Ingraham v. Phillips

Ingraham v. Phillips. 1803. In the- Court below, George Phillips, Thompson Phillips, Ichabod Wetmore, and Richard Alsop, Plaintiffs; 3M„‘v thaniel G. Ingraham, Defendant, Aii attachment., under the attachment law of this State, creates a lien up-en the property attached* within the meaning* ofthe 63d section of the bankrupt act. Where a suit is commenced by attaching* the property oí the defendant, nnd the de-be ad ant after-vGirds commies an act of bankruptcy, and regularly obtains a cer-tiib.ale, ami (leads the same in bar of said suit, judgment w ill be rendered i'gainst the defendant, but execution wall issue against tile propérty attached only. Action of book debt, by writ of attachment, served upon the real and personal estate of the defendant, in September, 1794. At the December Term of the Superior Court, in Middlesex County, in 1801, a certificate under the bankrupt law of the United States, regularly obtained in New-York, on the 11th of August, 1801, was pleaded in bar. The commission issued on the 16th of February, 1801, and the act of bankruptcy was found, by the commissioners, to have been committed on the 20th of January preceding. To this plea there was a replication, reciting the 63d section, of the bankrupt law, in these words, “ And be it “ further enacted⅜. that nothing contained in this act shall 'x be taken or construed to invalidate or impair any lien, existing at the date of this act, upon the lands and chattels of any person, who may become a bankrupt and averring, that before the date of said act, the plaintiffs commenced their action, and attached various articles of personal property, and sundry pieces of land, belonging to the defendant, which had ever since i>een hoi-den to satisfy the judgment. To this replication there was a demurrer. The Court adjudged the replication sufficient, and gave judgment for the plaintiffs to the amount of their but ordered execution to issue against the pronertv ° 1 * attached only. The defendant brought a writ of error, assigning for cause the general error. Daggett and Homier, for the plaintiff in error. The judgment of the Court below proceeded on the ground, that the attachment of Ingraham's property constituted a lien within the construction of the act. The plaintiff in error contends, that this construction is unwarranted ; that the word lien has not been applied to attachment, by law writers ; and that this, from a survey and comparison of the various parts of the bankrupt law, could not be the meaning of the national legislature. In that bankrupt law, of which ours is nearly a transcript, and, undoubtedly, to be in like manner expound.:!, the word lien has long been definitely applied, ít has e-er been construed to extendió cases of contract, exprés... or implied; to mortgages, and pledges, which, by express contract, constitute a lien, or jus in re, et ad rere, to the rights off factors, packers, dyers, policy brokers, innkeepers, &c. in whose favour a contract is implied. These are the liens, that have been recognized under the English bankrupt law. And not an instance of a lien can be found, but the person claiming to have it, ha', the possession, and a right of property, in the thing. Hence, a lien, in Its unvarying legal use, has been considered as implying the possession, and,a right of possession. Eut an attachment gives the creditor neither posses* sion, nor the right of possession» He has, in a certain event, a priority. The effect, then, of an attachment is nota lien, but a priority. The word lien, being-contained in a national law, must receive an uniform construction throughout the United' States. But, in many of the States, attachments are Unknown. There the word lien must mean something else, or be without a meaning. Strange it is, that the law should make particular provision, i dative to attachments, in the 31st section; and* that, ior & proviso, we are to look at the 63d section! Again, it is very extraordinary, that if attachments are liens, no legal method has been designated, to render them efficacious. The Gist section, relative to attachments, is very unequivocal. It provides for die distribution of the bankrupt’s effects, that there shall be a proportionable payment, regarding the amount of each debt ; so that every creditor,. having' security for his debt, by judgment, statute, recognizance, or specialtij, or having an attachment under any of the laws of the individual States, or of the United States, on die estate of the bankrupt, (provided there be no execution executed) shall not be relieved upon any such judgment, statute, recognisance, specialty*, or attachment, ⅛ for more than a rateable part of his debt vriih the other creditors of the bankrupt,” It is here to be remarked, that attachments are put on a footing with judgments, statutes, recognizances, and specialties. By the laws of many, probably of most of the States, a judgment gives apriority. A statute has the same effect. The creditor by a recognizance, or specialty, has a right to full payment before the simple contract creditor. If the right of one is presumed, so it is of alL flier., in New-York, the judgment and specialty creditor may sweep away the whole estate of the bankrupt. No person ever indulged so absurd an idea. It has never been pretended, that the specialty creditor, or the creditor on statute or recognizance, had the right to hold exclusively of others....... It is also to be remarked, that the words are. unrestrained ; they look backwards as well as forwards. They relate to the very date of the act, and, of course; to the previous liens : “ That every creditor having seen* rity,” &c. “ shall, not be relieved,” i. e. have legal reme» dy, “ for more than a proportionable part,” Further, the construction, which is opposed to the lien of an attachment, is the more probable, because this lien is far from being universal in the States, and, in many, is thought to be unreasonable, and impolitic. At die same time, they have their liens by specialty, See, To suppose that the specialty lien is dissolved, and that die attachment lien remains, would be absurd. The doctrine of lien by attachment is opposed to otli* er parts of the act. By sect. 5th, the commissioners are to take into possession all the estate of the bankrupt, and inventory and appraise it. By sect. 6th, they are to transfer all to the assignee. By sect. 10th, the assignment is to be good, as against the bankrupt, ancl all persons claiming from him, by subsequent act. By sect, 12th, when proper ty is conveyed or assumed on condition to redeem, . they may redeem, and shall assign, for general benefit. By sect. 13th, they may assign all the debts. By sect. 29th, and 30th, a dividend is to be made among such as have proved their debts, and in proportion. Then tornes sect. 31st, providing for the distribution, in the clearest manner, and shewing that the property assigned, &c. was subject to attachment, and included the -whole of the bankrupt’s estate. And sect. 44th authorizes the sale of all the bankrupt’s estate at auction. Viewing these 'provisions together, it appears, indisputably, that the commissioners are to assign all the estate of the bankrupt, and are to distribute it proportionally, with this exception, that where there is a right of property, arising out of lien by conveyance or assurance, they shall redeem. It is worthy of remark, that the English act allows of no preference by judgment or attachment, But, admitting that the attachment was alien, still wc contend, that the suit was barred, and the plaintiffs below must resort to some other method of rendering their lien effective. If an attachment constitutes a lien on the property, and gives a preference, the commissioners, by sect. 12th, must pay the debt. If they do not, you may procure an order to sell the property, by application to the District fudge, who stands in the place of the Lord Chancellor in England, In Bro. Ch. Ca. 548, there is a standing order on this subject. The commissioners are to sell the property at auction ; to settle the account; to receive the surplus ; or, if there is a deficiency, to permit the creditor to prove pro tanto. The commissioners are to settle the whole. If the bankrupt obtains his certificate, it is a bar to all debts due and owing at the commission of the act of bankruptcy. It is unheard of, that after certificate you may proceed at cominor, law. Further, the statute, unequivocally, makes the certificate a bar. “ The bankrupt shall be discharged from all debts by him due and owing, or which might have been proved.” The cause ox' action is taken away in “ all possible cases" How, then, if the certificate is pleaded, can a judgment be rendered r The same section declares, that the defendant shall not further be “ impleaded” for, or on account of, an}' of said debts. It also provides, that the certificate shall be sufficient evidence, and a verdict shall pass for the defendant; unless there is proof of fraud or concealment. It is remarkable that this section has one exception, and two provisos, and nothing is said about attachments, or proceeding at law, in any case. Then, the cause of action is extinguished; the bankrupt shall not be impleaded ; verdict shall be given for him ; and this in. every possible case. . Final!}?, as the. right of action is taken away, so is the jurisdiction of the Court, as to any ulterior proceedingsr fivftght^ for the defendants in error. It appears from the record, that the attachment was prior to the date of the bankrupt law. The question, then, is simply this : Does a creditor, in Connecticut, by virtue of an attachment, acquire a lien upon the property of his debtor ? Lien is a right which one man has to hold the property of another, until the claim of the former is satisfied. The attachment law of this State authorizes a creditor to attach and hold the property of his debtor, to respond the judgment, which he shall of-tain in the action thus commenced. The first attachment gives a complete preference, which cannot be defeated by any subsequent act of the debtor, or of other creditors. If it be possible to frame a case exactly to meet the provisions of the 63d section of the bankrupt law, one would think this to be that case ; and no reasoning can illustrate, or enforce this point. The authorities cited do not apply, because in England they have no such attachment law, and, of course, no such lien. But, it is contended, that the certificate is a bar, and that, of course, no judgment can be rendered. The effect of the certificate is to discharge the bankrupt from all his debts, due at the date of the commission ; so that neither his person, nor his future acquisitions shall he liable therefore. This effect can be secured to the bankrupt, in the present case, on the principles for which we contend. The judgment is against tfie defendant ; but, as it appears by the pleadings, that he has received hb certificate, execution is ordered against the property taken, and holden by the attachment, and to be satisfied solely by that. Cooper 278. Cullen 207, 210, 1 Cook 454. Cullen 242, 3, &c. Cooper 180. Cooper 186, and 366. 5 Atk. 528 Cullen 383, 1 Cook 503, Sect. 84. [MAJORITY — BY the thou: Court,] BY the thou: Court, The judgment was affirm J*