Bank v. Bachelder

The opinion of the Court was afterwards drawn up by Tenney J. The statutes of this Slate provide two modes by which means may be secured on mesne process, to satisfy a judgment sought to be obtained in the action. One is by direct attachment of the lauds or goods of the defendant, and the other by foreign attachment. The former secures the property returned on the writ, so that the creditor may cause it to be seized and sold upon his execution, to discharge the judgment, which he may obtain; the latter protects the goods, effects and credits in the hands of the trustee at the time of the service of the original writ upon him, so that they, or their value, are in the manner pointed out, to be applied for the saino purpose. In both forms of proceeding, it is the property of the defendant, which affords the security, and in each, that is a fund equally holden to be appropriated to the payment of the debt secured thereby. No sale or subsequent attachment — 64 — can impair the creditor’s rights to the one, nor can any restoration to the owner, or disposition by him or the trustee defeat the right acquired by the other. The manner of making the means thus secured available is different in one case from the other, if the property is not surrendered upon a proper demand, that it may be disposed of, to satisfy the debt; but the laws furnish a remedy in behalf of the creditor for any neglect, in those to whom the property was intrusted. A failure in the plaintiff to obtain a judgment will in both modes dissolve the attachment, because there is no debt, to which the avails of the property can be applied. But if judgment is obtained, whatever is the subject of the attachment in either form, is pledged for its satisfaction, as perfectly as it would be, if it had been placed in the same situation by a contract between the parties. Do either of these forms of attachment create a lien, after judgment, in favor of the judgment creditor, so as to be excluded from the operation of the Bankrupt Law of the United States of 1841, c. 9, by force of the last proviso in the second section ? The proviso is in these words : “ provided also, that nothing in this act, shall be construed to annul, destroy or impair any lawful rights of married women, or minors, or any liens, mortgages, or other securities, or property real or personal, which may be valid by the laws of the States respectively, and which are not inconsistent with the provisions of the second and fifth sections of this act.” This question has been fully examined by those distinguished for their talents, learning and long judicial experience, and although in some respects their opinions do not precisely coincide, one with the other, yet they all agree that a direct attachment is a valid lien upon the property, which cannot be defeated after judgment. Judge Story, in the case of ex parte Foster, 5 Law Reporter, 55, holds that an attachment on mesne process, before judgment, is not a lien, either in the general sense of the common law, or the maritime law, or in that of equity jurisprudence ; but is at most a contingent security, to satisfy the judgment of the creditor, if he obtains one; — 65 — but inasmuch as the defendant may plead a discharge in bankruptcy, and thereby defeat a recovery in the action, the whole foundation on which the security rested is taken away. And afterwards, in the matter of Cook, 5 Law Reporter, 443, the learned Judge, carrying out the doctrine intimated in the other case, says, “ the proceedings in bankruptcy after the judgment, can have no effect whatsoever upon that judgment, or upon the property attached in the suit. The creditors in the judgment have made their right (call it, if you please their lien) perfect under the attachment. It is no longer a conditional or contingent right, but it has attached absolutely to the property, and, by the laws of Massachusetts, it remains a fixed and positive lien for thirty days after judgment, by means of which the creditor at his election may obtain a preference of satisfaction out of the property attached, over all other creditors. Of that election, the Court has no authority to deprive him, or by an injunction to obstruct or stop his proceedings on his execution. If the bankrupt should obtain his discharge, it would be no bar or defence to the due execution and satisfaction of that judgment, in the regular course of proceedings thereon; for the debtor, after the judgment, has no day in Court to plead any bar or defence.” If our views are not erroneous, that a foreign attachment affords equal security with that in the ordinary form under the laws of the State, it follows, that it falls equally within the protecting provision in the proviso quoted from the second section of the bankrupt act. The creditor’s risk may be greater or less, when the property secured remains in the hands of the private trustee, than when it is in the custody of a public officer, but his rights are the same under one as the other. The law guards the property, and holds it in both instances as a sacred deposit, which nothing but the want of fidelity of the one to whom it is entrusted can divert from the destination indicated by the statute. In the case of ex parte Foster, before cited, Judge Story remarks, “that the attachments under the trustee process,” which were also brought to his consideration, by the petition as much as the attachment in the common — 66 — mode, “must be governed by similar considerations, and therefore, they will require no separate notice.” If we apply these principles to the case at bar, what are the plaintiffs’ rights ? They obtained their judgment in which the defendant is adjudged trustee on his own disclosure. The execution issued upon said judgment, and being in the hands of an officer, he demanded thereon of the defendant the goods, effects and credits, which were in his hands and possession, belonging to the debtors, and the same were refused. All these proceedings were before the debtors had filed their petitions to be declared bankrupts. This laid the foundation for a judgment upon scire Jadas against the defendant, de bonis propriis, to be rendered upon his examination in the first process, without his being again examined. Is the defendant at liberty to avail himself of that which was not and could not be the reason of his omission to surrender the property, in bar of this action? 'When after the refusal, he was liable, and it is not pretended, in his plea, that any excuse therefor then existed, can this neglect avail him to invoke a defence, which was not then open to him ? If the bankrupt act had even wrought the entire annihilation of the judgment so far as it regarded the debtors, was not his liability fixed by what had transpired ? When the security, which the law of our own State made perfect by that judgment, was unaffected by the bankrupt law of the United States by its express and positive provisions, can the omission of a duty in the defendant take away that security ? It is insisted for the defendant, that the property of Elwell & Pray after they filed their petitions in bankruptcy, including that in the hands of the defendant, was vested in the hands of their respective assignees; and that the defendant having a day in Court can do what the debtors cannot do, who have no opportunity to plead their discharges. This argument is founded upon the assumption, that the scire facias is a process to obtain the goods, effects and credits deposited by the principal debtors with the trustee, as they existed at the time of -the service of the original writ upon him. The writ of scire — 67 — facias is not provided in the statute for such a purpose. No surrender of goods or effects, or any other property, short of full payment of the judgment, after the refusal of the defendant to answer the demand on the execution, could exonerate him from his liability. The plaintiffs have no further interest in the property. By that refusal he appropriated the property to his own use, and was bound to answer for the value, lie rto longer holds it, to be disposed of, as he did before his refusal. The property is now a matter between him and the assignees of the bankrupts. If they take it out of his hands, so that he cannot indemnify himself therefrom, in this suit., he must impute it to his omission to surrender it, and not to any fault of the law. If he had disclosed certain specific articles, and he had refused to deliver them upon a legal demand, and they were afterwards consumed by fire, would he plead this in bar of scire facias, because a delivery would then be impossible ? A surrender, without consent of the plaintiff, would alike be impossible, if the property had remained cutiré. The counsel calls in aid of his defence, a remark of Judge Story in the case of ex parte Foster, before referred to, which is, “ a foreign attachment is a remedy liable to be defeated, by any act, that bars or takes away the remedy or right to judgment under it.” We cannot think that this remark of the learned Judge was intended to have such an application. The question under examination, was whether an attachment on mesne process created such a lien or security as to be embraced in the last proviso of the second section of the bankrupt act of 1841, and in answer to the proposition, that in cases of foreign attachment under the custom of London, the attaching creditors had a lien or pledge of the goods attached in the hands of the garnishee, and that it was such security of the debt, that if the defendant became bankrupt after the attachment and before judgment, the commissioners could not take or assign the goods, excepting subject to the lien and security of the attaching creditor. The Judge denies the doctrine contended for, in relation to a foreign attachment, although apparently supported by some authorities, and says, — 68 — “ the truth is, a foreign attachment is like a common attachment, on mesne process, a remedy merely given and regulated by law to enable a creditor to obtain satisfaction of his debt ; and like every other, is liable to be defeated by any act, that bars or takes away the remedy or right to judgment under it.” As long as a party defendant had an opportunity of pleading his discharge in bankruptcy, the lien created by a common or a foreign attachment, being dependent upon a. judgment for its perfection, was liable to be defeated by a failure of the suit in which either was made. This proposition, too plain to require argument in its support, cannot authorize a trustee to plead such discharge in answer to a writ of scire facias, which is as distinct from a process of foreign attachment, as is a suit against an officer for not holding and surrendering on demand property attached by him on mesne process. The judgment against the principal debtors cannot be impeached by them, much less by one, who was not a party to the matter of the suit on which it was rendered. It is one, which cannot be enforced against the debtors therein, because they have been discharged from the debt; but it remains a judgment not annulled or reversed, and it is sufficient to secure to creditors any lien made complete thereby. When Judge Story in the matter of Cook, before referred to, uses the strong and emphatic language, that the creditor after obtaining his judgment, at his election may obtain a preference of satisfaction out of the property attached over all after creditors; and of that election the Court has no authority to deprive him, or by injunction to obstruct or stop his proceedings on his execution, we cannot believe such a remark as he made to a matter entirely distinct as is quoted by the counsel, can be authority in support of the present defence. Such a construction would make the bankrupt law speak a language altogether different from that intended by its framers; would destroy a lien in terms and in spirit protected by it; would give an effect to the silent and unauthorized omission of a trustee to perform the duty imposed upon him more powerful, than the injunction of the highest tribunal in our land, clothed with power in equity jurisdiction in — 69 — matters of bankruptcy more ample, than that of the Lord Chancellor of England. Replication adjudged good.