Spurr v. Dean

Holmes, J. The main question in this case is whether one who lends money after publication of notice of the filing of a petition in insolvency against the borrower, but before the issuing of the warrant, is entitled to prove against the estate. We are of opinion that he is not- In involuntary proceedings the assignment relates to “the time of the first publication of notice of the filing of the petition,” Pub. Sts. e. 157, § 46, and it would be most anomalous if a creditor, for an advance which did not go to swell the fund to be distributed, but which the debtor had a right to keep in his pocket, should be allowed to share in the distribution. The facts to which a creditor is required to swear before proving are of course conditions of his right to prove. One of these is, that the debtor “at and before the date of such proceedings [i. e. the proceedings in insolvency] was and still is justly and truly indebted to me in the sum of .” We think that the assignment must be intended and taken to convey all property in the hands of the debtor which came there before the date of the proceedings, and therefore that the date of the proceedings cannot be said to be later than that fixed for the operation of the assignment. In other words, the daté of involuntary proceedings is hot later than the first publication of notice of the petition, and as the insolvent was not then indebted to Dean, Dean could not properly take the necessary oath, and was not entitled to prove. It is true that the form of discharge given in the Pub. Sts. c. 157, § 80, speaks, among other things, of debts due to persons who were resident within this Commonwealth on the day of the first publication of the notice of the warrant, and not of the petition. But, as was pointed out by the counsel for the assignees, the assignment formerly related to the first publication of the notice of the warrant in all cases, as it still does in [87] voluntary proceedings. Pub. Sts. c. 157, § 46. Gen. Sts. c. 118, § 44. This was changed with regard to involuntary proceedings by an amendment of the section just cited from the General Statutes, St. 1879, c. 245, § 3, and it would have been more consistent if a corresponding amendment had been made in the form of discharge, which now is strictly appropriate only to voluntary proceedings. However, as the phrase in the discharge refers to the residence of creditors, and not to debts, and as by another phrase only debts which are provable against the estate are discharged, the inconsistency is not fatal to the argument of the assignees, but is simply a case of inelegantia juris. The possible hardship of impeding a debtor’s power to borrow or contract before the petition against him has been adjudicated upon, cannot be allowed to outweigh the argument from the specific provisions of the statute and the general policy of the insolvent law. The assignees had a right to apply to the Court of Insolvency to expunge the claim. For as against the estate in their hands it was founded in illegality or mistake, however valid it might be against the debtor. Pub. Sts. c. 157, § 35. They were therefore entitled to have the order rejecting their petition revised; and, as it is now settled ( Woodward v. Spurr, 138 Mass. 592,) that an appeal to the Superior Court under § 36 does not lie, the bill in equity under § 15 was the proper remedy. The appeal must therefore be dismissed, and in the equity suit the entry will be a decree for the plaintiff. Judgment and decree• accordingly.