Wehl v. Wald.

herself fortunate that she has been saved from such a future by the selfish and perfidious conduct of the defendant.

A new trial is granted.

John T. Joyce, for the plaintiff.

William B. Douglass, for the defendant.

JULIUS WEHL

vs.

GUSTAVUS H. WALD, ASSIGNEE IN BANKRUPTCY OF ALBERT NETTER AND GABRIEL NETTER. IN EQUITY.

G., as

W., the voluntary general assignee of N., sued S. to recover money due to N. assignee in bankruptcy of N., under a petition in bankruptcy filed after such voluntary assignment was made, claimed the same money, and was made the defendant in the suit, by an order of interpleader. G. had not ob tained a decree setting aside the assignment to W.: Held, that, for the purposes of this suit, such assignment to W. must be regarded as valid, and as giving him the title to the money.

(Before WALLACE, J., Southern District of New York, May 17th, 1880.)

W

under

ALLACE, J. The plaintiff is the assignee of the Netters, a voluntary general assignment for the benefit of creditors, made December 26th, 1877. Within six months after the assignment the Netters filed their petition in bankruptcy, were thereafter adjudicated bankrupts, and the defendant appointed their assignee in bankruptcy. The plaintiff, assignee of the Netters under the voluntary assignment, and the defendant, as their assignee in bankruptcy, both made claim to a sum of money deposited with the firm of Stern

and

was

as

Wehl v. Wald.

berger & Co. in trust for the Netters. The plaintiff brought suit against Sternberger & Co., to recover the fund, and thereupon the latter obtained an order of interpleader, whereby the present defendant was brought into the action.

The present action involves the single question, whether the voluntary assignee has a better title to the sum in dispute than the assignee in bankruptcy. Undoubtedly, the voluntary assignment was void at the election of the assignee in bankruptcy, as a transfer in contravention of the bankrupt Act. (In re Beisenthal, 14 Blatchf. C. C. R., 146; McDonald v. Moore, 8 Benedict, 579; Platt v. Preston, 19 N. B. R., 241; Belden v. Smith, 16 N. B. R., 302.) But, the assignee in bankruptcy has not obtained a decree setting aside the voluntary assignment; and, in order to prevail here, he must establish the proposition that the voluntary assignment was not merely void at his election, but so absolutely void that the plaintiff's title under it can be assailed and defeated collaterally. No authority is cited sustaining this proposition, and it is not tenable upon any reasonable construction of the bankrupt Act. The statute declares, that prohibited transfers "shall be void," and that the assignee in bankruptcy “may recover the property, or the value thereof, as assets of the bankrupt." The assignee in bankruptcy is, therefore, authorized to acquire the title to the property transferred, or sue for its value, and, for this purpose, to adopt any appropriate remedy, at his election. But, it cannot be doubted that he may affirm the transfer; and, in practice, this is usually done by filing a bill against the voluntary assignee, for an accounting. And, in such actions, the voluntary assignee is usually protected in all payments made for the benefit of the estate. (Jones v. Kinney, 5 Benedict, 259; In re Cohn, 6 N. B. R., 379; Cragin v. Thompson, 2 Dillon, 513.) These cases, and many others that might be cited, proceed upon the theory, that the assignment is not void ab initio, even as against the assignee in bankruptcy, but voidable at his election. As is stated in Belden v. Smith, (16 N. B. R., 302,) until the general assignment shall have been set aside as void as against the

Whiting v. The Town of Potter.

assignee in bankruptcy, the title remains in the voluntary assignee.

It is not necessary to decide that an assignee in bankruptcy does not manifest his election to treat the assignment as void until he brings suit against the voluntary assignee to have it declared void and obtains a decree. It suffices to hold, that he does not do this by making claim to a part only of the assigned property. He must elect to treat it as void in toto or not at all. He cannot elect to consider it void as to the particular sum of money now involved, and valid as to everything else which the voluntary assignee claims under the assignment. Until he has elected to treat the assignment as void, it is to be treated as valid, and, as the title of the voluntary assignee is first in time, he is entitled to the sum in controversy. The case is to be considered as though the assignee in bankruptcy had brought an action to recover money owing to the assignors, before he has elected whether he will treat the voluntary assignment as valid or as void. He cannot manifest his election in this manner, nor can the assignment be thus declared void collaterally.

Judgment is ordered for the plaintiff.

M. H. Regensburger, for the plaintiff.

H. E. Howland, for the defendant.

WILLIAM H. WHITING VS. THE TOWN OF POTTER.

Under the Act of the Legislature of New York, passed May 18th, 1869, (Lars of New York, 1869, chap. 907,) as amended by the Act of May 12th, 1871, (Laws of New York, 1871, chap. 925,) permitting municipal corporations to aid in the construction of railroads, the petition of tax payers for the bonding of a town, filed with the county judge August 4th, 1871, did not set forth that the petitioners were a majority of the tax payers who were taxed or as

Whiting v. The Town of Potter.

sessed for property, "not including those taxed for dogs or highway tax only," and including the owners of non-resident lands taxed as such. It only set forth that the petitioners were a majority of the tax payers whose names appeared upon the tax list or assessment roll. But, the petition was accompanied by the affidavit of a tax payer, who was a petitioner, verifying the peti tion and setting forth that the petitioners were a majority of the tax payers "not including those taxed for dogs or highway tax only." The county judge made an adjudication that the petitioners were a majority of “the tax payers." The statute provided for the issuing of the bonds and their exchange for the stock of the railroad company named in the proceedings, and for the payment of the principal and interest of the bonds as a town charge. Another statute provided that the issuing of bonds might be restrained by injunction, and another, that the proceedings for bonding might be reviewed by certiorari by a higher Court. The bonds were issued dated September 1st, 1872, payable in 30 years, and had coupons payable every 6 months from and including March 1st, 1873. The town paid the coupons which fell due before March 1st, 1879. It had received the stock and retained it. In a suit brought against the town, on coupons which fell due March 1st, 1879, by a person who was a bona fide holder of the coupons, for value, Held,

(1.) That the county judge had jurisdiction to make the adjudication; (2.) That, as the statute provided that the word "tax payer," when used in it, should include "the owner of any non-resident lands, taxed as such," and should not include “those taxed for dogs or highway tax only," and that the petition, verified by one of the petitioners, should set forth that the petitioners were a majority of "the tax payers,” the petition and the verification together constituted the petition, and the petition, so verified, was to be regarded as verified by all the petitioners, and the petition and the adjudication were sufficient;

(3.) That, as against the plaintiff, as a bona fide holder, for value, of the coupons, the town was estopped from questioning their validity, after it had accepted and retained the stock for which the bonds and coupons were issued, and had paid the interest on the bonds for so long a time.

(Before BLATCHFORD, J., Northern District of New York, May 20th, 1880.)

BLATCHFORD, J. This suit was tried before the Court without a jury. It is brought to recover the amount payable by 218 coupons on bonds issued by the town of Potter, in Yates county, New York, a municipal corporation of the State of New York, in aid of the construction of the Geneva and Southwestern Railway Company. Of these coupons, 109 fell due March 1st, 1879, and 109 September 1st, 1879. Of each set of 109, 90 belonged to bonds of $100 each, and were for $3 50 each, and 19 belonged to bonds of $1,000 each, and

Whiting v. The Town of Potter.

were for $35 each. The total amount of the 218 coupons is $1,960. The total amount of bonds issued by the town in aid of the railroad was $30,000. The Commissioners who issued the bonds delivered them to the railroad company in payment of a subscription by the town for $30,000 of the capital stock of the company, and the town received a certificate for that amount of such stock and has retained it ever since. The bonds were dated September 1st, 1872, and were issued shortly after November 6th, 1872, and were payable in 30 years from date, and had on them, when issued, coupons payable every six months, from and including March 1st, 1873, to and including September 1st, 1902. The town paid the coupons which fell due before March 1st, 1879. The plaintiff is a bona fide holder, for value, of the coupons sued on. The bonds are in this form: "United States of America. State of New York. No. 3. $100. Town of Potter, County of Yates. The town of Potter, in the county of Yates and State of New York, acknowledges itself indebted to the bearer in the sum of one hundred dollars, which sum said town promises to pay to the holder hereof, at the county treasurer's office of Yates county, in Penn Yan, N. Y., thirty years after the date hereof, and also interest at the rate of seven per cent. per annum thereon, payable semi-annually, on the first days of March and September in each year, until the said principal sum shall be paid, on the presentation of the annexed interest warrants at the county treasurer's office of Yates county, in Penn Yan, N. Y. This bond is one of like tenor, amounting, in the whole, to the sum of thirty thousand dollars, and issued pursuant to an Act of the Legislature of the State of New York, passed May 18th, 1869, entitled An Act to amend an Act entitled an Act to authorize the formation of railroad corporations and to regulate the same, passed April 2d, 1850, so as to permit municipal corporations to aid in the construction of railroads, and the several Acts amending the same. In testimony whereof the undersigned, duly appointed Commissioners of said town of Potter, pursuant to sections 2d and 3d of the said Act, have hereunto set their hands and seals, the first day of September,