In re Bradstreet , 13 Johns. 385 ( 1816 )

Thompson, Ch. J.,.

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 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. .... :

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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 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 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.