Sexton v. Mann , 15 Wis. 162 ( 1862 )

By the Court,

Cole, J.

It appears to us that the question whether the circuit court was authorized to enjoin the proceedings on the judgment in the county court, depends much for its proper solution upon the still further inquiry, whether it is the object of our statute for the relief of insolvent debtors, to distribute all the effects of the insolvent ratably among his creditors. For if the statute contemplates that the property of the debtor shall be distributed among the creditors pro rata, then clearly, since the application by the insolvent for his discharge was pending when the proceeding in the county court was instituted, it was the duty of the circuit court to interfere and prevent thé appellants from obtaining satisfaction of their judgment out of assets the title to which would by relation vest in the assignee, and which should be ratably distributed. It is a mistake to suppose the application for a stay of proceedings upon the judgment should have been made in the county instead of the circuit court. The insolvent proceeding was pending in the circuit court, and undoubtedly that court might interpose by way of injunction, and prevent one creditor from obtaining a preference or priority of payment out of the insolvent’s estate to the injury of the others.

Now in regard to the law itself, we are of the opinion that its object and intent were to dedicate all the insolvent’s estate to the common benefit of the creditors, upon the principle that equality is equity. This being the policy of the law, it would manifestly be unjust to permit one creditor, by superior diligence, to gain an advantage over others through the aid of supplemental proceedings. For suppose the appellants are not enjoined, they might,' by such proceedings, exhaust the entire estate of the insolvent in satisfying their judgment. It is not pretended that they have acquired any special lien upon any portion of tbe debtor’s property; they have resorted to tbe supplemental proceedings in county court to reach assets which the insolvent embraced in his schedule, on presenting his petition for discharge to the circuit court. The property embraced in this schedule the law devotes to the payment of all the creditors ratably. It seems to us necessary to give the statute this construction in order to render it of any practical benefit to the creditors. Otherwise, while the insolvent proceeding is pending, one creditor may obtain his judgment, and by taking the steps resorted to in the county court in this case, exhaust all the property of the debtor before the order of assignment is made. The appellants can claim the protection of no superior equities in respect to the insolvent’s estate. They stand upon an equality with the other creditors. They must be content to come in under the assignment for their proportion of the assets.

It is insisted that this construction ought not to be given the insolvent law, because the court has no control over the property of the insolvent debtor to compel an assignment; nor have the creditors the power of compelling a continuance of the insolvent proceedings.

It is a sufficient answer to this objection to say, that the court may properly restrain one creditor from obtaining any preference or priority of payment out of the assets, until it is ascertained whether the insolvent prosecutes his application for a discharge or not. If a discharge is granted and an assignment made, then all of the property belonging to the debtor at the time of the presentation of his petition, is equally distributed among the creditors. If no discharge is granted, then the court would undoubtedly permit the creditors to resort to the ordinary remedies without restraint.

But after the insolvent proceeding is .instituted, and while it remains undetermined, one creditor ought not, by superior diligence, to obtain the entire control of the'debtor’s estate, or apply it, if need be, to the payment of his own debt to the exclusion of all others.

We therefore tbink the order of the circuit court,.enjoining the appellants from prosecuting their proceedings supplemental to an execution, in the county court, should be affirmed.