Johnson v. Crawford & Yothers

• Decision Date: 15 March 1907
• Docket Number: 34-1905.
• Citation: 154 F. 761
• Parties: JOHNSON v. CRAWFORD & YOTHERS.
• Court: U.S. District Court — Middle District of Pennsylvania

154 F. 761

JOHNSON v. CRAWFORD & YOTHERS.

No. 34-1905.

United States Circuit Court, M.D. Pennsylvania.

March 15, 1907

Seth T McCormick, for the rule.

A. L Cole and C. H. McCauley, opposed.

ARCHBALD District Judge.

On January 11, 1906, the plaintiff recovered a judgment of $27,710.60 against the defendants in an action of assumpsit for timber sold; and, having failed to obtain satisfaction by execution, on December 20, 1906, filed an affidavit charging in substance, that the defendants had money and property which they fraudulently concealed and refused to apply to the payment of the judgment, and thereupon secured a warrant of arrest under the act of assembly of July 12, 1842 (P.L. Pa 339). Upon this, one of the defendants, Crawford, was apprehended, and, having been brought into court, has moved to quash the writ upon the ground that in the present state of the law it is not authorized; the right to file a bond to take the benefit of the insolvent laws of the state being an essential part of the proceedings, and, having been suspended by the passage by Congress of the bankruptcy act of 1898, the right to the writ falls with it. The motion is justified by the case of Commonwealth v. O'Hara, 6 Phila. 402, where it was held that a warrant of arrest under the act of 1842 could not be prosecuted in the face of the existing bankruptcy law, the insolvent laws of the state being thereby made inoperative. But it was held, on the other hand, in Gregg v. Hilsen, 12 Phila. 348, by a court of equal authority, just the contrary of this, that nothing short of actual proceedings in bankruptcy would prevent a recourse to the writ; and the question may therefore be regarded as an open one. The further position taken in the O'Hara Case, that the writ was obnoxious to the bankruptcy law and so not allowable, because it would enable the execution creditor to obtain a preference, is an objection which would equally apply to a fi. fa. or other process to enforce the collection of a judgment, and is, of course, not tenable. Chandler v. Siddle, 3 Dill. 479, Fed. Cas. No. 2,594; Berthelen v. Betts, 4 Hill (N.Y.) 572; In re Hoskins, Crabbe, 466; Ex parte Winternitz, 18 Pittsb.Leg.J. (N.S.) 61. And in Scully v. Kirkpatrick, 79 Pa. 324, and Hubert v. Horter, 81 Pa. 39, the writ was sustained notwithstanding bankruptcy, which negatives any such idea; the fact that the debts there were not discharged being immaterial. This is a federal question, however, and must be decided on principle; state decisions at the best being merely advisory.

The act of the Legislature by which the warrant of arrest is given, in substance, provides that in all civil cases, where a party cannot be arrested or imprisoned, it shall be lawful for the plaintiff, having begun suit or obtained judgment, to apply for a warrant to arrest the defendant, upon proof by affidavit that he is about to remove any of his property out of the jurisdiction of the court with intent to defraud his creditors; or that he has property which he fraudulently conceals, or money or property which he unjustly refuses to apply to the payment of the judgment rendered against him; or that he has assigned, removed, or disposed, or is about to assign, remove, or dispose, of his property with like fraudulent intent; or that the debt in suit was fraudulently contracted. And, the defendant having been thereupon brought in, if the judge by whom the writ was allowed is satisfied that the charges made in the affidavit are substantiated, and that the defendant has done or is about to do any of the acts complained of, he shall commit him to the jail of the county in which the hearing is had, to be there detained until he shall be discharged by law: provided that he shall not be committed, if he pays the debt or demand with costs, or gives satisfactory security to pay the same with interest, within 60 days, if the demand is in judgment and the time allowed for a stay has expired; or gives bond, with sufficient sureties, that he will not assign or remove his property, where that is the fraudulent design charged; or gives like bond to apply within 30 days to the common pleas of the county for the benefit of the insolvent laws of the state, and to comply with the requirements of such laws, and, failing to obtain a discharge, shall surrender himself to the jail again. After having been committed, he may also be relieved from custody upon judgment being rendered in his favor in the pending suit, or upon assigning his property and obtaining a discharge in due course, or by paying or securing the demand with costs, or upon giving either of the bonds mentioned as aforesaid. In taking the benefit of the insolvent laws, either before or after commitment, the defendant is required, as to the matters set forth in his petition, the notice to be given to creditors, the oath to be administered to him, and all things touching his property, to proceed agreeably to the provisions of the act of June 16, 1836 (P.L. 729), entitled 'An act relating to insolvent debtors'; the trustee to whom the assignment is made being given the same powers and duties, creditors the same rights and remedies, a discharge the same effect, and the defendant made liable civilly and criminally the same as if the provisions relating thereto were in the warrant of arrest act fully and at length enacted. Turning to the act of 1836 for a better understanding of these provisions, it appears that in his petition to the court for the benefit of the insolvent laws the debtor is to make a statement under oath of all his property and effects and of the debts he owes, giving the names of his creditors, the amounts due to each of them, the nature of the indebtedness, and the causes of his insolvency. And a time for a hearing thereon having been fixed, and due notice given to creditors, he is thereupon to exhibit to the court a just and true account of his debts, credits, and estate, producing, if required, his books and papers relating thereto, and answering all questions that may be put to him touching the same; and having taken an oath to deliver up all his possessions, and denying any transfer or conveyance in fraud of creditors, he is to execute an assignment thereof to a trustee for the benefit of creditors, being thereafter relieved and discharged from liability to imprisonment by reason of any judgment or decree for the payment of money or for any debt or damages before that contracted, occasioned, or accrued, but property subsequently acquired is still to be liable, although after obtaining a discharge it may, by order of court, on consent of a majority in number and value of creditors, be made exempt from execution for seven years as to any previously existing debt or cause of action. It is further made the duty of the trustee to collect and convert the property so turned over to him, and, having accounted therefor, to distribute the same to creditors, under the direction of the court, upon due proof made of their respective claims. This in a general way was the system of insolvency prevailing at the time the act of 1842, authorizing a warrant of arrest was passed. More recently by act of June 4, 1901 (P.L. 406), there has been a revision and amplification of the law, modifying in some respects the provisions of the act of 1836 which is in terms repealed; but, being in the main the same, the most important difference being that voluntary assignments for the benefit of creditors, as well as those made after arrest upon civil process are provided for, and that creditors, upon accepting a dividend from the insolvent estate, are required to execute releases. So stood the law at the time the warrant of arrest in the case in hand was issued.

That, under the circumstances and subject to the conditions named in the statute, the right to such a warrant exists in the federal, the same as in the state courts, there can be no serious question. As a remedy by execution to reach the property of the debtor given by the state law, it either is carried into the federal law, as provided by section 916 of the Revised Statutes (U.S. Comp. St. 1901, p. 684); or, being sanctioned by the state statute and so being agreeable to the usages and principles of law, it is to be regarded as a writ, which, although not specifically provided for by act of Congress, is capable of being adopted as necessary for the full and complete exercise of the jurisdiction of the federal courts, within the meaning of section 716. It stands in fact much the same as a capias ad satisfaciendum, of which it may be considered as only another form. Wayman v. Southard, 10 Wheat. 1, 6 L.Ed. 253; Bank v. Halstead, 10 Wheat. 51, 6 L.Ed. 264; Ex parte Boyd, 105 U.S. 647, 26 L.Ed. 1200; Lamaster v. Keeler, 123 U.S. 376, 8 Sup.Ct. 197, 31 L.Ed. 238; U.S. v. Arnold, 69 F. 987, 16 C.C.A. 575; Stroheim v. Deimel, 77 F. 802, 23 C.C.A. 467. Of course, it goes into the federal law, if at all, with all its essential incidents, and the method of procedure marked out with regard to it by the state statute has therefore to be substantially followed. And the defendant, after having been taken into custody, and being about to be committed, having the right, as a part of it, to be released upon giving bond to take the benefit of the insolvent laws, or at least agreeably to the provisions of these laws, if this right is to be regarded as inhering in the remedy, and has been taken away by the passage of the bankruptcy act, as argued, without anything else being supplied, the right to the writ itself is also therewith necessarily abrogated.

That the right to relief agreeably to the insolvent laws of the state, either before or after commitment, inheres in the remedy, can hardly be doubted. This alternative is expressly given...