Stevenson v. McLaren

Gileillan, C. J. On November 1, 1873, the firm of E. NeAvman & Co., merchants, in insolvent circumstances, made to these plaintiffs a transfer of their stock in trade, etc., such as, though not void as to creditors under the law of the state, is declared fraudulent by the bankrupt act. On the 11th of December following, a petition for adjudication of bankruptcy Avas filed against them by their creditors, an order to sIioav cause issued against them, and also a provisional Avarrant to this defendant, McLaren, then marshal of the district, commanding him, as such marshal, to take possession of all the property and effects of the debtors, and safely keep the same until the further order, of the court. Under this Avarrant he took from the plaintiffs’' .possession the property which had been transferred to them, and for such taking they bring- this suit. The only question which Ave feel called on to decide is, did the Avarrant justify the marshal in taking property Avhich the alleged bankrupts had transferred in fraud of the bankrupt act? We can discover no difference in this respect between the provisional and the final warrant. Section 35 of the bankrupt act provides, that such “ sale, assignment, transfer, or conveyance shall be void, and the assignee may recover the property, or the value thereof, as assets of the bankrupt.” The plaintiffs claim — and it Avas so decided by the court beloAv — that this provision does not make the transfer void, but only voidable at the election of the assignee in bankruptcy when he shall bring suit to avoid it,-and to recover the property or its value ;, and that as to. [113] every one except the assignee bringing suit — even as to the bankruptcy court and its officers, other than the assignee when enforcing the act — it is good. If the act merely gives to the assignee a right of action against a perhaps irresponsible transferee of the bankrupt to recover the property, or the value of the property transferred in fraud of its provisions, and furnishes no means to arrest and preserve the property till an assignee may be appointed, it is much less efficient to prevent frauds upon creditors than has been generally supposed. This construction is too narrow. The meaning of the act is that all transfers made to defeat its operation shall be absolutely void, so far as they might in any manner stand in the way of enforcing its provisions, where the proceedings are instituted within the time prescribed. In contemplation of the act, property so transferred is, in cases commenced within the time, the property of the bankrupt at the time of commencing the proceedings, as fully as though the fraudulent transfer had not been made ; and the title vests at once ii: the assignee upon his appointment and the assignment to him. This view of the act is fully sustained in Bolander v. Gentry, 36 Cal. 105, and Hanson v. Herrick, 100 Mass. 323 ; and, although we do not find any decision of the federal courts directly in point, the same view is indicated in Foster v. Hackley, 2 N. B. R. 406, (131* ;) In re Hussman, Id. 437, (140* ;) In re Muller & Brentano, 3 N. B. R. 86 : In re Dexter M. Briggs, Id. 157 ; and, as we think, in the 13th amended order in bankruptcy. The judgment must be modified by abating all except $101.72, with interest from December 23, 1873, and costs in the court below; the costs of this court to be taxed in favor of appellant.