Court Opinion

ID: 8789171
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:45:04.057611+00
Date Added: 2024-06-11T17:03:15.064816
License: Public Domain

PUTNAM, Circuit Judge
(dissenting). The burden of the- litigation in this case is over the definitions given to the words “insolvent” and “insolvency” incorporated in the Bankruptcy Statutes by the amendment of 1903, so far as they relate to these appeals. A careful perusal of text-books and of the decisions of the courts bearing on the definitions to be given these words as applied here fails to show any authority for giving the peculiar definition to the words in question as applied here, except the Golden Malt Co., 164 Fed. 326, 90 C. C. A. 258. This case was much like many of the early decisions with reference to the bankruptcy statutes, where the conclusions were apparently reached without much consideration. The text was so hastily drawn that, on page 328, it declared the provision in question here was a part of the statute of July 1, 1898, when it came in by the Acts of 1903, 32 Stat. 797, as an entirely new topic; a fact which must be regarded in interpreting statutes, which must alwáys be interpreted from an historical point of view in order to be correctly understood. It is true that the amendatory act of 1903 was strictly amendatory in such way as to embody the amendment into the original act of 1898; but, whatever the circumstances under which an amendment comes in, or the form which it takes, the courts are -always at liberty to make a broad investigation and to *715apply broad considerations with regard to construing an amendment, even more than with reference to construing any part of the body of the original statute, which latter, of course, is always qualified by the context. Here especially, while the statute of 1898 applied throughout to courts in bankruptcy, and therefore may justly be held to have made propositions from the uniform standpoint of those courts throughout, yet this amendment related to proceedings in courts of equity and common law; and in describing those proceedings it may be assumed to use the language of those courts and to construe that language as those courts would have construed it. It is not credible to hold that, in referring to proceedings of the courts of equity and common law, the words “insolvent” or “insolvency,” under these circumstances, were to have any different construction than that usually given them in those courts.
By giving the words “insolvent” or “insolvency,” as found in the amendment of 1903, the peculiar definition given them by the body of the act of 1898, we would practically defeat the purpose of the amendment, and the amendment would be inapplicable. No proceeding in either courts of equity or common law has ever yet, in appointing receivers or otherwise, used the words “insolvent” or “insolven-cy” in the special sense declared by the Bankruptcy Act of 1898. Giving these words the force which the opinion of the court gives them would be in substance declaring that no adjudication in bankruptcy based on the appointment of a receiver by a court of equity or common law was in fact and in substance justifiable, because there never has been any case where such an adjudication was secured in which the court which appointed the receiver has ever given to those words the peculiar definition given them by the Bankruptcy Act of 1898, or was ever asked to do so. In the Golden Malt Co. Case, to which we have referred, the adjudication in bankruptcy was finally refused. Not only has there never been any adjudication in bankruptcy based on the appointment of a receiver under circumstances like those stated in the opinion of the court, but there is no reasonable probability that there ever will be, as not only has no court of common law or equity ever accepted the definition of “insolvency” embodied in the bankruptcy statutes, but there is no reasonable probability that such courts ever will do so.
None of the cases cited in the opinion of the court seems to sustain its propositions. In order to avoid unnecessary prolixity, we refer to them only by the volumes and pages of the decisions. 106 Fed. 839, 45 C. C. A. 666, was decided before the amendment of 1903; 181 Fed. 422, was in the District Court, and turned on a question of fraud and collusion; 165 Fed. 249, has the same features as the case last referred to; 150 Fed. 293, 80 C. C. A. 181, the Beatty Case, quite well known, showed expressly that the proceeding in the state court declared only that the parties proceeded against were unable to meet their obligations as they came due; in 145 Fed. 865, 76 C. C. A. 409, the question we have here was referred to at page 868 but ivas not decided either there or at page 871; in 131 Fed. 57, 65 C. C. A. 295, the case was submitted to the jury in the District *716Court from the aspect taken in the opinion of the court here but was disposed of in the Circuit Court of Appeals as a mere question of fact, without any disposition of the question-of law now brought to our attention; the other cases cited were in the District Court and of course are not authority on an appeal from the District Court, as there has been no such mass of them as would indicate a general acquiescence in the proposition now maintained. 139 Fed. 244, did not raise or discuss the question we have before us, although cited to sustain the decision of the District Court in 173 Fed. 699.
Therefore, while disposed to give full effect to the rule in this circuit with regard to following decisions of- Circuit Courts of Appeals of other circuits, we cannot go so far as to adopt the Golden Malt Co. Case, which is inconsistent with the settled practice, and which practically nullifies the statute to which we are asked here to give effect. Therefore, as this is really the only substantial proposition which stands in' the way of affirming the judgment of the District Court, we are of the opinion that that judgment should be affirmed.
We think some additional exposition is necessary with reference ' to the power of the court to permit the intervention of receivers for the purpose of resisting adjudications in bankruptcy. This matter is pertinent with reference to this case and with reference to the two cases on appeal concerning Everybody’s Store, Incorporated. The basis of the argument in opposition to permitting the receivers to intervene rests on the mere letter of the statute, found in subsection “b” of section 18 of the Bankruptcy Act of 1898. That limited the_ right of opposition to the bankrupt or some creditor. The pláin purpose of this subsection was to fix a limited time in order that .-the proceedings might be expedited. It would be an extraordinary-proposition that any general provision of law of this character, or .of any other character, unless unusually specific, should ■pulí up by the roots in any particular case the application of a fundamental rule governing courts proceeding on equitable principles, including. bankruptcy courts, and so denying the power permitting the intervention of receivers or anybody else having a title of any kind whatsoever. The power to intervene has been construed in equity in the most liberal manner where the rights of third parties are involved. This point was authoritatively determined under the 'present Bankruptcy Statutes in the Second Circuit, with the approval of the Circuit’Court of Appeals for that circuit, in 183 Fed. 703, 106 C. C. A. 139, 33 L. R. A. (N. S.) 454, of the decision of the District Court in Hudson River Power Co., 173 Fed. 934. We think the uniform practice in this particular is in harmony with the general rules of equity, so that- we would not be justified in disturbing it.