Harrison v. Sterry - 9 U.S. 289 (1908)
U.S. Supreme Court
Harrison v. Sterry, 9 U.S. 5 Cranch 289 289 (1908)
Harrison v. Sterry
9 U.S. (5 Cranch) 289
In the distribution of a bankrupt's effects in this country, the United States is entitled to a preference, although the debt was contracted by a foreigner in a foreign country, and although the United States had proved its debt under the commission of bankruptcy and had voted for an assignee.
An assignment by one partner, in the name of the co-partnership, of the partnership effects and credits, is valid.
Under a separate commission of bankruptcy against one partner, only his interest in the joint effects passes.
The bankrupt law of a foreign country cannot operate a legal transfer of property in this country.
This was an appeal from a decree of the Circuit Court for the District of South Carolina in a suit in equity in which Richard Harrison was complainant and the following parties defendants, viz., 1, The United States; 2, Sterry and others, assignees of H. M. Bird and Benjamin Savage under a British commission of bankruptcy; 3, Aspinwall and others, assignees of Robert Bird, under an American commission of bankruptcy; 4, several American creditors who had attached the effects of Bird, Savage & Bird, in South Carolina; 5, several British creditors who had also attached the same effects, and, 6, Thomas Parker, who, by consent of the creditors, had been appointed by the court of common pleas in South Carolina, an agent for all the parties concerned, to collect and receive the debts due to Bird, Savage & Bird, which had been attach and when
received, to hold the same till the further order of the court.
The question was how those attached effects should be distributed.
Harrison, the complainant, claimed them as a trustee for the benefit of certain creditors of the house of Robert Bird & Co., which was the name of the firm by which the house of Bird, Savage & Bird of London carried on merchandise at New York. Robert Bird, desirous of aiding and supporting the credit of the house of Bird, Savage & Bird, by raising funds, upon the security of the cargo of the East India ship Semiramis, and certain debts to a large amount due to them in South Carolina, made a deed of trust on 3 December, 1802, intending thereby to assign that cargo and those debts to the complainant. The deed purported to be signed and sealed by H. M. Bird and Benjamin Savage, by Robert Bird, their attorney, and by Robert Bird, in his own right. It recited that
"Whereas H. M. Bird, Benjamin Savage and Robert Bird, being co-partners in trade under the several firms of Bird, Savage & Bird, and Robert Bird & Co. have in consequence of disappointments been obliged to borrow money from the Bank of England, and under the firm of Robert Bird & Co. to purchase bills of exchange, public and bank stocks and goods upon credit in America in order to furnish means of more effectually supporting the credit of the said Bird, Savage & Bird of London. And whereas it may be necessary for the purpose aforesaid that the said Robert Bird & Co. should continue to make such purchases until the present difficulties may be removed, and security having been already given to the persons bound as sureties to the Bank of England, for their responsibilities, the said H. M. Bird, Benjamin Savage and Robert Bird, are desirous to secure all persons from whom purchases have been or may be made as aforesaid, for the purpose of aiding the said house or firm of Bird, Savage & Bird. Now therefore know ye that the said Henry M. Bird, Benjamin
Savage and Robert Bird, for the purpose above expressed"
&c. The trust expressed was
"to apply the same and every part thereof for the equal security and indemnification, in proportion to their just demands, of all persons from whom the said Robert Bird & Co. shall, before the end of the year 1803, have made any such purchases of goods, stocks or bills, or who before that time shall be holders of any bills of exchange drawn or negotiated by the said Robert Bird & Co. for the purpose of giving support to the house of Bird, Savage & Bird, as aforesaid."
Another ground of Harrison's claim was a similar instrument of writing, dated 31 January, 1803, not under seal, but signed, "Bird, Savage & Bird," and "Robert Bird & Co." which signatures were in the handwriting of Robert Bird.
The bill of complaint stated that Robert Bird & Co., before and after 3 December, 1802, and before the end of the year 1803, made various purchases of stocks, goods and bills of exchange, and became indebted for bills drawn and negotiated by them for the purpose of giving support to the house of Bird, Savage & Bird, which debts remain unpaid. There was a letter of attorney from Henry M. Bird and Benjamin Savage to Robert Bird, but it did not authorize him to execute deeds in their names generally.
The claim of the United States rested upon the priority given by the Act of Congress of 3 March, 1797. Vol. 3, p. 423, § 5.
The attaching creditors relied upon their attachments under the laws of South Carolina.
The assignees under the several commissions of bankruptcy relied upon the British and American bankrupt laws.
The United States had proved its claim under the American commission and had voted in the
choice of assignees. They had also attached the effects in South Carolina under the laws of that state, and had arrested Robert Bird and held him to bail in New York.
The court below decided that the United States was entitled to priority of payment. That after satisfaction of that claim Harrison would be entitled, under the assignment, to Robert Bird's third part or share of the property mentioned in the deed, and the attaching creditors to the other two-thirds. That the assignees under the British commission could take nothing, and that the assignees under the American commission could take nothing but the surplus after all the other classes of creditors were satisfied.
From this decree all the parties excepting the United States appealed.