Denny v. Mattoon

84 Mass. 361

Opinion

Bigelow, C. J.

The petition in this case is brought under that provision of the statute by which a general superintendence and jurisdiction are given to this court, as a court of chancery, of all cases arising under the insolvent laws. It is a proceeding in the nature of an appeal from the adjudication of the judge of insolvency of the county of Worcester, in refusing to act on a petition presented to him by the petitioner in this case on the 10th day of May 1860. To understand the question presented for our consideration, it is necessary to recur to that original petition. By it, it appears that the petitioner was a creditor of one Henry D. Stone; that said Stone was declared to be an insolvent debtor on the petition of two of his creditors, by the adjudication of Horace I. Hodges, judge of the court of insolvency of the county of Hampshire; that assignees of said Stone’s estate were duly chosen; that the petitioner had duly proved his debt against said Stone’s estate; that said assignees i.ad received a large sum of money above all expenses and charges, as the proceeds of said insolvent estate, from which a dividend ought to be paid; and upon these grounds the petitioner prayed that said assignees might be ordered to pay a dividend on said estate, and that such proceedings might be had as were necessary in order that the funds in their hands might be duly distributed according to law. The judge of insolvency to whom this petition was presented, refused to grant the prayer thereof, and assigned as the reason for his refusal that he had been prohibited and enjoined by this court from proceeding further under the warrant issued by said Hodges against the estate of said Stone, which prohibition and injunction were unreversed and still remained in full force. The object of the present petition is to obtain a decree of this court directing the judge of insolvency to proceed and hear the original petition, and to act thereon in such manner that said assignees may be required to make due distribution of the funds in their hands among the creditors of said Stone, according to the provisions of the insolvent laws; and the petitioner avers, as the specific ground on which the prayer of his petition is founded, that an act has been passed by the legislature of the Commonwealth, approved March 14, 1860, confirming all the proceedings theretofore instituted before said Hodges, by reason whereof the injunction of this court should be dissolved, and the said judge should be ordered to act further in said case. It is obvious, from this history of the previous proceedings, that the scope of our present inquiry cannot be confined to the precise matter comprehended within the prayer for relief in the original petition, and the adjudication of the judge of insolvency thereon. The case involves other rights than those of the petitioner, and reaches beyond the mere question of disposing in a proper manner of the funds in the hands of said assignees. These, it is true, are the matters more immediately and directly in issue; but they involve the broader and more general question of the validity of the original adjudication, by which said Stone was declared an insolvent, and his property was sequestrated and conveyed to said assignees, and of the rights of all parties who claim titles or interests by sales, grants or conveyances derived from said assignees, or in any way arising or growing out of said insolvent proceedings. It was this view of the nature and effect of the present petition, as operating to con- , elude the rights of all who might claim under the decree adjudging said Stone to be an insolvent debtor, according to the principles stated in Merriam v. Sewall, 8 Gray, 327, which prompted us to give notice to all parties interested of the pendency of the present petition, so that the rights and interests of all persons, so far as they may be affected by the adjudication in the case, might be brought distinctly before us.

In the consideration of the case, we have not deemed it necessary to pause to inquire whether there is any technical obstacle or difficulty in the way of maintaining the petition, on the ground that the proper remedy, if any exists, is by a bill of review, and not by a proceeding like the present in the nature of a petition asking for specific relief under St. 1838, c. 163, § 18. The real merits of the controversy between the parties have been very fully and ably discussed at the bar. We have found it necessary to consider with care the interesting and important questions which they involve, and, having arrived at conclusions which seem to us to be decisive of the whole case, it has seemed to us inexpedient to allow an objection of a purely formal nature to stand in the way of stating the result to which our minds have been brought on the main point in issue.

This court has already had occasion to decide that the proceedings by said Horace I. Hodges, in issuing the warrant against the estate of said Stone and in adjudging him to be an insolvent debtor, were originally illegal and invalid, and the assignees of the estate of said Stone, who were chosen and appointed at a meeting of his creditors, held in pursuance of said warrant and adjudication, have been by a decree of this court perpetually enjoined from any further action in administering or disposing of the assets in their hands as assignees, or in any way intermeddling with his estate. The reasons on which that decision was founded are stated at length in Grafton Bank v. Bickford,, 13 Gray, 564. There would seem to be no room for doubt that, if the judgment rendered in that case is not invalidated or annulled, but still remains in full force, it constitutes a complete bar to the maintenance of the present petition, so far at least as the rights of parties and privies to it are involved in the present proceeding. It was in the nature of ,a judgment in rem, or like a decree in the case of a creditor’s bill, by which the rights of all persons who are parties to the proceeding, or who might have become so, or who stand in the relation of privies to the subject matter in controversy, are finally determined. It settled conclusively the question of the invalidity of the proceedings by which Stone was adjudged to be insolvent, and his estate was sequestrated and transferred to his assignees. Whatever may have been its effect on the rights of those who had no constructive notice of the pendency of that proceeding, or who were not so situated in relation to the question at issue as to be within the rule of equity by which the rights of those who are represented in a suit are held to be concluded, that judgment was certainly binding on the immediate parties to the present petition; on the petitioner, who was directly privy thereto as a creditor; and on the judge of insolvency and the assignees, who were respondents and duly served with notice. But we are strongly inclined to the opinion that this was not the whole extent to which it operated on the rights of parties. It was a judicial determination, by which it was adjudged once for all that the decree by which the property of Stone was taken and conveyed to his assignees was invalid. Wheelock v. Hastings, 4 Met. 504. The proceedings in insolvency were thereby declared void. It would seem to follow, that the rights of all persons claiming under or by virtue of said decree, or in privity with said assignees, were thereby conclusively and finally settled. Such we are disposed to believe must be the effect of that decree, if it be true that a judgment of this court on the validity of insolvent proceedings, when drawn in question on a petition in the nature of an appeal, is conclusive as to the subject matter of the appeal, that is, as to the validity of the sequestration of the debtor’s estate. Such we understand to have been the decision of the court in Merriam v. Sewall, ubi supra. This result seems to flow necessarily from the nature of the proceeding. In the language of one of the learned counsel who appeared in aid of the petition,'" it would be intolerable if each creditor or other party in interest could maintain a separate petition, successively to try and determine the same question.” If it be alleged that the former judgment, by which the proceedings in insolvency against said Stone were held void, cannot affeit the rights of persons holding estates by grants, sales or other conveyances from said assignees, because they did not become parties to that proceeding and were not notified of its pendency, an appropriate and sufficient answer would seem to be, that such a defect in giving notice to parties interested might constitute an error in the proceedings, and furnish good ground for a rehearing of the case upon proper process, so far as it operated on the rights of parties to whom due notice was not given; but that it does not affect or impair the decree, so long as it remains unreversed and in full force, by which it has been determined that the property of said Stone was not legally vested in his assignees. The res judicata was the title to the estate of the debtor as affected by the insolvent proceedings. Although that decree may be subject to reconsideration and modification for error, either of fact or law, yet if it is still in force until changed or modified on due proceedings had, it would seem that it must have the binding force and effect of a perfect judgment in rem. If this be not so, we do not see why the evils indicated in Merriam v. Sewall would not follow in all cases where notice of the original proceedings was not given to all parties interested. The same question might be litigated anew in successive suits with different results.

Such being the nature and effect of the judgment which has heretofore been rendered on the subject matter in controversy in the present proceeding, the inquiry arises whether it has ceased to be a binding judgment, and is no longer conclusive on the rights of parties and privies. In considering this question, it is to be borne in mind that the object of the present proceeding is not to reverse or correct the former decree as being erroneous by reason of defect or informality. The original validity of that judgment is not called in question by the petitioner, or by any of the parties now before the court. Nor are we called on to decide whether this court has power for sufficient cause to revive or rehabilitate proceedings in insolvency, after a decree has been passed annulling or superseding them. The gist of the present inquiry is, whether the legislature, by a statute confirming proceedings which this court has adjudged to be void, and declaring that the same shall be taken to be good and valid in law, have the power to impair, set aside or annul the force and effect of a judgment in its nature final, so that it can no longer be held to be conclusive on the rights of parties. Such is the effect which the petitioner seeks to give to St. 1860, c. 78. It is the sole ground on which the interposition of the court is asked in the present proceeding. The validity of the statute in its application to other cases or proceedings in insolvency is not now before us. The precise question is, whether it can be held to operate so as to confer a jurisdiction over parties and proceedings which it has been judicially determined did not exist, and give validity to acts and processes which have been adjudged void.

The statement of this question seems to us to suggest the obvious and decisive objection to any construction of the statute which would lead to such a conclusion. It would be a direct exercise by the legislature of a power in its nature clearly judicial, from the use of which it is expressly prohibited by the thirtieth article of the Declaration of Rights. The line which marks and separates judicial from legislative duties and functions is often indistinct and uncertain, and it is sometimes difficult to decide within which of the two classes a particular subject falls. All statutes of a declaratory nature, which are designed to interpret or give a meaning to previous enactments, or to confirm the rights of parties either under their own contracts or growing out of the proceedings of courts or public bodies, which lack legal validity, involve in a certain sense the exercise of a judicial power. They operate on subjects which might properly come within the cognizance of the courts, and form the basis of judicial consideration and judgment. But they may nevertheless be supported as being within the legitimate sphere of legislative action, on the ground that they do not declare or determine, but only confirm rights; that they give effect to the acts of parties according to their intent; that they furnish new and more efficacious remedies, or create a more beneficial interest or tenure, or, by supplying defects and curing informalities in the proceedings of courts, or of public officers acting within the scope of their authority, they give effect tc acts to which there was the express or implied assent of the parties interested. Statutes which are intended to accomplish such purposes do not necessarily invade the province or directly interfere with the action of judicial tribunals. But, if we adopt the broadest and most comprehensive view of the power of the legislature, we must place some' limit beyond which the authority of the legislature cannot go, without trenching on the clear and well defined boundaries of judicial power. The wise and salutary provision in our Constitution, by which its framers sought to declare the distribution of the different powers of the government and to keep them separate and distinct, is not a mere abstract truth. It is capable of a practical application, by which each department may be made to operate within its own appropriate sphere, so as to accomplish the great end of securing a government of laws and not of men. Although it may be difficult, if not impossible, to lay down any general rule which may serve to determine, in all cases, whether the limits of constitutional restraint are overstepped by the exercise by one branch of the government of powers exclusively delegated to another, it certainly is practicable to apply to each case, as it arises, some test by which to ascertain whether this fundamental principle is violated. If, for example, the practical operation of a statute is to determine adversary suits pending between party and party, by substituting in the place of the well settled rules of law the arbitrary will of the legislature, and thereby controling the action of the tribunal before which the suits are pendingt no one can doubt that it would be an unauthorized act of legislation, because it directly infringes on the peculiar and appropriate functions of the judiciary. It is the exclusive province of courts of justice to apply established principles to cases within their jurisdiction, and to enforce their decisions by rendering judgments and executing them by suitable process. The legislature have no power to interfere with this jurisdiction in such manner as to change the decision of cases pending before courts, or to impair or set aside their judgments, or take cases out of the settled course of judicial proceeding. It is on this principle that it has been held that the legislature have no power to grant a new trial or direct a rehearing of a cause which has been once judicially settled. The right to a review, or to try anew facts which have been determined by a verdict or decree, depends on fixed and well settled principles, which it is the duty of the court to apply in the exercise of a sound judgment and discretion. These cannot be regulated or governed by legislative action. Taylor v. Place, 4 R. I. 324, 337. Lewis v. Webb 3 Maine, 326. De Chastellux v. Fairchild, 15 Penn. State R. 18. A fortiori, an act of the legislature cannot set aside or annul final judgments or decrees. This is the highest exercise of judicial authority. Lord Coke calls judgment and execution the “ fruit of the law.” To vest in the legislature the power to take them away, or to impair their effect on the rights of parties, would be to deprive the judiciary of its most essential prerogative. It could then no longer finally adjudicate and determine the rights of litigants. The will of the legislature would be substituted in the place of fixed rules and established principles, by which alone judicial tribunals can be governed. The power to correct errors and to revise and reverse judgments, which in the strictest sense of the word has always been deemed essentially judicial, would be transferred to the legislative branch of the government, even to the extent of controlling the final decrees of the tribunal of last resort. It is obvious that such an exercise of authority would lead to the entire destruction of the order and harmony of our system of government, and to a manifest infraction of one of its fundamental principles. Indeed it is difficult to see how the legislature could more palpably invade the judicial department and effectually usurp its functions, than to pass statutes which should operate to set aside or annul judgments of courts in their nature final, and which would otherwise be conclusive on the rights of parties. Upon this ground we are. of opinion that the Si. of 1860, c. 78, cannot be held to extend to a case like the present, in which a judicial decree declaring the proceedings void had been entered at the tizne of the enactment of the law. If such was the intent of the legislature in passing the act, it cannot be carried into effect, because ir would operate to annul or reverse a final judgment of this court, which had conclusively settled the rights of persons who are parties and privies to the present proceeding.

But there is another aspect of this case which seems to us to be equally decisive against any construction of the statute under consideration, by which it could be held to apply to the proceedings in insolvency against Stone, so as to give them validity ab initia, and render it the duty of the court to revive them by a dissolution of the injunction now in force. The first and essential step in all proceedings under the insolvent law, on which the validity of all acts and decrees in the sequestration of the estate and the administration of the assets of the debtor depends, is, that there should be an adjudication concerning the condition or status of the debtor. He must be found to be insolvent within the legal signification of that word, in order that his property may be taken, the title thereto vested in the assignees, and its proceeds be distributed among his creditors. Especially is this true where, as in the case at bar, the proceedings are in invitum, and no assent of the debtor, either express or implied, can be had or inferred to aid or confirm the course of legal proceedings by which his right to his property was devested and appropriated to the payment of his debts. The determination of the question, whether a debtor is so situated in relation to his creditors as to be subject in his person and estate to the provisions of the insolvent laws, is in its nature the exercise of a judicial power. It is not to be settled arbitrarily or capriciously, but by the application of fixed rules and established principles to facts which may be proved. Nor is it to be determined as a matter of course on the mere petition of the debtor or of his creditor, but it must be the result of due inquiry sufficient "to satisfy the discretion and convince the judgment of the officer of the law, in whom the authority and jurisdiction to decide the question have been duly vested. Until such adjudication, no proper foundation is laid on which proceedings in insolvency can be maintained, nor can the property of the debtor be said to have been taken from him by due process according to the law of the land. In the case at bar, there never has been any legal and valid determination that said Stone was insolvent at the time of the commencement of the original proceedings against him by his creditors. His condition and status at that point of time have never been adjudicated or passed on by any person of competent authority or jurisdiction. Such was the decision of the court when the validity of the proceedings was in controversy before us in Grafton Bank v. Bickford. It therefore follows that if he is held to be subject to the consequences which would follow from a proper and valid adjudication, to take effect from the time when the first warrant was issued against his estate, it must be by force of the act of the legislature, which confirms the proceedings and declares them to be valid. It is, then, not by an order or adjudication, made by competent authority in the due course of proceedings according to the standing law, that said Stone has been declared to be insolvent and his estate sequestrated and vested in assignees, but by an act of legislation, operating retrospectively and purporting to give efficacy and validity to acts and processes which have been adjudged void. If such a statute does not constitute an exercise of judicial power by the legislature, it is certainly a violation of another fundamental principle of the Constitution. It takes away from a subject his property, not by due process of law or the law of the land, but by an arbitrary exercise of legislative will. Under our Constitution the right of the legislature to interfere with vested rights and to deprive persons of their estate is not left to implication. Not only is the- right of acquiring, possessing and protecting property declared to be among the essential and unalienable rights of all men, but also, by the twelfth article of the Declaration of Rights, the great principle is enunciated that no subject shall be deprived of his property or estate but “ by the judgment of his peers, or the law of the land.” The meaning of the latter phrase, adopted as it was from Magna Charla, is well settled and familiar. As applied to civil rights and proceedings it signifies “ due process of law,” or “ by writ original of the common law.” 2 Inst. 45,50. Or, in other words and in a more enlarged and comprehensive sense, it imports that no person shall be deprived of his right to his property by legislation merely; but that it shall be done only according to general laws, after due inquiry, in a regular course of proceeding according to prescribed forms, and with due opportunity to parties for a hearing, before the matter shall be adjudged against them. It is by the law in its due and orderly administration through appropriate tribunals, and not by force of an act of legislation only, that the subject can be deprived of his property in the true sense of that clause of the Constitution which secures to him the protection of “ the law. of the land.” 2 Kent Com. (6th ed.) 13. Sedgwick on Stat. and Const. Law, 538. Taylor v. Porter, 4 Hill, (N. Y.) 140. Wynehamer v. The People, 3 Kernan, 378. Hoke v. Henderson, 4 Dev. (N. C.) 15. Sohier v. Massachusetts General Hospital, 3 Cush 483, 493. In this sense, it cannot be said that Stone was declared to be an insolvent debtor under the original proceedings instituted against him. Prior to the enactment of the statute, by which it is alleged that these proceedings were confirmed and made valid, there had been no adjudication or decree by virtue of which his property had been taken from him, and the title to it passed to his assignees. It was still vested in him; he had the entire jus disponendi; his power over it was as perfect as if no warrant had been issued against him or his estate. Clearly this was so, after the proceedings had been adjudged to be void by a decree of this court. It was then his property by force of a valid judgment in rem. It is therefore the effect of the statute by which if at all, the property of Stone is taken from him or irom those who claim under him; and this, too, operating retrospectively and confirming proceedings which had previously been adjudged void, which were commenced and prosecuted in invitum, and to which there is no assent by Stone or his grantees,- either express or implied. How then can it be said that he was deprived of his estate by due process of law, or according to the law of the land? Is it not a case where an attempt is made to impair vested rights by taking property against the consent of the owner by the mere force of a legislative act?

There is a class of cases, the authority of which cannot be denied, by which it is settled that persons who take grants of property, which has previously been sold and conveyed by deeds or under legal proceedings,' which lack validity by reason of some omission or informality, hold subject to the right of the legislature to cure such errors or defects by acts of retrospective legislation. To such cases the salutary principle is applicable, that the title to the property is deemed to have been vested subject to the equity existing in the first purchaser, which the subsequent statute recognizes and enforces. But it is a mistake to suppose that this case comes within that principle. No such equity existed against Stone. After the first proceedings were adjudged void, he and those claiming under him held the property by a title which was clear and unimpeachable, and which was subject to no right or claim in others which could be made valid, or which could support an equity which legislation might ripen into a paramount title against their consent. To say that a man’s property may be taken from him by force of an act of legislation, which attempts to confirm and give validity to proceedings which have previously been adjudged void for want of authority and jurisdiction, is only to affirm that he may be deprived of his estate without due process of law. There is some show of reason for the doctrine, that defects and informalities in legal proceedings may be supplied or cured by legislative enactment, so as effectually to devest titles to property even as against the original owners. But in such cases legislation finds its support and sanction either in the express or implied assent of the owner, so that the maxim volenti non Jit injuria is applicable; or from the principle, that it only gives force and effect to the regular administration of the law through appropriate tribunals having jurisdiction of the subject matter. Both these elements are wanting in the case before us. The proceedings against Stone were in invitum, and there is no proof of any assent by him to the sequestration of his estate. They were not adjudged to be invalid by reason of any error or omission, but because there was an entire absence of any jurisdiction or authority to commence or conduct them at all. This, we think, is the vital distinction between this case and most of the cases cited by the counsel in support of the petition, in which the authority of the legislature to pass healing acts to confirm the equity of those Holding under defective legal proceedings has been recognized. No such equity can be set up under proceedings which were wholly without authority of law; still less can it be asserted to support titles acquired under such proceedings after they have been adjudged void by the decree of a competent tribunal operating as a judgment in rem.

It was suggested by the learned counsel who appeared in aid of the present petition, that the validity of the statute might be upheld and vindicated as a confirmation of the acts of a judge de facto. But the difficulty in the way of adopting this suggestion is, that it is founded on a misapprehension. The judge of insolvency for the county of Hampshire, so far as he undertook to act and to take jurisdiction of cases in the county of Worcester, was not, in the legal sense of the term, a judge de facto. He had no color or show of right to exercise the duties of the office. He did not act under any appointment or commission which conferred on him a title to perform official duties or hold jurisdiction of cases in that county. This was essential to give to him the character of a judge in fact. In the absence of any legal or prima facie right to fill the office, he was, within the legal signification of the word, a mere usurper or intruder, whose acts and doings were not even colorably valid. Coolidge v. Brigham, 1 Allen, 333. Fitchburg Railroad v. Grand Junction Railroad and Depot Co. Ib. 552. It is not, therefore, a case where a statute was designed to confirm the acts of an officer or magistrate who has exercised a jurisdiction to which he had an apparent valid right, by virtue of an appointment or election in which there was some defect or illegality. The act under consideration goes much further. It purports to give validity to the unauthorized acts of a person who has exercised a jurisdiction to which it has been judicially determined that he had no claim or color of title. We do not mean to say that it is not competent for the legislature to pass statutes confirming acts of magistrates or other public officers, which were originally void. On the contrary, there are many cases in which such legislation would not only be valid, but would operate with a most salutary and beneficial effect. Nor do we intend to be understood, that this statute may not render valid many of the proceedings which it was intended to confirm. But we do say, that we cannot give it effect where, as in the present case, it operates to annul or set aside the judgment of this court, and to disturb vested rights by taking property, without due process of law, against the consent of the owner.

We do not think it necessary to examine at length the cases cited from our reports by the counsel who appeared in aid of the petition. None of them are directly in point on the questions raised in the present case. The leading ones are Walter v. Bacon, 8 Mass. 468; Patterson v. Philbrook, 9 Mass. 151; Locke v. Dane, Ib. 360; Simmons v. Hanover, 23 Pick. 188. Of the first three, it may be said that they are not very satisfactory, and certainly cannot be considered as an authority beyond the precise cases which they decide. When necessary, it may be proper to reconsider them with care. But they do not decide that the legislature can confirm proceedings which have been adjudged void by the tribunal of last resort. No such question could arise in those cases, because the act which was there under consideration contained a proviso that it should not affect any suit in which final judgment had been rendered by this court. Si. 1808, c. 92. In regard to the last named case, it is sufficient to say that the statute, the validity of which was there affirmed, in no way affected any vested right to property, and might well be sustained as affecting only a remedy and not a right.

Petition dismissed *

Footnotes

*

A similar decision was made at the same time, in a ease arising in the same county.

John A. Fayerweather vs. William Dickinson & others.

On the 28th of December 1857, Brainard A. Tyler, a creditor of the Westboro Manufacturing Company, a corporation duly established by law, filed a petition in the court of insolvency for the county of Worcester, praying, for reasons therein set forth, that a warrant might issue against the estate of the company, as an insolvent corporation ; and A. H. Bullock, the judge of that court, issued an order of notice returnable on the 2d of February 1858. Before that day, Judge Bullock resigned his office, and the hearing was adjourned by the register to February 9th, when, the vacancy still continuing, Judge Hodges of Hampshire county heard the petition and issued a warrant thereon, and William Dick inson and Harrison Bliss were chosen assignees at the first meeting, on February 23d. Afterwards, on the 7th of February 1860, John A. Fayerweather, a creditor of the company, filed a petition in this court praying that, the proceedings before Judge Hodges might be vacated, and that the judge of insolvency for the county of Worcester might be ordered to hear and proceed with the original petition of Tyler, and that the assignees might be enjoined from acting further in the case; on which, after notice and a hearing, Hoar, J. issued an order in accordance with the prayer of the petition, on the 13th of February 1860 ; and, on the 10th of March following, the assignees and the judge of insolvency appealed to the full court, in which the injunction against the assignees was made perpetual, and a decree entered vacating all proceedings after the return of the order of notice, and ordering the case to be heard before the judge of insolvency on the original petition.

L. H. Boulell, for the petitioner.

P. C. Bacon $■ E. B. Stoddard, for the respondent».