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provided, that such parties may avail themselves of this act for the purpose of procuring an equal distribution of their assets among their creditors, and for that purpose only said act shall apply to estates of such insolvents in this section mentioned; and provided, further, such debtor may be discharged from all debts not named in this section.
Cases of insolvency, under the act of 1852, are special cases within the meaning of the constitution." The legislature, in conferring jurisdiction in these cases on both the district and the county courts, acted in the exercise of a legitimate power, and these courts have concurrent jurisdiction.’ Parties appointed as assignees of an insolvent firm, in a proceeding in insolvency which was illegal and void, are merely the custodians, receivers; or bailees of the fund in their hands, by virtue of the order of the court, and only hold it subject to the order of the court.” Consequently, when in another proceeding for the protection of the creditors' property, instituted by one of the insolvent firm against his partners, in the same court, an order is made that they pay over the fund to a receiver appointed by the court, it is no answer or defence, that the fund has been attached in their hands in actions brought by the creditors, or that it had been attached in the hands of a former receiver, appointed by the same court, from whom they, under a like order, had received it.” Nor is the disposition of the fund affected by any action of the immediate parties to the action, which was instituted to secure a distribution of the assets among the creditors—an object which a court of chancery will carry out, without regard to any attempt by any of the partners to evade or defeat it.” An application for a discharge in insolvency, is a special proceeding in the nature of an action. The petition schedule and affidavit are the pleadings on the part of the petitioner, who is the plaintiff; and if they are sufficient to entitle him to his discharge, any irregularity or defect in form must be taken ad
Harper v. Freelon, 6 Cal. 76. * Adams v. Haskell, 6 Cal. 118.
vantage of before judgment, by his creditors, who are defendants in the proceeding.' The judgment, if not reversed on appeal, is conclusive between the parties.' An insolvent's discharge must be by judgment of the court, entered in the same county in which the proceeding is instituted." A discharge made by the district judge at chambers in the same district, but in another county, is void.” The date of publication of notice to creditors, under our Insolvent Act, is the first day on which the notice is published." The fact that the court was adjourned, though not for the term, at the time set for the hearing of objections of creditors, and that the hearing took place before the judge, is no objection to the regularity under the statute.” The insolvent law is not obnoxious to any provision of the Constitution.” When the estate of an insolvent is subject to liens or mortgages, created before the application in insolvency, proceedings therein do not affect such liens or mortgages, and the right of the assignees is confined to the surplus.“ The provisions of the fourteenth section of the Insolvent Act, providing that all suits brought against the insolvent debtor anterior to his surrender of property, shall be transferred to the court in which said insolvent shall have presented his schedule, does not apply to suits brought for the enforcement of prior liens or mortgages." A party who seeks the benefit of the Insolvent Law, must comply strictly with its provisions.” Where an insolvent was liable on a note made by S., to him, and by him endorsed to R., and by him over to M., and describes the same in his schedule, viz.: “To R., I am contingently liable for one thousand dollars and interest, as endorser for one S., upon a promissory note, made and executed by said S., to said R.;” Held, that the description was insufficient, for inaccuracy, and that his discharge in insolvency is no bar to a recovery on the note."
* Kohlman v. Wright, 6 Cal. 230. • Rix v. McHenry, 7 Cal. 89. O O * Turner v. McIlhany, 6 Cal. 287. * McAllister v. Strode, 7 Cal. 428; Judson t. * Clarke v. Ray, 6 Cal. 600. Atwill, 9 Cal. 477.
The petition in insolvency must state the name of each creditor, if known, and if unknown, such fact must be stated.' A joint application of two partners for the benefit of the Insolvent Act is void, there being no authority for such applications in the act.” A schedule attached to such a petition, showing a surrender of all the joint property of the partners, is not a compliance with the act, which requires a surrender of all the property of the insolvent.” A discharge under the Insolvent Act, to be a bar to actions on indebtedness mentioned in the petitioner's schedule, must be in strict conformity with the various provisions of the law; otherwise it is void.” Where an insolvent, after his discharge, expressly promises his creditor to pay his debt, it can be enforced, the debt being a sufficient consideration to support the subsequent promise.” A verbal promise is sufficient, as our statute has not changed the common law rule.” A party whose assets are forty per cent. above his liabilities, cannot be considered insolvent." An order of court made staying all proceedings against a petitioner under the Insolvent Law, for a discharge of his debts— pending his petition, would not prevent the issuance of an execution on a judgment rendered against the petitioner, and a sale of property under the same, within the time limited for the lien of said judgment.” A decree of discharge, under the Insolvent Act, from the payment of a note secured by mortgage, does not release the lien of the mortgage; it only operates to limit the recovery of the mortgagee to the proceeds of the mortgaged premises." The object of the thirty-ninth section of the “Act for the Relief of Insolvent Debtors and Protection of Creditors,” which provides that no assignment of any insolvent debtor otherwise than as provided in that act, shall be legal or binding upon creditors, was to do away with all voluntary assignments by a debtor in failing circumstances, for the benefit of his creditors."
1 McAllister v. Strode, 7 Cal. 428; Judson v. 4 Hunt v, his creditors, 9 Cal. 45. Atwill, 9 Cal. 477. - * Isaac v. Swift, 10 Cal. 71. * Meyer c. Kohlman, 8 Cal. 44. • Luning c. Brady, et al. 10 Cal. 265.
* Feeny v. Daly, 8 Cal. 84. * Dana v. Stanfords, et al. 10 Cal.209.
It was never intended to prevent an insolvent debtor from transferring his property directly to his creditor, either absolutely in payment of his debts, or as security by way of mortgage.' A conveyance giving a preference, is not fraudulent, though the debtor be insolvent, and the creditor be aware at the time that it will have the effect of defeating the collection of other debts. To avoid the conveyance, there must be a real design on the part of the debtor to prevent the application of his property, in whole or in part, to the satisfaction of his debts. A creditor violates no rule of law, when he takes payment or security for his demand, though others are thereby deprived of all means of satisfaction of their own equally meritorious claims.' Where a debtor, who was at the time insolvent, executed a mortgage of all his property and effects to certain specified creditors, to secure his indebtedness to them, and to protect them from liabilities incurred by their endorsement of his paper: Held, that the mortgage was not an assignment either within the letter or spirit of the thirty-ninth section of the “Act for the Relief of Insolvent Debtors and Protection of Creditors,” and did not create a trust for the use of the mortgagor, prohibited by the statute of frauds.” On a petition for a discharge from the debts of the petitioner, under the Insolvent Act, it is unnecessary for the petitioner to allege that his debts were created in this state. The courts do not owe their jurisdiction, in insolvency cases, to an averment in the petition that the debts of the insolvent arose in this state.” A defective statement in the schedule of an insolvent, of certain promissory notes which constitute a portion of his debts and liabilities, does not invalidate the entire proceedings. If the statute, as to the particularity with which debts and liabilities are required to be set forth by the insolvent, is not substantially complied with, a creditor cannot be prejudiced by the decree of discharge in any suit which he may institute to enforce his claim.” There is no rule of law which prevents a debtor, in insolvent circumstances, from the application of his property to the payment of one debt rather than another.'
1 Dana v. Stanfords, et al. 10 Cal, 269. * Slade p. his creditors, 10 Cal. 483. * Sharp v. his creditors, 10 Cal. 418.
Where it is shown that an insolvent, shortly before his application, made and caused to be recorded a deed of property, to withhold it from his schedule with a view to defraud his creditors, the proof of fraud is complete without proof of an actual delivery of the deed.”
Petition in Insolvency.
In the District Court of the Twelfth Judicial District, City and
County of San Francisco.
To the Honorable Edward Norton, Judge of the District Court
of the Twelfth Judicial District of the State of California:
The petition of John Doe respectfully shows: That your petitioner is domiciled and now and usually a resident in the said city and county, and within the twelfth judicial district of the state of California, wherein your honor has original jurisdiction. That in consequence of losses in business, bad contracts, bad debts, interest paid, rents, clerk hire, expenses, fires, shipments of merchandise and its depreciation, and as endorser, your petitioner has become and is insolvent, and utterly unable to pay his debts, and is an insolvent debtor within the true intent and meaning of the act entitled “An act for the Relief of Insolvent Debtors and Protection of Creditors,” passed May 4th, 1852, and being desirous of having the estate, property and effects of your petitioner a plied to the payment of his debts and liabilities proportionally and without preference to any, he, for that purpose, surrenders his property in pursuance of the provisions of said act.
The schedule annexed, marked “A,” contains a summary statement of the affairs of your petitioner, with a list of the losses he has sustained.
The schedule hereunto annexed, marked “B,” contains the names of his creditors, as near as he can now state them, and the amount due to each creditor, the cause and nature of said indebtedness, and when it accrued, and a statement of any existing judgment, mortgage, collateral or other securities, for the payment of any such debt.
The schedule hereunto annexed, marked “C.” contains a full, complete and perfect inventory of all the property, real, personal
1 Randall v. Buffington and wife, 10 Cal. 491. * Fishe w. his creditors, January Term, 1859.