In re Bradstreet — 13 Johns. 385

Majority

p. 385

In the matter of Bradstreet, an Insolvent Debtor.

Headnote

When an order has been msde for the assignementJj¡¡¡ntth®/an ¡“1 ™Er“4 iifetasHÍ section of the insolvent act, <1 N. R. L. 464.). the officer granting the order cannot after-wards vacate it, unless there has been surprise oa the opposing creditors, or they have been misled by the opposite party.

W here thé counsel for the opposing creditors was, while going to the office of the recorder of Neiv-Yorle to oppose the insolvent’s discharge, met by one of the attorneys for the petitioning creditors and insolvent, and detained by him in conversation and the perusal of papers relating to the opposition, and in the mean time the ^®r SoDingíredüo'rí coito,‘and X «Susolvent’s estate, under these re- recorder ought

officer be {^®ce'’,“| tmntllof9theSfn¡“T^ó'íid satisfied that two thirds of the creditors had requested that an assignment of the insolvent’s estate should be made; 'álthmigh if it appear, after the assignment has been made, that two thirds of the creditors had not assented, the assignment is, notwithstanding, valid.

If the creditors do not attend in due time to oppose, their assent is presumed, and that they have waived their opposition.

The assignment having been made by the insolvent himself, under the 9th section of the insolvent act, he is to be discharged, on conforming with the directions of the act, in respect to petitioning creditors; he must therefore make out, under oath, an aeeouot of his creditors, and a just ami true inventory of his estate, and deliver over his estate to bis assignees; but’he is not bound to advertise anew,

THE following facts Were submitted by the parties to the 'court for their opinion,' and were to he considered in the nature of a return to an alternative mandamus directed to the recorder Of New-York, requiring him to sign the insolvent’s dischai’ge, or show cause to the contrary.

On the 23d December, 1815, one of the cx'editors of the insolvent applied to the recorder, under the 9th section of the insolvent act, to compel the insolvent to assign his property for the benefit of all his creditors. Regular notice having been given, such of the creditors as appeared before the recorder, at the time appointed by the notice, proved their debts, and requested an assignment. The order to assign was made, and in a few minutes thereafter certain opposing creditox’s appeared, and applied to have the order vacated. The following facts are stated in the affidavit of Mr. Mi(Joun, who acted as counsel for the opposing creditors. The deponent received a letter from Boston, enclosing certain affidavits to oppose the insolvent’s dischai’ge. On the morning of the 27th February, 1816, at the time appointed for the creditors to appear, while going to the recorder’s office, he was met by Mr. Fay, one of the attorneys for the petitioning creditors and insolvent, who requested the deponent to stop and let him look at the affidavits before subBlitting them to the recorder, at the same time observing, that perhaps some arrangement might be made to satisfy the crediitors. The deponent thereupon showed him the affidavits, and read him part of the letter accompanying them, and Fay con sented to adiourn the business until the Monday following. The deponent then proceeded with Fay to the recorder’s office, where they wei’e informed by the recorder, that he had just granted Mr. Van Wyclc (the other attorney for the petitioning creditors and insolvent) an order for the assignment of the insolvent’s

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\ . ■ . estate. Fay then expressly admitted, that he had detained thS deponent, and that but for his detention, the deponent would havé been, in time to. make his opposition, and declared that th eré should be no difficulty about it,, and that he would go after Mr. Van Wyck. Shortly after,, Fay and Van Wyck returned to the recorder’s office, and, after some conversation, they agreed, as the deponent understood, to open the case, and then proceeded, to object to the affidavits that they. were. not. made before a proper magistrate,,. The recorder, to give the deponent, an-opportunity to show that they were properly token, adjourned-the proceedings until the next day, when the deponent having shown, to. the satisfaction of the recorder, that they Were taken before a competent magistrate, Fay and Van Wyck objected that they were not certified under the seal of the magistrate ; upon which the ¡ recorder intimated,, that 'if'that were a good objection he ..would be .willing-to. allow further time to have the affidavits properly certified 5 whereupon. Van Wyck declared, that, if such were to.be the case, he would, not consent to give up the order- of assignment which he had obtained : and there was,.accordingly, an end to all-further discussion before the recorder. , The next day Fay'met, the. deponent, and.denying -that there had been any collusion between him- and Van Wyck, told the deponent that he had .determined that the order, should be vacated, and the case opened for a hearing, and that he had prevailed upon Vari Wyck to consent 5.'soon after, the deponent saw Van Wyck, who told him that.he would consent to submit the case to. the recorder, when. Mr, Sedgwick (on whoso behalf the deponent had acted .in this affair) should return, and let. him decide whether he would open it or nob *£b this the deponent replied, that, such a submission of the case would be of.no avail, as the recorder had', already said that he could not open the case for a hearing,, unless, they would consent- to; give up the order, absolutely; and that it was the deponent’s-wish, and was the only w-ay in which, in, his opinion, the business could bé conducted, to submit the case to the recorder-in. the same, manner,as if no order had - been made» Van Wyck replied,. to the best of.the deponent’s reoollec.tion, “ very well, we . will do- so,, and we will let .the business rest until Mr. Sedgwick’s return,;- in the mean time, ifany assignment, is made by the insolvent, it shall be conditional.’’ From these conversations with Fay md Van Wyck, the deponent understood that they

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liad consented to give up and vacate the order of assignment, and open the case for a rehearing.

To the case was annexed a paper signed by Mr. Fay, in-which .... ^ ° , 1 11 he stated that he desired that the order might be vacated, and'that the opposing creditors might be allowed to come in; “ it being nevertheless hereby expressly declared, that the petitioning creditors, and the insolvent, since the conversation at the. recorder’s office aforesaid, have objected, and now object, to-vacating such order, and to the coming in of the creditors.”

The case was argued at the last term, by R. Sedgwick, fop the opposing creditors, and T. A. Emmet, for- the insolvent.,

now delivered the opinion of the court. The counsel, in the argument of the case, have made two questions for the consideration of the court. The first relates,, particularly, to this case, to wit, whether the recorder, under the circumstances stated, has the power, and ought to vacate the order for assignment made by him. The second is a .more general question, involving the construction of the 9th section of the insolvent act, (1 N. R. L. 464.,) concerning which a diversity, of opinion, as’well as practice, has prevailed. . . •

With respect to the first question, it is unnecessary to decide,, whether the recorder, after haying made an order for the assignment, would have a right to vacate it, when there was no surprise upon opposing creditors, or any circumstances attending the proceedings, calculated to mislead them; I am inclined to think, however, he could not. But a recurrence to; the particular circumstances • disclosed in' this ease shows, very clearly, that the counsel for the opposing creditors was prevented from making opposition to the order for assignment, by-the conduct of the counsel for the insolvent; whether it was by design or not, is unnecessary to say. The willingness of the counsel, to have the order vacated, would seem very strongly to counteract any unfavourable conclusions from such conduct. We have no hesitation, however, in saying, that the recorder, under the circumstances disclosed to him, had the- power, and it waphis duty, to have vacated the order. The decision of this point-puts an end to the present case, as it opens the proceedings to

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let1 in the creditors to. oppose the assignment-. • The 'other qiies»’ tion made on .the argument might not arise1. But, for the pur-, pose of settling the construction to be given to.'this/section of:' the act,, and of having a conformity in the proceedings under it-,: it has been thought /proper to express,* a:n ' opinion upon * the other-question also. .... :

. This- section applies; to the case of an-adversary proceeding against the insolvent, founded upon the supposition that he is ' wasting his property; but there, is too much reason to believe,/ that the proceedings, under this section, are commenced'and1 carried on at the instance of the insolvent, calculating'upon tjie inattention of his creditors,- and that he may procure his discharge without obtaining the assent of creditors, whose debts* amount tq two thirds of.all the debts owing b,y the insolvent,; and thus evade what is the clear and manifest policy of the statute* The point immediately in controversy*, is the meaning óf that.part of the. section which declares, that* if the insolvent shall make such assignment in ten days,. and shall conform to the directions pf this net, with respect to petitioning debtors,’ ¡such insolvent shall be thereupon discharged, In like manner as ' •if he.had petitioned for. his discharge, in conjunction'with the creditors^ pursuant'to this act.” The-insolvent is supposed* to have made the assignment, and what else he has to do,, is the question* The clause refers to his duties, in other parts of the "act, and requires of him. to- conform tó its.-directions with re« spect-to petitioning creditors*- This,, however, in good sense and sound interpretation,; must be understood as extending only to shch things as have not already, been done*, He is mats there» • fore, bound to advertise anew* .That has been done,, And, under this, section,, before any-,order is made for the- assignment, the judge,,- or officer before .whom- the proceedings -are hady must be satisfied that two. thirds of his creditors.have requested an assignment to. he made. A notice, for the purpose of the creditors appearing t.o. assent to, . or-oppose,- such' assignment, having been given, the law presumes that the creditors have, appeared,'or have waived any opposition to the assignment» We must, assume,, therefore, that two- thirds of the creditors, have actually appeared and requested the assignment, arid made the necessary affidavit ; and, of course, nothing more is to be' done by the creditors. As,yet,-the proceedings are'presumed -io -have been hostile to the. wishes .of the .insolvent, and, if he

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Still*'holds out,-the Officer-before whom-the proceedings - are had is directed to make -the assignment. The insolvent* however, in such case, is not discharged fro’m imprisonment* ° # \ or from his debts. * But if the insolvent, in this stage of the proceedings, chooses to step in and make the assignment himself, and conforms, as above stated, he is discharged-, both from imprisonment and from his debts;. and this- conformity*. I apprehend, must bé by making out an account-of his creditor^ and a just and .true inventory of his estate,, and delivering over his estate to his assignees. These aré acts which the statute prescribes to be done by the insolvent, and which have not been done, or presumed to have been done, by any proceedings which have as yet taken place under this section of the act. This inventory and account ought to be rendered milder oath. The proceedings are' founded upon -the allegation or apprehension that the insolvent is "wasting or embezzling his property; and if willing to repel this, by truly and honestly giving up his estate, he is entitled: to his discharge. An account of his creditors ought to bé given, that the assignees may know who are entitled to dividends. By such account of the creditors, and" the debts owing- to them, it will, probably, in most cases, appear, that less than-ttvo thirds,-in amount, have requested the assignment-to be made. But this cannot defeat the discharge; the creditor^ should have appeared pursuant to the notice: and, after the order for the assignment is duly made, it is too late to call that mat-tei’-in question. I am aware that this mode of proceeding is liable to very great abuse, by the, insolvent’s procuring one of his-creditors to proceed against- him- under this section of the act, and by thé negligence of creditors in not appeai-ing pUrsuant to sueh notice. But most of this abuse* or fraud, grows out of the inattention-of creditors : and the officer- before whom the proceedings are had might, perhaps,- if he- suspected,, or had any evidence of collusion, take measures" to guard against it. He must be satisfied that creditors to two thirds in - amount of the insol vent’s debts do request the assignment to' be made. If creditors will not appear' in due time, and make opposition, if ap-y* they have*, they have themselves only to blame.- The proceedings: tinder this section ,of the act are, perhaps, not so well guarded -jo prevent fraud as -might be desirable; but we must give a construction to the act as tve find it; and the One Thave. mentioned seems to be most conformable to its. letter and

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intention. I am, accordingly, of opinion, that in proceedings uncjer this section of the act, after the order for the assignment is duly made, and the assignment executed, the insolvent is entitled to his discharge, upon making out, upon oath, a true inventory of his estate, and account of his creditors; notwithstanding it may appear, by such account, that two thirds of his creditors have not requested the assignment to be made ; and this is the construction adopted by the court.