-102; Coll. Bankr. pp. 427-443.

It is unnecessary to discuss the provisions of former bankruptcy laws for the purpose of drawing a distinction between their phraseology and that of the national bankruptcy law of 1898. It is sufficient to consider a few of the provisions of the latter act. The last provision of the bankruptcy law of 1898 is as follows: ‘Proceedings commenced under state insolvency laws before the passage of this act shall not be affected by it.’ Branden. Bankr. p. 547. This provision, under the familiar rule of statutory construction that the expression of one thing is the exclusion of the opposite, means that no proceedings under state insolvent laws shall be commenced after the passage of the act of 1898. The plain implication is that proceedings commenced under state insolvency laws after the passage of the act of 1898 are unauthorized. The last provision of the act of 1898 was thus construed by the supreme court of Massachusetts in the recent case of Manufacturing Co. v. Hamilton, 172 Mass. 178, 51 N. E. 529, and it was there held that the bankruptcy act of 1898 so far superseded the insolvency laws of the state from the time of its passage as to deprive the state courts of jurisdiction to entertain petitions for the commencement of insolvency proceedings filed after said date.

In the provision of the act of July 1, 1898, next preceding the provision above quoted, are the following words: ‘This act shall go into full force and effect upon its passage.’ Branden. Bankr. p. 547. The evident meaning is that the rights of persons coming within the terms of the act are to be determined by the act from the time of its passage. The various provisions of the act, affecting the rights and conduct of creditors and debtors, supersede all conflicting provisions in the state insolvency laws. It is true that the right to file a...