Holbrook v. Coney

Walker, J. The first objection raised to the validity of the deed offered in evidence, is that the lots in controversy were never scheduled by the bankrupt. The third section of the bankrupt act of 1841 provides that all the property and rights of property of every description, name and nature, and whether real, personal or mixed, of every bankrupt, except the articles of property exempted by the statute, who by the decree of the proper court, shall be declared a bankrupt within the act, shall by mere operation of law, ipso facto, from the time of such decree, be deemed divested out of the bankrupt without any other act, assignment or other conveyance whatsoever; and the same shall be vested, by force of the decree, in the assignee. Howmore comprehensive language, to vest the title in the assignee could have been employed, it is impossible to conceive. But lest a doubt might remain, the succeeding clause of the same section has, if possible, made it still more explicit, by providing, that “ the assignee so appointed, shall be vested with all the rights, powers, and authorities to sell, manage and dispose of the same, and to sue for and defend the same, subject to the orders and directions of such court, as fully to all intents and purposes, as if the same were vested in, or might be exercised by such bankrupt, before or at the time of his bankruptcy, declared as aforesaid.” The property in controversy is not embraced within the exemption of the statute, and is subject to this provision. And by the operation of the decree of bankruptcy and the appointment of an assignee, the property “is vested in him without any other act, assignment or conveyance whatsoever.” This most unquestionably excludes the supposition, that a schedule of the property was in any way essential to divesting the title out of the bankrupt, or vesting it in the assignee, however necessary it may have been for other purposes. When the case was pending in the court, and its judicial functions were invoked, and its decree pronounced, declaring the petitioner a bankrupt, he by the operation of law was • thereby divested of his title, and by force of the same power, the appointment of the assignee vested him with the title in precisely the same manner and to the full extent, that it had been held by the bankrupt, and vested the assignee with power to sell, manage and dispose of the same, under the orders and directions of the court, to the same extent that the bankrupt might have done previous to the decree of bankruptcy. We have no question that by the decree of bankruptcy and the appointment of the assignee, the title vested in him under and by operation of the act, as fully *as if it had been embraced in the schedule returned by the bankrupt. It seems to us, that every principle of justice, independent of the enactment, requires that such should be the case. Otherwise the fraud or negligence of the applicant for the benefits of the act, would defeat the design of the law, deprive the creditors of their rights to participate in the avails of the bankrupt’s estate, and enable him to evade the law. The design of the law was that all. but the excepted property should pass to the assignee, for the benefit of the bankrupt’s creditors, and to vest it in the assignee as their trustee, and good faith must be observed by the bankrupt, and if it has not been, he nor those claiming under him have any right to profit by its omission. The title to the property in controversy having then vested in the assignee, the next question presented by this record is, did the conveyance by the assignee, transfer it to his grantee. It is urged that it did not for a want of a compliance with the provisions of the bankrupt act, inasmuch as the sale was not made at a time, place, or in the manner required by the court. We have seen that by the third section of the act, he is empowered “ to sell, manage and dispose of” the property, “ subject to the orders and directions of such court as fully, to all intents and purposes, as if the same were vested in, or might be exercised by such bankrupt, before or at the time of his bankruptcy, declared as aforesaid.” The ninth section provides “ That all sales, transfers and other conveyances of the assignee, of the bankrupt’s property and rights of property, shall be made at such times, and in such manner, as shall be ordered and appointed by the court in bankruptcy.” The evidence discloses the fact that the court rendering the decree in bankruptcy, have adopted a rule prescribing the duty of the assignee, which was numbered 51, and was read in evidence on the trial, and is this: “ It shall be the duty of the assignee of the bankrupt to make sale of all the right, title and interest of the bankrupt, whether equitable or legal, in and to any real estate, wheresoever situated, with all due diligence, having due regard to the interest of the creditors, (unless some one of said creditors shall, previous to the time appointed for such sale, file with the assignee his written dissent thereto, when it shall be the duty of such assignee to refer the matter to the court.) and that the sale of said real estate, or any interest therein, be made, either for cash or upon a credit not exceeding one and a half years, as the assignee shall deem best for the interest of said estate ; at least twenty days’ notice of the time, place and terms of sale being first given by affixing up at least three notices, and also by publication in some newspaper nearest the premises, when, in the opinion of the assignee, the property is sufficiently valuable to justify the expense of such publication.” This rule of the court having been adopted, became as binding upon the assignee as if it had been incorporated at length in the decree of bankruptcy. That he so regarded it, is apparent from the recitals in his deed. He there recites that he had .been appointed assignee, and that he had complied with the provisions of the decree, had filed his bond with the clerk of the court, and had complied with all other regulations and directions of the decree, and with all the rules in bankruptcy, so far as the same apply to, or are binding and incumbent on him. That he had sold the property at public auction at the court house of Jo Daviess county, having first advertised the same according to law, in separate lots, and that Holbrook became the purchaser. Then was this sale conducted subject to the orders and directions, and was it made at such time and in such manner as was ordered and appointed by the court? It was unquestionably made in pursuance to the 51st rule, which must be regarded to be, as it undeniably was, an order of the court, and it was made subject to the directions of the court, because that rule prescribed the mode in which the sale should be made. The court by the rule authorized the assignee to fix the time, and to adopt the manner of making the sale. And as the assignee occupied to that court, for the purpose of selling the estate, the relation of a master, and as the court was in the very nature of things compelled to confide to some extent in his discretion, we are of the opinion that this was not an excess of authority conferred by the court in violation of the law, so as to render the act void. The policy of the act in adopting these provisions, undoubtedly was the protection of the creditors of the bankrupt, in their rights, and to vest the court with a large discretion, in having the assets converted, in the mode best adapted to the production of the largest fund that could be produced, for the benefit of the creditors. The statute has prescribed no time, nor has it indicated the manner of conducting the sale, but has left that to the court. And in determining that question, so many circumstances of a local character must necessarily have to be considered, that usually the assignee at the place would be as capable of determining them as the court. And we are of the opinion" that the conferring of that discretion, by the court to the extent it was done upon the assignee by this rule, was warranted by the law. In this conclusion we are fortified by the provisions of the fifteenth section of the same act. It has expressly provided that a copy of the decree in bankruptcy, and the appointment of the assignee as directed by the third section of the act, shall be recited in every deed for land, belonging to the bankrupt, sold and conveyed by the assignee, by virtue of the act. And that such recital, together with a certified copy of such order, shall be full and complete evidence of the bankruptcy and assignment to validate the deed, and that all deeds containing such recitals, and supported by such proof, shall be as effectual to pass the title of the bankrupt, of, in and to the lands therein mentioned and described, to the purchaser, as fully and to all intents and purposes, as if made by himself immediately before such order. This deed contains the recital of the decree in full, and from it we are informed that Campbell was declared a bankrupt, and that Bostwick, the maker of the deed, was appointed the assignee. This is an ample recital of those facts, and the deed, together with a certified copy of the decree, affords all the proof required by the statute, that the title of the bankrupt in the premises had passed to the grantee. By the provisions of the statute, this deed is made as effectual to pass the title, as if executed by Campbell himself. This provision has precluded all inquiry in a court of law, into precedent facts. All the court can do is to see that the deed contains the requisite recitals, and that there is a certified copy of a decree regular on its face that sustains the deed. The statute has not provided that this order shall fix the time and manner of making the sale, and if such a requirement were essential, it might just as well appear in any other order as in this. The order recited in this deed has every requisite of a valid and binding order. It is true that there was no offer to produce a certified copy of the decree, but an objection was not interposed for that reason, and unless that objection had been made in the court below, either when offered in evidence, or after all the evidence on the part of the plaintiff was heard, by motion to exclude the deed, it cannot be urged here. Neither was done in this case, and as the deed was properly admissible in evidence, the court erred in excluding it, and the judgment of the court below must be reversed, and the cause remanded. Judgment reversed.