Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1899-01-10
ACT OF BANKRUPTCY
JUDGE wADDILL RENDERS
OPINION IN THE WEST CASE.
Il. S. COURTS JURISDICTION PLENARY
pcrsops Making Assignments Can DE
Enioined from proceeding i"
Courts-Important and Far-He"en-
ing Decision.
ing Decision.


bankruptcy law especially IN l'S re'"''O''
10 the jurisdiction Of State courts was
determined yesterday.
ruaqa WaddilI. who heard argument IN
the case in the United States Distrie'
Court recently, handed down a written
on,pion in which he holds that an as
alignment for the benefit of creditors con-
stitutes an act Of bankruptcy and per
sons making such assignment can De re-
strained from further proceeding IN
State court, and decree may De entered
adiudcatlng the bankruptcy and enJoin-
ing any disposition Of the fund IN 'he
State court. This is the first case OF the
sort that has arisen in the United states
and the matter will. Of course. be carried
I'm 10 the Supreme Court. 1t is a question
of vast Importance. and many requests
have been made for copies OF the oplHlon
from all parts OF the country
TWO QUESTIONS INVOLVED.
The pleadings in this case, writes Judge
Waddil, present two questions lor tho
consideration of the Court:
/ whether a general assignment loI
the benefit Of creditors constitutes an ac'
of bankruptcy, and (O II an act OF DahK-
ruptcy. what effect the action OF inc
State court appointing d receiver TO au-
minister the trust under the deed OF as
signment should have in the admlihstrd-
ton of the trust estate; that Is 10 say
whether the State or bankrupt court
should. after the adjudication OF Dahh-
ruptcy. administers the trust estate.
FIVE ACTS OF BANKRUPTCY.
The present bankrupt law, section D.
specifies FIVE acts OF bankruptcy-Vlz.:
an Conyeved. transferred, concealed, or
removed. or permitted to be concealed
or removed, any part Of his property with
intent TO hinder, delay, or defraud his
creditors, or any of them; or % trans
ferred, while insolvent, any portion OF
his property to one or more of his credi-
tors with intent to prefer such creditors
over his other creditors; or CD suffered
ior permitted while insolvent, any creditor
to obtain preference through legal pro-
ceedings, and not having at least hve
DAYS before a sale or final disposition of
any property affected by such preference
vacated or discharged such preference;
or % made q general assignment Tor
the benefit of his creditors; or 90 admitted
in writing his inability to pay his debts
and his willingness TO be adJudged a
bankrupt on that ground
AS TO INVOLUNTARY BANKRUPTCY.
And the law particularly provides, in
involuntary bankruptcy cases, for con-
testing the first, second. and third grounds
of bankruptcy by allowing the bankrupt
to disprove his alleged Insolvency, and the
burden to prove Solvency is placed upon
him. No provision seems to be made for
contesting the fourth and fifth grounds OF
bankruptcy, for the manifest reason. 1t
would appear, that the question Of In
solvency is not one open for dispute
where the bankrupt either in writing ad-
mits his inability 10 pay his debts and
consents TO be adjudaed a bankrupt or
makes general assignment for the bene-
fit of his creditors The general assign
ment itself is inconsistent with solvency
and the answer 10 the contention that one
may assign and still be Solvent IS that to
determine that fact involves the admins
tratiOn Of the trust which the law has chO
sen 10 impose upon court Of bankruptcy at
the instance Of creditors. and not upon the
bankrupt himself through agencies chosen
by him. To allow the bankrupt 10 make
an assignment. and creditor secured in
the assignment. submit the admnistra-
ton Of the trust arising under IL 10
State court TO defeat the Jurisdiction Of
the bankrupt court. would in effect destroy
the bankruptcy law.
ASSIGNMENT ACT OF BANKRUPTCY.
Under the law itself 1t is quite clear
that a general assignment Of ones estate
and effects to trustees constitutes an act
Of bankruptcy. and the current OF au-
thority. both English and American, is to
the same effect.
general assignment of an insolvent
debtor TO an assignee or trustee Of his
own choosing is itself an act of bank
YfIf nd fQ..l.T Il
the rights OF creditors to the choice Of a
trustee. and the trustee, under such as
Segment can hold nothing as against
the trustee in bankruptcy where pro-
ceedings are taken to avoid the assign
ment. Judge Waddil here quotes in sup
port Of this from the act of 1867. the
Supreme Court OF the United States,
Boese VS.. King, 10S L. S., 1855. and hume
rous other authorities.
JURISDICTION or STATE COURTS.
Coming now to the consideration OF
what action should be taken by this
court, where the State court has entered
upon the administration of the trust es-
tate. by reason OF the general assignment
of the bankrupt, while every reasonable
effort should be exerted to avoid even an
apparent conflict of jurisdiction between
State and Federal courts, this case is
apparently free from difficulty, as il will
not be seriously maintained that the act
OF bankruptcy itself can be made the
basis Of dispOssessing the bankrupt court
of its jurisdiction.
The Constitution of the United States
authorizes Congress, in its wisdom, 10
enact bankruptcy legislation, and when
such action is taken. 1t is the supreme
law Of the land on the subject.
IND. h.. 49,
of the United States alone are made
courts Of bankruptcy within the States,
and are vested with such Jurisdiction at
law and in equity as will enable them TO
exercise original jurisdiction in bankrupt
| cy proceedings.
There are many matters In which the
State and Federal courts can proceed in
| harmony under the bankruptcy act, and
| which the bankrupt court should leave TO
| the determination of the State court and
as far as possible, it will be the policy
| of this Court to do so, but i'm a case
| like the present one / do not see how the
! two courts can proceed tremendously.
! The litigation in each court involves the
| administration of the entire estate of the
| bankrupt; one court or the other must
| proceed If the assignment Is itself an
act of bankruptcy and the makers there
| Of have been adjudged bankrupts, then
| This Court has 10 proceed and therefore
| must be possessed Of the bankrupt's es-
tate. or otherwise the ANOMALOUS condi-
ton would exist OF one court dealing with
the bankrupt and his creditors. and an
other court administering his estate.
BANKRUPT COURTS POWER PIE
NARY.
The power of the bankrupt court in the