Rand v. Iowa Cent. R. Co.

• Decision Date: 02 October 1906
• Parties: RAND v. IOWA CENT. R. CO.
• Court: New York Court of Appeals Court of Appeals

186 N.Y. 58

78 N.E. 574

RAND

v.IOWA CENT. R. CO.

Court of Appeals of New York.

Oct. 2, 1906.

Appeal from Supreme Court, Appellate division, First Department.

Action by Ezekiel C. M. Rand against the Iowa Central Railroad Company. From a judgment of the Appellate Division (89 N. Y. Supp. 212,96 App. Div. 413), affirming a judgment at Trial Term dismissing the complaint after verdict for plaintiff had been set aside, plaintiff, by permission, appeals. Reversed.

Frank K. Pendleton, for appellant.

Arthur H. Van Brunt, for respondent.

WILLARD BARTLETT, J.

The plaintiff in this action recovered a verdict of $2,840 for services alleged to have been rendered to the defendant corporation. Notwithstanding the verdict the court at Trial Term, by consent of counsel, entertained and finally granted a motion to dismiss the complaint. The judgment thereupon rendered has been affirmed by the Appellate Division upon the ground that the plaintiff had been divested of all title to the claim in suit by reason of the fact that he was adjudicated a bankrupt after the cause of action had accrued in his favor and before the beginning of this suit. The adjudication in bankruptcy was deemed to have this effect, although no trustee in bankruptcy was ever appointed. It is apparent from the record that the omission to appoint a trustee must have been due to the failure of the plaintiff to disclose the existence either of this claim or any other property in the bankruptcy proceedings. While the concealment of any property on the part of a bankrupt must be deemed a reprehensible act as toward his creditors it by no means follows that such concealment has any bearing upon the question as to whether the bankruptcy proceedings have gone far enough to divest the bankrupt of title. In our judgment the proceedings in the case of the plaintiff had not progressed sufficiently to deprive him of the right to maintain an action in his own name in the state court upon the claim in suit. The bankruptcy act of July 1, 1898 (30 Stat. 565, c. 541, § 70 [U. S. Comp. St. 1901, p. 3451]), provides that the trustee of the estate of a bankrupt upon his appointment and qualification shall be vested by operation of law with the title of the bankrupt as of the date he was adjudged bankrupt. It is plain that this provision can never become effective until a trustee in bankruptcy shall have been appointed. Here none was appointed; hence the conditions did not exist which were requisite to render this provision of section 70 operative.

Such was the view necessarily adopted by this court in affirming the judgment in the case of Fuller v. Jameson, 184 N. Y. 605, 77 N. E. 1187, where the case turned upon the question whether the title to insured property had been changed by reason of an adjudication in bankruptcy sgainst the owner, the insured property having been burned after the referee in bankruptcy had announced the appointment of a receiver but before the order of appointment was actually signed. We agreed with the courts below that the bankruptcy proceedings had not gone far enough at the time of the fire to divest the insured of his title. If that conclusion was correct it follows that the present judgment cannot be sustained. The proposition of law involved in that decision was that under section 70 of the bankruptcy act of 1898 the appointment of a trustee is essential to divest the bankrupt of a title to his property. As was said by the Supreme Judicial Court of Massachusetts in another litigation growing out...