Court Opinion

ID: 6548316
Source: CourtListenerOpinion
Date Created: 2022-07-19 22:21:34.773148+00
Date Added: 2024-06-11T15:56:01.993389
License: Public Domain

Kirby, J., (after stating the facts.) It is contended (1) that the national bankruptcy act superseded all State laws authorizing the affairs of insolvent corporations to be wound up, and that the Pulaski Chancery Court was without jurisdiction to appoint receivers or order the sale of the contract, and that such sale and transfer was void; (2) that the insolvency of the vendee authorized the vendor to rescind the contract of sale; (3) that the contract was not assignable. 1. It is no longer questioned that the national bankruptcy law brooks no interference with its operation, and supersedes all State insolvency laws in conflict with it or that provide the same relief. Sturgis v. Crowninshield, 4 Wheat. 122, 4 L. Ed. 529; Ogden v. Saunders, 12 Wheat. 213, 6 R. Ed. 606, and cases cited in division 2 of note to Corling v. Seymour Lumber Co., 51 C. C. A. II. But it is also true that such Federal /bankruptcy law does not repeal or abrogate State laws in confliot, but only supersedes and suspends their operation for the time being upon persons or cases within the purview of the Federal statute. Ib. note, supra. The National bankruptcy act does not apply to all persons and all corporations. The proceedings in the State court, and the appointment of receivers of the T. H. Bunch Company at the suit of a stockholder, alleging that it was not able to pay its debts as they matured, and insolvent, occurred on September 19, 1909. The three creditors of the company filed the petition in bankruptcy against it on January 17, 1910, within two days of four months after the appointment of the receivers by the State /court. At that time the bankruptcy act only permitted involuntary proceedings to be had against corporations of the class of the T. H. Bunch Company, and denied them and their stockholders the benefit of the bankruptcy proceedings by a voluntary petition. In other words, such corporation was denied the benefit of the bankruptcy act except by involuntary proceedings upon petition of three of its creditors. It is true that the appointment of the receivers by the State court for the insolvent company constituted an act of bankruptcy within the meaning of section 3a (4) of the bankruptcy act, which could have been taken advantage of by the creditors of said company by involuntary proceedings at any time within the four months thereafter, and which was done on the 17th of January, 1910. This insolvent company and its stockholders knew of its /condition, and could not invoke the benefit of the bankruptcy law to preserve its estate and protect its creditors, and for this purpose resorted to the State tribunal, which had plenary powers unless their execution was superseded by the bankruptcy law. It was insolvent, but could not set in operation the bankruptcy law, and must either flounder along in an attempt to do business until it was attacked by creditors or resort, as it did, to the tribunal of its residence. The chancery court appointed receivers to collect and preserve the estate and protect the creditors, which it had the right to do unless and until the bankruptcy law was set in motion against the company. Sections 950, 951, 954, 6342, 6345, 6349, Kirby’s Digest; Old Town Bank v. McCormick, 96 Md. 341; Watson v. Citizens’ Savings Bank, 5 S. C. 159; State v. Superior Court, 20 Wash. 545, 56 Pac. 35, 45 L. R. A. 177; Keystone Driller Co. v. Superior Court, 72 Pac. 398; In re Edward Ellsworth Co., 173 Fed. 699; Conklin v. U. S. Shipbuilding Co., 123 Fed. 913. Having such right, the orders of the court and the actions of the receivers in pursuance thereof were valid as against all persons, unless it be the receivers and trustees in bankruptcy; and, although as to them such prior action of the receivers of the State court might be voidable, it would not and could not be void upon a collateral attack of a stranger to both proceedings. When the proceedings in bankruptcy were instituted, it displaced those of the State court, and terminated its jurisdiction, and, as was said In re Watts & Sachs, 190 U. S. 1: “It has already been assumed that the bankruptcy proceedings operated to suspend the further administration of the insolvfent’s estate in the State court, but it remained for the State court to transfer the assets, settle the accounts of its receiver and close its connection with the matter. Errors, if any, committed in so doing could be rectified in due course and in the designated way.” The case of Hickman v. Parlin-Orendorff Co., 88 Ark. 519, in which it was said: “The insolvency laws of Arkansas were suspended by the bankruptcy act of Congress of July 1, 1898, and since that date have remained and are now in abeyance, in so far as they relate to the same subjfect-matter and affect the same persons as the act of Congress, which is still in force,” .is not in conflict with the views herein expressed, since it was expressly said that such laws were suspended only “in so far as they relate to the same subject-matter and affect the same persons as the aot of Congress;” and that was a case of an individual to whom the bankruptcy law was applicable. In addition, the acts of the receivers of the coúrt were confirmed and approved by the orders of the bankruptcy court, including the transaction of the sale of the contract to appellees herein. It follows, even without regard to this, that the action of the Pulaski Chancery Court in ordering and approving the sale of said contract was valid, so far at least as appellee is concerned, and conveyed the title of the said T. H. Bunch Company. 2. Appellant made no tender, nor in any way offered to perform its contract, nor demanded payment in advance, which it might have had the right to because of the insolvency of its vendee, but assumed, because of such insolvency, the right to declare its own contract broken and at an end and refused absolutely to perform it. This it had no right .to do; the insolvency of the vendee alone not releasing it. Brassel v. Troxel, 68 Ill. App. 131; Vandegrift v. Cowles Engineering Co., 55 N. E. 941-4; Pardee v. Kanady, 100 N. Y. 121; In re Carter, 47 N. Y. Supp. 383; New Eng. Iron Co. v. Gilbert El. Rd. Co., 91 N Y. 153-5-6; Merchant v. Rawson, Clarke, Ch. (N. Y.) 123. 3. It is next contended that the contract was personal and not assignable; but the subject of the contract involved nb personal relation of confidence between the parties, or the exercise of personal skill or science, and there was nothing in its terms to prevent an assignment, and this contention is without merit. Kirby’s Digest, § 509; Vandegrift v. Cowles Engineering Co., supra. It was not necessary for appellee to make a tender in cash, as appellant repudiated the contract and refused to perform it; and the proof shows that because of such refusal appellee was damaged in the sum of $1,200, the amount recovered. The judgment is therefore affirmed.