Ford v. Hayes

[231] By Court, Dunne, 0. J.: One Strode, being on the third of June, 1873, insolvent, preferred certain of his creditors, the plaintiff Ford being of the number, and assigned to Ford for himself, in trust for the other preferred creditors, certain property in payment of his indebtedness to them, and possession of the property was delivered, and it is admitted that the assignment was for the purpose of paying bona fide existing debts. Certain other creditors of Strode sued, and Hayes, the defendant herein, as sheriff, attached the property held by Ford under the assignment and sold the same upon execution, whereupon Ford sued the sheriff for the value of the property so taken from him, and got judgment therefor in the court below. Hayes, the sheriff, appeals. Counsel for appellant claims, that under the existing bankrupt laws of the United States an insolvent can not prefer creditors. He cites Chancellor Kent, in Riggs v. Murray, 2 Johns. Ch. 565, to the effect that, “ as we have no bankrupt laws, the right of the insolvent to select one creditor and exclude another is applied to every case, and the consequences of such partial payments are extensively felt and deeply deplored.” Appellant herein states what is undoubtedly the law, that unless a bankrupt act makes such assignments void they stand good, although they work a hardship on the creditors who are left out. We have the United States bankrupt law in force in this territory, which furnishes relief in such cases. But how ? By declaring all such assignments void per se? By no means. The bankrupt law merely provides, that any creditor who has been left out in the case of an insolvent debtor assigning his property may file his petition, cause the insolvent debtor to be declared a bankrupt, have all assignments which were made to a creditor within four months, or to any other person within six months, prior to the filing of the petition set aside, bring the property into a common fund, and make an equal distribution of it; but even when a creditor proceeds strictly under the bankrupt act, he can not touch assignments to creditors made more than four months prior to the institution of the bankruptcy proceedings. In notes of decisions in Bump’s Bankruptcy, [232] p. 471, it is declared: “After the lapse of four months, the preferences—simple preferences which an insolvent debtor may have made—are to be held valid as against all the world, so far as the preferred creditor is concerned.” See the twelve cases therein cited. But the appellant is not proceeding under the bankrupt act, and its provisions, therefore, afford him no relief in this case. The law views such assignments with an unfriendly eye, and legislatures pass bankrupt laws to enable a creditor to set them aside; but unless he proceed regularly under the bankrupt law they stand good. It is because they do stand good in law that bankrupt acts are necessary to enable a creditor to avoid them. Judgment affirmed, with costs.