William Nelson Petitioner In Bankruptcy v. Daniel Carland, An Opposing Creditor

• Decision Date: 01 January 1843
• Citation: 42 U.S. 265,11 L.Ed. 126,1 How. 265
• Parties: WILLIAM NELSON, A PETITIONER IN BANKRUPTCY, v. DANIEL CARLAND, AN OPPOSING CREDITOR
• Court: U.S. Supreme Court

42 U.S. 265

1 How. 265

11 L.Ed. 126

WILLIAM NELSON, A PETITIONERIN BANKRUPTCY,v.DANIEL CARLAND, AN OPPOSING CREDITOR.

January Term, 1843

THE case up on a certificate of division in opinion between the judges of the Circuit Court of the United States for the district of Kentucky. The facts are set forth in the opinion of the court.

Mr. Chief Justice TANEY delivered the opinion of the court.

In the case of William Nelson, petitioner in bankruptcy in the Kentucky district, against Daniel Carland, an opposing creditor, several points were adjourned by the District to the Circuit Court. Upon the hearing in the last-mentioned court, the district judge, as well as the justice of the Supreme Court, sat in the case; and being opposed in opinion upon the questions adjourned, they were certified to this court upon the motion of the counsel for the petitioner.

The first question that presents itself upon this certificate is, whether the Supreme Court have jurisdiction in the matter in this form of proceeding. And after examining the printed argument filed by the counsel for the petitioner, and carefully considering the subject, the court are of opinion that the district judge cannot sit as a member of the Circuit Court, upon questions adjourned to that court, under the 'Act to establish a uniform system of bankruptcy throughout the United States;' and that, consequently, the points adjourned cannot be brought before this court by a certificate of division. Nor will an appeal or writ of error lie from the decision of the Circuit Court; and it is conclusive upon the district judge.

In delivering the opinion of the court, it is, however, proper for me to say, that I dissent from that part of it which excludes

the district judge from sitting as a member of the Circuit Court in a case of this description. Yet I concur in the judgment dismissing these proceedings; being of opinion that the act of Congress of 1802, authorizing the certificate of division where the judges of the Circuit Court are opposed in opinion, does not apply to the peculiar and summary jurisdiction directed to be exercised in cases of bankruptcy.

The proceedings must therefore be dismissed for want of jurisdiction.

Mr. Justice CATRON dissented.

On a petition for a discharge, the district judge adjourned into the Circuit Court the question—Whether the act of 1841, establishing a uniform system of bankruptcy, was constitutional, or otherwise. The judges were divided in opinion on the question, and a certificate of division was made to the Supreme Court; calling upon this court to decide the question, and return it so decided, to be entered as the judgment of the Circuit Court.

The district judge may adjourn into the Circuit Court any question, whether he has, or has not, doubts regarding its decision. Its importance is a sufficient reason. That he properly adjourned the question, whether the bankrupt law was or was not constitutional, is free from doubt. Of this question, the Circuit Court had full and proper jurisdiction; and the decision of it would have been conclusive of the case before us.

Was it a 'question' on which the judges could divide in opinion?

The act of April 29, 1802, provides: 'That whenever any question shall occur before a Circuit Court, upon which the opinion of the judges shall be opposed, the point upon which the disagreement shall happen, shall during the same term, upon the request of either party, or their counsel, be stated under the direction of the judges, and certified under the seal of the court, to the Supreme Court, at their next session to be held thereafter; and shall, by the said court, be finally decided. And the decision of the Supreme Court, and their order in the premises, shall be remitted to the Circuit Court, and be there entered of record, and shall have effect according to the nature of the said judgment and order: Provided, That nothing herein contained

shall prevent the cause from proceeding, if, in the opinion of the court, further proceedings can be had without prejudice to the merits.'

The act declares, when any 'question shall occur before the Circuit Court,' & c., then, on a division, a certificate shall be made at the request of either party. No matter in what form of proceeding it occurs, be it at law or in equity; divisions are nearly as frequent in causes in equity as at law. Under the bankrupt law, the proceedings are in the form prescribed to courts of equity.

Now, 'did a question occur,' in the Circuit Court? It must be admitted that one of the gravest occurred that could be presented to a court of justice: there it was to be decided, and the case concluded by its decision. The judges were opposed, and it could not be decided: then it was their duty, at the request of either party, to send it to this court, to decide for the Circuit Court; where the decision of the Supreme Court is to be entered as the judgment of the Circuit Court.

So far the case presented, seems to be sufficiently clear: but it is met by another consideration; and that is, whether the Circuit Court, in a question adjourned under the 6th section of the bankrupt law, consists of the two judges, or of the circuit judge only. In all other cases, in the Circuit Courts of the United States, except in writs of error and appeals from the District Court to the Circuit Court, (an exception made by positive legislation;) the two judges have equal powers—they constitute the Circuit Court usually; and must do so when a division takes place: does the bankrupt law cut off these powers of the district judge? The law does not so provide; and can it be justly inferred? If the district judge cannot be a memoer of the court on the hearing of the adjourned question, then no division of course can take place. To come at the inference of his exclusion, the intention of Congress must be ascertained from the whole scope of the act.

Great questions were involved in its construction. It was to be administered by more than thirty judges, acting separately; no appeal to the Circuit Court was allowed, save in a single case: that of a refusal to finally discharge the bankrupt from his debts, (sec. 4;) and then the Circuit Court is commanded, if the bankrupt shall be found entitled to the benefits of the act, 'to make a

decree of discharge, and grant a certificate, as provided in this act.' No appeal is allowed to this court from the decree of the Circuit Court: the creditor is not allowed an appeal, either from the District Court to the Circuit Court, or to the Supreme Court, in any case. Nor is the debtor allowed an appeal from the decree of the Circuit Court, refusing his discharge. Such is the unanimous opinion of my brethren now present; and with which opinion I concur. If the discharge is objected to by the creditors, and the District Court refuses it, the debtor may then demand a trial by jury, and try the matter over again: if the jury decides against him also, he may then appeal to the Circuit Court, and there elect to submit the matter a third time, either to the court, or to another jury; and this finding is conclusive, whether by the court or a jury. It is not possible, therefore, to reach this court by appeal, in a bankrupt case. This is clear; and my brethren think it equally clear, that no adjourned question can be brought here by a division of opinion: it follows, this court has no revising power over the numerous and conflicting constructions of the bankrupt law. In some circuits it is held, that one indebted 'in consequence of a defalcation as a public officer; or as executor, or administrator, guardian, or trustee; or while acting in any other fiduciary capacity,' can be discharged from all his other debts; and that the less favoured creditors may take all his property, unless the government, ward, &c., see proper to come in for distribution; when the fiduciary claim will also be extinguished. In other circuits, those indebted to any amount in a fiduciary capacity are all excluded as a class: the fact appearing on the face of the petition, it is dismissed of course. Such is the construction of the act in the eighth circuit; it has excluded from applying great numbers in the eighth and other circuits, who would have been admitted had they applied in circuits where the law is construed otherwise. This question also has been brought here by a division of opinion from the district of Kentucky, at the instance of the district and circuit judges, acting together as the Circuit Court; the question having been adjourned into that court by the district judge.

In the case of William Nelson, the question occurred in the same court, whether the bankrupt law was unconstitutional and void, or otherwise. It was adjourned, as already stated, into the

Circuit Court by the district judge; and there the judges were opposed in opinion, and certified the question to this court for its decision. This was done at the instance of the bar of St. Louis; the district judge of Missouri having pronounced the bankrupt act a mere insolvent law; sueh as was never contemplated by the framers of the Constitution, and therefore void. The following are some of his reasons for entertaining this opinion:

'Is this act of Congress, under which the petitioner claims a discharge from his debts, authorized by the Constitution? In order to determine this, it will be necessary to notice several of its provisions.

'It provides, in substance, that any person, whether a trader or not, who is indebted, except in a few enumerated cases, may file his petition in the District Court of the United States, for the benefit of the act, at any time he may please, without the consent or action of any of his creditors, and obtain by a decree of the court, a discharge from all his debts.This decree is to be had without the consent of any of his creditors being required, even if they do not participate in the proceedings or receive a dividend from the...