Sedgwick v. Menck

NELSON, Circuit Justice. The filing of the creditors’ bills gave, according to the law of New York, a lien upon the assets of the debt- or, in behalf of the judgment creditors; and tlie receiver, representing their interests, has, it appears, been diligently engaged in endeavoring to reduce them to possession, and apply them to the payment of the judgments. It is difficult to see what right exists in the as-signee in bankruptcy to this property, thus devoted by the law to the payment of the debts of these judgment creditors, some ten years before anj- right attached in bankruptcy. The judgment creditors have been subjected to very considerable expense, already, in the litigation, and have succeeded, in the lower courts, in setting aside the assignment, as fraudulent, and thereby giving effect to their judgments against the property. Whether they will derive any benefit from the expense and trouble, must depend on the decision of the appellate court. It seems to me, that they are entitled to, at least, this chaDce, and that the bankrupt’s assignee is neither entitled to it himself, nor in a position to deprive them of it. The question involving the right to this property is in the state court, where it belongs, and the decision of that court will be conclusive upon the right. If it shall be in af-firmance of the judgment of the court below, the property will be applied to the satisfaction of the judgments, on the creditors’ bills. If it shall be in favor of the validity of the assignment, the property will take the direction given to it by the trusts created in the assignment. The right to this property attached long before the assignment in bankruptcy was made, and even before the passage of this bankruptcy law' [of 18G7 (14 Stat. 5171]. The motion to dissolve the injunction is granted.