Pirie v. Chi. Title & Tr. Co., 182 U.S. 438 (1901)
Case details
Citation
182 U.S. 438
Full caption
PIRIE v. CHICAGO TITLE AND TRUST COMPANY.
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Decided
May 27, 1901
PIRIE v. CHICAGO TITLE AND TRUST COMPANY.
APPEAL FROM THE CIRCUIT COURT OF APPEALS FOR THE SEVENTH
CIRCUIT.
No. 391. Argued January 18, 21, 1901. —Decided May 27,1901.
Frank Brothers were adjudged bankrupts in February, 1899. For a long time prior to that Pirie & Co. had dealt with them, selling them merchandise. Within four months prior to the adjudication of bankruptcy Pirie & Co. received from them $1336.79, leaving a balance still due and unpaid of $3093.98. When this payment was made Frank Brothers were hopelessly insolvent to the knowledge of Frank Brothers, but Pirie & Co. and their agents had no knowledge of it, and had no reasonable cause to believe that the bankrupts, by such payment intended to give a preference, nor did they intend to do so. Pirie & Co. proved their claim against the estate, and received a dividend thereon, which they still hold. The provisions in the Bankrupt Act of July 1,1898, c. 541, § 60, that “a person shall be deemed to have given a preference if, being insolvent, he has. procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of his debt than any other of such creditors, of the same class,” means that a transfer of property includes the giving or conveying anything of value, anyt mg which has debt paying or debt securing power; and money is property. If the person receiving such preference did not have cause to believe tha it was intended, he may keep the property transferred, but, if it be on y a partial discharge of his debt cannot prove the balance.
When the purpose of a prior law is continued, its words usually are, an an omission of the words imply an omission of the purpose.
The object of a bankrupt act is, so far as creditors are concerned, to secar equality of distribution, among all, of the property of the bankrup • Subdivision c of section 60 of the bankrupt act is applicable to t e arising under subdivision b, and allows a set-off, which might no otherwise allowed.
In proceedings in bankruptcy in the matter of Frank Broth ers, bankrupts, in the District Court for the Northern s nc^ of Illinois, the appellants filed a claim for goods, wares an merchandise, sold and delivered to said bankrupt firm or sum of $3093.98. The claim was allowed, and subsequen y dividend of fifteen per cent was paid thereon.
On the 31st of August, 1899, the appellee, the Chicago Title and Trust Company, filed a petition for a reconsideration of the claim and its rejection on the ground that Carson, Pirie, Scott & Company had within four months prior to the filing of the petition in bankruptcy received from the bankrupts large sums of money as preferences, which preferences had not been surrendered. The recovery of the dividend paid was also prayed for.
To the petition, Carson, Pirie, Scott & Company made the following answer:
“ They admit that they have collected in the usual and ordinary course of their business, from said bankrupts, Frank Brothers, within four (4) months prior to the filing of the petition in bankruptcy, the sum of one thousand three hundred and thirty-six and dollars ($1336.79).
“Further answering, Carson, Pirie, Scott & Company say, that they did not know, or have reason to believe, that the said Frank Brothers were insolvent at the time the payments were made, nor did they have reasonable cause to believe that such payments were made with any intent to give them a preference, nor did said Frank Brothers intend the payments so made to be preferences.”
The matter came up before Frank L. Wean, referee, and he substantially found the facts, from the stipulation of the parties, as ereinafter stated in the findings of the Circuit Court of Appeals, and that the payments constituted a preference. He ad-Ju ged therefore that the claim be reconsidered and rejected, nn the dividend paid thereon be given up. On review the istnct Court also found the facts as the referee found them,
an on the 9th of May, 1900, made and entered an order, the conclusion of which was as follows: nf ^lere^ore ordered, adjudged and decreed that said claim anj3,1]! arson’ Scott & Company, heretofore filed herein fallowed, should be reconsidered.
ho r Carson, Pirie, Scott & Company should
«rejected and expunged. That said Carson, Pirie, Scott & Company forthwith pay p. 440to the trustee herein the amount of the dividend heretofore paid to them by the trustee herein, to wit, the sum of $464.10.”
Carson & Company excepted, and subsequently took an appeal to the Circuit Court of Appeals, which court affirmed the order of the District Court, upon its opinion in Columbus Electric Co. v. Worden, Trustee, In re Fort Wayne Electric Corporation, 99 Fed. Rep. 400. The case was then brought here.
The findings and facts and conclusions of law of the Circuit Court of Appeals are as follows:
“ First. That on February 11, 1899, August Frank, Joseph Frank and Louis Frank, trading as Frank Brothers, were duly adjudged bankrupts.
“ Second. That for a long time prior thereto appellants carried on dealings with the said bankrupt firm—said dealings consisting of a sale by said appellants to said Frank Brothers of goods, wares and merchandise amounting to the total sum of $4403.77.
“ Third. That said appellants in the regular and ordinary course of business, and within four months prior to the adjudication in bankruptcy herein, did collect and receive from said bankrupts as partial payment of said account for such goods, wares and merchandise so sold and delivered to said Frank Brothers, the sum of $1336.79, leaving a balance due, owing and unpaid, amounting to $3093.98.
“ Fourth. That at the time this payment was made said Frank Brothers were wholly and hopelessly insolvent to the knowledge of said Frank Brothers, and that when said payments were made and at the time of the adjudication in bankruptcy of t e bankrupts herein, the assets of said bankrupts did not exce the sum of $125,000, while their liabilities exceeded $500,0 •
“ Fifth. That at the time of the payment above neither said appellants nor any of their agents had know e ge of the insolvency of said Frank Brothers, or had reasona e cause to believe that said Frank Brothers were insolvent, an that when said payment was made said appellants did not axe reasonable cause to believe that said bankrupts by sai ment intended thereby to give a preference. Nor did sai an rupts by said payments intend thereby to give a preference.
“ Sixth. That at or about the time of the first meeting of the creditors herein, to wit, on March 17,1899, said appellants duly filed a claim herein against said bankrupts’ estate for their balance of said claim for goods, wares and merchandise sold by them to the bankrupts, as aforesaid—said balance amounting to the sum of $3093.98, and that at or about the time of the said first meeting of creditors herein said claim was duly allowed at the sum last above set forth ; that thereafter, and on the 28th day of April, 1899, a dividend of 15 per cent upon all claims which were allowed against said bankrupts’ estate was duly declared by the referee herein, and that said dividend was paid to the various creditors who had proved their claims, including appellants’; that the amount of the dividend paid to appellants was $404.10, which money appellants still retain, no part thereof having been repaid or returned to the trustee herein or anybody acting on behalf of said trustee.
“ Seventh. That at the time of the allowance of said claim and the declaration of said dividend and the payment thereof, the trustee was not aware of the fact that said appellants had received any preference on their claim and demand against said bankrupts.
Eighth. That said appellants have refused to surrender to t e trustee the amount of the payment made to them by said ankrupts above set forth as a condition of the allowance of eir said claim, and have by their counsel declared that it is e intention of said claimants to retain the full amount of said payment so made to them by said bankrupts, and not to surrender the same.
Ninth. That the appellee, Chicago Title and Trust Comany, trustee, which had been duly appointed trustee of the i^111 rupf estate of said Frank Brothers, filed its petition pray-
& at the claim of appellants against the bankrupts’ estate derpdC°nT C'red and rejected’ aud sa^d appellants be ordivid &d re9u^red to repay to the trustee the amount of the ground T Sa^. theretofore paid to appellants, the four mS ° ,said.Potion being that said appellants had within bankru0^ § ^ie adjudication in bankruptcy of said
P s received large sums of money as preferences, which p. 442preferences said appellants had not surrendered; that said appellants appeared in said proceedings and answered said petition.
“ That the referee upon the evidence presented before him decided that the said payment made by the bankrupts to said appellants constituted a preference, and that by reason of said preferences the appellants’ claim should be reconsidered and rejected, and that appellants should repay to appellee the amount of the dividend on appellants’ said claim theretofore paid by appellee to them, the sum of $464.10; that upon appellants’ application and upon the certification of the questions presented to the United States District Court for the Northern District of Illinois, the decree of the referee was confirmed, and an order in the District Court was entered in accordance with the referee’s said report, from which order an appeal was taken to this court.
“ Upon the foregoing facts this court makes the following conclusions of law:
“ First. That the payment made by appellants to the bankrupts at the time and in the manner above shown constitutes a preference, and that by reason of the failure and refusal of said appellants to surrender said preferences they were not entitled to prove their claim against the bankrupts’ estate.
“ Second. That the District Court had the power and authority to order, require and compel appellants to repay to the trustee the amount of the dividend received by appellants.
Mr. Henry Ach and Mr. A. J. Pflaum for appellants, din George Packard, Mr. Joseph M. Rothschild, and Mr. S. Levinson were on their brief.
Mr. Eli R. Felsenthal and Mr. Herman Frank for appellee-
Mr . Just ic e Mc Ken na , after stating the case as above, de v ered the opinion of the court.
The question presented by this record is whether payments^ money made by an insolvent debtor to a creditor, the intending to give a preference, and the creditor not having r p. 443sonable cause to believe a preference was intended, did nevertheless constitute a preference within the meaning of the bankrupt act of 1898, and were required to be surrendered as a condition of proving the balance of the debt or other claims of the creditor.
The solution of the question depends primarily upon the intrepretation of subdivisions “ a ” and “ 5,” section 60, of the law of July 1,1898, c. 541, and certain related sections. Subdivision “ a ” of section 60 is as follows,:
“ Preferred Creditors.—a. A person shall be deemed to have given a preference if, being insolvent, he has procured or suffered a judgment to be entered against himself in favor of any person, or made a transfer of any of his property, and the effect of the enforcement of such judgment or transfer will be to enable any one of his creditors to obtain a greater percentage of is debt than any other of such creditors of the same class.”
It will be observed that payments in money are not expressly mentioned. Transfers of property are, and one of the contentions of appellants is that by “ transfers of property,” payments in money are not intended. The contention is easily disposed - , It is answered by the definitions contained in section 1. is there provided that “1 transfer ’ shall include the sale and every other and different mode of disposing of or parting with property or the possession of property, absolute or conditional, as a payment, pledge, mortgage, gift or security.” It seems ecessanly to mean that a transfer of property includes the
or conveying anything of value—anything which has debt paying or debt securing power. oth 6 are n°^ Unaware that a distinction between money and in th Pr°Perty sometimes made, but it would be anomalous obliffat,eX^reine a statute which is concerned with the itors atr°nS dobtors and the prevention of preferences to crednrpf<L 6 readiest an^ most potent instrumentality to give a ertv wh°iKS °U^ i)ave been omitted. Money is certainly prop-It mav h ei*We re®arCi an-' its forms or any of its theories, itself o.«-6 comPose<i °f a precious metal, and hence valuable of which . ttle or no addition of value from the attributes ve i its ready exchangeability and currency. And its p. 444other forms are immediately convertible into the same precious metal, and even without such conversion have, at times, even greater commercial efficacy than it. It would be very strange indeed if such forms of property, with all their sanctions and powers, should be excluded from the statute, and the representatives of private debts which we denominate by the general term “ securities ” should be included. We certainly cannot so declare upon one meaning of the word “ transfer.” If the word itself permitted such declaration, which we do not admit, the definition in the statute forbids it. “ Transfer ” is defined to be not only the sale of property, but “ every other mode of disposing or parting with property.” All technicality and narrowness of meaning is precluded. The word is used in its most comprehensive sense, and is intended to include every means and manner by which property can pass from the ownership and possession of another, and by which the result forbidden by the statute may be accomplished—a preference enabling a creditor “ to obtain a greater percentage of his debt than any other creditors of the same class.”
But it is said “ that Congress in passing the law had in min the distinction between the payments of money and the transferring of property; otherwise they indulged in tautology in subdivision (d). By that it is provided: “ If a debtor sha , directly or indirectly, in contemplation of the filing of a petition by or against him, pay money or transftr property to an attor ney and counsellor at law, solicitor in equity, or proctor in a miralty, for services to be rendered, the transaction shall e re examined by the court on petition of the trustee or any ere itor, and shall only be held valid to the extent of a reasonable amoun to be determined by the court, and the excess may be recovere by the trustee for the benefit of the estate.”
That all the words of a statute should, if possible, e giv^ effect we concede, but tautology sometimes occurs. Is t ere an example in subdivision (e) of section 67 (which, by t e and notwithstanding, is relied on by the appellants) vides that “all conveyances, transfers, assignments, or brances of his property, or any part thereof, made or g1' a person adjudged a bankrupt,” in fraud of creditors, s null and void as to them.
Manifest tautology, but certainly not used to detract from the definition of “ transfer ” in section 1, or to exclude application of that section in proper cases. Conveyances, assignments and incumbrances of property are but modes of its absolute or conditional disposition (transfer), as payment of money is a mode of its disposition (transfer), and there was a particular expression of each mode on account of the primary purpose to be secured in each case—the purpose being, in 60 (<7), to control payments to attorneys; in 67 (<?), the purpose being to prohibit the disposition of property by the debtor to persons other than creditors in fraud of the act.
But, construing transfers of property to include payments of money, it is nevertheless urged, that not only must the act and state of mind of the giving debtor be considered, but the act and state of mind of the receiving creditor must be considered. It is not enough that an advantage in fact be given, but to make it a preference “ the person receiving it or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended, thereby to give a preference. In other words, it is contended that the quoted words s ould be read into subdivision (a) from subdivision (6), and the necessity of doing so is claimed to be established by other sec-ions of the statute. The other sections are inserted in the margin.1
eivp^o' a cred’lor bas been preferred, and afterwards in good faith whirl 6 t°r fur^er credit without security of any kind for property rpm»1 ,ecomes a Part°f the debtor’s estate, the amount of such new credit setoff UnPa*d a^ the time of the adjudication in bankruptcy may be
Sec amount which would otherwise be recoverable from him. consist of V SK°f BankruPtcy-—Acts of bankruptcy by a person shall permittpa <-1 v. avin£> G) conveyed, transferred, concealed, or removed, or to hinder a i ° COnceaded or removed, any part of his property with intent while ins’ 1 defraud his creditors, or any of them; or (2) transferred, with intonJp11 ’ Porti°n of his property to one or more of his creditors
Sec 3 6 a ° suck creditors over his other creditors. who ha« Petition may be filed against a person who is insolvent and commissinn m#ni \ aU aC^ bankruptcy within four months after the after (11 th« <a fUC. ®uck hime shall not expire until four months ment when th^n ? ® recording or registering of the transfer or assign-
c consists in having made a transfer of any of his property
Section 60 (J) is as follows:
“ If a bankrupt shall have given a preference within four months before the filing of a petition, or after the filing of the petition and before the adjudication, and the person receiving it, or to be benefited thereby, or his agent acting therein, shall have had reasonable cause to believe that it was intended thereby to give a preference, it shall be voidable by the trustee, and he may recover the property or its value from such person.”
Subdivisions (a) and (&) are concerned with a preference given by a debtor to his creditor. Subdivision (a) defines what shall constitute it, and subdivision (6) states a consequence of it—gives a remedy against it. The former defines it to be a transfer of property which will enable him to whom the transfer is made to obtain a greater percentage of his debt than other creditors. The latter provides a consequence to be that the transfer may be avoided by the trustee and the property or its value recovered, provided, however, that the preference was given four months before the filing of the petition in bankruptcy or before the adjudication, and the creditor had reason to believe a preference was intended. So far, so clear. If the con-
with intent to hinder, delay or defraud his creditors or for the purpose of giving a preference as hereinbefore provided, or a general assignment foi the benefit of his creditors, if by law such recording or registering is ie quired or permitted, or if it is not, from the date when the beneficiary notorious, exclusive, or continuous possession of the property un ess petitioning creditors have received actual notice of such transfer or assign ment. .
Seo . 67 d. Liens given or accepted in good faith and not in contenip tion of or in fraud upon this act, and for a present consideration, w have been recorded according to law, if record thereof was necessa y order to impart notice, shall not be affected by this act.
Sec . 68. Set-offs and Counter Claims.—a. In all cases of mutua e mutual credits between the estate of a bankrupt and a creditor t ie a shall be stated, and one debt shall be set-off against the other, an ance only shall be allowed or paid. debtor
b. A set-off or counter claim shall not be allowed in favor o an^ waS of the bankrupt which (1) is not provable against the estate, purchased by or transferred to him after the filing of the petition,. o four months before such filing, with a view to such use an wi edge or notice that such bankrupt was insolvent, or had commi of bankruptcy.
ditioiis mentioned exist, the preference may be avoided. But if the person receiving the preference did not have cause to believe it was intended, what then ? It follows that the condition being absent, its effect will be absent. In other words, he may keep the property transferred to him, whether it be a complete or partial discharge of his debt. But if only a partial discharge, may he prove the balance of his debt or other debts ?
Section 57 (<?) provides for such case. “ The claims of creditors,” it provides, “ who have received preferences shall not be allowed unless such creditors have surrendered their preferences.”
There is certainly no ambiguity so far. What a preference is, is plain. What the effect of it is, if taken under the conditions mentioned, is equally plain. So taken, it may be recovered back. If not so taken, it may be kept or surrendered. Unless surrendered, he who received it cannot prove his debt or other debts. His election is between keeping the preference and surrendering it. That is the favor of the law to his innocence, but, aiming to secure equality between him and other creditors, can the law indulge farther ? He may have been paid something—maybe a greater percentage than other creditors can be. That is his advantage, and he may keep it. If paid a less percentage he can obtain as much as other creditors y surrendering the payment, and an equality of distribution ® t e assets of the bankrupt is assured. The effect is equitae, and that it was intended is supported by prior legislation.
e bankrupt act of 1867 had provisions against preferences, ecs. 23 and 35; secs. 5084 and 5128, Rev. Stat. They could recovered and had to be surrendered to enable the creditor prove his debt, but the law was careful to express upon what cred’f101^11 ea°k case’ They could be recovered back if the solv1 7 ad <reasonaUle cause to believe” the debtor was in-act ”D were given “ in fraud of the provisions of the recei Rev. Stat. They had to be surrendered if vided th Un{fer condition. Section 5084, Rev. Stat., proferenc Person • • • has accepted any preor qiv reasona^e cause to believe that the same was made y the debtor contrary to any provision of the act, p. 448March 2, 1867, chap. 176, . . . shall not prove the debt or claim on account of which the preference is given, nor shall he receive any dividend therefrom until he shall first surrender to the assignee the property, money, benefit or advantage received by him under such preference.”
The words in italics are omitted from the act of 1898. Was the omission without purpose ? The omission of a condition is certainly not the same thing as the expression of a condition. Was it left out in words to be put back by construction ? Taken from the certainty given by prior use and prior decisions and committed to doubt and controversy ? There is a presumption . against it. When the purpose of a prior law is continued usually its words are, and an omission of the words implied an omission of the purpose. This rule we lately applied in Bardes v. First National Bank of Hawarden, 178 U. S. 524. In that case, in determining whether the jurisdiction of the Circuit and District Courts of the United States was concurrent with the state courts in certain suits at law and equity between the assignee in bankruptcy and the adverse claimant of property of the bankrupt, the statutes of 1841 and 1867 were compared with that of 1898, and from the omission from the latter of certain provisions of the former statutes it was decided that such jurisdiction did not exist. It was said by the court, speaking by Mr. Justice Gray: “ We find it impossible to infer that when Congress, in framing the act of 1898, entirely omitted any simi lar provision, and substituted the restricted provisions of section 23, it intended that either of those courts should retain t e jurisdiction which it had under the obsolete provision o e earlier acts.” ,.
We might rest the discussion here, but counsel have a y urged against our interpretation of the statute considera io . which should be noticed. They assert its incorrectness e^aU® (1) That the provisions of 57 (ffi) which deny allowance o claims of creditors unless such creditors surrender t e ences they have received, are penal and should be stric strued. Being penal, it is contended, there should a g intent to incur their punishment. (2) Of the defective 60 (a) and the necessity of explaining it and enlarging p. 449other provisions. (3) Of the consequences of the construction—consequences which are declared to be anamolous and even absurd.
1. We cannot concur in the view that 57 (y) is a penal requirement. It is hardly necessary to assert that the object of a bankrupt act, so far as creditors are concerned, is to secure equality of distribution among them of the property of the bankrupt—not among some of the creditors, but among all of them. Such object could not be secured if there were no provisions against preferences—no provisions for defeating their purpose. And it is no reflection on the statute that it does not do so entirely. It allows complete payments, and counsel has seen and urges what seems to be inequitable in that—the giving favor to the diligence which secured it, and strongly argues that if complete payments may be retained without penalty, why not partial payments; if diligence (and diligence is made a great deal of in the argument) is favored in the one case, why not in the other ? The view is too narrow and partial. Comparing such creditors, there may be inequality, but, considering other creditors, what shall be said ? Some thought must be had of them, and considering them—indulgent creditors as well
as diligent creditors—an attempt to secure the best remedies and results in the circumstances was, no doubt, the aim of the egislature. An advantage may be left with the preferred creditor. As we have already said, if the preference exceed 6 share of the bankrupt’s estate which the creditor would be entitled to, he may keep the preference. If it be less, he may surrender it and share equally with the other creditors. If the purposes of the statute are to be considered, this is certainly uo punishment but benefit. If it is discrimination at all, it is rimination against the other creditors. to "thUDd0Ubtedly actions of the act must be construed
ar^61 means e^eet its purpose, and some of its sections tio ° h86y re^a^e^' d°es n°t follow, however, that each secclTS °a d no^ given the meaning its language conveys, if of an . cons^stent. It does not follow that because the terms prov,S^C 10n are ^e^ne(^ elsewhere, or the consequences of its isions are expressed elsewhere, it becomes a nullity or is vol . clxx xii —29 p. 450defective. Not that we may not “ travel outside,” to use counsel’s expression, of any section if it be necessary to travel outside. We may travel outside for some things, not necessarily for all things. The argument is, you must travel outside of subdivision (a) for a time within which the preference must have been given, and four months are selected in analogy to subdivision (J) and of section 3 (5). This may be conceded, and the meaning of subdivision (a) would not be otherwise altered. There would still remain a clear definition of a preference.
The argument is strong which is urged to support a four months’ limitation, but it can be argued in opposition that subdivision (a) needs no explanation from other parts of the statute ‘‘ in order to obtain a time limit on the question of preference.” It can be argued that subdivision (a) gives such limit in the existence of insolvency. But we are not required to decide either way on this record. A time limit is entirely independent of the belief of the creditor or of the belief which may be attributed to him—entirely independent of his right to a greater proportion of the bankrupt’s property than other creditors. It is urged, however, that a time limit—whether of four months or extending indefinitely before the filing of the petition in bankruptcy having no limit but the statute of limitations —differently affects the creditor receiving the preference, an the difference should be considered in construing the statute. It is pointed out that insolvency has a different meaning un er the act of 1898 than it had under the act of 1867. Under t e latter, the debtor was insolvent when he was unable to pay 1S debts in the ordinary course of business. Under the former, when the aggregate of his property at a fair valuation is msu ficient to pay his debts, and, it is said, this being practica yim possible to ascertain on account of the uncertainty o tors, therefore a time limit to a preference is necessary, a also that there should be a guilty knowledge on the Pal^ ° creditor of the guilty intent upon the part of the debtor. are two weaknesses in the argument. It ascribes a pena o acter to section 57 (</), and regards the requirement o t e & render of the preference as a condition of proving e p. 451punishment and not a provision to secure equality among creditors. On this we have sufficiently commented. The other weakness in the argument is that it exaggerates the difference between the definitions of insolvency and overlooks an advantage to the creditor in the definition contained in the act of 1898. Inability to pay debts in the ordinary course of business usually accompanies an insufficiency of assets. It may not, of course. At times a debtor’s property, though amply sufficient in value to discharge all his obligations, may not be convertible without sacrifice into that form by which payments may be made. The law regards that possibility. In this there is indulgence to the debtor, and through him to preferred creditors. But the discussion need not be extended. The law has made its definition of insolvency, whatever the effect may be, and has determined by that definition consequences not only to t e debtor but to his creditors and to purchasers of his prop-
It is but one rule of construction that the consequences of a statute may be considered in construing its meaning. The ru e may be counterpoised by other rules; it may be prevailed M °ne wb*cb requires intent of the statute to be a^ d'^°r i*1 it8 word®’ Where they are clear and involve no sur ity, they are its only expositors. It is not contended that e provisions which we are considering are not clearly exit r ade^ua^e c°nvey a definite meaning. It is true, ticin^6 word preference imports the conscious par-cam^t011 th? creditor and debtor in the same intent. We queue C°„nc1ui ^t view, and we are brought to the conse-It ic ° t e construction which we have put upon section 60. absuffiTT^ absurd by appellants. What is the test of to mak " ' • e contradiction of reason, it may be said, and tion ofT lmmed^ate application to legislation, the contradiclegislatinn reaS01J which grows out of the subject matter of the don is notai1' ^ur?ose ^e legislators. But all legislatrolled pv s1.1?!3® .nor consequences obvious or to be contion at all •? V^ous" Whether there should be any legisla-Its coTi<pn.an 1 S Gxtent and form may be matters of dispute, ences may be viewed with favor or with alarm; p. 452some regretted but accepted as inevitable—accepted as the shadow side of the good. In such situation it is for the legislature to determine, and it is very certain that the judiciary should not refuse to execute that determination from its view of some consequence which (to use the thought and nearly the words of Chief Justice Marshall) may have been contemplated and appreciated when the act was passed, and considered as overbalanced by the particular advantages the act was calculated to produce. United States v. Fisher, 2 Cranch, 358, 389. Therefore the sound rule expressed in Sturgis v. Crowninshield, 4 Wheat. 202: “ It would be dangerous in the extreme, to infer from extrinsic circumstances, that a case for which the words of an instrument expressly provide, shall be exempted from its operation. Where words conflict with each other, where the different clauses of an instrument bear upon each other, and would be inconsistent unless the natural and common import of words be varied, construction becomes necessary, and a departure from the obvious meaning of words is justifiable. But, if in any case, the plain meaning of a provision, not contradicted by any other provision in the same instrument, is to be disregarded, because we believe the framers of that instrument coul not intend what they say, it must be one in which the absur ity and injustice of applying the provision to the case, would be so monstrous that all mankind would, without hesitation, unite m rejecting the application.”
So in United States v. Goldenberg, 168 U. S. 95,103, w ere Mr. Justice Brewer, answering the argument based on the con sequences of an act of Congress against the meaning express by its words, said: .
“No mere omission, no mere failure to provide for con i gencies, which it may seem wise to have specifically provi for, justify any judicial addition to the language of the s « In the case at bar the omission to make specific provision the time of payment does not offend the moral sense, Trinity Church v. United States, 143 IT. S. 457; it ? injustice, oppression or absurdity, United States V- 4 > 0 Wall. 482; McKee v. United States, 164 IT. S. 287; tb®r®game overwhelming necessity for applying in the one clause p. 453limitation of time which is provided in the other. Non constat but that Congress believed it had sufficiently provided for payment by other legislation in reference to retaining possession until payment or security therefor ; or that it failed to appreciate the advantages which counsel insists will enure to the importer in case payment does not equally with protest follow within ten days from the action of the collector ; or that, appreciating fully those advantages, it was not unwilling that he should enjoy them.”
Let us apply these principles to the present case. The consequences of the construction of the Circuit Court of Appeals is said to be that it will “ harass and embarrass the business of the country,” and the specification is that any payment to a creditor may become a preference and the alternative forced upon him of giving it up or losing the right to prove his claim or claims against his debtor’s estate. That consequence does not seem to us very formidable even in the instance of payments to private bankers by their depositors as illustrated by counsel or, as also illustrated if the payments should be distributed as gifts to relatives, or to endow universities, and cannot be obtained to be surrendered. Granting that such situation may be produced, is it anything after all but putting the creditor to an election of comparative and debatable courses where some loss must occur, w ichever be taken ? Business life has many such examples, and a law which has that consequence in seeking equality among creditors is certainly not absurd in even the loosest and most inconsiderate meanings of the word. Other illustrations are use which present the same situation or depend upon it—that 1S’ 6 e^eC^on ^ich a preferred creditor is forced to make in 2 Pr°ve (^ebts. A trader is insolvent and owes P t His assets are $75,000. He owes $50,000 to A and j e other $50,000 to other letters of the alphabet. He a es payments to the latter in order to prefer them, and then oes into bankruptcy. A and B having nonpreferred, hence Co°Va 1e,c^ajms’ e^e°b a trustee. What of the other creditors ?
unse aving full control of the imaginary situation makes to debtor’s affairs, and therefore unwilling
18 a ivision with A and B. That it is possible for such p. 454ignorance and doubt to exist may be conceded, but it does not occur to us how either can reasonably continue for the time debts may be proved against the estate under the disclosures required of the bankrupt by the statute, and the information obtained by the trustee of the estate in its administration.
But is said a debtor may even make money by going into voluntary bankruptcy, and the result is worked out by circumstances carefully imagined to that end, combined with, as absolutely necessary to the result, the ignorance and timidity of creditors. The illustration is that, suppose a bankrupt has made partial payments to every one of his creditors within four months preceding bankruptcy; that his assets at the time of the filing of the petition amounted to $50,000, and his liabilities to $100,000. Hesitating in this extraordinary situation to surrender their payments—no creditor being tempted by $50,000—the conclusion is confidently advanced that “if the construction of the court below is sound, there are no creditors who have provable claims against the bankrupt.” And the query is put, who gets the $50,000 ? The implied answer is, that the bankrupt gets themj and the result is easily pronounced absurd. It is an absurdity which the “construction of the court below ” is not responsible for. What a court would do with such a scheme as a fraud upon the act, we are notcalle upon to say. We may well doubt if a scheme of that kind w ever come up for decision. We find it impossible to conceive a case in which $50,000, or, indeed, any surplus, would not e an inducement to some creditor to add it, or some portion o i, to the payment of his claim. ,
It is further contended “ that to constitute a preference un er the bankruptcy act within either 57 (y) or 60 («), at leas intent on the part of the bankrupt to pref&r must be presen . In support of this it is said that an act of bankruptcy consisi under section 3 (2) of a transfer by a debtor while inso ven any portion of his property to one or more of his creditors, intent to prefer such creditors over other creditors, an in a case a petition in involuntary insolvency may be file a^a him. Section 3 b. It is hence deduced, reading those ProV1^ with section 60 (a), that preferences under the latter mu p. 455taken with the intent declared in the former, because it is not reasonable to assume that Congress intended that there could be preferences which were not acts of bankruptcy. The claim overlooks the fact that the language of section 3 (2) implies a difference between a preference and the intent with which it is given, and besides confounds the different purposes of the sections and their different conditions. It was for Congress to decide whether the consequences to a debtor of being forced into bankruptcy so far transcended the consequences to a creditor by a surrender of his preference, as to make the former depend upon an intent to offend the provision of the statute and the latter not so depend. And we see nothing unreasonable in the distinction or purpose. Nor does the contention of appellants find support in the provisions of the act of 1867, and the cases of Mays v. Fritton, 20 Wall. 414, and Wilson v. City Bank, 17 Wall. 473. In that act there was a careful expression of the intent of the debtor (section 5021, Rev. Stat.) and as careful an expression of the state of mind of the preferred creditor. Secs. 5084, 5128.
Nor again do we find anything which militates against our conclusion in subdivision “ c ” of section 60. That subdivision is applicable to the cases arising under “ 6,” and allows a set-off which otherwise might not be allowed.
The interpretation of the statute which we have given has so been given by the Circuit Court of Appeals of the Ninth ircuit, in a well considered opinion by Circuit Judge Morrow,
. m the matter of Fixen, Bankrupt, 102 Fed. Rep. 295.
he second assignment of error is that the court erred in com-Pe ing the appellants to repay the amount of dividends received y t em. Error is asserted because of the provision of subdi-
vision J Of section 23. The whole section is as follows:
IT 4 UPS^^011 the United States and state Courts.—a. The ni e States Circuit Courts shall have jurisdiction of all controinb168an^ e<^U'^T’ as distinguished from proceedings co an yuPtcy’ between trustees as such and adverse claimants, theCerDlng proPerty aeQnired or claimed by the trustees, in same manner and to the same extent only as though p. 456bankruptcy proceedings had not been instituted and such controversies had been between the bankrupts and such adverse claimants.
“ b. Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt, whose estate is being administered by such trustee, might have brought or prosecuted them if proceedings in bankruptcy had not been instituted unless by consent of the proposed defendant.
“ c. The United States courts shall have concurrent jurisdiction with the courts of bankruptcy, within their respective territorial limits, of the offences enumerated in this act.”
The proceedings we are reviewing were not a suit within the meaning of that section, and the order of the court requiring the repayment of the dividend was properly and legally made.
Judgment affirmed.
The Chi ef Just ic e , Mr. Justice Shi ra s , Mr. Justice Whi te and Mr. Justice Peck ham dissented.
UNITED STATES ex rel. QUEEN v. MNW-
ORIGINAL.---- PETITION FOR MANDAMUS.
No. 17. Original. Argued February 25,1901.—Decided May 27,1901.
Under the circumstances set forth in its opinion this court thinks that the rule respecting appeals to the Court of Appeals of the District o o umbia must receive the interpretation here which was given to it y Court of Appeals.
Upon filing the petition for mandamus a rule was issued and
served. The respondents have replied thereto. The ques ion presented is the interpretation of a rule of the Court of PPea of the District of Columbia hereinafter set out.
The case of petitioners as presented by their petition is su stantially as follows: Marcella Jarboe, a widow, died wi o issue in the District of Columbia, on the 28th day o ar ’ p. 4571899, aged 88 years. The petitioners were her heirs at law. After her death a paper writing, purporting to be her will, dated February 24, 1892, and two other paper writings purporting to be codicils, dated respectively October 20, 1892, and February 15, 1898, were offered for probate by William Myer Lewin, executor, in the Supreme Court of the District of Columbia, holding a special term for orphans’ court business, as her last will and testament.
The relators filed caveats to the probate of the will traversing the due execution of the papers as a will and alleging incapacity, undue influence and fraud. Upon the issue thus formed testimony was taken, and at its close the court instructed the jury to render a verdict for the will and codicils. Exception was duly made, and subsequently, on May 10, 1900, a motion for new trial was made and overruled, and an order was passed admitting the will and codicils to probate and directing letters testamentary to issue., An appeal was allowed to the Court of Appeals of the District, and a bond fixed for costs, not to operate as a supersedeas. The bond was duly approved, and filed May 17,1900.
On July 2,1900, the trial justice extended the time for filing e transcript forty days from the expiration of the time then anted. The transcript, however, was not filed within the ex-en ed time, and Mr. Justice Cole again extended it to Octo-
ber 15,1900.
The transcript was filed October 9, 1900, but not until after ppe ees had given notice of a motion to docket and dismiss ? e ru^e> When the motion came on to be heard it was suhst’f0^’an<^ ^eave the court a motion to dismiss was diem* Uj I* vvas granted October 19, 1900, and the appeal
• S.Se W^h °osts. This petition was then filed. The rule, u erPretati°n of which is involved, is as follows : ceivM h J? the records and transcripts of which shall be re-the te y 1 clerk of this court before the last twenty days of but S a i i)e considered for trial in the course of that term; in whinh <lases sha11 he placed on the docket in the order of time ceived w’tk’0 records or transcripts shall be received; and if ren twenty days of the next succeeding term, either p. 458party shall be entitled to a continuance; but when an appeal is entered in the court below which shall operate as a supersedeas of the judgment, order or decree appealed from, or when there has been a special order or appeal bond for the stay or supersedeas of the judgment, decree or order appealed from, in all such cases it shall be the duty of the appellant, within forty days from the time of the appeal entered and perfected in the court below (unless such time for special and sufficient cause be extended by the court below, or the judge thereof by whom the judgment, decree, or order may have been rendered, such time to be definite and fixed), to produce and file with the clerk of this court a transcript of the record of such cause; and if he shall fail to file the transcript within the time limited therefor the appellee shall be allowed to file a copy or transcript of the record with the clerk of this court, and the cause shall stand for trial in the like manner as if the transcript had been filed by the appellant in due time; or the said appellee may, on producing a certificate from the clerk of the court below, stating the cause, and that an appeal has been entered, and the date thereof, and that the judgment, decree or order appealed from is stayed or super-
seded by bond or otherwise, have the said appeal docketed and dismissed ; or, in any and all cases, the appellee may, after the time limited for filing the transcript in this court by the appellant, and his or her default in respect thereto, upon producing a certificate showing the entry of appeal and the date thereof, have said appeal docketed and dismissed; and in no case shall the appellant be entitled to docket a case and file the record after said appeal shall have been docketed and dismissed under this rule, unless by special order of the court, upon satisfactory reason shown.”
The answer of the respondents alleged the promulgation o the rule in pursuance of the act of Congress creating the court, and that under the same act on the 29th of September, 18 , the court amended the rules in several respects and promu gated them as amended. The amendment consisted in t e in sertion of the words “ in any and all cases” for wor “ in any case,” in numbered rule XV.
Mr. Walter D. Davidge and Atfr. Walter D. Davidge, Jr., for petitioners.
JTr. A. 8. Worthington for respondents. Afr. Charles L. Frailey was on his brief.
Me . Ju sti ce Mc Ken na , after stating the case as above, delivered the opinion of the court.
By the act of Congress of February 9, 1893, which established a Court of Appeals for the District of Columbia, it was provided—
‘That any party aggrieved by any final order, judgment or decree of the Supreme Court of the District of Columbia, or of any justice thereof, may appeal therefrom to the Court of Appeals hereby created; and upon such appeal the Court of Appeals shall review such order, judgment or decree, and affirm, reverse or modify the same as shall be just.”
And it was also provided—
That said Court of Appeals shall establish by rule of court such terms in the court in each year as to it may seem necessary . Provided, however, that there shall be at least three terms m each year, and it shall make such rules and regulations as may be necessary and proper for the transaction of its business t e taking of appeals to said court. And said Court of ppea s shall have power to prescribe what part or parts of e proceedings in the court below shall constitute the record appeal and the form of bills of exception, and to require that a nd °ri^lna^ PaPers shall be sent to it instead of copies thereof, in .,generally to regulate all matters relating to appeals, whether the court below or in said Court of Appeals.” Pe n T* a “8 Prov^s^on the rule set out in the return of the is asT +v^S-WaS es^ahhshed and amended. The question now the rul 6 lnterPre^a^011 °t the rule. It will be observed that below 6 h* ^eS “ w^en an aPPeal is entered in the court order W J0 °Pera^e as a supersedeas of the judgment, order q 1" e°ree aPPea^e(t from, or when there has been a special r appeal bond for the stay or supersedeas of the p. 460judgment, decree or order appealed from, in. all such cases it shall be the duty of the appellant, within forty days from the time of the appeal entered and perfected in the court below, (unless such time for special and sufficient cause be extended by the court below, or the judge thereof by whom the judgment, decree or order may have been rendered, such time to be definite and fixed,) to produce and file with the clerk of this court a transcript of the record of such cause.”
The contention of the parties turns on this provision. Is it to be interpreted independently or in connection with and as receiving meaning from the subsequent provision commencing with the words “ w any and all cases ? ” Or, in other words, is the rule to be applied differently when the appeal operates as a supersedeas from what it does when the appeal does not so operate ? The appeal of relators did not so operate, and the relators contend that their cause “ was not of the class of cases to which the rule relates,” and therefore no rule or authority imposed on them the duty of filing the transcript within the forty days, but that their case falls under that part of the rule which provides for filing the record in cases where there was no supersedeas or stay. “ It does not enlarge in any manner, counsel say, “ the cases specified in the former part of the rue, and to which the duty of filing within forty days is confine . The Court of Appeals held otherwise, and declares in its rep y, which is very circumstantial, that the rule even as origin» y framed was intended to have a different meaning from a which relators put upon it, but upon doubts arising it was amended to remove the doubts, and “in all cases, w e there had been a supersedeas or not, to fix a perio o i within which the transcript should be filed in the Court ® peals (subject to the authority given by the rule itse , 0 court below or a judge thereof, to extend the time). there would have been no provision at all for cases in w there should be no supersedeas.”
The answer also states— ndents “ The rule as so understood and construed by the respo has been enforced in every case in which it has been r to the attention of the respondents. So far as they p. 461case has arisen since September 29,1894, in which the transcript has not been filed within forty days from the time of the appeal entered and perfected in the court below, except where the time has been extended in accordance with the rule, by an order made by a judge of the court below before the expiration of the time limited by the rule or by a previous order. In the case of the District of Columbia v. Humphrey, 11 App. D. C. 68, the appeal was dismissed solely because the transcript was not filed in the Court of Appeals within the forty days prescribed by the rule in question, and without reference to whether the appeal operated as a supersedeas. The opinion of the Court of Appeals in that case was published among the regular reports of that court in 1898.”
Under these circumstances we are of the opinion that the rule must receive the interpretation which was given by the Court of Appeals.
Rule discharged.