Matter of Coates.

I think the judgment herein must be reversed; but the action being one in which costs are discretionary, and the questions such that the plaintiff had judgment of the supreme court, at special term and in general term, in her favor, the reversal should be without costs.

MASON and GROVER, JJ., concurred with WOODruff, J.

Judgment affirmed, with costs.

MATTER OF COATES.

March, 1856.

Reversing 13 Barb. 452.

Every one who was a creditor of an absconding, concealed or nonresident debtor, at the time an attachment issued against the debtor under 2 R. S. 1, &c., and who continues to be such creditor at the time of distribution, has a right, irrespective of his residence, to exhibit his claim to the trustees, and, if it be allowed, to share in the distribution. The statute does not allow non-residents to initiate the proceedings, but does allow them to share in the distribution.

Where a debtor is discharged, and the creditor receives his dividend, in bankruptcy proceedings under the law of the State where both were domiciled, and where the debt had its origin,-the debt is discharged, and the creditor cannot assert it in another State.*

David Evans, an English creditor of Ezra J. Coates and John Hilliard, petitioned the supreme court to be admitted to share in the distribution of the assets of their estate by S. P. Nash, Waldo Hutchings, and Marshall Lefferts, the trustees of the creditors of the estate appointed by the court, after attachment issued against the property of the debtors as non-residents under R. S. part 1, ch. 5, title 1, upon the application of other creditors. The petitioner's claim had been previously rejected by the trustees, on the ground that he was excluded from participation in the fund, by having received a dividend under proceedings in bankruptcy in England, under which the absent

* Compare Munroe v. Guilleaume, p. 334 of this vol.

Matter of Coates.

debtors had been discharged. The special term of the court denied the application; but the order was reversed at general term, and Evans permitted to share in the fund in question. The trustees appealed to this court.

J. H. Rodman, for trustees, appellants.-The debtors' assets within the jurisdiction of our courts are reserved for the benefit of domestic creditors, and the claims of a foreign assignee are excluded or postponed. Harrison v. Sterry, 5 Cranch, 298; Ogden v. Saunders, 12 Wheat. 360-1; Blake v. Williams, 6 Pick. 313; Matter of Fitzgerald, 2 Caines, 318; Abraham v. Plestero, 3 Wend. 550, 560; Holmes v. Remsen, 20 Johns. 229. The English assignees in bankruptcy are the real claimants; if Evans recovers a dividend, he must pay it over to them. Phillips v. Hunter, 2 H. Bl. 402; Sill v. Worswick, 1 Id. 615; Hunter v. Potts, 4 T. R. 182; Holmes v. Remsen, 20 Johns. 229; Blake v. Williams, 6 Pick. 312. The claimant and the insolvent debtors being residents of England, the debt having been contracted there, and the discharge granted there, the debt is absolutely extinguished for every purpose and in every place. No suit could be maintained on it, here or there. 3 Burge Com. on For. & Col. L. 876, 925; 5 and 6 Vict. §§ 37, 43; Ogden v. Saunders, 12 Wheat. 364; 2 Kent Com. 392, 459; Story on Conf. of L. § 338; Clay v. Smith, 3 Pet. 411. "It is idle to talk of a debt where there is no legal obligation to pay it." BRONSON, J., Van Keuren v. Parmelee, 2 N. Y., 533. The bankrupt law of England recognizes no right of the creditcr, as such, to the bankrupt's assets; the assignee takes the whole the debt is extinguished, and the right of action of the creditor is gone.

H. G. De Forest, for petitioner, respondent.-Evans' application to the court was authorized by 2 R. S. p. 49, tit. 8, § 51, and the appeal to the general term by section 59 of the act amending Code, passed April 11, 1849. Under the old law, Act of March, 1801, 1 R. L. 157, a foreign creditor was not allowed to initiate the proceedings, but was permitted to share in the property assigned after the estate has passed into the hands of the trustees. Matter of De Peyster, 5 Cow. 266; Exp. Schroeder, C Id

Matter of Coates.

603; and see Revisers' Note to § 1, 3. R. S. 2 ed. 613. The existing statute (R. S. part 2, ch. 5, tit. 1), by its terms and spirit, is for the benefit of foreign as well as domestic creditors; and bankruptcy proceedings, and discharge of the debtors, in another country, do not take away the interest of a foreign creditor in assets here. The English act proceeds on the theory that the entire assets of the bankrupt, all over the world, are to be faithfully applied to payment of his debts. Eden on Bankrupt Law p. 227, marg. cxiv, § 4; p. 344, marg. cxix, § 4. The discharge granted is not a discharge of existing property of the bankrupt, but of his person, and future acquisitions. Id. p. 395, marg. cxxiii, § 1; p. 431, § 10. And the right of creditors to property acquired previous to his discharge, is sacred and complete. Id. p. 396, ch. 23, §§ 2, 7. But our courts do not permit an insolvent's property, under their own jusisdiction, to be deported to a foreign country for administration. Abrahams v Plestero, 3 Wend. 550; Holmes v. Remsen, 20 Johns. 229; 2 Kent Com. 405, 406, marg., and cases cited. As they hold, that the place of distribution should be where the assets are found. The petitioners proceeding is not in personam, but in rem, and against property, upon which the creditors' lien attaches the instant that it passes into the hands of assignees or trustees.

BY THE COURT.-JOHNSON, J.-One main question in this case is, whether the trustees appointed pursuant to the statute upon proceedings by attachment against absconding, concealed, or non-resident debtors, are to distribute the funds which may come into their hands among all the creditors who establish their claims, or only among such as might have instituted, or become parties to, the attachment proceedings before the appointment of the trustees, if they had chosen to take the steps necessary for that purpose? As the right to institute such a proceeding, and the effect of it when instituted, and all the steps to be taken in the course of it, depend upon stated authority, it is quite obvious that to the statute itself we must look to determine the question proposed.

In the Revised Statutes, several proceedings, all ending in the appointment of trustees of a debtor's property, and pro

Matter of Coates.

viding for its distribution, are grouped into a single title, consisting of eight articles. Article 1 is "of attachments against absconding, concealed and non-resident debtors"; the 2nd, "of attachments against debtors confined for crimes"; the 3rd, "of voluntary assignments, made pursuant to the application of an insolvent and his creditors"; the 4th, "of proceedings, by creditors, to compel assignments by debtors imprisoned on execution in civil cases"; the 5th, "of voluntary assignments by an insolvent for the purpose of exonerating his person from imprisonment"; and the 6th, "of voluntary assignments by a debtor imprisoned on execution in civil cases." Those six are the several kinds of proceeding specified The 7th article consists of general provisions, applicable to proceedings under the several preceding articles, or some of them; and the 8th treats of the powers, duties and obligations of trustees and assignees under this title. 2 R. S. 1.

In proceedings under the first article, the debtor may, within a certain time, appear and have the attachment discharged, upon either paying those creditors who have procured the attachment, or who have made themselves parties to the proceeding under the provisions of the statute, on giving security to them in a prescribed manner. If he fail to do this, three or more persons are to be appointed "to be trustees for all the creditors of such debtor." 2 R. S. 12, § 58.

By article 8, section 1 (2 R. S. 40), all trustees appointed in pursuance of either of the preceding articles, are declared to be trustees of the estate of the debtor in relation to whose property they shall be appointed, for the benefit of his creditors, and are to have the powers, and be subject to the obligations thereinafter declared. By section 7, subdivision 8 (2 R. S. 42), they have power to settle all matters and accounts between such debtor and his debtors or creditors." By section 8 (2 R. S. 42), they are required to give notice of their appointment and therein to call upon all the creditors of such debtor to deliver their respective accounts and demands to the trustees by a day specified. They are, within fifteen months from their appointment, to call a general meeting of the creditors of such debtor, and at that meeting, or other adjourned meeting thereafter, "all accounts and demands, for and

Matter of Coates.

against the estate of such debtor, are to be fairly adjusted, as far as the same can be ascertained." 2 R. S. 46, §§ 27, 28. They are then to proceed to pay debts due to the United States, and certain other specified preferred claims, and they are then to "distribute the residue of the moneys in their hands among all those who shall have exhibited their claims as creditors, and whose debts shall have been ascertained, in proportion to their respective demands, and without giving any preference to debts due on specialties, as follows:" in cases under the first article," among those who were creditors at the time of the issuing of the first warrant of attachment" (2 R. S. 46, § 33); in cases under articles 3 and 5, among those who were creditors at the time of the execution of the assignment by the insolvent;" in cases under the fourth article, "among those who were creditors" at one or the other of the two periods specified; and in cases under the sixth article, "among those creditors at whose suit the debtor was imprisoned on execution at the time of his discharge."

The next section (§ 34) declares that, in making such distribution the trustees shall first pay all debts that may be owing by the debtor as guardian, executor, administrator, or trustee, and that these are to be paid in full; or, if the assets are insufficient, then in proportion to their respective amounts.

Thus far the language of the act is in itself plain. It speaks of all creditors. It furnishes no rule of exclusion, nor does it even hint that any are to be excluded, whose debts are ascertained, and who have claimed as creditors. On the contrary, a strong inference that no such exclusion was intended is afforded by the contrast between the declared duties of the trustees under the sixth article and under the others. Under that article the distribution is among the creditors at whose suit the debtor was imprisoned. Under the other articles, the only way in which the generality of the term "creditors" is at all restrained, is by fixing the time at which they must have been creditors, to entitle them to share in the distribution. When the legislature has fixed but a single restriction, we should hesitate long before we venture to add another. Such a restriction is, however, sought to be imported from provisions contained in the first article.