Jones v. Horsey

Eccleston, J., delivered the opinion of this court. The counsel for the appellants contends, that the recommendation of O. Horsey, as the permanent trustee of Wiggins, even if the recommendation had been made by the plaintiffs in person, was not such a recognition of, or assent to, the proceedings in insolvency as could deprive them of ³¹² their right to attach the fund in controversy, they being foreign creditors. He assumes, “that nothing short of taking a dividend under the insolvent laws, can so bring a foreign creditor under the operation of such laws as to affect his debt.” In this we think he is certainly mistaken. He refers to Van Hook vs. Whitlock, 26 Wend., 43 .

McCarty vs. Gibson, 5 Grattan’s Rep., 307. Norton vs. Cook, 9 Conn. Rep., 314 , and Phillips vs. Allan, 8 Barn. and Cres., 477, as sustaining his view of the subject. But in neither of these cases was there an act on the part of the creditor which could be construed into an assent to the proceeding; on the contrary, in each case the creditor opposed the discharge of the applicant and did nothing else', so far as the reports inform us.

In Clay vs. Smith, 3 Peters’ R., 411, the creditor received a dividend of the insolvent’s assets, and that was held to be such an assent to the insolvent laws of the State, as amounted to an abandonment of the extra-territorial immunity of the foreign creditor. And this is a leading case, which has since been referred to in various decisions. But we have never understood it was supposed to establish the doctrine, that nothing less than the actual receipt of a portion of the assets could have a similar effect upon the creditor’s claim. The effect of an insolvent’s discharge being under consideration in Van Raugh vs. Van Arsdaln, 3 Caine’s Rep., 155, Chancellor Kent, in giving the decision of the court, declined expressing any opinion as to the operation of such a discharge, provided the case had been presented in either' of several enumerated aspects, among which are, “if the plaintiff had given his assent to the proceedings under the' insolvent law, or accepted any dividend of the defendant’s estate.” It is very true the learned chancellor does not here decide what would be the effect either of assenting to the proceedings or of taking a dividend; but it is equally true, he seems to consider these alternatives as standing upon equal grounds; and, at all events, we cannot believe he entertained the opinion, ³¹³ that receiving a portion of the estate was the only acquiescence in the proceedings which could take from a foreign claimant his rights, as such, in opposition to the discharge.

There is no necessity, however, to rely upon the inference to be drawn from this language of Chancellor Kent, for a decision of the present distinguished chief justice of the United States, in White, Warner f& Co., vs. Winn and Ross, establishes clearly, that the rights of a foreign creditor, in opposition to the discharge of an insolvent and in preference to the claims of domestic creditors, may be lost by other means than taking a dividend of the assets. This decision may be found in 8 Gill, 499 , and is also mentioned in 2 Md. Rep., 468 . In the case alluded to, an attempt was made in behalf of the plaintiffs, (who were foreign creditors,) in an attachment, laid in the hands of the trustees of an insolvent, to set aside a deed as fraudulent under the statute of 13 Eliz. In the progress of the cause the court were satisfied, that under the English statute, and independently of our insolvent laws, the deed was valid.

And the court put the plaintiffs in the predicament of being obliged to decide, whether they would submit to a non suit in consequence of the validity of the deed, if they intended to deny the validity of the proceedings in insolvency; or whether they would insist upon avoiding the deed under our insolvent laws. By adopting the latter alternative, they could claim under the permanent trustee such interest only as the insolvent laws would award them. So that they were forced to elect between a non suit or taking a dividend of the fund in the hands of the trustees. This, it will be seen, was not a proceeding in a State court, having jurisdiction over cases of insolvency, but in the circuit court of the United States.

And there the foreign creditors were held hound to submit to the effect and influence of our insolvent system, if they claimed the benefit of that system for the purpose of invalidating a deed, which otherwise would have defeated their entire claim, so* far, at least, as the property included in that deed was concerned. Voluntarily calling in aid the insolvent laws to avoid the deed otherwise ³¹⁴ valid, is then such an acquiescence in those laws as places a foreign creditor upon the same level with domestic creditors, and compels him to take a dividend of the assets as.they do. We see no just reason why voluntarily coming forward and uniting in the recommendation of a trustee, especially when that trustee is the attorney of the claimant, should not produce a-similar effect. Admitting this conclusion to be correct, the appellants' coünsel insists, that