Sage v. Wynkoop

WHEELER, District Judge. This cause has been heard on bill, answer, replication, proofs, motion of defendant to suppress evidence, and argument of counsel. The evidence sought to be suppressed, although most of it is in the nature of hearsay, as the motives of those communicating are in question, shows parts of the transaction involved, and for that purpose seems to be admissible. The motion is therefore overruled. From the pleadings and proof it satisfactorily appears that the bankrupt, of whom the defendant is assignee, was insolvent and known to be so by himself and by the agent and attorney of the orator having entire control of this business for the orator. That the bankrupt, who was a trader, by giving new notes signed by himself alone to the attorney of the orator to take up other notes of the same amount, secured by the signature and indorsement of other responsible parties toward whom they were both friendly, on which to be sued, and by procuring goods on credit of parties to whom his insolvency was unknown, in addition to his stock, that they might be taken on execution for this debt, procured, or at least suffered, his property to be seized on execution, if seizure there was, to give relief to those liable for the debt and interested to have it satisfied by him or out of his means. And that the agent and attorney of the orator had good reason to know that the new notes were given, and took them, and caused suit to be commenced upon them, for the like purpose of saving the other parties, or some of them for whom he was interested, harmless, without detriment to his client and principal or to himself, and caused the proceedings to be carried forward, knowing that if the plan should be successful other creditors would probably suffer. This was done by the bankrupt, being insolvent, with a view to give a preference to a person or persons under a liability for him, and done by the agent of the orator having reasonable-cause to believe the bankrupt was insolvent, and knowing that it was in fraud of the provisions of the bankrupt law, which is the same as if done by the orator himself, with the same cause to believe and with the same knowledge, and brings the case within both the letter and spirit of section 512S, Rev. St as amended by sections 10 and 11 of the act of June 23, 1S74 [18 Stat 180]. The orator having brought this suit to reach the avails of property of the bankrupt levied on by virtue of executions on judgments in these suits so brought, is not, on these findings, entitled to any decree in his favor. There is another ground, not urged in argument, however, on which it would seem that the defendant is entitled to a decree in his favor, at least so far as the first and larger judgment and execution are concerned. It is alleged in the bill, fol. 15, that the sheriff, by virtue of that execution, levied on the stock of goods of the bankrupt, and fols. 25 and 26, that he kept and retained possession of it. The levy, whatever it was, is admitted in the answer, foL 108, and as proved [149] before the master, fols. 635-6; but there is no admission or proof about keeping or retaining possession under the levy except the testimony of the deputy-sheriff who served the other execution, fols. 639-47, which shows that possession, if taken, was not kept, nor resumed under that execution until the night of June 3, 1S75, and that it was vacant so far as-the officer serving that execution, or any officer acting under it was concerned from before 11 o’clock until night of that day, during which time, at 2 o’clock p. m., the petition in bankruptcy of the bankrupt was filed. From the whole it seems most probable that there was a formal levy, as it is called, by going into the store on the 31st of May, but no seizure until the night of the 3d of June. However that was it is clear that any seizure that had been made had been relinquished, and after relinquishment it was the same as if it had never been made. Bradley v. Wyndham, 1 Wils. 44; 2 Term R. 596; Storm v. Woods, 11 Johns. 110, Fitch v. Rogers, 7 Vt. 403; Kellogg v. Griffin, 17 Johns. 274; Heard v. Fairbanks, 5 Metc. [Mass.] 111, 2 Add. Torts, § 907. [On appeal to the supreme court, the decree of this court was affirmed. 104 U. S. 319.] In this view neither the sheriff nor the orator had, at the time the petition in bankruptcy was filed, any greater right to the goods of the bankrupt than so far as they were bound by the common law by the teste of the writ of execution, left in force by the statute after delivery of the writ to the sheriff. The common law so bound the goods of the debtor that the sheriff might seize them in the hands of a purchaser from the debtor unless bought in market overt, but vested no property in them in the sheriff without seizure. Smallcomb v. Cross, 1 Ld. Raym. 251; Payne v. Drewe, 4 East, 523; Edwards v. Harben, 2 Term R. 587; Beals v. Guernsey, 8 Johns. 446; Bliss v. Ball, 9 Johns. 132; Westervelt v. Pinckney, 14 Wend. 123. The whole property in the goods remained in the debtor and passed by the assignment to the assignee. Rev. St. U. S. § 5044. This is in accordance with the rule under the English bankrupt acts. Bayly v. Buuning, 1 Lev. 173; Philips v. Thompson, 3 Lev. 69, 191; Mont. Liens, 83; Smallcomb v. Cross, 1 Ld. Raym. 251; Cole v. Davies, Id. 724. The right of the sheriff to seize the goods is quite similar to that of the landlord under the statute of Illinois to seize the goods of his tenant for rent, which is held not to vest any right in the goods against an as-signee in bankruptcy. Morgan v. Campbell, 22 Wall. [89 U. S.] 381. And it seems to have been on the ground that there was an actual seizure that the right of a landlord to hold the property of his tenant against the assignee has been upheld. Marshall v. Knox, 16 Wall. [83 U. S.] 551. It is not at all clear that the sheriff serving the other execution took and maintained any possession of the goods before the night of June 3d, and, if showing that he did would maintain the orator’s bill, it is quite doubtful on the evidence whether it would be made out. But whether it would be or not, he fails here on the other point. Let a decree be entered that the bill be dismissed with costs.