Clark v. Clark - 58 U.S. 315 (1854)
U.S. Supreme Court
Clark v. Clark, 58 U.S. 17 How. 315 315 (1854)
Clark v. Clark
58 U.S. (17 How.) 315
Where a person took the benefit of the bankrupt law of the United States, omitted, in first schedule of property, to take any notice of a claim which he had against the Mexican Republic for the unlawful seizure of the cargo of a vessel. filed an amended schedule in which he mentioned the claim so indistinctly as to give no information of its value, although he was then prosecuting it before the board of commissioners, concealed the evidence of the property so that the assignee in bankruptcy reported that it was of no value, and sold the whole for a nominal consideration to the sister of the bankrupt, who afterwards transferred it to him, the purchase was fraudulent, under the 4th section of the bankrupt law and also by the general principles of equity.
Where a creditor of the bankrupt filed his bill and gave his bond within thirty days after the award of the board of commissioners, this was sufficient within the 8th section of the Act of March 3, 1849, to carry into effect our treaty with Mexico.
The creditor was a cestui que trust of the fund, and had a right to intervene, as the assignee in bankruptcy was dead. This was sufficient to give jurisdiction to the court. His not having proved his debt did not debar him of this right. Another assignee was appointed, and filed his claim without loss of time.
The 8th section of the bankrupt law, limiting actions to two years after the bankruptcy, relates only to suits brought against persons who have claims to property or rights of property surrendered by the bankrupt. And moreover, no right of action accrued until the fund existed
Ferdinand Clark, the appellant, prosecuted a claim before the commissioners who acted under the treaty between the United States and Mexico, which claim was for the unlawful seizure of the cargo of a vessel called The Louisiana. The commissioners awarded to him $86,786.29, out of which there was deducted, by agreement, a sum of money as compensation to the agents employed in its recovery, leaving $69,429.04.
The award was made on the 15th of April, 1851, and on the 15th of May following, Benjamin C. Clark, of Boston, filed a creditor's bill in the Circuit Court of the United States for the District of Columbia, claiming the fund, for himself and other creditors of Ferdinand Clark who had taken the benefit of the bankrupt law of the United States, on the 22d March, 1843, in the State of New Hampshire. Soon after this bill was filed -- namely on the 30th May -- Hackett, the then assignee in bankruptcy of Ferdinand Clark, filed his bill, also claiming the entire fund, for the purpose of distribution amongst the creditors; Palmer, the original assignee in bankruptcy, has died, and Hackett was appointed in his place.
The substance of Hackett's bill was as follows:
In this bill, Hackett sets forth his appointment as assignee in
place of Palmer, deceased, and prays for leave to come in, under the prayer of the original bill of B. C. Clark and to be made complainant in said cause. He then avers that Ferdinand Clark was duly and regularly declared a bankrupt in 1843, and that all his property and effects passed out of the bankrupt and vested in the assignee, Palmer, who was regularly appointed, and is since dead, leaving the proceeding in bankruptcy still pending; that the bankrupt had among his assets a claim on the Republic of Mexico, which is the claim in satisfaction of which the award in controversy was made; that the said claim was not described in any manner to make the same available to his creditors, and that no such evidences as would enable him to recover said claim were put into the hands of the assignee; and that the assignee was ignorant of the true value of the assets, and that he therefore reported them to the court as of no value; that no right, title, or interest in said claim ever passed out of said assignee or became revested in said bankrupt; that said bankrupt had since prosecuted said claim in his own right, falsely and fraudulently claiming that his debts in bankruptcy had been satisfied and that said claim had revested in him; that the amount of said award legally belongs to complainant as assignee. The complainant then submits that the said Benjamin C. Clark and others, the creditors of said Ferdinand at the date of his bankruptcy, being in the condition of cestuis que trust whose trustee is dead, have complied with the true intent and meaning of the act of Congress. Prayer for an injunction and general relief.
The answer to this bill, amongst other things --
Admits that defendant had among his assets a claim against Mexico, and that the claim on which the award was made is the same; admits that said claim was set down in the schedule, but denies that it was not described so as to make the same available to his creditors, and he expressly and particularly denies that such evidences and information as would have enabled said assignee to recover said claim were fraudulently withheld by this defendant, and denies that his assets and effects generally were so described in his schedules that the assignee was in ignorance of their true value; avers that this Mexican claim was expressly mentioned in said schedule in the manner demanded by the rules and practice of the District Court of New Hampshire; that said claim was mentioned as subject to a mortgage; that such mortgage did exist in fact; that he did not know the amount thereof, but verily believed it to be more than the value of the claim; that no value was set to said claim, because he believed, and had reason to believe, that said claim was wholly without value; that defendant communicated
to Palmer, the assignee, the situation of all the claims mentioned in his schedules; that all the papers and evidences in support of said Mexican claim were not in his possession, but had been, in the year 1842 or earlier, filed publicly before the commissioners appointed under the convention of April 11, 1839, and were afterwards placed, and, at the time of the commencement of the proceedings in bankruptcy, were in the public archives of the government of the United States, and there remained till the time of said award.
The defendant then sets forth more particularly the bankrupt proceedings up to his discharge, on the 17th December, 1844, from all debts then owing by him. He states that notice of the proceedings in bankruptcy was published in the leading papers in the district, and that notice, personally and by letter, was also served on all creditors, whose residence was known; that notwithstanding this, no creditor ever filed in the district court any proof of debt or any objections to the proceedings in bankruptcy or to the doings of the assignee until after the award was made.
The answer then avers that on the 14th day of March, 1845, the assignee filed a petition for an order to sell the estate of the defendant, and on the 14th it was so ordered; that in pursuance of said order, Palmer did, on the 9th day of April, 1845, after posting up advertisements &c., sell at public auction all the estate and demands of the bankrupt mentioned in the schedules attached to the petition of Ferdinand Clark to be declared bankrupt, to R. M. Clark, and that, by sale, said Mexican claim passed to said R. M. Clark. And the answer denies all artifice or fraud to depress the value of said demands, or this Mexican claim particularly; that on the 9th of April, 1845, said Palmer executed a formal bill of sale, with schedules attached to it, in which schedules this Mexican claim was included; that on the 10th April, 1845, defendant purchased, for valuable consideration, all the said property from R. M. Clark, including said claim; that he has prosecuted said claim in his own name and at his own risk and expense; that complainant has not filed his notice with the Secretary according to the provisions of the 8th section of the Act of March 3, 1849.
On the 2d of June, 1851, the circuit court issued an injunction restraining the Secretary of the Treasury from paying, and Ferdinand Clark from receiving, the amount of the award until the further order of the court.
The 8th section of the Act of March 3, 1849, 9 Stat. 394, authorized any person who claimed any part of an award to file a bill and directed the fund to remain in the Treasury, to await the decision of the courts.
The case went on in the circuit court and much testimony was taken. A part of it related to the proceedings in the bankrupt court of New Hampshire, which are summarily referred to in the opinion of the Court and need not be further noticed here.
On the 30th of May, 1853, the circuit court decreed that the fund should be paid over to Hackett for distribution in the bankrupt court of New Hampshire, amongst the creditors of Ferdinand Clark.
From this decree, Clark appealed to this Court.