Court Opinion

ID: 6408235
Source: CourtListenerOpinion
Date Created: 2022-06-25 11:50:37.553461+00
Date Added: 2024-06-11T15:51:17.040639
License: Public Domain

Shaw, C. J.
Questions arising under the insolvent law of the State and its several amendments, requiring, as they do, a construction of new statutes, embracing provisions somewhat numerous and complicated, and affecting to a great extent the rights of debtors and creditors, are now among the most important presented for the consideration of the court.
This is a petition of Messrs. Eastman, Fondey & Co., insolvent debtors, for a writ of mandamus, directed to the master in chancery, before whom the proceedings in the matter of their insolvency are pending. The petition sets forth, that these proceedings were commenced by their own petition to the master, on the 29th of March 1844 ; that he sustained such petition and granted a warrant; that regular proceedings were ordered and had, and a first meeting appointed for the 9th of April 1844; that said meeting was duly held, debts proved, and *421assignees chosen, who duly accepted the trust. The petitioners then state, that they applied to the master to call a second meeting of their creditors, to be held within three months from the date of the issuing of the warrant, to enable them to complete their schedule, take and subscribe the oath required by law, and apply for their discharge; that the master has declined issuing a notice for the second meeting, within three months, which are now nearly expiring; and the prayer of the petition is, that a writ of mandamus may go from this court requiring him to do his duty in this particular.
The case involves the question, whether the petitioners’ right to a discharge is to be governed by the Sts. of 1838 and 1841, or whether it is to be governed by the provisions of the recent act, St. 1844, c. 178. This act was passed on the 16th of March 1844, and went into operation thirty days after, to wit, on the 15th of April. It appears, therefore, that the proceedings were commenced after this act had passed, and that they had made some progress when it went into operation.
The main ground of the petitioners’ claim is, that they are entitled to their discharge on the terms of the acts of 1838 and 1841, and are not bound by the provisions of the recent act. The St. of 1838, c. 163, § 7, provides that a second meeting shall be called within three months after the date of the warrant ; at which creditors may prove their debts, the debtor may amend his schedule, take and subscribe the oath, and if he is not opposed, the master may then grant him a discharge. The question is, whether this right is controlled and modified by St. 1844, c. 178, which prescrib.es different terms on which alone a discharge may be obtained, and different modes of proceeding, on the part both of the debtor and the creditors. On this question, the court are of opinion, that the act of 1844, being, in its whole character and all its provisions, in amendment of the preexisting laws, so far as it was prospective in its operation, so far as it directed proceedings which were then future, did apply to cases commenced at the time when it went into operation. The fourth section provides explicitly that an insolvent debtor, whose assets shall not pay fifty per cent, of his *422debts, shall not be discharged, if a majority in value of his creditors, who have proved their claims, shall dissent therefrom within six months after the date of the assignment. This is plainly inconsistent with the provisions of § 7 of St. 1838, directing the time when, and terms on which, a discharge should be granted ; and therefore by the act of 1844, § 17, the former was repealed, if it applied to a case commenced. But the statute does apply, in terms, to future proceedings under cases then commenced; and the time not having come, when that act went into operation, at which the insolvent could apply for his discharge, or the master grant it, such application for a discharge, the right of the creditors to oppose, and the power of the master to act upon it, were all future, and must, we think, be regulated by the late statute; and the provisions of the act so regulating future proceedings were prospective in their operation, and not inconsistent with the just exercise of legislative power. Ex parte Lane, 3 Met. 213.
We are therefore of opinion, that although proceedings had commenced, yet as the time had not arrived for acting on the question of discharge, the insolvents are not now entitled to claim their discharge until six months from the time of the assignment, because that time is allowed to the creditors to prove their debts, and thereby qualify themselves to act on the question of dissent; and the same time is allowed the assignees to ascertain whether the assets will pay fifty per cent.; and if not, for a majority of the creditors to dissent, and thereby prohibit the discharge.
Again; § 8 of St. 1844 provides, in addition to the various causes which should prevent a discharge under prior statutes, that the discharge shall not be granted if the debtor shall have given certain preferences therein specified, if the creditor proves that he had reasonable cause then to believe himself insolvent. This implies a judicial inquiry and adjudication by Ine master, upon contested facts, in which any creditor may be heard as a party. Such a creditor, we think, is one who shall prove his debt within the time limited for creditors, who shall have proved, to dissent; which is six months ; and therefore if *423cannot be heard or decided, on the application of the debtor, within the six months.
It was argued for the petitioners, that the provisions of the two acts might to some extent be reconciled in this way ; viz. that the master might grant the certificate, at the second meeting, to be held within three months, pursuant to St. 1838, but that the debtor should not be discharged by it, if the creditors should dissent in six months. We think this would be a forced construction, not necessary to accomplish any object contemplated by the legislature. When they speak of granting a discharge, we have no doubt it ordinarily means a certificate of discharge. But the construction contended for would render the certificate utterly useless, because its efficacy would depend in no degree upon the adjudication of the master and the facts testified, but upon facts to be proved in pais, to wit, whether the assets had paid fifty per cent., and whether a majority in value of the creditors had dissented within six months. Such a contest, in each particular case where a discharge is pleaded, would be attended with great inconvenience. But our construction, we think, is fortified by the provisions of the 3d section of St. 1844, in relation to fiduciary debts. These shall not be discharged under the act; but they may be proved, and the dividend shall be deemed a payment pro tanto, and every certificate of discharge shall contain a statement of the debts created as aforesaid, to be 'exempted therefrom. From this clause it is manifest that the debts are to be proved before the certificate of discharge is granted; and if, by a fair construction of the other clause, creditors, authorized to dissent, are to have six months to prove their debts, then it is clear that the certificate is not to be granted till the expiration of the six months allowed for the proof of debts and the dissent of creditors.
The only ground on which this petition for a mandamus to the master could be sustained is, that the petitioners have a rightto a second meeting withinthree months, in order thatthey may then apply for and obtain their discharge. We are of opinion that for this purpose they are not entitled to it, because they could not then apply for their discharge, nor could the master *424grant it. This 'disposes Of the present application, so far as these petitioners are concerned.
Whether it is the duty of the master, under the provisions of the statute, to give notice for a second meeting within three months, for the general purposes contemplated by the insolvent, laws, perhaps it is not necessary now to decide; but as we see nothing to repeal the direction in § 7 of St. 1838, c. 163, and as there may be some useful objects to be accomplished by it, we are inclined to think that it is. At such meeting, the creditors may prove their debts, the debtor may correct and complete his schedule, and take, subscribe and file his oath; all of which tend to secure the rights of the several parties, to speed the proceedings, and to facilitate a regular and early settlement of the estate.
The late act, St. 1844, c. 178, § 1, directs that a court shall be held for these purposes, on the second Monday of every month; and the proceedings in such case are to be had only after due notice to all parties in interest. It is still therefore necessary, that due notice be given by the master of the time and place of such second meeting.