Court Opinion

ID: 6682763
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:30:38.12942+00
Date Added: 2024-06-11T16:00:50.157486
License: Public Domain

The Chancellor :
It is insisted on the part of the insolvent trustee of Kerr, that the orders granting and continuing the injunction, and appointing a receiver, being reversed, Kerr, if he had not petitioned, would be remitted to all his rights, and would be entitled to a restitution of the property; and that the trustee being clothed with all his rights, the possession must be restored to him.
It is to be presumed, however, if the Court of Appeals had considered it proper to dispose of the question of title in this summary way ; that is, if they had thought, that in no possible phase which the cause might assume, the creditors of the mercantile house of E. M. Kerr and Company, or the joint credi tor of Kerr and Potter, could intervene in this cause for the protection of their rights, and ask the court to apply the assets to their payment in preference to the private creditors of Kerr, they would either have dismissed the bill, or remanded the *279cause to this court with directions to dismiss it, after recalling the funds from the receiver. But this was not done, the direction being to proceed, as the nature of the cause, and the rights and equities of the parties, may require.
The parties to the record before the Court of Appeals, were Moses Potter vs. Edward M. Kerr, and it may be that the court decided the cause upon the ground, that upon that record they could only regard the rights of those parties inter se ; and there being as between them no partnership, there was no foundation for the orders appealed from.
It must have been manifest to the Court of Appeals, however, that there were creditors of the house to a large amount, for that appeared by the pleadings; and it must have been equally obvious to that tribunal, that Kerr was insolvent, and that claiming the sole ownership of the property, he insisted upon his right to apply the effects to the payment of debts due from him, not connected with or growing out of the business of the house; and this may have been the reason why the bill was not dismissed, or the record remanded to this court, with directions to dismiss it, after the property should be taken out of the hands of the receiver.
The Court of Appeals may have considered, that the creditors not being parties to the cause before that court, the orders passed by this court, which were designed for their protection, could not be supported.; but that seeing there were creditors to a large amount, who might become parties at a subsequent stage of the cause, and whose rights would be jeoparded by restoring the property to Kerr, it was deemed right, instead of pronouncing a final judgment, to send the case back to this court for such further proceedings as the interests of the creditors might require, and to give them .an opportunity of coming in and being heard.
This view of the subject borrows strength from the disposition which the appellate court made of the subject of costs. They award the appellant the costs incurred by him upon the appeal, and in the Court of Appeals; but leave undecided the question of costs in this court, which it is fair to infer, would *280not have been done if they had. meant to decide the whole controversy, and to restore to the appellant without restriction and at once, the subject in dispute.
Supposing it possible, nay, probable, that if the creditors of E. M. Kerr & Co., had been parties to the record before the Court of Appeals, a different decision would have been made, it follows, that as these creditors are now here upon the invitation of the court itself, it would be proper, at least for the present, to abstain from passing any order which may seriously endanger their interests. In a very short time, it is believed, the Court of Appeals will deliver their opinion, when the doubts which now surround this subject will be removed.
The order which the court will pass, whilst it will secure the property for those who may be entitled to it, will expose no parties to danger.
The propriety of the order which the Chancellor, under the circumstances thinks it right to pass, would seem to be vindicated by another consideration.
Attachments, as we have seen, have been laid in the hands of the receiver, one of them prior to, and the other since, his authority was revoked, and it would, perhaps, be presumptuous in this court to pronounce absolutely upon the validity of these proceedings. Should they be sustained by the courts in which they are pending, and this court, by its order should take the property from the receiver, and hand it over to the trustee of Kerr, the former might be involved in heavy loss. It is surely the duty of this court to protect its officer from loss when acting in the discharge of his duty, and especially when it can be done without exposing the rights or interests of others to the slightest risk.
It has been urged in the argument, that the right of the petitioner, as the permanent trustee in insolvency of Kerr, to the possession and administration of this fund, is superior to any which he himself could have claimed, if he had not applied for the benefit of the insolvent laws ; and the case of Alexander vs. Ghiselin is relied upon in support of this position.
That case might have a controlling effect, if it did not appear, *281as it does in this case, that a number of these judgment creditors are non-residents of the state.
The rights of these creditors are, unquestionably, not affected by the discharge of Kerr under the insolvent laws of Maryland. Independently of the case of Cook vs. Moffatt et al., 5 Howard Rep., 295, the last decision, it is believed, of the Supreme Court upon the subject, the Court of Appeals of this state, in the case of Frey vs. Kirk, 4 Gill & Johns., 509, have put the question at rest. In remarking upon the case of Ogden vs. Saunders, 12 Wheaton, 213, they say, that the ultimate opinion of Mr. Justice Johnson, which established the law upon the subject, settled among others, the principle, “that such laws, (speaking of the state insolvent'laws,) although constitutional in their action upon the rights of their own citizens, are unconstitutional, when they affect the rights of citizens of other states.”
It is said, however, that though the state insolvent laws are unconstitutional, so far as they operate upon the rights of the citizens of other states, that yet the decisions of the Supreme Court of the United States, concede to the states, the power to pass laws, affecting and regulating the remedies which may be resorted to, for the enforcement of those rights. And it is urged, that our state insolvent system, which, as expounded by the Court of Appeals in the case of Alexander and Ghiselin, places the whole property of the insolvent in the hands of the trustee, to be administered by him, is a mere regulation of the remedy, and so far constitutional and binding upon the citizens of other states. And that, consequently, the property must be delivered to the trustee, who will distribute it among the creditors according to their respective rights.
This view of the subject is in direct conflict with what was said by the learned judge, who delivered the opinion of the Court of Appeals in the case of Larribee vs. Talbot, decided at December term, 1847, which was, that “it was now settled by the adjudications of the Supreme Court, that a discharge obtained under the insolvent laws of Maryland, could not affect the right of foreign creditors to obtain against the insolvent in the Maryland courts an absolute and unqualified judgment, and *282to place their execution upon any property of the insolvent debtor to be found undistributed in the hands of the trustee.”
Whether this position is to be regarded as an obiter dictum or not, it is of course entitled to great consideration ; and seeing that the case was decided at the same term as that of Alexander and Ghiselin, with which it is supposed to be inconsistent, we musí presume that the enlightened tribunal by which both causes were decided, were clearly of opinion, that nothing decided, or even said by way of argument, in the one, was in conflict with the other.
The conflict, certainly, is not apparent to me, nor do I see the dangers which it is said the domestic creditors will be exposed to, if property in the hands of the trustee, upon which they have acquired liens, prior to its transfer to him is after-wards levied upon in his hands at suit of the foreign creditor of the insolvent. Because, although the foreign creditor may lay his execution on property in the hands of the trustee, such levy must be subject to the prior liens of the domestic creditor, and any sale which may be made under such execution would pass the property subject to the same lien, precisely as if the party had not petitioned, and the levy and sale had been made whilst the property remained in the hands of the debtor himself.
My opinion, therefore, is, that as this case now stands, I cannot grant the application of the trustee of Kerr, and must dismiss his petition, but inasmuch as the anticipated opinion of the Court of Appeals, may present his right in a different aspect, it will be dismissed without prejudice to his rights hereafter to renew the application as he may be advised. The money and funds, however, now in the hands of the receiver, will be ordered to be brought into court to be deposited to the credit of this cause.