The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1875-06-26

that the ships resourees would suffce 70 pay the
make the freight ana the general average avail
abe. And they had then no control over the in
s s Y 10, therefore, quite unlikely That
they undertook 10 pay the bond and discharge
the lien. Their arrangement was with
the MORTGAGE, and there Is no evidence that they
the bond from the holder and act as general agent
OF the ship IN adjusting It's AFFAIRS the proofs do
not establish that In that arrangement they under.
took 70 satisfy the bOttomry and extinguish It's
lien without regard TO the amount OF freight, gen
eral average aud insuraRces which could be col
iected, ana without regard 70 the necessary dis
burscments and commissions such Is not the
testimony Of Mr.. Higgins, nor mas the mortgagee
50 testified aud Tue owner Was not present ~ tue
arrangement. The appellants, however, rely
npon the statement Of two sons OF the
owner who do not SPEAK at all or the ar
rangement OF the MORTGAGE. They SPEAK
only OF subsequent interview OF Mr.. nig-
gina with the owner, from whom the posses
slon mad been taken, and who mad then no
control over the settlement OF tie SHIPS
affairs. Their statement is that Higgins proposed
pay the bOttomry bond for tne owner il he
would give his firm adjustments OF claims against
tons OF what his arm could do makIu0 some
promises res pectlns the rate Of commissions and
promising 10 apply the collections TO the bond Inn
medialey. me sons state further that tails was
agreed to, but the policies were not delivered In
pursuance or any such agreement, nor WAS there
any agreement to deliver them, ana what IA very
remarkable the sons state that nothing was said
az the interview about the policies. They
subsequently handed to Mr.. Higgins TO be COL
lected ana the amount TO be applied 10 the
payment III the bottomry Bond II necessary.
lars by Mr. Higgins, but, assuming that their
statement Is correct, is tails short or proof thar
Higgins agreed TO discharge the snip from the
bottomry hen, or agreed TO pay the bond and look
only TO the freight assurances aud general aver
age. And even II the nrm could be considered as
agents or the owner, the payment OF his debt, or
the debt OF the Ship could not work satisfaction
OF the debt OF extinguish its lien IL would only
change the creditor. We are OF the opinion, Them
that no arrangement with the owner has been
proved by which the hbellants have been dis
sbied rom enforcing the botIomry lien.
N. n
pellants contend that the libelants are estop-
ped from resorting 10 the snip for any
balance OF the bend unpaid by their representa-
lions. Ihey insist that tney purchased the ship,
relying upon representation OF Mr.. Higgins that
OF the charterers there would be at least $4,000
peyond wat was needed to pay the bottomry
ever, no sufficient proof Of such representations.
They are denied BY Mr.. Higgins, and me only per-
the purchaser himself And even The testimony
OF Nickerson appears to assert only that Higgins
expressed an Option respecting what would be
Of the fact This is quite an insult
Gent basis for an sstoppel. and msniIcstly
the opinion was not relied upon. Nlc&erson
had examined Tor himself some or the accounts at
least. This disposes of the case. Admitting tie
hbelants have no lien in admiralty for their lees
! and commissions, or even for their disbursements
on account OF the snip they had, IA we have said,
! right to apply the iuscs they had In hand, first
| to the satisfaction OF the debt due them Tor such
! fees commissions and disbursements, applying
only the remainder 20 the bonds For the Dalaii GO
4
lien.
interest At the rate allowed In PENNSYLVANIA, and
with costs.
BANKRUPT AcT-LccEPTANCE IN FAVOR OF AN
INsoLvRNT.
No. 227. Harry Fox ct al. Vs. Edwin Gardner, as
slgnee OF Nicholas Young, oankrupt-In error to
the Circuit Court for the Western district CT Wis.
consin.-Mr. Justice Hunt delivered the opialon
or the Court. The plaintiffs In error. under the
partnership name OF Fox & Howard, we're railroad
contractors on portion Of the chicago and North
western Railway. The defendant in error is the
assignee In bankruptcy OF one Nicholas Young a
sub-contractor under them. me contract was
fnlsned about December "a 1870, and full
payment became due on December Is,
1870 subsequently Young was adJudged o
bankrupt in pursuance OF = petition in bankruptcy
filed against hi Ia on tho 18th OF January, 1871, ana
on the l2,h OF september, 1872, the defendant In
error as his assignee, lnstltu cd the proceedings
which are now before THIS Court for review, 70
compel the payment OF an alleged balance due
nom the plaintiffs In error 20 Young.
Under the rulings oil the District Court, which
were anirmed by the Circuit Court tina jury rem
oeTed verdict in favor or the assignee Tor the
sum OF g. 69l A. ofwhich the principal items were
SS602 So claimed by the plalntns In error 10 nave
been paid bY them TO the use OF Young before the
fling OF the petition In bankruptcy, IN pursuance
OF acceptances by them OF loung's draft to that
amount, aud $500 20 OF orders drawn on Young Dy
various small creditors in favor OF one Burroughs,
and, as Is claimed, with Young's consent, taken
by the plalntin and CHARGED up against Young and
credited 70 Burroughs before the institution OF
the proceedings IN bankruptcy The main con-
troversy IN the case Is as to The validity Of these
bankruptcy law OF the United States TO
meet these claims the assignee proved
thar when the bankrupt gave the drafts which are
claimed TO operate ~ payment he was insolvent.
and that such insolvency was known 10 Fox and
Howard and TO the creditors 10 whom the drafts
rupt with interest, % afford preferences foroid-
den by the bankrupt act and tnas they were ao-
oepted by Fox ana Howard In fraud OF that act.
the contention OF the plaintiffs IN error IA found
In the following extract rom the pref OF. their
counsel :-1frhat the Court below was mstakcn IA
its construction Of the thrty-nfth section OF the
Bankrupt act That section dOes not authorize
suits ~ an assignee against debtors u the bank
rupt VINO have discharged their deOts 10 him or
paid money 10 other persons for hGnsc, WITHIN
the period Of four or SIX months spccified IN the
act liz only authorizes suits against such credit
ors OF the bankrupt IS have iraudulenuy received
such payments Only the parties benefited BY
fraudulent preference under the Bankrupt act are
liable 20 the assignee. The doctriRe or the Ds-
trict Court, 10 * SAID, leads 10 the most alsas-
trous consequences. For IL Z de tor cannOt re-
spect the orders OF a man In embarrassed circum-
stances, except at hts peru. then he Will neces-
sarlly precipitate the condition Of insolvency
might have prevented. IL Is believed that TINS
doctrlne Is contrary 10 common justice and the
established principles OF law The thirty-hth
section OF the BANKRUPT act provides that a trans
acuOn ike the one we have presen ted "Shall be
void, and toe assignee may recover the property
or the value Of y rom The person so receiving II
or so TO DC beneated." The language % the sta
tute authorizing the assignee 40 recover tae
property, or the value OF II, from the person so
receiving IL or so 10 DC benented,n does not ere
ate qualification or Limitation OF power. There
il implication that the party paying y not also
liable. The words are those OF caution merely,
and give the assignee no power that
he would not possess II they had been
omitted from the statute. In the pres
ent case the property value attempted
10 be transferred belonged originally to the DanN-
ruDL on the adjudication Of bankruptcy the pos
session and ownership cf the same we're trans
ferred 70 the assignee section lf. Tue attempted
transfer by tAe bankrupt was fraudulent and
VOID. IL follows logically That the debtor ret
holds IL for the assignee, aud that the assignee
may sue for les recovery. tsee B0anger vs..
Gentry. 80 Cal, los; Hanson vs. Heruch, loo Mass,
SAL Upon principle there would seem TO he
scarcely room FOR 0Oubl upon the point before US.
The pretended payment or transfer or substIJu-
ton by the debtor OF the bankrupt was Ia fraud
Of the act and illegal. II was transaction ex-
pressy forbidden by the statute. The jury found
tnat the insolvency Oi Young was known to
Fox & Howard, and 20 the creditors nv
wnom the drafts we're taken At the
time they we're tak on; that they were given By
tha hanEruut with intent create tOrnfddau