Court Opinion

ID: 7346259
Source: CourtListenerOpinion
Date Created: 2022-07-26 00:55:08.113898+00
Date Added: 2024-06-11T16:20:20.964255
License: Public Domain

Coxe, J.
It is not deemed necessary to enter upon an extended discussion of the questions presented by this motion. The opposing views are maintained with great clearness and ability in the conflicting opinions delivered in the State courts. Little additional light, therefore, can be thrown upon the controversy (See In re Stowell, 26 Hun, 258).
At the outset, the petitioners are confronted with the proposition that the assignment to Perry was valid. This is the broad foundation upon which the creditors construct their argument. When the petition in bankruptcy was filed, the assignment' had been in existence twenty months. It was not preferential. The assignee in bankruptcy could not have attacked it successfully. A bill filed by him for that purpose, the dates appearing, would have been held" bad on demurrer. The assignment was unimpeachable. Not only so, but the bankruptcy court had no jurisdiction of the assigned property. This difficulty could not be remedied by a majority of the creditors. They could deal with the property and rights within the control of the bankruptcy court. They could, by their voluntary action, release their interests, respectively, in other property and estop themselves from asserting claims thereto. But the majority could not in this manner trample upon the privileges of the minority. The dissentient creditors here, had acquired an equitable interest in the assigned property. The court had no power to deprive them of this right. The other creditors had no such power. They could dispose of their own property, but not, in invitum, of the property of others. These creditors are not bound. They consented to nothing. They ignored the composition *94proceedings. But it is said that the debt is satisfied, and that all the remedies, rights and privileges incident thereto, perish with it. Undoubtedly the debt is discharged so far as the debtors are concerned. The creditors can no longer pursue the bankrupts personally, but the right to demand that property set aside for their benefit shall be /applied, for that purpose is by no means relinquished.
The simple question, then, is, does an order in composition proceedings, based upon a resolution passed by the requisite majority-of creditors, deprive a non-consenting creditor of a vested right, with which the bankruptcy court has no power, otherwise to interfere % I am constrained to answer this question in the negative.
The petitioners farther contend that these creditors are estopped by their own laches. They had, it is said, full notice of the composition proceedings. They knew, or could have known, of each successive step as it was taken. Yet they made no sign. No objection was interposed, no suggestion made to the court, no warning given to the assignee. They stood by and saw the composition resolution carried out in good faith by the court, the bankrupts, the assignee and the other creditors, without dissent, and cannot now be permitted to set in motion machinery calculated to give them an unfair advantage and affect injuriously the rights of innocent parties. This is the argument. It is certainly persuasive, and would, quite likely, be controlling, were it not that the question, being jurisdictional in character, cannot be affected by the mere inertness and silence of the creditors ; and further, an examination of the papers discloses the fact, that the proceedings in the county court were commenced only four days after the petition in bankruptcy was filed. At- the date of the final order in composition, at the very time the assignee delivered back the property to *95the bankrupts, a motion was pending, at the instance of Fraser, Bell & Loughran, to compel him to account, and to punish him for contempt in not having accounted before. He had, then, direct and positive notice of the position of these creditors, and cannot now be heard to say that he was entrapped, or that he pro- ■ ceeded in ignorance of their hostile attitude towards him. He was perfectly aware of the situation, acted with full knowledge, and, knowing what risk he ran, concluded to assume it.
The examination of these questions was begun with an inclination to restrain, if possible, recalcitrant creditors, whose proceedings were calculated to give them an unfair advantage over other creditors, and vex those who had acted innocently and in good faith. But as the inquiry progressed, there was substituted for the impression formed on the argument in favor of the petitioners, a deep-seated conviction that it would, in such circumstances, be an arbitrary assumption of power to permit the summary writ of injunction (which should never issue in a doubtful case), to go out against creditors who have a decision of the supreme court of New York in their favor, and thus, in effect, restrain a State tribunal, which has had jurisdiction of the controversy for more than seven years, and which is fully competent to protect the rights of all parties concerned.
The motion must, therefore, be denied, but without prejudice to any other remedy the petitioners may see lit to take.