Chapman v. Brewer

On the tenth of October, 1873, John Whittlesey, a creditor of Benjamin C. Hoyt and Enoch C. Hoyt, copartners under the name of B. C. Hoyt & Son, filed a petition in bankruptcy in the district court of the United States for the Western district of Michigan, praying that the said two persons, 'partners as aforesaid,' might be declared bankrupts. The petition contained the prescribed allegations, and set forth, as the demand of the petitioner, a promissory note made by the partnership, in its firm name, to his order. It alleged, as one act of bankruptcy, that the firm had 'fraudulently stopped payment' of its commercial paper 'within a period of fourteen days,' om tting to add 'and not resumed payment within said period.' It alleged, as a second act of bankruptcy, that the firm had 'suspended and not resumed payment' of its commercial paper 'within a period of fourteen days.' Before anything was done on this petition except to file it, and on the twelfth of January, 1874, Daniel Chapman procured to be issued by the circuit court of the county of Berrien, in the state of Michigan, an attachment against the lands and personal property of the said persons, as such copartners, for the sum of $4,895.44, in a suit brought by him in that court, against them, to recover a money demand, which attachment the sheriff, on that day, levied on certain real estate in that county. Enoch C. Hoyt died on the twenty-fifth of February, 1874. On the fifth of March, 1874, a petition, indorsed 'amended petition,' was filed by Whittlesey in the bankruptcy court, containing the same averments as the first petition, with the addition of the words so omitted in the first petition. In the body of the petition there was no mention of its being an amended petition, nor did it allude to the first petition, or to the death of Enoch C. Hoyt, and its prayer was the same as that of the first petition. It was verified March 3, 1874. On the fourteenth of April, 1874, an order was made in the suit in the state court, entering the default of Benjamin C. Hoyt, for want of an appearance, on proof of personal service on him of the attachment and of the filing of the declaration; and on the sixteenth of April, 1874, an order was made on affidavit, suggesting the death of Enoch C. Hoyt, since the issuing of the attachment, and ordering that the action proceed against the surviving defendant, Benjamin C. Hoyt. On the second of May, 1874, an order was made by the bankruptcy court, stated in it to be made on the appearance and consent of 'solicitors for the alleged bankrupts,' reciting that it had been shown that Enoch C. Hoyt had 'departed this life since the commencement of the proceeding in said matter,' and ordering that all proceedings should stand against Benjamin C. Hoyt, survivor of himself and Enoch C. Hoyt, and that they might be prosecuted against him, with like effect as if Enoch C. Hoyt had not died, and that the individual property of Enoch C. Hoyt be surrendered by the marshal to his proper representatives. On the same day Benjamin C. Hoyt filed a denial of bankruptcy, signed by his attorneys, as follows: 'And now the said Benjamin C. Hoyt appears and denies that he has committed the act of bankruptcy set forth in said petition, and avers that he should not be declared bankrupt for any cause in said petition alleged, and he demands that the same be inquired of by a jury.' On the eighth of May, 1874, in the suit in the state court, a judgment was rendered in favor of the plaintiff, against Benjamin C. Hoyt, for $4,930.15, and costs; and on the same day an execution was issued thereon, under which, on that day, the sheriff levied on the same real estate which he had levied on under the attachment. On the first of June, 1874, an adjudication was made by the bankruptcy court in these words: 'ADJUDICATION OF BANKRUPTCY ON CREDITORS' PETITION.

'''Western District of Michigan, ss.-In the District Court of     the United States for the Western District of Michigan. In     Bankruptcy''.

'In the matter of BENJAMIN C. HOYT, against whom a petition     in bankruptcy was filed on the nineteenth day of October, A.      D. 1873. At Grand Rapids, in said district, on the first day     of June, A. D. 1874. Before Hon. SOLOMON L. WITHEY, District     Judge.

'This matter came on to be heard at Grand Rapids, in said     court, the respondent having withdrawn his denial and demand      for a jury, and having, by his attorneys, Hughes, O'Brien &      Smiley, consented thereto. And thereupon, and upon     consideration of the proofs in said matter, it was found that      the facts set forth in said petition were true, and it is      therefore adjudged that Benjamin C. Hoyt became bankrupt,      within the true intent and meaning of the act entitled 'An      act to establish a uniform system of bankruptcy throughout      the United States,' approved March 2, 1867, before the filing      of the said petition, and he is therefore declared and      adjudged a bankrupt accordingly. And it is further ordered     that the said bankrupt shall, within five days after this      order, make and deliver, or transmit by mail, postpaid, to      the marshal, as messenger, a schedule of his creditors and      inventory of his estate, in the form and verified in the      manner required of the petitioning debtor by the said act.

'Witness the honorable SOLOMON L. WITHEY, Judge of the said     District Court, and the seal thereof, at Grand Rapids, in      said district, on the first day of June, A. D. 1874.

ISAAC H. PARRISH,

[Seal.]

'Clerk of District Court for said District.'

In the certificate made by the clerk of the district court of the United States for the Western district of Michigan, certifying the copies of the bankruptcy papers, he certifies 'that the foregoing is a true copy of the petition for adjudication filed October 10, 1873, copy of amended petition, order continuing proceedings, denial of bankruptcy by B. C. Hoyt, and adjudication of bankruptcy, on file in the proceedings of said court in said entitled matter.' This is mentioned because, in the adjudication, the petition is referred to as filed October 19, 1873.

On the sixteenth of December, 1873, an alias execution was issued in the suit in the state court, which the sheriff, on that day, levied on real estate in Berrien county other than that before levied on by him. On the first of October, 1874, the register in bankruptcy executed to Joseph W. Brewer an assignment in these words:

'''In the District Court of the United States for the Western     District of Michigan. In Bankruptcy''.

'In the matter of BENJAMIN C. HOYT, Bankrupt.

'Western District of Michigan, ss.: Know all men by these     presents, that Joseph W. Brewer, of the village of St. Joseph, in the county of Berrien and state of Michigan, in     said district, has been duly appointed assignee in said      matter: Now, therefore, I, J. Davidson Burns, register in      bankruptcy in said district, by virtue of the authority      vested in me by the fourteenth section of an act of congress      entitled 'An act to establish a uniform system of bankruptcy      throughout the United States,' approved March 2, A. D. 1867,      do hereby convey and assign to the said Joseph W. Brewer,      assignee as aforesaid, all the estate, real and personal, of      the said Benjamin C. Hoyt, bankrupt aforesaid, including all      the property, of whatever kind, of which he was possessed, or      in which he was interested or entitled to have on the tenth      day of October, A. D. 1873, with all his deeds, books, and      papers relating thereto, excepting such property as is      exempted from the operation of this assignment by the      provisions of said fourteenth section of said act, to have      and to hold all the foregoing premises, to the said Joseph W.      Brewer, and his heirs, forever, in trust, nevertheless, for      the use and purposes, with the powers, and subject to the      conditions and limitations, set forth in said act.

'In witness thereof, I, the said register, have hereunto  set my hand and caused the seal of said court to be   affixed, this first day of October, A. D. 1874.

[Seal.]

'J. DAVIDSON BURNS, Register in Bankruptcy.'

On the twenty-seventh of January, 1876, Brewer filed a bill in equity, in the circuit court of the United States for the Western district of Michigan, against Chapman, (the judgment creditor,) and the sheriff who had levied under the first execution, and the deputy-sheriff who had levied under the second execution, setting forth the filing of the first petition in bankruptcy, and its contents; averring 'that the usual order to show cause was thereupon made by said district court, and a certified copy thereof duly served on said Benjamin C. and Enoch C. Hoyt, who subsequently, and in due time, appeared in said bankruptcy matt r;' and alleging the death of Enoch C. Hoyt, the making of the order of March 2, 1874, the adjudication of bankruptcy, the appointment of and assignment to the assignee, the facts in regard to Chapman's judgment, executions, and levies, and threats by the officers to sell the real estate levied on. The bill makes no mention of the amended petition in bankruptcy or of the attachment. It states that the executions are outstanding; that the real estate so levied on was the separate property of Benjamin C. Hoyt at the date of filing the petition; that the plaintiff, as assignee, is the owner and in possession of all of it, except certain specified lots; and that said levies constitute a cloud on his title, and embarrass and hinder him in disposing of the property, and notices of the levies have been recorded in the office of the register of deeds of the county. The prayer of the bill is that the levies be decreed void as against the plaintiff, as assignee, and the defendants be decreed to release to the plaintiff, as assignee, all their right and title and interest, acquired under the levies, in and to the real estate he is so in possession of, and, on their failure to do so, the decree be ordered to have the effect of said release, and he have leave to record the same in the office of said register of deeds, and the defendants be enjoined from selling or interfering with the real estate the plaintiff is so in possession of. The bill also prays for such other and further relief as shall be equitable and just.

The answer denies the validity of the petition set forth in the bill, and denies that Benjamin C. Hoyt was adjudicated a bankrupt on the footing of that petition, or on any petition of which he had notice, and denies the validity of the adjudication. It sets up the attachment levy, and admits the existence of most of the material facts alleged in the bill, and that the property was the separate property of Benjamin C. Hoyt, but denies that the plaintiff is entitled to any equitable relief. A replication was filed, and proofs were taken, establishing the facts above set forth, and that Brewer had acted as assignee since October 3, 1874, and had had the management and custody and possession of the property, and paid taxes on it, since October 10, 1874, and that it was worth about $10,000.

The circuit court made a decree on April 15, 1880, adjudging that Benjamin C. Hoyt, 'at the date of the filing of the petition in bankruptcy against him, namely, on the tenth day of October, 1873, was the owner in fee of the' lands described in the bill as those of which the plaintiff was in possession; that the plaintiff succeeded to the interest which said Hoyt had in those lands on the tenth of October, 1873, and was and is the owner in fee, and in the actual possession, of them; that each of said execution levies was and is a cloud on the title of the plaintiff as assignee to said lands, and was and is void as against him; that the defendants execute to the plaintiff a release of their interest in said lands under said levies, and, on their failure to do so, the decree should have all the force and effect of such release, and might be recorded in the office of the register of deeds of said county; and that an injunction issue, restraining the defendants from selling, disposing of, or interfering with said lands under said levies, and from making any new or further levies on any of said lands, under said judgment. An injunction to that effect was issued and served January 3, 1881. Chapman has appealed to this court.

H. F. Severens, for appellant.

[Argument of Counsel from pages 164-166 intentionally omitted]

John W. Stone, for appellee.

BLATCHFORD, J.