New Milford Security Co. v. Windham County National Bank

It has long been the general policy of our law that the universal administration of an insolvent estate for the benefit of creditors should work a dissolution of freshly-made attachments. This policy has been manifested, in the case of insolvency proceedings and of receiverships of corporations and partnerships, by statute; and in the case of the settlement of insolvent estates of deceased persons, by the unwritten law up to 1903. In the latter case the attachment was dissolved by the death of the defendant debtor, regardless of its date. Such was the combined effect of the common-law rule that all civil actions should abate on the death of a sole defendant, whether solvent or insolvent, and of the limitations of our survival statutes which provided for the survival of such actions only as might originally have been prosecuted against the executor or administrator; and, with minor exceptions, no actions at all could be originally prosecuted against the executor or administrator of an insolvent estate. General Statutes, § 343. In 1903 a more liberal survival statute was enacted, by which all actions not expressly excepted from the operation of the Act might be continued by or against the executor or administrator of a deceased plaintiff or defendant. Public Acts of 1903, Chap. 193, p. 149. In Craig v. Wagner, 88 Conn. 100,89 A. 916, we held that the effect of this statute was to continue the original action in force, and thus to preserve the liens of attachments made in the defendant's lifetime.

From this outline it will appear that until 1903 the question whether the phrase "insolvency proceedings" in § 279 is broad enough to include the settlement in insolvency of the estate of a deceased defendant, could not have been raised, because until then the attachment was automatically dissolved by the death of the defendant. It now comes before us for the first time, because in Craig v. Wagner, 88 Conn. 100, 89 A. 916, the estate was not represented insolvent until more than eleven months after the attachment.

As originally passed in 1853, § 279 provided that "whenever an assignment shall be made for the benefit of creditors, or whenever a trustee shall be appointed . . . for the settlement of the estate of an insolvent debtor, all attachments of the property of such debtor, either real or personal, made at any time within sixty days preceding such appointment, or the application to the court of probate for such appointment, shall be dissolved," etc. In this form the statute was expressly confined to proceedings instituted in the lifetime of an insolvent debtor. But in the Revision of 1875 the statute appears in its present form, providing that the "commencement of proceedings in insolvency shall dissolve all attachments . . . made within sixty days next preceding." The special provisions of the original Act were thus changed, in point of form, into a general rule applicable to all proceedings in insolvency, and for forty years the statute has remained in this form.

The settlement of the estate of a deceased debtor as an insolvent estate is, in principle and in practice, a "proceeding in insolvency." By § 8 of the present Federal Bankruptcy Act, Congress has assumed the right, under the power to establish uniform laws on the subject of bankruptcy, to administer the estate of a bankrupt who dies after the commencement of the bankruptcy proceedings. So in our own statutes, the term "insolvent estates" is used to include estates of living and deceased insolvents, and in chapter 28 of the General Statutes we find, under the title "claims against insolvent estates," a series of provisions covering the appointment of commissioners to receive and decide upon the claims of creditors, the limitation of time for exhibiting claims, the character of claims which are allowable, the consequence of failure to seasonably exhibit claims, the commissioners' report of claims presented, allowed and disallowed, and the proceedings to be taken when a creditor has security for his claim. In all these provisions the term "insolvent estate" is used to include estates of deceased, as well as of living, debtors, and the result is that substantially the entire statutory proceedings relating to the distribution of insolvent estates among creditors apply indiscriminately to both classes of estates. Upon general principles it is therefore impossible to say that the words "proceedings in insolvency," in § 279, which also relates to the rights of creditors, may not include all proceedings taken under these sections of the statutes. Unless expressly limited in some way, these words cannot, for example, include the appointment of commissioners under § 331 on the estate of a living insolvent debtor, and at the same time exclude the appointment of commissioners under the same section on the estate of a deceased insolvent debtor.

There is no such express limitation to estates of living insolvent debtors in § 279. The special provisions for the revival of an attachment, in case the property subsequently escapes from the custody of the law, relate on their face exclusively to insolvency proceedings upon the estates of living debtors. But that does not necessarily signify an intent to limit the Act, because estates of deceased persons cannot escape from the custody of the law until settled either as solvent or insolvent estates. Hence there is no necessity for specially providing for the revival of an attachment in case the estate turns out to be solvent. "If the estate is not insolvent, the lien by attachment is unnecessary, because ample security is provided by the bonds of the administrator." Green v. Barker,14 Conn. 431, 435. In short, § 279 is not only applicable in terms and in principle to insolvent estates of deceased persons, but it covers that ground as adequately as it covers insolvent estates of living debtors.

The real question, therefore, which we have to answer, is whether the General Assembly, in declaring, by the Survival Act of 1903, that existing attachments should not thereafter be ipso facto dissolved by the death of a defendant, intended to perpetuate all such attachments without exception, or to perpetuate them subject to the exception stated in § 279. The latter hypothesis seems to us more probable than the former. The reason for dissolving attachments made within sixty days of the commencement of insolvency proceedings applies with equal force to all insolvent estates which are in process of universal administration for the benefit of creditors, whether of living or deceased individuals, or of corporations and of partnerships. If any distinction were to be drawn, special reasons might be found for dissolving such attachments in the case of insolvent estates of deceased debtors. At any rate, the general policy of our law on this subject has been fixed for many years, and it is extremely improbable that the General Assembly should have intended to make an exception to it. On the other hand, § 279 states the existing policy of the law in terms broad enough to include the settlement of insolvent estates of deceased debtors; and even if it were so that the General Assembly had at one time intended § 279 to apply only to insolvency proceedings on the estates of living debtors, we should not now be justified in creating a casus omissus by construing the section with reference to that former intent, after the reason for its existence has completely disappeared, and in spite of the broad statement, in § 279, of the underlying principle involved. It is more reasonable to suppose that when the General Assembly passed the Survival Act of 1903 it recognized the controlling fact that the general terms "insolvency proceedings." and "all attachments," in § 279, were comprehensive enough to express and preserve the existing policy of our law. This conclusion disposes of the whole case.

The Superior Court is advised that both of the attachments in question were dissolved by the commencement, within sixty days, of proceedings to settle Green's estate as an insolvent estate.

In this opinion PRENTICE, C. J., THAYER and RORABACK, Js., concurred.