Risser v. Hoyt

• Decision Date: 06 March 1884
• Citation: 53 Mich. 185,18 N.W. 611
• Court: Michigan Supreme Court
• Parties: RISSER v. HOYT.

18 N.W. 611

53 Mich. 185

RISSER v. HOYT.

Supreme Court of Michigan

March 6, 1884

Act No 193, Laws 1883, relating to insolvents and creditors, being in derogation of the common law, and conferring extraordinary powers on courts and officers, should be strictly construed and the authority conferred closely pursued.

Section 2 of this act confers on the judge in vacation power to hear and determine, summarily and conclusively, the questions of the insolvency of the debtor, his preference made, and refusal to assign. If the decision is adverse to the debtor the judge must appoint a receiver, who is commanded to seize all the property of the debtor, including attached or garnished property, and convert it into money, to distribute among the creditors releasing their claims. No record or minute of the proceedings need be kept, nor need the petition to the judge be filed anywhere. Section 10 authorizes the judge to hear the complaint of any creditor in opposition to the debtor's release; he may allow the debtor to appear or may proceed without the allegations being controverted, and he may, in his discretion, order all the debtor's property not exempt by law to be distributed among the creditors without their filing releases. These provisions conferring such judicial powers on a judge at chambers are in conflict with article 6, � 1, of the constitution, and are void.

The intent and object of the statute could not be carried out without sections 2 and 10, and hence the whole act must be held to be unconstitutional and void.

The questions of fact as to whether the petitioners are creditors of the debtor, whether the debtor has given any preferences or has refused to assign, involve valuable property rights, and are proper to go to a jury. The act, providing no such recourse, conflicts with the constitutional right of trial by jury.

It is no defense to the foregoing objection that the party holding attached property may defy the authority of the receiver, and put him to a suit to recover it. If the law is valid, the receiver has a right to take the property, and resistance to his authority would tend to provoke breaches of the peace, and subject the parties to the penalties provided by law for such acts.

The fact the court may send every such case as this by a general rule to a jury, does not secure the right of jury trial to the parties; they only hold it at the discretion of the court.

The hearing before the judge cannot be said to be merely preliminary; property is wrested from the debtor, and from attaching creditors, converted into money to be distributed to other parties, and at no later stage in the proceedings is there any final adjudication upon the issues submitted.

Under our constitution, defining the courts and their jurisdictions, and prohibiting them from exercising legislative powers, the circuit courts cannot supplement defects in legislation by a liberal exercise of judicial power and vigorous construction.

In adopting a law from another state it is not necessary to follow always the construction put upon it by the courts of the state from which it is taken.

CHAMPLIN, J.

This is a proceeding under act No. 193 of Session Laws of 1883, in which a receiver was appointed of the property and effects of Lafayette Mumford. The facts, briefly stated, are as follows Lafayette Mumford was engaged in business in the village of Kalamazoo, and had been for some time prior to the twenty-first day of August, 1882. On said date he executed a chattel mortgage upon his entire stock in trade to Charles S. Dayton, cashier of the Kalamazoo City Bank, to secure the sum of $2,500, which mortgage was not placed on file until the fifth day of October, 1883. On the sixth day of October, 1883, Mumford conveyed to his wife, Anna Mumford, a stock of goods at Battle Creek, (where he was also doing business,) and certain other property, all of the value of several thousand dollars, in payment of an alleged indebtedness to her. On the eighth day of October, 1883, Mr. Mumford gave another chattel mortgage to Charles S. Dayton to secure the sum of $2,372.66, which was on the same day filed with the town clerk, and covers his entire stock in trade in Kalamazoo and elsewhere, and was given to secure the same indebtedness that the first chattel mortgage secured. On the sixteenth day of October, 1883, Mumford made a general assignment for the benefit of creditors, subject to the chattel mortgages made to Dayton, to Henry E. Hoyt, and not including the Battle Creek stock.

It is claimed that Mumford, when he made the transfer to his wife, and when he made the second mortgage to Dayton, was insolvent, and was largely indebted to various persons, and among them, to the petitioners in this case. Messrs. Risser & Reitz, of Chicago, Illinois, and Peter Hayden, of Detroit, Michigan, being creditors of Mumford, filed their petition before Hon. ALFRED J. MILLS, judge of the circuit court of Kalamazoo county, setting forth the mortgages to Dayton which they claimed to be preferences prohibited by the act, and the sale to Mrs. Mumford which they alleged to be fraudulent; and also the assignment to Hoyt, which they also claimed to be void. This petition was presented to the circuit judge at chambers, upon which he granted a restraining order, and fixed a day of hearing upon the petition, and a citation to Lafayette Mumford, Ann Mumford, Charles S. Dayton, Horace M. Peck, Henry E. Hoyt, and the Kalamazoo Wagon Company, to appear before him and show cause why the prayer of the petition should not be granted and a receiver appointed as therein prayed for. A hearing was had, testimony taken, and the judge declared the mortgages and sale were executed to prefer the bank and Mrs. Mumford over the other creditors of Mumford, and ordered a receiver to be appointed, with all the powers of a receiver under act No. 193, and that such receiver proceed according to the provisions of said act. The secured creditors contested these proceedings, and after the order was made appointing a receiver, sued out a writ of certiorari, and the record has been removed into this court.

The petitioners assign several errors to the proceedings, the more important of which we shall proceed to consider.

It is claimed that act No. 193 of the Laws of 1883, upon which the proceedings are based, is unconstitutional; and our attention is called to four provisions of the constitution with which this act conflicts: (1) Section 20, art. 4, which provides, "No law shall embrace more than one object, which shall be expressed in its title;" (2) section 27, art. 6, which provides, "The right of trial by jury shall remain, but shall be deemed to be waived in all civil cases, unless demanded by one of the parties in such manner as shall be prescribed by law;" (3) section 32, art. 6, which provides, "No person shall be compelled in any criminal cause to be a witness against himself, or be deprived of life, liberty, or property without process of law;" (4) section 1, art. 6, relative to judicial power.

The title of the act under consideration reads as follows: "An act to prevent debtors from giving preference to creditors, and to secure the equal distribution of the property of debtors among their creditors, and for the release of debts against debtors." It will be necessary, for a proper understanding of the objections made, to recite at considerable length the provisions of the act.

Section 1 enacts "that whenever the property of any debtor is attached or levied upon by any officer, by virtue of any writ or process issued out of a court of record in this state, in favor of any creditor, or garnishment made against any debtor, such debtor may, within ten days after the levying of any such attachment, process, or garnishment shall have been made, make an assignment of all his property and estate, not exempt by law, for the equal benefit of all his creditors, in proportion to their respective valid claims, who shall file releases of their debts and claims against such creditors as hereinafter provided; *** and upon making such assignment all attachments, levy, or garnishment so made shall be dissolved, upon the appointment and qualification of an assignee or receiver, and thereupon the officer shall deliver the property attached or levied upon to such assignee or receiver."

By section 2 it is enacted that when any debtor, being insolvent, shall confess any judgment or do any act or make any conveyance whereby any one of his creditors shall obtain a preference over any other of his creditors, or shall omit to do any act which he might lawfully do to prevent any one of his creditors from obtaining a preference over his other creditors, contrary to the intent of this act, or if he shall not, within 10 days after any levy by attachment execution, or garnishment made against him, make an assignment of all his property, as provided in section 1 of the act, or within such time, in good faith, institute proceedings to vacate the attachment and execution or garnishment, or secure a release of such levy, and defend against the said garnishment at the first opportunity, then, or within 60 days thereafter, any two or more of his creditors, holding and owning debts or claims of not less than $200 in the aggregate amount, may make a petition to the circuit court, or a judge thereof, setting forth therein such matter and facts as may be pertinent, which petition may be heard in any county, in the discretion of the judge; and after notice given in pursuance of the order of the court, and in such manner as the court may direct, to the debtor and creditors sought to be preferred, of the time and place of hearing, the court in the term time, the judge in vacation, shall proceed summarily upon...