In re Damon

• Decision Date: 23 July 1879
• Citation: 70 Me. 153
• Parties: In re HERBERT L. DAMON, appellant from DECREE OF JUDGE OF INSOLVENCY.
• Court: Maine Supreme Court

70 Me. 153

In re HERBERT L. DAMON, appellant from DECREE OF JUDGE OF INSOLVENCY.

Supreme Judicial Court of Maine.

July 23, 1879

ON EXCEPTIONS.

On December 9, 1878, the judge of the court of insolvency, on application of the creditors of the appellant, issued a warrant for taking possession of the appellant's estate in accordance with the provisions of Stat. 1878, c. 74, §§ 14, 15. The warrant was made returnable December 24, 1878 and ordered the appellant to then appear.

On return day Damon appeared before the court of insolvency resisted the prayer of the application, and filed a motion alleging, in substance, that he was adjudged an insolvent on December 9, 1878, on the petition of his creditors and without any notice to himself, contrary to the law of the land; that the statute under which he was so adjudged is unconstitutional and void, for that when said statute was enacted, to wit: February 21, 1878, the federal bankrupt law was in force and so continued until September 1, 1878; that the state statute did not take effect upon its passage, or at the expiration of thirty days after the recess of the legislature which enacted it, by reason of the federal bankrupt law; and that the state statute never became of effect. The prayer of the motion was for a dismissal of the proceedings against him.

The judge of the court of insolvency overruled the motion; and Damon appealed to the supreme judicial court.

The presiding justice of the appellate court ruled, as matter of law, that the decree appealed from be affirmed. Thereupon the appellant alleged exceptions.

Hutchinson, Savage & Hale, for the appellant, cited 1 Kent Com. 387. Houston v. Moore, 5 Wheat. 21. R. S., c. 1, § 3. Const. Maine, Art. I, §§ 1, 9. U. S. Const. 7 Amend. 14 Amend. Barron v. Mayor Baltimore, 7 Pet. 243. Porter v. Taylor, 4 Hill 140. Mass. Stat. different.

Frye, Cotton & White, contra.

APPLETON C. J.

The insolvent law of this state, c. 74 of the acts of 1878, was enacted while the bankrupt law of the United States was in full operation. The proceedings in the case before us are under the insolvent law of this State, and were commenced since the repeal of the bankrupt law.

I. It is objected that the statute of this state is unconstitutional and void because enacted while the bankrupt act of the United States was in full force.

It is provided by section eight 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." Here is no prohibition against the passage of bankrupt or insolvent laws by the states. As long as the national government abstains from legislation on this subject the states may act. " It is sufficient to say," observes Marshall, C. J., in Sturgis v. Crowninshield, 4 Wheat. 122, " that until the power to pass uniform laws on the subject of bankruptcies be exercised by Congress, the states are not forbidden to pass a bankrupt law, provided it contain no principle which violates the tenth section of the first article of the constitution of the United States." The right of the states to pass insolvent or bankrupt laws, and that the power given to the United States is not exclusive, has been repeatedly affirmed. Boyle v. Zacharie, 6 Pet. 348. Cook v. Moffat, 5 How. 310. Baldwin v. Hale, 1 Wall. 223.

If there is a state law on the subject, the subsequent passage of a bankrupt law by congress neither repeals nor annuls it. It only suspends its operation so far as the law of the State may be in conflict with the act of congress. As was said by Bartol, C. J., in Lavender v. Gosnell, 43 Md. 153, " the act of congress suspends the state law but does not repeal it. Proceedings commenced under the state law prior to the passage of the bankrupt act may be carried on to their final termination in accordance with the provisions of the state law." Judd v. Ives, 4 Met. 401. Chamberlain v. Perkins, 51 N.H. 337.

A voluntary assignment by a debtor for the benefit of his creditors, under the insolvent law of the state, is prima facie an act of bankruptcy within the thirty-fifth section of the bankrupt act of 1867, but such an assignment, no proceedings in bankruptcy having been instituted, remains valid, unless such proceedings are instituted within six months thereafter. Maltbie v. Hotchkiss, 38 Conn. 80. The insolvent law of this state is not wholly superseded by the bankrupt act of the United States, but when they come in conflict, the latter must prevail. Hawkins' Appeal, 34 Conn. 549. Gerry's Appeal, 43 Conn. 289. In Iowa it was held that the state insolvent law was not nullified, superseded or suspended by the bankruptcy law, and that jurisdiction might be exercised under the former until proceedings have been commenced under the act of Congress. Reed v. Taylor, 32 Iowa 209. But it is not required to go to the length of the case last referred to.

While the bankrupt law is in full force, it has, or may have, jurisdiction of cases within its provisions. " Upon the repeal of that law," observes Dewey, J., in Atkins v. Spear, 8 Met. 491, " the insolvent law of Massachusetts was revived, and with its revival all the limitations and restrictions upon the right to a discharge revived, although the acts occurred during its suspension." The bankrupt law merely suspending the state insolvent laws, upon its repeal they at once revive and need not be re-enacted. Lavender v. Gosnell, supra. " If the right of the states to pass a bankrupt law is not taken away by the mere grant of the power to congress," observes Marshall, C. J., in Sturgis v. Crowninshield, supra, " it cannot be extinguished; it can only be suspended by the enactment of a general bankrupt law. The repeal of that law cannot, it is true, confer the power on the states; but it removes a disability to its exercise, which was created by the act of congress."

It follows from these decisions that a state insolvent law is not unconstitutional, and that it is neither repealed annulled nor rendered void by the passage of the bankrupt law, for proceedings commenced under its provisions may be...