Wendell v. Lebon
| Decision Date | 20 February 1883 |
| Citation | 15 N.W. 109,30 Minn. 234 |
| Parties | Emanuel Wendell and others v. A. Lebon |
| Court | Minnesota Supreme Court |
Appeal by plaintiffs from an order of the district court for Clay county, McKelvy, J., presiding, (acting for the judge of the 11th district,) dissolving an attachment. The case is stated in the opinion.
Order affirmed.
Briggs & Elders, for appellants.
W. K Gould, for respondent.
The questions involved in this appeal relate to the constitutionality of certain provisions of chapter 148, Laws 1881, entitled "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," passed March 7, 1881 and which took effect July 1st of the same year. A reference to the law itself will be necessary to a full understanding of the case. Suffice it to say here that the act in its essential features is a bankrupt law. Section 1 provides for what may be termed voluntary bankruptcy, by an assignment by the debtor of all his property, not exempt, for the benefit of his creditors. Section 2 provides for putting the debtor into involuntary bankruptcy upon petition of his creditors upon his committing certain acts of insolvency, and for the appointment by the court of a receiver, with power to take possession of all his property, not exempt, and distribute it among his creditors. In either case only those creditors receive any benefits under the act who file releases to the debtor of all claims other than such as may be paid under the provisions of the act, provided that where, upon a hearing had upon complaint of the creditors, it is ascertained by the judge that the insolvent debtor has fraudulently concealed or disposed of any of his property with intent to cheat or defraud his creditors, he may direct the distribution of his estate among the creditors, without their being required to file such releases. Another provision of the act is that whenever a debtor whose property has been attached or levied upon, by virtue of any writ or process issued out of a court of record of this state in favor of any creditor, shall, within 10 days thereafter, make an assignment of all his property for the equal benefit of all his creditors, pursuant to the provisions of this act, all such attachments and levies shall be dissolved upon the appointment and qualification of an assignee or receiver, and thereupon the officers are required to deliver the property levied upon to such assignee or receiver. All proceedings under the act are had under the direction of the district court or a judge thereof, who is vested with large discretionary powers in matters of practice.
In this case the plaintiffs, who were citizens of the state of Illinois, brought this action on the 4th of February, 1882, against defendant, a citizen of this state, to recover the value of certain goods sold by them to him at Chicago between the 2nd of July, 1881, and the 2nd of February, 1882, and caused an attachment therein to be issued and levied upon the property of defendant, on the 6th of February, 1882. After this levy, and on the 7th of February, the defendant made an assignment to J. Goodman Hall of all his property, for the benefit of all his creditors, pursuant to the provisions of section 1 of the act referred to, which was duly filed on the same day. The assignee accepted the trust and duly qualified on the 8th of February, 1882. The court, on motion of the assignee, made an order, on the 25th of February, dissolving this attachment. This is the order appealed from.
1. The first objection made to this act is that, under section 2, a debtor who is in fact solvent -- that is, who has sufficient property subject to execution to pay all his debts -- may, upon petition of his creditors, be put into involuntary bankruptcy, and his property taken from him by a receiver, simply because he has not, within 10 days after any levy by attachment, execution, or garnishment against him, made an assignment of his property as provided in section 1 of the act, or within such time in good faith instituted proceedings to vacate the attachment, execution, or garnishment. It is argued that this transcends the constitutional powers of a legislature in enacting a bankrupt act; that this is taking away the debtor's property without due process of law; that there must be insolvency in fact -- that is, a deficiency of assets with which to pay debts -- before a legislature can exercise any such powers over a person's property.
For the purposes of this case there are two sufficient answers to this argument: First, the plaintiffs cannot raise this objection; it is only the debtor himself who can do so. Cooley on Const. Lim. 163-4. Second. These proceedings are not under the second, but under the first, section of the act, the assignment being the voluntary act of the debtor himself; and the provisions of the two sections are not so connected and dependent on each other but that that which would remain would be complete in itself, and capable of being executed in accordance with the legislative intent, even if the provisions in the second section objected to were stricken out. Cooley on Const. Lim. 177, 181.
We might remark, however, without expressing any opinion as to the correctness of this construction put upon section 2 by appellant, that it has been the common practice in statutes of this character to make the doing or omitting to do certain acts of this kind a sufficient legal ground for declaring a debtor insolvent, and for sequestrating his estate for the benefit of creditors, regardless of the fact whether he was or was not insolvent in the popular sense of not having sufficient property to pay his debts; and the power of the legislature to do so has never been questioned, but often, impliedly at least, fully recognized. See O'Neil v. Glover, 5 Gray 144; Kimball v. Morris, 2 Met. 573; Wheeler v. Bacon, 4 Gray 550.
2. If we correctly understand counsel's second objection urged against this act, it, in substance, is that a creditor is entitled to all the present property of his debtor in satisfaction of his debt; that courts of this state have no power to reach the property of a debtor situate in other states; and yet this act requires a creditor, as a condition to sharing in the distribution of the debtor's estate, to release him from all claims other than such as may be paid under the provisions of the act. In other words, while the law may be able only to give him a part of what he is entitled to, yet, in order to get that part, it requires him to release all claim to the remainder.
If there is anything in this objection, it could be urged with equal force against any bankrupt law, state or federal, that could be enacted; for neither would have any inherent authority in foreign jurisdictions. But the assignment of the debtor's property provided for by the act is not limited to property within the state, but includes all his property, wherever situated; and while other jurisdictions might, on grounds of policy, give preference to domestic attaching creditors over foreign assignees or receivers in bankruptcy, yet, subject to this exception, they would, on principles of comity, recognize the rights of such assignees or receivers to the possession of the property of the insolvent debtor. Story on Conflict of Laws, § 403 et seq. We think there is nothing in the point.
3. The third objection is that the act does not give the creditor a right of trial by jury upon the question whether the debtor's property may be distributed among his creditors without their filing releases, where the debtor has fraudulently concealed or disposed of any of it; that, under the...
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