New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-11-28
d BANKRUPTCY QUESTION.

tFRoA REGULAR CORRESPONDENT OF THE TRIBUSEl
WASHINGTON, Nov. 26.-In view of the many
failures among business men in consequence OF the panic
and the condition OF the business OF the ooun
try, the following bankruptcy decision by Attorney
General Williams will be OF interest:
DEPARTMENT OF JUSTICE, WASHINGTON. Nov. 10.
The Hon. W. A. RICHARDSON, Secry Of The Treasury:
sIR have the honor to acknowledge the receipt Of
your letter OF the LIST ns In which, at the instance OF
the First Controller you submit for my official opinion
the following questions:
Whether valid payment be made first person who has
COMMITTEE an sei Of bankruptcy and against whom proceedings have
siged bsnrnn onG to ueon gbo il Known 10 have commit.
TED an e' bankruptcy but against whom proceedings have not YET
The 18th section OF the Bankrupt law Of 1907 a. STAT
S? provides for an assignment q all me estate real
under the provision OF that statute and declares that
such assignment shall relate back TO the commencement
OF the proceedings In bankruptcy and that tereupon
by operation OF law tho title TO all such property ana
estate, both real and personal shall vest IN said as
signee," etc. Certain exemptions from tho assignment
are expressly made, but they are OF no consequence in
connection with the questions proposed In the third
proyiso OF the section 1t Is furthermore declared
among other things, all chooses in action belonging to
for his use with the like right utle power and author
10y to dispose Of sue for and recover the same as the
had made, shall in virtue OF the adjudication OF
vested in assignee" This section refers TO an
assignee appointed under proceeding III what is called
voluntary bankruptcy but its provisions far perth
nent here are made applicable gnees appointed in
OF Involuntary bankruptcy by the 42d secOn ana
the expression commencement OF proceedings IN bank
rupcy whether voluntary involuntary, Is defined in
Section IS to mean the filing OF the petition In bank
ruptcy. --
The 5h section OF the act declares void among other
transactions, all payments made by any person. being
rupcy within four or six months previous TO tho filing
OF the petition with View to give fraudulent prefer
or 10 eyade the provisions OF the act where tho
party receiving has reasonable cause 10 believe
that such person insOyent or ID acting IN contemp
authorize the recovery back by tho assignee OF the
money SO paid But there is no provision In the act
which inyalidates payments made TO the bankrupt
before the petition Is fled against hun In legal pont
Of view these payments Therefore seem 10 stand pre-
csey as they would no bankruptcy proceedings were
instituted.
United States in recently before that tribunal
Buchanan ct al. against Smlthlt is remarked with rel
TO Sec. IA above cited that the appointment Of
assignee under decree III bankruptcy relttes
back 10 the cOmmencemenOf the bankrupt proceedings
aud that the instrument requires TO be executed under
the hand Of the Judge or Register assigns and conveys
to the assignee all the estate real ana personal or the
and ntars and things in action as well as those
possession belonged to the debtor ut the time the
This view OF the scope and effect OF the assignment
mentioned appears 10 mo to rest upon the plain aud OBJ
yiOus meanings OF the statute, and, accepting 1t as
correct statement OF the law as It now stands the re-
suit at which arrive is that all debts ami Liabilities
subsisug in favor OF the bankrupt at the period when
the petition filed, or then constituting part OF his
estate together win the right TO receive OF sue for and
recover same, become upon the execution or the as
Segment, completely and exclusively vested IN the
assignee by relation to that per9d and that c99se
liability after that date would be no satisfaction OF the
demand against the claim Of the assignee unless the
PAYMENT is protected by exception made by Con-
sre.s which covers the par cuiar case
nv the bankrupt act OF April t. 1900 "a Stat, 49,
assignment by the commissioners or bankrupt estate
had retrospective relation TO the time when the act OF
bankruptcy was committed upon which the commits
sion 5ee Sec lO They empowered toassgn
all the debts due 20 the bankrupt or TO any person for
his use and after the ssgnmen neither the bankrupt
any person acting as trustee Lor nun could esa
enacted that wnen any debtor boua de paid ms debt
the bankrupt without notice or the BANKRUPTCY ne
should not be liable 10 pay to the assignee See Sec H.
There the principle Is distinctly recognized by Congress
that except where Is otherwise provided by s1Jute
payment made to the bankrupt subsequent to the time
at winch the assignment taxes eHeGI uOos hot GseNatse
theindoDiedness against the assignee
the estate OF the bankrupt became vested IN the assig
only from the time or the decree Of bankruptcy
This act declared void certain payments, ETC., when
made by the bankrupt previous to tue decree In con-
temptation OF bankruptcy (ee Section yet payments
made the banBrupt before the decree would seem 10
be unaffected by the act No provision Is contained
sequent the decree and after the little to his estate
vested in the assignee but such case ever lett suo
cct To the legal effect Of assignment which, oper
ating general transfer OF all the estate OF the bank
am unable to discover any exception, express i'm
Piled in tue Act of 1867 or its supplements favor
Debtor who has paid his debt TO the bankrupt after the
time OF filing the petition against the latter This, as
already observed, is the period to which the assignment
under that act relates at which the title to the BANK
rupt's estate rests III the assignee.
From the action OF such exception 10 the statute aud
upol the principle recognized by Congress above
stated tho conclusion appears to me 10 be unavoidable
that the claim OF the assignee duly appointed would pre-
vail against the debtor, Notwithstanding sueh payment
though IL was made bona lde aud without knowledge Of
the bankruptcy proceeding Inns doctrine, hnd. Is
supported by opinion Of the Supreme Court OF Penn
ylyGnia given IN 1870 Gee 9oys ast manufacturers
National Bank, CT Penn. st Ate X 14J
Tue same principle Is applied by the courts of
England in constituting the bankrupt laws OF that
country. There the transfer OF the bankrupt
e act Oy 0Rs2n OF E r Az ies @ gIgh
founded upon the provisions oil the earliest OF
their bankruptcy acts, namely the "a aud 50 Hen WILL,
Cts and tue IS Ez e. T. a. ON thsse two statutes
t.erey iona de chasers o< lands and goods though
FOR valuable consideration and without notice. debtors
VINO hai pad tAe amount oil iae sums die from theu
aud creditors OF the bankrupt to whom the VI
deos owing 10 them from the bankrdpt had been paid,
sgt. Carlisle e. f. 1907 but tine Legislature has nom
tune TO time by new statutes cut down inc relation III
9NucMar Cases, as frst IN the case OF pay ment oi
DEBT sto the bankrupt before nolice OF an acc OF
bankruptcy Joe CO l5 next III the case OF the sale
not sued out within five years after the secret Get
ments By the bankrupt to creditors for goods sold 10
Geo H., c. 3z) and again III the Case vi cohVeyanees.
baukrupts bona Rde made and entered into than
two calendar months before the date ana issuing OF the
OF these partial restrictions the general rule OF relation
the act OF bankruptcy" remarks Lord ChiefJusce
doubt two proposltions Fot, tat consideration OF
hardship IN the individual case VIII DC sufficient to
that next nothing short OF the power OF the Legislature
Itself is saislen. to relax tue seventy o. ths i3rer
rupt law in force ttho SD and Ssa Wet, C. ~ any
payment made in good faith aud for value received TO
any bankrupt before the date Of the order or adudca
tion, by not having at the time OF snch pay
notice OF act OF bankruptcy committed ~ the
bankrupt, available against him for adjudication Ia
protected by the statutes.
My opinion therefore Ia view OF the foregoing con-
siderstions:
first. That a payment made by debtor 10 a creditor
who has committed act Of bankruptcy, and against
whom proceedings bankruptcy have oeen instituted
aud pending, but VINO has not yet been a'judgeda
bankrupt, will not be- valid In the event OF an aUudca-
ton OF bankruptcy in such proceedings II the payment
traDspired subsequent TO tho ming OF the peuuoh
therein.
Second: That pay ment made by debtor TO a cred
is known have committed an act OF baik-
ruptcy, but against whom proceedings have not nj he