Merrill v. Bowler

• Court: Rhode Island Supreme Court
• Writing for the Court: DOUGLAS, J.
• Citation: Merrill v. Bowler, 20 R.I. 226, 38 A. 114 (R.I. 1897)
• Decision Date: 28 July 1897
• Parties: MERRILL et al. v. BOWLER.

38 A. 114

20 R.I. 226

MERRILL et al.

v. BOWLER.

Supreme Court of Rhode Island.

July 28, 1897.

Petition in insolvency by Frank W. Merrill and others against James I. Bowler. Constitutional questions raised by respondent's objections were certified to the full court. Objections overruled.

Saml. R. Honey, for petitioners.

Chas. Acton Ives, for respondent.

DOUGLAS, J. This is an involuntary petition in insolvency, brought by certain creditors, alleging that they hold claims not less than three-fourths in amount of all the debts of the respondent; that the respondent is an inhabitant of this state, and owes debts therein to the amount of $300 or over, and has within four months prior to the filing of the petition made conveyances of certain parts of his property with intent to hinder, delay, or defraud his creditors; that, while insolvent, he has, for the purpose of giving a preference, made a conveyance, mortgage, pledge, or transfer of certain of his property; that he suffered certain of his property or assets to be taken and levied upon by process of law; and that he has made an assignment for the benefit of his creditors; and praying that he may be adjudged insolvent, and that such proceedings may be taken in the premises as are provided in chapter 274 of the General Laws of Rhode Island. The respondent, having been duly cited, comes in his own person, and objects to further proceedings on the petition on the grounds: (1) That said chapter 274 is unconstitutional and void. (2) That respondent made a legal assignment for the benefit of his creditors before the filing of the petition, and so much of said chapter as attempts to set aside such an assignment is unconstitutional and void, and there is no property whatever that can be affected by proceedings upon this petition. (3) That at the time of making said assignment the respondent had not estate sufficient to enable him to comply with the rule of requiring a deposit of $50 as a condition of being permitted to file a petition in insolvency, and that said rule is unconstitutional as to such persons as are unable to comply with it. These objections, raising constitutional questions, were certified to and heard by the full court. At the hearing the respondent appeared by counsel, who, in his printed brief, defined the objections to the law as follows: (1) There is no provision in the act under which this case is brought (chapter 274, Gen. Laws R. I.) by which the assignee, in whom are vested the rights of the insolvent, or the insolvent himself, may have a jury trial of the validity of any claim presented against the estate; and the entire act is therefore repugnant to the constitution, and void. (2) The provisions invalidating all assignments for the benefit of creditors (sections 16, 39, and 51) are unconstitutional and void. (3) The requirement (by rule) of a deposit of $50 as a condition precedent to relief under the act, if valid, takes out of the category of acts done in fraud of the act all acts done by an insolvent by reason of his inability to comply with the rule. And as to such acts of an insolvent the enforcement of the act becomes and is unconstitutional.

In support of the first objection it is urged that a creditor has a constitutional right to try by jury his claim against the estate of the insolvent in the hands of the assignee, and that the distribution of the assigned estate by direction of the court without reference to a jury is taking the debtor's property from his control, and giving it to others, contrary to the constitution. There is no provision in the constitution of Rhode Island which provides that all controversies regarding property shall be brought in the form of a common-law action, or be tried by a jury. Article 1, § 15, provides, "The right of trial by jury shall remain inviolate," which means simply that in those proceedings in which a right to trial by jury existed at the time of the adoption of the constitution the right shall still continue. Crandall v. James, 6 R. I. 144, 148. "The constitution requires simply the conservation, not an extension, of the right of jury trial." Bishop v. Tripp, 15 R. I. 466-469, 8 Atl. 692. And it would be a sufficient answer to this objection to say that at the time of the adoption of the constitution no provision was made for ascertaining claims against the estate of an insolvent by jury trial between the claimant and the assignee. At the time of the adoption of the constitution an insolvent law was in force in this state, though suspended in its operation by the United States bankruptcy act of 1841. It was enacted January 19, 1828, afterwards repealed and re-enacted with some amendments January 11, 1832. It provided for voluntary insolvency only, and its discharge was simply from imprisonment of the debtor's body. This act conferred jurisdiction in insolvency upon the supreme judicial court, "with power to carry into full effect all the provisions of the act," and the reviving act provided for an appeal to the general assembly. Section 8 provided: "* * * And said assignee or assignees shall also have power to submit any and all claims and demands against said estate or in favor thereof to the final decision of referees, under a rule of any competent court." No provision is made therein for a determination of any issue by jury trial. The assignee is authorized to take upon himself the conduct of actions pending, and this provision is substantially contained in section 25 of the present law. But it is argued that the claims provable under this act are mostly simple contract claims, and such as are more appropriately the subject of common-law procedure. A glance at the plan and scope of the statute will remove this impression. The statute, like every bankrupt or insolvent law, takes away from an insolvent debtor the control of his property, and vests the legal title to it in an assignee in trust for his creditors. This step, if objected to, cannot be had under this act till his insolvency has been established by verdict of a jury. Section 18. A jury trial, therefore, stands at the threshold of these proceedings, and no man's property can be taken from him by the act, against his will, except by a jury of his peers. When the estate has once been taken from him, it becomes subject to other rules. It can no longer be reached at common law, but becomes a trust fund, the administration of which is only within the jurisdiction of a court of equity. A voluntary assignee cannot be sued...