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HAMPTON v. ROUSE.

October 1, 1874

HAMPTON
v.
ROUSE.



ERROR to the Circuit Court for the Southern District of Mississippi; the case being thus: A valuable planation in Mississippi belonging to Wade Hampton, and at the time in his possession, though mortgaged by him, was sold on the 11th of April, 1867, to John Rouse, under a statute of the State just named, entitled 'An act to incorporate the Board of Levee Commissioners, &c.'*fn1 This act gives to this board power to assess taxes on lands such as the plantation of Hampton was, and if the taxes are not paid to have the sheriff sell the lands. It contains, however, this provision on the subject of redemption: 'The sheriff's deed, however, for all lands sold for taxes, shall be and remain with the probate clerk; and should the owner or owners of said land, their agents or attorneys, apply, they, or either of them, shall be entitled to the redemption of said land at any time within two years of the day of sale, upon the payment of the purchase-money, &c., &c. This redemption may be made from the levee treasurer or from the probate clerk where the sheriff's deed is kept.' In this state of things Hampton, on the 29th of December, 1868, applied for the benefit of the Bankrupt Act, and on the 17th of April, 1869, was decreed a bankrupt under it. On the 19th, an assignee in bankruptcy was appointed. The Bankrupt Act of March 2d, 1867, the now existing act and the one under which Hampton was decreed bankrupt, enacts:*fn2 'SECTION 11. If any person owing debts provable under this act exceeding the amount of $300, shall apply by petition to the judge of the judicial district in which such debtor has resided, . . . setting forth his inability to pay all his debts in full, his willingness to surrender all his estate and effects for the benefit of his creditors, and shall annex to his petition a schedule containing a full and true statement of all his debts, . . . also an accurate inventory, . . . of all his estate, such petitioner shall be adjudged a bankrupt.' The same section of the act, at its close, further directs that the district judge in that state of the case, shall issue a warrant directed to the marshal of the district, authorizing him to publish notices in such newspapers as the warrant specifies; to serve written or printed notices on all creditors named in the schedule filed with the petition of the applicant, and to give such notice to all concerned as the warrant directs, which notice shall state as follows: (1.) That such a warrant has been issued. (2.) That the payment of debts or the delivery or transfer of property to the debtor is forbidden by law. (3.) That the creditors will meet, on a day therein named, to prove their debts and choose an assignee. The twelfth section enacts that at the meeting of the creditors, such as the preceding section contemplates, one of the registers of the District Court shall preside, and that the creditors in his presence shall choose one or more assignees of the estate of the debtor. The act then goes on in its fourteenth section thus: 'As soon as said assignee is appointed and qualified, the judge, or, where there is no opposing interest, the register, . . . shall by an instrument under his hand assign and convey to the assignee all the estate real and personal of the bankrupt, with all his deeds, books, and papers relating thereto; and such assignment shall relate back to the commencement of said proceedings in bankruptcy, and thereupon, by operation of law, the title to all such property and estate, both real and personal, shall vest in said assignee.' The Bankrupt Act of 1841*fn3 differed, as to the mode and time of appointing the assignee in bankruptcy, from the now existing and above-quoted act of 1867. It ran thus: 'SECTION 3. That all the property and rights of property, . . . of every bankrupt . . . shall, by mere operation of law, ipso facto, from the time of such decree be deemed to be divested out of such bankrupt without any other act or conveyance whatsoever; and the same shall be vested by force of the same decree in such assignee, as, from time to time, shall be appointed by the proper court for the purpose.' Hampton being still in possession of his land, Rouse now brought ejectment against him for it; and on the trial Hampton offered to prove that on the 10th day of April, 1869–that is to say, 'within two years of the day of sale,' the same having been made as above stated on the 11th of April, 1867–his son, as his agent, offered to redeem the land, under circumstances which made the offer equivalent to a redemption. The son testified in substance thus: 'On the 10th of April, 1869, I went as agent of Wade Hampton to the office of Mr. Haycroft, the levee treasurer, and offered to redeem the lands in controversy. I had the means to redeem the lands. There were so many applicants waiting to redeem lands before me that I could not then be attended to. The press of business in the treasurer's office prevented my redeeming the lands when I went on the 10th of April, and that pressure continued until the time of redemption had passed. 'The means which I had were levee bonds. They were my means and not my father's. They were in the hands of Mr. Haycroft, in his office. Some of them had been converted into currency. I do not know how much. The proceeds of some of these bonds had been applied to the redemption of another estate, which was redeemed entirely out of them. 'When I applied to redeem these lands, in controversy, Mr. Haycroft exhibited a map of the county to me, and it was perfectly understood between him and myself what lands I wished to redeem, and also the taxes of what year. He knew at the time what means were to be used in redeeming said lands, and he made no objection, and the only reason why the lands were not then redeemed was because of the press of business in his office.' Mr. Haycroft, the levee treasurer, referred to above, testified that he occasionally sold the levee bonds, such as just above spoken of, as an accommodation to taxpayers, and with the proceeds paid the redemption-money; that he had done so in the case of other lands for Hampton; but that it was no part of his official duty so to sell bonds and apply the proceeds; that in this case he had told Hampton's son that he would have to pay in currency. He added, however, that the applications for redemption on the 10th of April, 1869, were so numerous that he could not on that day have attended to the redemption of these lands under any circumstances; and that on the 11th the time expired. The court charged the jury, 'That Wade Hampton, having been adjudged a bankrupt on his own application, after the land was sold for the taxes, had thereby ceased to be the owner of the land, and had lost the right to redeem.' And this charge was assigned for error.

The opinion of the court was delivered by: Mr. Justice Clifford delivered the opinion of the court.

Messrs. James Lowndes and W. W. Boyce, for the plaintiff in error:

It is clear that under the eleventh and twelfth sections of the Bankrupt Act, the decree in bankruptcy does not, under the present Bankrupt Act, divest the debtor of his estate, though under the act of 1841 it did do so in terms. Under the present act the decree only settles the fact that the debtor is a bankrupt; that is to say that he cannot now pay his debts as they come due.

It is by what is prescribed in the fourteenth section as to be done–that is to say, by the appointment of the assignee and the assignment and conveyance to be executed, 'as soon as said assignee is appointed,' that the debtor's property is divested. Now, as no assignee was appointed in this case, nor any assignment or conveyance made until several days after the offer to redeem was made, it can only be through the words at the close of the paragraph which declares that 'such assignment shall relate back, &c.,' that it can be pretended that the redemption was of no effect. But while the assignment and conveyance vest the assignee with 'the title to all such property and estate' as the bankrupt had when the proceedings were begun, it does not follow that they vest him with that title wholly unaffected by what has been lawfully done as to the estate in the meantime; what has been done by way of benefit to the estate. If, for example, a debtor at the time when the proceedings in bankruptcy were begun, had land heavily charged by mortgage, and by the voluntary act of the mortgagee the mortgage were satisfied, would the assignee take the land still subject to the mortgage or discharged from it? or if the debtor or any one else put on the land valuable improvements, would the assignee get those improvements or not get them? We suppose that the assignee in one case would take the land clear of the mortgage, and in the other would take it improved by the new erections. In the case now before the court, a defeasible estate is made by the act of the debtor, between the time of the decree and that of the assignment and conveyance, and indefeasible one. In this case as in the former ones, we suppose that the assignee in other words the creditors or the assets–get the benefit of what is done. They still get 'all the title to all such property and estate.'

But even if the estate were vested in the assignee the old owner could redeem.

I. In Dubois v. Hepburn,*fn4 this court said:

'Any right which in law or equity amounts to an ownership in the land; any right of entry upon it, to its possession or enjoyment, or any part of it which can be deemed an estate, makes the person the owner, so far as it is necessary to give him the right to redeem.'

Now, though a man may be a bankrupt–that is to say, though he may be unable to pay all his debts as they fall due, and though his estate may be passed accordingly to his assignee in bankruptcy it does not follow that the debtor may not himself afterwards, from other property, coming to him by descent or gift or other good fortune, pay all his debts; nor follow that without this good fortune of any kind the assignee may not, with the proceeds of the assigned estate, pay all the debts and return a surplus to the former debtor. The debtor has, therefore, 'a right which in equity amounts to an ownership.' He has a right to pay the debts, and if he do pay them, all the estate is his; or if the assignee pay them from a part of the estate assigned, all the residue of the estate is equally his. Such an interest, says the above-cited case, 'makes the person owner so far as it is necessary to give him the right to redeem;' for that case makes 'any (possible) right of enjoyment of any part of it enough,' if that part can be called an estate. Indeed it is only by a liberal construction of the word 'owner' that an assignee in bankruptcy can redeem. Strictly speaking he is but a trustee to pay debts, and return any balance to the debtor

It may be here observed that long since the case of Dubois v. Hepburn, this court has twice construed statutes authorizing redemption from taxes, with the utmost benignity. The cases of Bennet v. Hunter, in 9th Wallace,*fn5 and Tracy v. Irwin, in the 18th of the same reports,*fn6 show this; the former case deciding that any person may act as the owner's agent to redeem, and that the action of such person if ratified by the proper party operates as a redemption. If it were necessary to enlarge the scope of Dubois v. Hepburn these cases minister the means. But it is not necessary.

We assert, therefore, that notwithstanding the retroactive words of the fourteenth section of the Bankrupt Act of 1867, Hampton had still the right to redeem. No doubt the assignee also had. So indeed had any creditor; or, if the proper person ratified the act of redemption, any person whatever. It would certainly be monstrous if an estate worth $100,000, which had been sold for $500 tax, should be wholly lost to creditors because the bankrupt owner had no right to redeem and the assignee as yet no money to do so; or because the time for redemption expired between the time of filing the petition and the appointment of the assignee.

II. If our views are at al correct, then the charge was wrong. We assert that under the two last cases above cited from Wallace, that which was in law a tender was made. But whether or not, evidence was certainly given tending to show that a tender was made; and if such evidence was given, the charge was equivalent to having rejected the evidence on the trial. To have done this would have been error.

Mr. P. Phillips, contra:

The fourteenth section of the Bankrupt Act enacts that 'the assignment shall 'relate back' to the commencement of the proceedings in bankruptcy;' and thereupon, 'by operation of law,' the title to all the property of the bankrupt shall vest in the assignee. The present act herein goes further than did the act of 1841. Under the third section of that act the bankrupt's estate was divested out of him ipso facto by the decree. But so, too, under that act, the assignee in bankruptcy was appointed by the court, at the moment of the decree made. In fact, in some courts, the assignee was always the same person in all cases; so that he was really a permanent officer of the court existing previously to the decree. There was thus a person in whom the estate could, on the divestiture from the bankrupt, immediately vest. The present act, we say, goes further, and means to vest the bankrupt's property in his assignee from the time that proceedings are begun from the time, namely, that the debtor himself has proclaimed that he was bankrupt, or is shown by his creditors to have been so. And, why should it not so vest it? The bankrupt's estate ought to pass from him from that time if bankrupt acts are to prevail at all. But this difficulty occurred here. Under the present act the assignee is not an officer of the court, but is appointed in each case by the creditors, pro re nat a. He cannot be appointed, therefore, until after the petition is filed, in other words, until after 'the commencement of the proceedings.' The creditors must have notice of them, and meet before they can appoint the assignee. If, therefore, the act had said that the estate of the debtor 'shall be divested from him on the commencement of proceedings in bankruptcy,' there would be no one in whom it could vest. It would be in nubibus. It accordingly leaves it to the assignment to divest the estate, but declares that 'such assignment shall relate back to the commencement of the proceedings.'

But whatever may have been the reason for the special character of the enactments, the language of the fourteenth section is positive; and under the enactment made by it all the property of Hampton, as he owned it, on the day when he filed his petition, vested in the assignee. Thus vesting, Hampton was not 'owner' of it when the ...


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