In re Adler

103 F. 444, 1900 U.S. Dist. LEXIS 312
CourtDistrict Court, W.D. Tennessee
DecidedJune 29, 1900
StatusPublished
Cited by2 cases

This text of 103 F. 444 (In re Adler) is published on Counsel Stack Legal Research, covering District Court, W.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Adler, 103 F. 444, 1900 U.S. Dist. LEXIS 312 (W.D. Tenn. 1900).

Opinion

HAMMOND, J.

The bankrupt having offered a composition to his creditors, his application for a confirmation was refused by the court upon the specifications of a creditor in opposition thereto. Thereupon he prayed an appeal.

Composition, as a feature of a system of bankruptcy, was unknown to our American legislation until the act of 1874, c. 390, § 17 (18 Stat. 182). Historically, it will be found to have been doubted whether such a feature was within the constitutional grant of power to establish a uniform system of bankruptcy; the subject being so distinctively apart from that of bankruptcy, as generally understood at the time of our constitution. See In re Reiman, 11 N. B. R. 21, Fed. Cas. No. 11,673; Id., 13 N. B. R. 128, Fed. Cas. No. 11,675; Loveland, Bankr. 549, § 242. So far as I am advised, there has been no authoritative judicial determination of that constitutional question; but the very absence of a provision for composition, and the reluctance of congress to-put it into our system, show how separated the provisions for it are from the general scheme of the bankruptcy statute, and how necessary it is, in construing the act of congress, to keep the independence of the two in mind. They have no relation to each other. [445]*445The constitutional grant, ex necessitate, must be the foundation of either; and the bankruptcy structures of the act must be, by like necessity, a co-existent framework, within which or superposed on which the composition structure must rest; but this for reasons of constitutional integrity, and for no other reason whatever. This dependence is purely structural, and otherwise composition with creditors, authorized by a bankruptcy statute, or imposed forcibly by it upon unwilling creditors, is as independent of a system of bankruptcy as composition at common law would be. Indeed, congress takes advantage of the bankruptcy statute to permit, encourage, or compel a common-law composition. The word “discharge” has no technical, common, or appropriate meaning in the law of common or voluntary composition; nor would it have in an ordinary statute, by a legislature with plenary power to pass it, authorizing creditors to get together and adopt a composition on such terms as the statute might prescribe, voluntary or compulsory. The word “release” would exactly describe the transaction, technically and in common parlance. Or, less technically, but with equal common significance of meaning and acceptance of understanding, the word “satisfy” or “acquit” would define that which was done. And it may be conceded that the word “discharge” would somewhat synonymously express the transaction. Yet, when that word is used in a statute authorizing a debt- or to “compound” his debts by an agreement, voluntary or enforced, with his creditors, which statute at the same time establishes “a system of bankruptcy,” it borrows, not unnaturally, a reflected light by association with a technical term of similar import and identical form familiar to all bankruptcy statutes; one having a definite and distinctive meaning in the law of bankruptcy, however, which it has and can have nowhere else; quite as distinctive, indeed, as the most limited term used in the law of real property; one peculiarly technical in its meaning when used in bankruptcy statutes; - and one likely to confuse the thought when used elsewhere in relation to analogous effects, but altogether dissimilar conditions of legal right, as well as legislative phraseology. This borrowed light of association must be discarded for a proper understanding of the use of the word “discharge” in the “composition” sections of the bankruptcy statute of 1898. The bankrupt is effectually discharged from all his debts by either process, undeniably, — by agreement with his creditors, voluntary or partly voluntary and partly compulsory, called a “composition,” or, without any agreement, by the compulsory grant of a discharge in bankruptcy. But, except in this ultimate effect, there is not one element even of similarity in the two processes, — neither in the form nor in the substance. The dictionaries define “composition” as a compact or agreement, the settlement or adjustment of a matter of controversy; and they quote from Shakespeare, pertinently to our present inquiry:

“Thus we are agreed;
I crave our composition may be written
And sealed between us.”

It is this compact or agreement which the debtor must plead, if sued, as a release of his debt. This is manifest, because he has noth[446]*446ing else to plead. If the composition be confirmed, the statute commands that the bankruptcy proceedings shall be dismissed; if not confirmed, the estate shall be administered in bankruptcy. Bankr. Act 1898, § 12e. This shows that the composition is separate from the bankruptcy by the act itself, except as a mere foundation for it. There is no decree of discharge or other direction by the court in that behalf, — none whatever. Form No. 62, prescribed by the supreme court (18 Sup. Ot. xlvii.), is only that: “It is therefore hereby ordered that the said composition be and is hereby confirmed.” Form No.-63 (18 Sup. Ct. xlviii.) only directs the distribution of the confirmation fund. Not one word in either as to a discharge of the debtor. Nor in form No. 61 (18 Sup. Ct. xlvii.), which is the application for confirmation of composition, nor in -form No. 60 (18 Sup. Ct. xlvi.), which is the bankrupt’s petition for a meeting of creditors to ■ consider the acceptance of the proposed composition. It is strange, if the idea is sound that these proceedings are equivalent to a discharge, or are to be' considered as the granting or denying a discharge; that the supreme court did not insert apt words in the order giving effect to it as a discharge, and in all these forms adapt them to that end. Now, if any creditor forced by the composition.to accept less than his claim should reply to the plea of payment and satisfaction that he had been forced by the act of congress to take the less sum; that it was not within the power of congress to so compel him; that the bankruptcy statute, in respect of its provisions for composition, was not within the grant in that behalf, being as to such composition clauses only an artificial hook on which to hang the exercise of a power entirely outside of any System of bankruptcy, as such,- — he would raise the constitutional question already suggested, which caused congress to hesitate about inserting such features in a bankruptcy statute. The distinction insisted on here is therefore not unimportant, and the statute should be construed with regard to it. On the other hand, the bankruptcy proceedings carry with and within themselves the primary and technical idea of “a discharge,” which is to be “granted” or “denied,” as expressed in the provisions of the statute for appeals, which are to be as in equity cases, and which are carefully and with manifest purpose limited to three fundamental subjects in bankruptcy, — bankruptcy, as such, and not having the remotest reference to the outside and outlandish subject of composition by agreement or compact. Act 1898, § 25a. It may be that this agreement is reached by a partly enforced assent of recalcitrant creditors, but none the less it is a compact, and in law there is an implied assent thereto by all of them.

This discharge in bankruptcy is as old as the original conception of the system, or nearly so, because it did not obtain in the very earliest of the English statutes, although it has become in the American legislation quite the chiefest concern or motive for the statutes that have been passed. Hil. Bankr. p. 227, § 1, et seq.

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Related

Myers v. International Trust Co.
273 U.S. 380 (Supreme Court, 1927)
United States ex rel. Adler v. Hammond
104 F. 862 (Sixth Circuit, 1900)

Cite This Page — Counsel Stack

Bluebook (online)
103 F. 444, 1900 U.S. Dist. LEXIS 312, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-adler-tnwd-1900.