Blum, Ex'r. v. . Ellis

Settle,'!J. Congress has power, under the Constitution of the United States, to establish uniform laws on the subject of bankruptcies, throughout the United States. In order to make the laws uniform the bankrupt tribunals must act independently of State tribunals, and must control them in all things pertaining to the bankrupt and his estate, for it would entirely destroy the system, by preventing that uniformity which is enjoined by the Constitution, if suitors should be permitted, at their pleasure, to withdraw from the bankrupt courts into the State tribunals, eases involving any of the questions which grow out of the administration of the assets of a bankrupt. It is not denied that Congress could have withdrawn from the State Courts all cases pending against a bankrupt at the time of the adjudication of his bankruptcy, but for convenience, as it was supposed, this was not done, and the assignee of a bankrupt is permitted to prosecute or defend an action in the State Courts, either to recover the estate of the bankrupt or to ascertain the liabilities and liens upon it. The bankrupt law does not divest a lien, but as all the property of a bankrupt, as well that subject to mortgages and liens as that which is unencumbered, passes to the assignee, and is in custodia legis, subject of course to priorities and liens, it follows that the bankrupt court is the proper tribunal in which to administer the remedies for the enforcement of liens. The State Courts, as we have said, may be employed to col *296 lect the assets of a bankrupt, and also to ascertain the liens ivhieh may exist upon such assets, but it is one thing to ascertain a lien, and quite another to liquidate it; and if a party can liquidate his own liens, through the intervention of State Courts, in the absence of the assignee, who represents the general creditors, there is no protection to other creditors against collusion and fraud between the bankrupt and such a claimant; further, the settlement of the estate of a bankrupt may be indefinitely postponed by tedious litigation in the State Courts. While all subsisting liens are fully protected by the bankrupt act, we think, by the true interpretation of that act, all claimants against the estate of the bankrupt are required to prove their debts however evidenced. If not so, why, in addition to the requirement that the bankrupt shall enter upon his schedule all secured debts, &c., does the 22d section of the act require the claimant to prove his demand and disclose “ whether any and what securities are held therefor?” The first section confers jurisdiction upon the bankrupt court to ascertain and liquidate the liens and other specific claims upon the assets of the bankrupt. Here are several courses open, in the bankrupt court, to the secured creditor, but he must adopt some one of them; he will not be permitted to sleep upon his lien until everything is closed in the bankrupt court, and then virtually nullity the whole thing by proceedings in the State Courts. If he remains outside of the bankrupt court, he does so at the risk of having his debt barred, and he may also lose the benefit of his securities. We are aware that cases may be found, in great abundance, both supporting and opposing the positions here assumed. We do not feel called upon to cite or comment upon them, but feel ourselves at liberty, in this conflict of authority, to adopt what appears to us to be the most reasonable interpretation of the bankrupt act, and one which will lead to the least confusion in the administration of the assets of a bankrupt. Indeed when we behold the obscurity in which this subject has been involved by the conflicting decisions of different courts, we are inclined to think that it would have been *297 better, had Congress withheld entirely from State tribunals all questions touching the bankrupt, his creditors and his assets. We give no weight to the suggestion that the plaintiff in this case had no notice of the proceedings in bankruptcy, for this debt was entered upon the defendant’s schedule, and notice was sent by mail addressed to the plaintiff’s testatrix, and the usual publication of notice was made in the newspapers. ■ This Court has held in Knabe & Co. v. Hayes, 71 N. C. Rep., 109, that the discharge of a bankrupt does bar the claim of a creditor who had no knowledge of the filing of the petition in bankruptcy, and whose name was not inserted in the schedule of creditors, and to whom no notice was mailed, unless the creditor alleges and can show that the omission to give notice was -the result of fraud on the part of the debtor, and not the result of forgetfulness, accident or mistake. Per Curiam. The judgment of the Superior Court is affirmed.