Sonneborn v. . Libbey

Earl, J. We are of opinion that the bankrupt court had the power to require this bond .to be given. Under the Bankrupt Act of 1867, the U. S. District Court had general jurisdiction in all cases of bankruptcy. The powers conferred upon it were extensive, and were intended to be adequate for all the purposes of the act. Section 39 of the act provides that any person residing in the United States and owing debts exceeding $300, who shall commit any of the acts of bankruptcy in that section specified, “ shall be adjudged a bankrupt on the petition of one or more of his creditors,” etc. Section 40 provides that upon filing the petition “if it shall appear that sufficient grounds exist therefor, the court shall direct the entry of an order requiring the debtor to appear and show cause * * why the petition should not be granted.” Here the command of the statute is imperative. If the petition is sufficient, the court must grant the order to show cause, and cannot grant or withhold the same in its dis *548 cretion. Following paragraphs of the same section provide that the court “ may by injunction restrain the debtor or any other person in the meantime from mating any transfer or disposition ” of the debtor’s property, and “ from any interference therewith”; that “if it shall appear that there is probable cause for believing that the debtor is abont to leave the district or to remove or sell his goods * * * the court may issue a warrant to the marshal commanding him to arrest the alleged bankrupt * * * and forthwith to take possession provisionally of all the property and effects of the debtor, and safely keep the same until the further order of the court.” The powers conferred in these paragraphs are discretionary, to be exercised only when, in view of all the circumstances of a case, the court may conclude that the ends of justice and the purposes of the law require it. The court could in its discretion, in all cases where it had jurisdiction to grant the provisional remedies, withhold them. The petitioning creditors could never demand either of them, as matter of right. So, too, the court having granted one of these remedies, could at any time, in its discretion, recall or .set it aside. Its discretionary control over either of these remedies remained until it was fully executed, and had thus become functus officio. These powers were very extraordinary, and their exercise might be very destructive. The warrants could be issued ex parte without any notice, and thus great and irreparable mischief could be done. It was certainly very appropriate that the court should possess power to take security against the damage which its process thus granted might do. As it was in the discretion of the court to withhold or grant the warrant of ceizure, it could specify the terms upon which it would grant it, and it could require compliance with such terms or else refuse the warrant. It is a universal rule in the procedure of all courts that when, in the exercise of their discretion, they may grant or withhold a favor asked for, they may impose any reasonable terms or conditions upon which the favor is to be had. What a party cannot demand of a court as matter of right, he must, usually take upon such terms, proper and judicial in their nature, adapted to the *549 ends of justice, as the court sees fit to impose. (Decker v. Judson, 16 N. Y. 439; In re Bradner, 87 id. 171.) The administration of justice would be greatly impeded, and the courts greatly embarrassed and crippled, if they did not possess the power to impose terms in such cases. This power does not depend upon the common law, nor upon chancery law, nor upon statutory law. It is an inherent power of courts incident to the exercise of the discretion, and really a part of the discretionary power. It cannot be said that the discretion was unreasonably exercised in this case when the warrant was issued upon an ex parte application and the seizure under it broke up the plaintiffs business and would necessarily greatly damage his property. The requirement of a bond is a usual and almost universal condition in such cases. If the bond could have been required as a condition of issuing the warrant, it could also be required as a condition for refusing to recall or vacate it. But it is claimed that this bond was arbitrarily required and not as a condition for the refusal to recall the warrant on the motion of Sonneborn. It is true that it was not in terms ordered to be given upon that condition. On the return day of the order to show cause there were four motions, one by the petitioners to amend their petition, one by Sonneborn to dismiss the proceedings, another by him to recall the provisional warrant, and still another for the indemnity bond, and these motions were all disposed of by one order. JSTo one familiar with legal proceedings can doubt that Sonneborn’s motion to the court was that the warrant'be recalled or that the petitioners be required to give the bond, and the court refused to recall the warrant, but required the bond. Thus, although not so expressed in terms, the bond was required as a condition for the refusal to recall the warrant. If the petitioners did not desire to give it, they should have consented to the recall of the warrant. The bond was required because they insisted upon, maintaining the seizure of the goods, and clearly as a condition of the maintenance of such seizure.^ *550 There was ample consideration for the bond. The petitioners maintained the seizure of the goods for their benefit, and Sonneborn was deprived of their possession and subjected to great loss and damage. We, therefore, see no reason to impeach the validity of the bond, and it only remains to be inquired whether there was such a compliance with its conditions as to impose liability upon the obligors thereof. They contend that, before they could be made liable, it was incumbent upon the plain till to show that in the bankruptcy proceedings he proved that he was not bankrupt, and they claim that he did not show that. It is by no means clear that he did not show that. He had goods worth about $10,000. The only debt that appeared or was in any form alleged in the bankrupt proceedings, besides that claimed by the petitioners was one for a little less than $7,000, and when Sonneborn established that he did not owe the petitioners any thing, he showed at least prima faoie that he was not bankrupt. But this view of the case need -not be taken. We do not assent to defendants’ construction of the bond. We must construe the bond and the order in pursuance of which it was given, so far as they throw light upon each other, together, and thus arrive at the intention of the court and of the parties. (Elmendorf v. Lansing, 5 Cow. 468.) Evidently what was intended was to protect Sonneborn against the consequences of the seizure of his property in case it should turn out that the petitioning creditors had no cause to seize it. At the time the order was made, Sonneborn had obtained one verdict upon a trial upon the merits that he was not indebted to the petitioners, and he was about to proceed to another trial. That he was not a debtor of the petitioners seems to have been his main contention and "reliance, and it cannot be supposed that it was the intention of the court that in case the proceedings should be dismissed on the ground that the petitioning creditors had no claim against him and thus no right to institute them, he was to have no indemnity. The order required the bond to be upon/the condition that *551 Sonneborn “ should prove that he is not bankrupt and the proceedings against him by the said petitioning creditors shall be dismissed.” blow what was meant by this language ? We think the purpose to be accomplished by the bond, and the language of the bond given in pursuance of the order, show that the word “ and ” should be read as “ or,” so that Sonneborn would have the indemnity in case he proved that he was not a bankrupt or the proceedings were dismissed. That the parties so understood the order and requirement of the court is shown by the language of the bond. The bond follows the language of the order and then apparently in explanation of its meaning has the following language: “ In case said proceedings are not dismissed or if said Meyer Sonneborn shall be adjudged a bankrupt thereunder, then this obligation to be void; otherwise to -remain in full force.” The last clause if written out would be thus: “ But in case said proceedings shall be dismissed, or if said Meyer Sonneborn shall not be adjudicated a bankrupt thereunder, then this obligation to remain in force.” Such is the plain meaning of the bond when all its language is considered, and no other construction would harmonize with the surrounding circumstances and accord with the presumed intention of the court and of all the parties interested. Therefore, when final judgment was rendered for Sonneborn in the bankrupt proceedings, the event had happened upon which the liability of the defendants was conditioned, and the indemnity to Sonneborn should become operative. We are, therefore, of opinion that the judgment should be reversed and a new trial granted, costs to abide event. All concur. Judgment reversed.