often depend upon the negotiability of the paper. Frequently these come into conflict with those of the assignee, or of other parties; and in such cases the general rule would seem to be, that the bankruptcy overrides the commercial law or rules, and the title of an innocent party is made to yield to that of the assignee, where it would be available against any others Hence a bankrupt's transfer, by his bill, of funds in the hands of a drawee, would be invalid against the assignees who take these funds by the bankruptcy. (d) But if the bill were drawn for more than the funds, and was accepted, the holder could recover from the acceptor the excess of the amount of the bill over the funds in his hands. (e) This applies, however, only when firm in London failed, and their assignees took possession of these bills. A petition having been filed praying that these bills might be taken from the assignee, and returned to the petitioners, the Vice-Chancellor said: "In cases of this nature the case always turns upon the fact whether the bills are remitted in order that the party to whom they are sent may recover the amount, as the agent of the party remitting, or whether the bills are so sent, on a general account between the parties, that the person receiving them has a right to deal with them for his own use. Certainly, bankers are the persons who are employed in such agencies; but a merchant, or any other person, may be so employed.... In this case, the admitted facts exclude all doubts as to the actual nature of the transaction. Messrs. Power & Co. are desired to do the needful with the bills, and to place the amount to the credit of the petitioners when in cash. In answer, Messrs. Power & Co. say, 'The needful shall be done.' They were bound, therefore, to receive the amount of the bills, as the agent of the party remitting, and were not at liberty to deal with the bills for their purposes.' So they did not pass to the assignees. (d) Willis v. Freeman, 12 East, 656. This was an action against the defendants as acceptors of a bill of exchange for 1,400., drawn by one Anderson, payable to his own order, and indorsed by him to the plaintiff for value. And the defence was, that in consequence of a prior act of bankruptcy by Anderson, which had since been followed by a commission, Anderson's indorsement transferred no right to the plaintiff. Other facts in this case will be stated in the notes below. Of the point here considered, Lord Ellenborough said: "It may be considered as clear, that, except in cases provided for by particular statutes, a trader who has committed an act of bankruptcy, upon which a commission afterwards issues, can make no transfer of his property to the prejudice of his assignees, nor do any act to interfere with their rights; but every such attempted transfer or act is liable to be vacated by his assignees. On the other hand, when it does not affect the rights and interests of the assignees, the act of a man who has committed an act of bankruptcy has the same effect as the act of any other person. The question, therefore, for consideration here is, whether this indorsement by Anderson, if allowed to be effectual, could prejudice his assignees, or interfere with their rights, because, so far forth as it would do so, it would be inoperative." (e) Wilkins v. Casey, 7 T. R. 711. The case of Willis v. Freeman, above cited, also is an authority upon this point. In that case, the trader, after the secret act of bankruptcy, as above set forth, having securities in his banker's hands to a certain amount, drew on them a bill for a larger amount for his accommodation, payable to his order, which, after acceptance, he indorsed to the plaintiff (who knew of his partial insolvency, but not of the act of bankruptcy), the commission having been subsequently taken out, it was held that the plaintiff, who was to make title through the bankrupt's indorsement after his bankruptcy, though he was entitled to sue the acceptors upon the bill, could only recover on it the amount of the sum accepted for the accommodation of the some act of the bankrupt is necessary to make out a party's title; for if he can rest his claim on his own equity, it would be good. Nor can the assignees take paper which was transferred by indorsement of the bankrupt after bankruptcy, if it be such that they could not make it available for the funds of the assignment. Thus, if the bankrupt indorsed over accommodation paper, which he might indorse but could not sue, the assignees do not take it. (f) So if bankers or others held commercial paper only for the owners, if they are insolvent it does not go to their assignees. It is sometimes difficult to determine the facts on which this question turns; but, in general, the rule is this. If the insolvent held the paper only for collection, the assignee does not take it. If he has held it to collect and hold in any trust, or for any especial purpose, and had placed or held the proceeds in separate or special deposit, applicable to a special purpose, the assignees do not take the proceeds. If he had advanced money on the paper, the assignees take his claim for reimbursement and his lien. If he had discounted the paper, or made it his own otherwise, as by purchase, then the assignee takes it. Generally, (g) if the insolvent holds such paper, even by a legal title, but the beneficial interest is in another, the assignee does not take it. (h) bankrupt over and above the amount of the bankrupt's effects in the hands of the acceptors at the time of the bankruptcy. And this on the ground that, by his recovery, the amount of the assignees and creditors would not be damnified. (f) Arden v. Watkins, 3 East, 317. It seems that the same principles will govern the case of accommodation paper, when proof of it is attempted against a bankrupt's estate, as would apply if suit had been brought upon it against the bankrupt; and the same reasons hold when the bankrupt has given accommodation notes or acceptances. It is clear, on the authorities, that no action could be maintained in either of the above cases. Smith v. Knox, 3 Esp. 46; Fentum v. Pocock, 5 Taunt. 192; Thompson v. Shepherd, 12 Met. 311; Brown v. Mott, 7 Johns. 361; Grant v. Ellicott, 7 Wend. 227; Charles v. Marsden, 1 Taunt. 224; Carruthers v. West, 11 Q. B. 143; Renwick v. Williams, 2 Md. 356; Molson v. Hawley, 1 Blatchf. C. C. 409. If the accommodation bill is in the hands of a third party, who took it bona fide, even with notice of its being an accommodation bill, he may prove against the estate of either party to it, and recover a dividend on it to the amount due him. Smith v. Knox, above cited, and 5 Taunt. 192; Ex parte Bloxham, 6 Ves. 449, 600; Ex parte Bloxham, 8 Ves. 531; Bank of Ireland v. Beresford, 6 Dow, 238; Er parte King, Cooke, 157; Ex parte Lee, 1 P. Wms. 782. See Jones v. Hibbert, 2 Starkie, 304. (g) Kitchen v. Bartsch, 7 East, 53; Giles v. Perkins, 9 id. 12; Tennant v. Strachan, 4 C. & P. 31. (h) Anonymous, in the notes, 1 Camp. 492; Bourne v. Cabot, 3 Met. 305; Waller v. Drakeford, 1 Starkie, 481; Greening, ex parte, 13 Ves. 206; Ex parte Deey, 2 Cox, 424; Watkins v. Maule, 2 Jacob & W. 243; Smith v. Pickering, Peake, N. P. 50; Ex parte Hall, 1 Rose, 13: Ex parte Rowton, id. 15. It has been held, on strong grounds, and apparently in conformity with established principles, that an assignee takes the benefit of a promise made to the insolvent, which could be available only on the happening of a contingency, as a successful termination of a suit, which did not happen until after the insolvency. (i) Where an assignee sues for damages, the measure to him is not always the injury to the estate, for he rests upon a strict legal right. (j) WHAT INTERESTS OR PROPERTY OF THE BANKRUPT DO NOT PASS TO THE ASSIGNEE. As it is the purpose of the insolvent laws to give to the creditors all they could take by attachment or levy, so it gives them nothing more. In all the States, some specified property of certain kinds, real and personal, is exempt from attachment, and generally, at least, the same is exempt from the operation of the insolvent laws. It would seem, however, that a person may lose the benefit of this exemption, by his own laches; thus, it has been held in Massachusetts, that if a debtor, who has a larger quantity of any kind of provisions than the law exempts from attachment, sets apart no portion thereof for the use of his family before it is about to be attached, and makes no claim to any portion of it when the officer is about to attach the whole, he cannot maintain an action against the officer who takes the whole. (k) Where this exemption is for a certain amount of property, the question has been raised, whether this relieves merchandise of that value, or is confined to household goods, or other similar things. This must be a question of construction (i) Johnson, C. J., in Burton v. Lockert, 4 Eng. 411. (j) Hill . Smith, 12 M. & W. 618; Thorpe v. Thorpe, 3 B. & Ad. 580; Col son v. Welsh, 1 Esp. 379. See also, Por ter v. Vorley, 9 Bing. 93, s. c. 2 Moore & S. 141. (k) Clapp v. Thomas, 5 Allen, 158. of a statute. But, on general principles, we should not extend the exemption to merchandise It has been said, that all rights of action pass to the assignee; but there is one broad exception to this. No rights of action for mere personal injury pass. (1) None, for example, for assault and battery, and none for slander. (m) And it has been held, (1) Stone v. Boston & Maine Railroad, 7 Gray, 539. (m) Rogers v. Spence, 13 M. & W. 571. This was an action of trespass for breaking and entering the dwelling-house and garden of the plaintiff, and making a great noise and disturbance therein, damaging the doors, &c., of the house, and the trees, &c., of the garden, and seizing certain goods of plaintiff, and exposing them to sale on the premises without his leave; whereby the plaintiff and his family were greatly disturbed and annoyed in the peaceable possession of the dwelling-house and garden, and the plaintiff was prevented from carrying on his lawful business. The defendant pleaded in bar, that the plaintiff became bankrupt after the action brought, and that an assignce had been appointed, who accepted, &c., and that thereby, under the statute, the cause of action became vested in the assignee. Demurrer to the plea, and judgment for the plaintiff. Sce 11 M. & W. 791. Held, on error brought, that the plea was bad. Lord Denman said, ably defining the doctrine on this subject: "As the object of the law is manifestly to benefit creditors, by making all the pecuniary means and property of the bankrupt available to their payment, it has, in furtherance of this object, been construed largely, so as to pass not only what in strictness may be called the property and debts of the bank rupt, but also those rights of action to which he was entitled, for the purpose of recovering in specie real or personal property, or damages in respect of that which has been unlawfully damnified in value, withheld, or taken from him; but causes of action not falling within this description, but arising out of a wrong personal to the bankrupt, for which he would be entitled to remedy whether his property were diminished or impaired, or not, are clearly not within the letter, and have never been held to be within the spirit, of the enactment, even in cases where injuries of this kind may have been accompanied or followed by loss of property; and to this class we think the action of trespass quare clausum fregit, and that of trespass to the goods of the bankrupt, must be considered to belong. These rights of action aro given in respect of the immediate and present violation of the possession of the bankrupt, independently of his rights of property; they are an extension of that protection which the law throws around the person, and substantial damages may be recovered in respect of such rights, though no loss or diminution in value of property may have occurred; and even when such an incident has accompanied or followed a wrong of this description, the primary personal injury to the bankrupt being the principal and essential cause of action, still remains in him, and does not vest in the assignee, either as his property, or his debts." s. c. on Appeal, 12 Clark & F. 700. In Howard v. Crowther, 8 M. & W. 601, which was a case for the seduction of the sister and servant of plaintiff, Lord Abinger, C. B., said: "Has it ever been contended that the assignees of a bankrupt can recover for his wife's adultery or for an assault? How can they represent his wounded feelings? Nothing is more clear than that a right of action for an injury to the property of the bankrupt will pass to his assignees; but it is otherwise as to an injury to his personal comfort. Assignees of a bankrupt are not to make a profit of a man's wounded feelings." Alderson, B., said: The service, for the loss of which this action is brought, is of more value to one person than another, and the loss of it is, therefore, only a personal injury." Bird v. Hempstead, 3 Day, 272; Stanly v. Duhurst, 2 Root, 52; Nichols v. Bellows, 22 Vt. 581. As early as the case of Benson v. Flower, Sir W. Jones, 215, it was held, that no action for slander passed to the assignee. Clark v. Calvert, 8 Taunt. 742, 3 Moore, 96; Shoemaker v. Keeley, Yeates, 245, 2 Dall. 213; Smith v. Milles, 1 T. R. 475; Brandon v. Pate, 2 H. Bl. 308. The distinction seems to rest upon the solution of the questions, Have the assignees lost any that the assignee took no right of action for breach of contract to employ the insolvent in a certain way for certain wages; but this has been overruled. (n) It may sometimes be difficult to draw the line between the rights of this kind which the assignees take, and those which they cannot; but the general rule would seem to be, that the right to damages passes from thing? What are they entitled to? The bankrupt's property. If, then, that property has been converted or injured, they may bring an action; but they cannot be said to have a property in the personal feelings, or even reputation of the bankrupt. In Wright v. Fairfield, 2 B. & Ad. 727, the right of assignees to sue on contracts and for injuries affecting the bankrupt's property was declared. Hancock v. Coffyn, 8 Bing. 358, 1 Moore & S. 521; Bennett v. Allcott, 2 T. R. 166; Porter v. Vorley, 9 Bing. 93, 2 Moore and S. 141; Brewer v. Dew, 11 M. & W. 625; Chippendale v. Tomlinson, 1 Cooke, 106; Clarkson v. Parker, 7 Dowl. 87; Splidt v. Bowles, 10 East, 279; Kymer v. Larkin, 2 Moore & P. 183; Rouch v. Great Western Railway Co. 1 Q. B. 51. So it is held, that a covenant to renew a lease in favor of one who subsequently becomes bankrupt, will not be enforced in equity in favor of his assignees. Drake v. The Mayor of Exon, 1 Ch. Ca. 71, 2 Freem. 183; Moyses. Little, 2 Vern. 194, 1 Eq. Ca. Abr. 53, pl. 1; Brooke v. Hewitt, 3 Ves. 253; Willingham v. Joyce, id. 168; Buckland v. Hall, 8 id. 92; Vandenanker v. Desbrough, 2 Vern. 96. So with an agreement for a lease for the personal accommodation of the bankrupt. Flood v. Finlay, 2 Ball & B. 9. (n) Beckham v. Drake, 8 M. & W. 846, 9 id. 79. Judgment reversed in the Exchequer Chamber, 11 id. 315. The facts briefly were, that A agreed, in writing, with B and C, on behalf of themselves and D, as partners in trade, to serve them, B and C, and the survivor of them, for seven years, as their foreman, and not to engage in trade on his own account during that period without their consent; and B and C agreed to pay him wages after the rate of £3 38. per week so long as he should serve them faithfully. The Court of Exchequer held, by Parke, B., that, as the contract related to the employment of the personal skill and labor of the bankrupt, and the damages for the breach of it being compounded partly of the personal incon venience to himself, and partly of the consequential loss to his personal estate, the right of action did not pass to his assignees. On error, brought to the Exchequer Chamber, it was held, Denman, C. J., delivering the opinion of the court, that the right of action for the dismissal of A without reasonable cause, passed to his assignces in bankruptcy, as being part of his personal estate, whereof a profit might be inade. It will be seen that the difference of opinion was not so much upon the prin ciple as upon the application of the principle to the facts before the court. Lord Denman said: "It was further argued, that as this contract related to the person of the bankrupt, the right of action will not pass. There is no doubt that a right of action for an injury to the body or feelings of a trader, arising from a tort independent of contract, does not pass to his assignees, ex. gr. for an assault and battery, or for slander, or for the seduction of a child or servant, and the same may be said of some personal injuries arising out of breaches of contracts, such as contracts to cure or to marry; and if, in the case last supposed, a consequential damage to the personal estate follows from the injury to the person, that may be so dependent upon and inseparable from the personal injury which is the primary cause of action, that no right to maintain a separate action, in respect of such consequential damage, will pass to the assignees of a bankrupt. In all those cases, the primary cause of action, if of a nature, properly speaking, personal, and the right to maintain it, would die with the bankrupt. In the present case, although the contract was for the personal · skill and labor of the bankrupt, the breach of that contract does not appear to cause him any other injury than the diminution of his personal estate. In the cases referred to, the injury (if any) to the personal estate, is a consequence of an injury to the person; in this case, the injury to the person (if any) is a consequence of the injury to the personal estate." |