In re Francke

9 F. Cas. 697, 7 Ben. 420
District Court, S.D. New York·Decided September 1, 1874·No. Case No. 5,046·Published

Opinion

BLATCHPORD, District Judge.

The bankrupts were adjudged such, as copart-ners, by this court, on the 2Sth of June, 1872, on a petition filed against them. They appeared and filed a written consent to an adjudication. A warrant was issued, and the first meeting of creditors was held on the 2d of August, 1S72. On that day thirty creditors proved their debts. An assignee was elected by the votes of twenty-seven of those. On the 19th of September, 1S72, the bankrupts hied their sworn schedules of debts and assets. On the 23d of July, 1874, and not before they filed a petition for discharge. By the 24th of July, 1874, forty-four creditors had proved their debts. The hearing on the petition for discharge was fixed for the ISth of August, 1S74. No creditor appeared to oppose a discharge. The as-signee has received moneys belonging to the estate to the amount of 89.996.22. It is not shown that the assets of the bankrupts are equal to fifty per centum of the claims proved against their estate, upon which they are liable as principal debtors; nor is it shown that the assent, in writing, of a majority in number and value of their creditors. to whom they have become liable as principal debtors, and who have proved their claims, was filed at or before the time of the hearing of the application for discharge. According to the said schedules, all of the debts were contracted after the 31st of December, 18CS. Notwithstanding these facts, the register certifies that the bankrupts have “conformed to their duty, under the act of congress entitled ‘An act to establish a uniform system of bankruptcy throughout the United States,’ approved March 2, 1867 [14 Stat 517], and the acts amendatory thereof and supplemental thereto, and have con[698]*698formed to all the requirements of tlie said act, and the acts amendatory thereof and supplemental thereto.”

The first section of the act of July 27, ISOS (15 St'at. 227), amends the second clause of the thirty-third section of the said act of 1SG7, so as to read as follows: “In all proceedings in bankruptcy commenced after the first day of January, eighteen hundred and sixty-nine, no discharge shall be granted to a debtor whose assets shall not be equal to fifty per centum of the claims proved against his estate, upon which he shall be liable as the principal debtor, unlessthe assent, in writing, of a majority in number and value of his creditors to whom he shall have become liable as a principal debtor, and who shall have proved their claims, be filed in the case at or before the time of the hearing of ;lie application for discharge.” By the first section of the act of July 14, 1S70 (16 Stat. 270). it is declared that the provisions of the second clause of the thirty-third section of said act of 1SG7, as amended by the first section of the said act of 186S, shall not apply to those debts from which a bankrupt seeks a discharge, which were contracted prior to the 1st of January, 1869.

The requirements of the act of 186S apply to “all proceedings in bankruptcy” commenced after the 1st of January, 1809, whether the petition be one filed by, or one filed against, the debtor, tinder those requirements, the right to discharges in this'case is not shown. But the certificate of the register implies that it is supposed, that, because this is a case of compulsory or involuntary bankruptcy, discharges may and must, under the act of June 22, 1S74, be granted, without a compliance with the requirements of the act of 180S.

The ninth section of the act of 1S74 provides as follows: “In cases of compulsory or involuntary bankruptcy, the provisions of said act” (the original bankruptcy act of March 2, 1807), “and any amendment thereof. or of any supplement thereto, requiring the payment of any proportion of the debts of the bankrupt, or the assent of any portion of his creditors, as a condition of his discharge from his debts, shall not apply; but he may, if otherwise entitled thereto, be discharged by the court in the same manner and with the same effect as if he had paid such per centum of his debts, or as if the required proportion of his creditors had assented thereto. And in cases of voluntary bankruptcy, no discharge shall be granted to a debtor whose assets shall not be equal to thirty per centum of the claims proved agaiust his estate, upon which he shall be liable as principal debtor, without the assent of at least one-fourth of his creditors in number, and one-third in value; and the provision in section thirty three of said act of March second, eighteen hundred and sixty-seven, requiring fifty per centum of such assets, is hereby repealed.” The provisions of the act of 1808 were in amendment of the thirty-third section of the act of 1807.

What is the effect of the ninth section of the act of 1874? Was it intended to apply to cases commenced before the date of its passage? It does not repeal anything except the provision “requiring fifty per centum of such assets;” and the twenty-first section of the act of 1874 repeals only such acts and parts of acts as are inconsistent with the provisions of the act of 1874. Is it inconsistent with the provisions of the act of 1874, that, in the present case, it should be necessary to comply with the requirements of the act of 186S? Does the repeal of the provision “requiring fifty per centum of such assets,” make the act of 1808 inapplicable to the present case?

The ninth section of the act of 1874 must be construed in connection with the other provisions of the same act. The language of the ninth section is general. It says, “in cases of compulsory or involuntary bankruptcy,” and “in cases of voluntary bankruptcy.” This language is satisfied by applying it to cases to be commenced after the passage of the act of 1874. That is the natural meaning of such language. It is not to be construed as applying to cases commenced before, and pending at the time of. the passage of the act of 1S74, unless the intention to have it so apply is apparent from the act. The intention to have other provisions of the act of 1874 apply to cases commenced before its passage is manifested and declared by that act, and. if such intention is not declared in regard to the provisions of section 9, and if those provisions can have proper scope wiaiout applying them to cases commenced before the passage of the act of 1S74, and, especially, if, to apply those provisions to such cases, would be inconsistent with the intent manifested by all the provisions of the act of 1S74, considered together, then the inference is proper, that it was not intended that those provisions should apply to cases commenced before the passage of the act of 1S74. The twelfth section of the act of 1S74, in amendment of the thirty-ninth section of the act of 1807, in regard to cases of compulsory or involuntary bankruptcy, declares that the provisions of such twelfth section shall apply to cases commenced after the 1st of December, 1S73. and prior to the passage of the act of 1S74. as well as to those commenced after its passage. So, too. the seventeenth section of the act of 1S74, which prescribes proceedings for a composition with creditors, prescribed them for “all cases' of bankruptcy now pending or to be hereafter pending.”

Under the act of 1874, in cases of compulsory or involuntary bankruptcy commenced, after its passage, one-fourth in number and one third in value of the creditors of a debtor must join in a petition against him, or he cannot be adjudged a bankrupt. The idea of the act, then, seems to' be, that if such num-[699]

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In re Francke, 9 F. Cas. 697, 7 Ben. 420 (S.D.N.Y. 1874).

9 F. Cas. 697 (In re Francke) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.