Mathews v. Stewart

6 N.W. 633, 44 Mich. 209, 1880 Mich. LEXIS 533
Michigan Supreme Court·Decided October 6, 1880·Published

Opinion

Graves, J.

Stewart recovered in the circuit court in an action of trover, and Mathews urges that errors to his preju[211] dice were committed on the trial. A brief reference to the material facts is requisite.

November 5, 1877, C. F. & A. Draper, being furniture dealers, made a common law assignment to Stewart for the benefit of their creditors. It provided that certain preferred creditors should be paid in full and the rest pro rata, in case the fund should turn out insufficient for the entire payment of all. Stewart took possession and proceeded to carry out the trust by daily sales of the property.

February 2, 1878, and between two and three months after the assignment and possession under it, a petition was filed in bankruptcy against the Drapers, on which they were regularly adjudged bankrupts. Thereupon the usual warrant was issued to take possession of the estate, and Mathews in his capacity of marshal received it for execution. About July 5th, 1878, he proceeded with it to the place where Stewart was still engaged in selling under the assignment, and on explaining'the purpose of his call as being to make seizure of the assigned property by virtue of his warrant, he obtained possession of the unsold portion and passed it shortly after-wards to the assignee in bankruptcy.

On the 27th of May, 1879, and abont nine months later, Stewart demanded of Mathews a return of the property, which was refused, and on the next day this suit was begun.

It has not been claimed that Stewart’s title has ever been passed on judicially. But the ground taken is that the assignment was void as against the warrant and that it may beso adjudged in defense of the marshal in this action. The general view indicated is that the Bankrupt Law, in being put in motion by the filing of the petition, reached back and divested the assignment of all force to shield the property from the process and consideration of the court of bankruptcy. The provision supposed to warrant this position in § 5129 of the Revised Statutes of the United States as amended by the act of June 22, 1874. No other part of the Bankrupt Law is cited in its favor. The counsel on' the part of Stewart deny that this section applies, and insist that the assignment was exclusively subject to the one immediately [212] preceding, being § 5128 as amended by the act of June before mentioned, and to this the court below acceded.

By the amending act referred to, the retroaction of § 5129 was reduced from six to three months, and that of § 5128 from four to two months. Lienee, if the assignment was subject to § 5128 instead of § 5129, it was not within reach of the retrospective operation of the Bankrupt Law - at all, because more than two months occurred between the assignment and the filing of the petition. Judicial opinion has not been entirely harmonious in regard to the meaning and application of these provisions, some judges thinking that common law assignments for the benefit of creditors and with preferential conditions, were covered by § 5129. Still on examination it appears that the drift of authority in the State courts and in the inferior Federal courts has been distinctly in favor of regarding such dispositions as falling-under § 5128.

It is not essential to comment on the disagreeing views which have appeared or to consume space in original discussion, because the question is deemed to have been, in effect, disposed of by the Supreme Court of the United States. Prior to the Congressional Revision the substance of these provisions appeared as two clauses of § 35 of the original act of 1867, and not in the shape of two separate sections, as arranged by the revisers.* The alterations made by amend[213] ment and revision, however, produced no change in the sense as respects the question here. The construction which in this particular was due in' 1868 was the proper one ten years later. The question as to which of the two regulations such an assignment as that to Stewart must be referred, was subject to the same answer when the law was repealed as when Gibson v. Warden 14 Wall. 244 and Dutcher v. Wright 94 U. S. 553 were decided.

Now, in the last of these cases one Peterson was adjudged bankrupt on a petition filed on the 8th of April, 1870, and Wright, the assignee in bankruptcy, claiming that the bankrupts on the 8th day of the preceding December had assigned certain of his property to his creditors Duteher, Ball & Goodrich with a view to give them a preference over his other creditors, filed a bill to recover that property or its proceeds as assets of the bankrupt. The point chiefly contested was whether, as the assignment was made on the 8th of December and the filing of the petition was on the same day of the fourth month thereafter, the Bankrupt Law touched the transaction at all. At that time, as before stated, § 5128 reacted four months and § 5129 six months. Of course the assignment was within the time of retroaction given to § 5129. But no one regarded that section as applicable. The case was believed to turn on the point whether the transaction was or was not reached by § 5128. The court observed : [214] “Both parties agree that the petition in bankruptcy was filed April 8, 1870; and it appears both by the bill of complaint and the plea filed by the respondents, that the notes, accounts and property were assigned by the bankrupt to the respondents the 8th of December of the preceding year. Undisputed as the facts are, the decision must turn upon the construction of the Bankrupt Act. 14 Stat. 534; Rev. St. § 5128.” In entertaining and deciding the question whether the 8th of December, the date of the assignment, was within four months of April 8th, the date of filing the petition, according to the intent of the act, and in making the fate of the assignment turn on the result, the court virtually and effectively ruled that the assignment was one of the list of [215] transactions arrived at by § 5128 and not by § 5129. The case can be explained on no other hypothesis. If the assignment was within the description of § 5129, there was ■ no occasion at all for discussing whether the 8th of December was not within four months of the Sth of April, and the court, in holding that the decision of the case hinged on that point, committed an .absurdity.

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Mathews v. Stewart, 6 N.W. 633, 44 Mich. 209, 1880 Mich. LEXIS 533 (Mich. 1880).

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Related

Gibson v. Warden
81 U.S. 244 (Supreme Court, 1872)
Dutcher v. Wright
94 U.S. 553 (Supreme Court, 1877)
Flanigan v. Lampman
12 Mich. 58 (Michigan Supreme Court, 1863)
Halsey v. Fairbanks
11 F. Cas. 295 (U.S. Circuit Court for the District of Massachusetts, 1826)
Lawrence v. Davis
15 F. Cas. 70 (U.S. Circuit Court for the District of Illinois, 1843)