Court Opinion

ID: 6578165
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:36:08.276074+00
Date Added: 2024-06-11T15:56:55.689506
License: Public Domain

Dutton, J.
The defendant in this case -was factorized on the 7th of February, 1860, as the debtor of an insolvent, against whom proceedings were commenced in January, 1859, but the trustee was not appointed until February, 1861, after twenty-one adjournments, most of which were had by the mutual consent of the applicants and the insolvent. The factorizing creditor had no actual knowledge of the application to the court of probate until he had obtained judgment in the original suit. When the defendant was factorized he had knowledge of the application, and he knew that the case was pending when demand was made on him on the execution in favor of the factorizing creditor. He, however, took security of the creditor and paid the money on the execution.
The defendant’s counsel have tided to convince us that the debt due from the defendant never passed to the trustee, and that the trustee could take only such property as belonged to the insolvent when he was appointed. But we are clearly of the opinion that the statute on the subject is too explicit to admit of any such construction. The language of the statute is, “ All the property of such debtor or debtors, both real and personal, of every kind and description and wheresoever found, (except as above excepted,) shall at once upon said appointment become vested in said trustee, in as full and ample a manner as if the same had been voluntarily assigned or conveyed by such debtor or debtors, to such trustee, at the time of the application to the court of probate for the appointment of such trustee.” Stat., Comp. 1854, p. 513. We can not doubt that the intention of the legislature was that the change of title should be considered as having taken place when the application was made. Any other construction would enable an insolvent to dispose of all his property before a trustee should be appointed. But the statute evidently contemplated the appointment of the trustee within a short period of time. *508The hardship of such a relation back would in many cases, if a long delay should intervene, be extreme. The facts found by the court in this case furnish a strong illustration of the injurious consequences of such a course. For more than two years after the application was served upon him the insolvent continued his business, buying and selling, and contracting and collecting debts as before. In this particular instance it appears that he kept the stock of his drug store nearly good. But suppose he had not. So far as the mere title is concerned, we do not see why the trustee could not reclaim the goods, or make the possessor liable, although they had been bought of the insolvent in good faith two years before, and had passed in the way of business through a dozen hands. The stock here was small, but the same rule must be applied where the insolvent’s goods amount to thousands of dollars. Even in this instance, if the plaintiff can collect this debt, the trustee could probably bring and sustain an hundred actions of trover against innocent persons, to say nothing of actions of assumpsit and book debt. If this can be allowed, it looks very much like a reproach upon the law.
Although we hold to this doctrine of relation as applicable to this statute, we ought to take into consideration at the same time other statutes of equal force.
The statute regarding foreign attachment provides that the factorizing creditor, on praying out an execution, “ may direct the officer serving the same to make demand of such attorney, agent, factor, trustee, or debtor, of any debt due to the defendant, and it shall be the duty of said debtor to pay the same.” Also that “ if such debtor shall not .pay to the officer, when demanded, the debt due to the defendant at the time the copy of the writ was left with him, such attorney, agent, factor, trustee, or debtor, shall be liable to satisfy such judgment out of his own estate.”
When a demand was made upon the defendant in this case he owed a debt to the insolvent. That debt might or might not be subsequently transferred by the proceedings in insolvency and the transfer relate back. What could the defendant do to relieve himself? How could he excuse himself for *509not fulfilling a duty- which then rested and for aught he could know would continue to rest upon him? Was he bound in a matter in which he had no personal interest to expose himself to a contingent liability of paying it, and the costs of a scire facias, out of his own effects ? It is indeed provided in a subsequent section (sec. 234) that the garnishee may allow a scire facias to be brought against him, and then if he knows of some one who claims the debt as assignee or owner he may cite him in and leave the several claimants to contend for the debt. If in this case a trustee had been appointed before the demand was made upon the garnishee, he could have safely refused to pay, and allowed a scire facias to be brought, in which he could have cited the trustee in to try titles with the factorizing creditor. The statute says the party to be cited in is the claimant or claimants of the debt. But when the demand in this case was made upon the garnishee there was no claimant. The applicants to the court of probate were not then, and never have been since, owners of this debt or entitled to collect it. It would have been useless to have cited them in, as they would have had no right to appear. The garnishee, in the view of a majority of the members of the court, had a right, under these circumstances, to pay the money on the execution, and the law will protect him.
This view of the subject would dispose of this case, but would leave the question open whether the creditor could re tain the money against the trustee.
We all concur in the opinion, although with some hesitation on the part of some of the members of the court, that on another ground judgment should be rendered for the defendants.
All the goods and effects of the insolvent were suffered to remain in his possession and subject to his control for more than a year after the application was made before the factorizing suit was brought. It appears that the factorizing creditor did not even know that such an application had been made. If he is chargeable with notice at all, it is by the doctrine of Us pendens. It would be carrying that doctrine very far to charge him with constructive notice of that application, when he has never made himself a party to the proceedings by prov*510ing his debt before the commissioners, and the insolvent’s claim against the garnishee is not specifically named in them.
The policy of the law imperatively requires, as a general rule, that the possession of personal property should accompany the title. The trustee in this case represents those creditors of the insolvent who chose to present their claims to the commissioners. Before his appointment the applicants to the court of probate undertook to represent these creditors. The principal creditors individually had a right to make themselves parties to the proceeding. Now it appears that all the parties to the application voluntarily allowed it to rest, and the property to remain in possession of the insolvent, for more than two years, and until after the factorizing creditor had brought his suit, kept it in coxxrt about a year, obtained judgment, made a demand on the execution, and obtained the money. The difficulty has all arisen from this voluntary delay on the part of the creditors and those who represented them. In addition to this it appears that one of the applicants was notified of this factorizing suit, and agreed with the garnishee to take care of it. Now we think that no reasonable excuse has been shown for this long retention of possession by the insolvent; that the creditors and those who represented them, by procuring this delay, and allowing the insolvent to treat the property, including the debts, as his own, gave the defendant reason to believe that he could safely pay the money to the officer, and that they ought not now to be allowed to recover it from the garnishee.
But it is strongly insisted on the part of the plaintiff that we are not at liberty to put the case on this ground, because the superior court has found that “ the adjournments of the coxrrt of probate were obtained for reasons presented to and approved by the court of probate, and were by said court deemed necessary and proper for the interests of said Litchfield Bank (the applicant) and the creditors of the insolvent,” and the sxxperior court finds that all said adjournments were for good and substantial reasons. What these reasons were we have no means of judging, as none are stated. We can conceive of no reasons that would justify such a delay of taking possession, in itself considered. We are bound to presume that there were *511other considerations of more importance to the Litchfield Bank than the danger of loss incurred by the want of possession. We can easily conceive that there were considerations which, so far as the parties appearing before the court of probate were concerned, would justify that court in its action. But the factorizing creditor and the garnishee ought not to be prejudiced by such proceedings. Their interests were not consulted. ' The factorizing creditor was not personally notified, and he has never made himself a party to them by proving his debt before the commissioners. We think therefore that however regular the proceedings may have been before the court of probate, the creditors who are represented by the trustee are chargeable with such a want of diligence in allowing the goods and debts to remain so long in the possession and under the control of the insolvent, as ought to protect this creditor in factorizing this debt. At the same time we wish it understood that if the trustee had been appointed and had taken possession of the estate of the insolvent in a reasonable time, the mere possession of the insolvent between the time of the application and that of taking such possession by the trustee would not have exposed it to an attachment.
We advise judgment for the defendants.
In this opinion the other judges concurred.