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are so clear as to leave little room for construction.
II. Coin money. The gold coins of the United States, of standard weight and fineness, are legal tender in all payments at their face value. Act Feb. 12, 1873, Rev. Stat. & 3585, Comp. Stat. 8 6572, 6 Fed. Stat. Anno. 2d ed. p. 297.
Silver coins of denominations smaller than $1 are legal tender in all sums not exceeding $10. Act June 9, 1879, Comp. Stat. § 6573, 6 Fed. Stat. Anno. 2d ed. p. 301.
The minor coins of the United States are legal tender for any amount not exceeding 25 cents in any one payment. Act Feb. 12, 1873, Rev. Stat. § 3587, Comp. Stat. $ 6574, 6 Fed. Stat. Anno. 2d ed. p. 298.
Under the act last referred to, 5cent pieces have been held to be “lawful current money.” Black v. State (1904) 46 Tex. Crim. Rep. 107, 79 S. E. 311 (larceny).
A 5-cent piece is legal tender, though it is worn, defaced, and mutilated, if its weight is not appreciably diminished and its mint marks are plainly discernible. Cincinnati Northern Traction Co. v. Rosnagle (1911) 84 Ohio St. 310, 35 L.R.A.(N.S.) 1030, 95 N. E. 884, Ann. Cas. 1912C, 639. See to similar effect, as to worn or mutilated minor coins: Mobile Street R. Co. v. Watters (1902) 135 Ala. 227, 33 So. 42; Chicago Union Traction Co. v. McClevey (1906) 126 Ill. App. 21; Ruth v. St. Louis Transit Co. (1903) 98 Mo. App. 1, 71 S. W. 1055; Jersey City & B. R. Co. v. Morgan (1889) 52 N. J. L. 60, 18 Atl. 904, affirmed in (1890) 52 N. J. L. 558, 21 Atl. 783.
III. Paper money. It has been authoritatively settled that Congress has the power to make paper money legal tender. Legal Tender Cases (1871) 12 Wall. (U. S.) 457, 20 L. ed. 287; Legal Tender Cases (1884) 110 U. S. 421, 28 L. ed. 204, 4 Sup. Ct. Rep. 122. In the latter case it was said: “We are irresistibly impelled to the conclusion that the impressing upon the Treasury notes of the United States the quality of being a legal tender in payment of private
debts is an appropriate means, conducive and plainly adapted to the execution of the undoubted powers of Congress, consistent with the letter and spirit of the Constitution, and therefore, within the meaning of that instrument, 'necessary and proper for carrying into execution the powers vested by this Constitution in the government of the United States.'"
The Federal statutes provide that the following United States paper money shall be legal tender for private debts :
United States notes, Act February 25, 1862, Rev. Stat. § 3588, Comp. Stat. $ 6575, 6 Fed. Stat. Anno. 2d ed. p. 299.
(2) Demand Treasury notes authorized by the Act of July 17, 1861, and the Act of February 12, 1862, Rev. Stat. § 3589, Comp. Stat. 6576, 6 Fed. Stat. Anno. 2d ed. p. 300.
(3) Interest-bearing Treasury notes issued under the Acts of March 3, 1863, and June 30, 1864, Rev. Stat. § 3590, Comp. Stat. § 6577, 6 Fed. Stat. Anno. 2d ed. p. 300.
(4) United States gold certificates, Act December 24, 1919, Comp. Stat. § 6577a, Fed. Stat. Anno. Supp. 1919,
Certain other paper currency is authorized by Congress, which is not made legal tender for all debts.
(1) National bank notes are legal tender for the payment of “taxes, excises, public lands, and all other dues to the United States except duties on imports, and also for all salaries and other debts and demands owing by the United States to individuals corporations and associations within the United States, except interest on the public debt and in redemption of the national currency." Rev. Stat. § 5182, Comp. Stat. § 9721, 6 Fed. Stat. Anno. 2d ed. p. 733. The foregoing provision as to debts owing by the United States was also enacted in Rev. Stat. § 3475, Comp. Stat. 8 6381, 6 Fed. Stat. Anno. 2d ed. p. 636.
(2) Federal reserve notes are made "receivable by all national and member banks, and Federal reserve banks, and for all taxes, customs, and other public dues.” Act Dec. 23, 1913, § 16,
Comp. Stat. $ 9799, 6 Fed. Stat. Anno. arguendo as "bills which under ordi2d ed. p. 833.
nary circumstances pass from hand to In the reported case (VICK v. hand as money at their nominal value, HOWARD, ante, 240) it is held that and which, when so current, the law gold certificates are legal tender un- has always recognized as a good tender the Act of 1919, supra, and that der in payment of money debts, unnational bank notes are not legal less specifically objected to at the time tender for private debts, because not of the tender." so declared by Congress. It is how- In North Hudson County R. Co. v. ever, recognized in that case that Anderson (1897) 61 N. J. L. 248, 40 national bank notes are a good tender, L.R.A. 410, 68 Am. St. Rep. 703, 39 Atl. unless specifically objected to. So, in 905, 4 Am. Neg. Rep. 317, a United Legal Tender Cases (1884) 110 U. S. States Treasury note from which a 421, 28 L. ed. 204, 4 Sup. Ct. Rep. 122, corner had been torn was held not to national bank notes were referred to be legal tender.
W. A. S.
JOSEPH K. STONE, Trustee in Bankruptcy of Guiseppe Gioffre, Appt.,
Pennsylvania Supreme Court - January 7, 1924.
(278 Pa. 400, 123 Atl. 333.) Bankruptcy -effect of payment of insurance to bankrupt.
1. In view of the provisions of the Bankruptcy Act of 1898, that the trustee shall be vested with the title of the bankrupt as of the date he was adjudged a bankrupt, an insurance company which, without notice of the proceedings, pays a loss to the bankrupt between the time of the involuntary petition and the adjudication, will not be required to pay again to the trustee because of the Amendment of 1910, that the trustee shall be deemed vested with all the rights, remedies, and powers of a judgment creditor holding an execution duly returned unsatisfied.
[See note on this question beginning on page 254.] — right of trustee when fixed.
2. Under the provisions of the 1910 terial in what condition any property Amendment to the Bankruptcy Act, may have been at the time of the filing if there was nothing in existence at of the petition. the time of adjudication to which the [See 3 R. C. L. 231; 1 R. C. L. Supp. trustee could take title, it is imma- 790; 4 R. C. L. Supp. 182.]
APPEAL by plaintiff from a judgment of the Court of Common Pleas for Beaver County (Baldwin, P. J.) refusing to remove a compulsory nonsuit in an action brought to recover an amount paid by defendant to the insured bankrupt less the sum paid the mortgagee. Affirmed.
The facts are stated in the opinion of the court.
Messrs. Roy M. Jamison and Joseph Where a fire insurance company, in Knox Stone for appellant.
settlement of a loss, has made payMessrs. John M. Haverty and John
ment to the insured, after the date B. McClure for appellee.
of filing an involuntary bankruptcy Schaffer, J., delivered the opinion petition against him, but before the of the court:
adjudication, without knowledge of This is the question presented : the petition, can the trustee, the in(278 Pa. 400, 123 Atl. 333.) sured having absconded, compel pay- Manufacturers' Nat. Bank, 64 Pa. ment by the insurance company a 74, 77, 3 Am. Rep. 573, thus charsecond time?
acterized it: “This is an unjust and Gioffre owned a building covered cruel law; and the effect of it may by a policy of defendant company; be to make bankrupts of honest and on January 30, 1920, it was de- solvent men, who are only desirous stroyed by fire. The insured made of fulfilling their legal obligations. proof of loss March 20, 1920. An That all the world has notice of a involuntary petition in bankruptcy transfer by operation of law, in prowas filed against him on April 13, ceedings in bankruptcy, is a mere 1920. August 28, 1920, the insur- fiction, -not true in reality. ance company, without notice of the The attention of Congress ought pendency of the bankruptcy pro- surely to be called to this subject, ceeding, paid to Gioffre the amount and some suitable provision made to of the policy, less a sum due on a protect those who deal honestly, in mortgage covering the property, good faith, and without notice, with He was adjudged a bankrupt .No- bankrupts." vember 19, 1920, and on December That Congress did not intend to 18, 1920, a trustee was appointed, continue this injustice when it who subsequently (Gioffre having passed the Act of 1898 is made absconded) began suit to recover manifest by the provisions of $ 70a from the insurance company the of the statute, which provides that amount of money it had paid the the trustee shall be vested, by operabankrupt, less the sum paid the tion of law, with the title of the mortgagee. On the trial the court bankrupt, “as of the date he was entered a compulsory nonsuit; the adjudged a bankrupt.” In our opinrefusal to remove it brought about ion, it would take more explicit lanthis appeal.
guage than that of the 1910 AmendOn first reading there seems to be ment, on which appellant relies, to some confusion among the various change this provision of the act, and cases in which the courts have been to make its effect similar to that of called on to determine the rights of the earlier statute. The amendment those who in good faith have dealt reads: “And such trustees, as to all with a bankrupt between the time property in the custody or coming of the filing of an involuntary peti- into the custody of the bankruptcy tion and the adjudication. These
adjudication. These court, shall be deemed vested . cases are many, and a review of all with all the rights, remedies, and of them will not be attempted. A powers of a judgment creditor holddiscussion of most of them can be ing an execution duly returned unfound in 1 Fed. Stat. Anno. 2d ed. satisfied.” Comp. Stat. § 9631, 1 p. 1154. Their careful perusal, hav- Fed. Stat. Anno. 2d ed. p. 934. ing in mind the particular facts of “It was to obviate the prior limieach case, what the court was called tation upon the right of a trustee to upon to determine, the provisions of attack unrecorded conditional sale the Bankruptcy Act of 1898 and its contracts and other like liens, that Amendment of 1910 (Comp. Stat. the amendment was passed.” 2 Col$$ 9585–9656, 1 Fed. Stat. Anno. 2d lier, Bankr. 13th ed. 1053. ed. p. 509), dispels at least some of "For the purpose of fixing prior
ity as between a trustee in bankUnder the Bankruptcy Act of ruptcy and adversely claiming lien March 2, 1867 (14 Stat. at L. 517, holders, the time of filing the petichap. 176), payment to a bankrupt, tion is the vital date, and a lien inafter filing of the petition, although valid on that date cannot be perfectmade in good faith, and without ac- ed before adjudication, so as to tual notice of the proceeding, was make it valid against the trustee. not valid. Judge Sharswood, in
The filing of an involuntary speaking of that statute in Mays v. petition does not, ipso facto, take
from the alleged bankrupt his do- effect an attachment and injunction. minion over his property; while his Thereafter all the property rights of disposition of his property may be the debtor were ipso facto in abeyinvalidated and set aside under cer- ance until the final adjudication. tain circumstances, such property
Those who dealt with his remains under his control until the property in the interval between the adjudication.” 2 Collier, Bankr. filing of the petition and the final 13th ed. 1636.
adjudication did so at their peril." As Congress, in enacting the International Bank v. Sherman Amendment of 1910, did not use the (1879) 101 U. S. 403, 406, 25 L. ed. language of the Act of 1867, al. 866, 867. though necessarily familiar with "It is as true of the present law as the terms of that statute, it will not it was of that of 1867, that the filing be deemed by us, under the dubious of the petition is a caveat to all the language it employed, to have in- world, and in effect an attachment tended to bring about the injustice and injunction,
and on adworked by its prior law. In consid- judication, title to the bankrupt's ering the effect of the Amendment property became vested in the trusof 1910, we said in Bank of North tee, ... with actual or construcAmerica v. Penn Motor Car Co. tive possession, and placed in the 235 Pa. 194, at page 200, 83 Atl. custody of the bankruptcy court." 624: “The manifest purpose of the Mueller v. Nugent (1902) 184 U. S. amendment was to enlarge the 1, 14, 46 L. ed. 405, 411, 22 Sup. Ct. rights, remedies, and powers of a Rep. 269, 275. trustee in bankruptcy, and it had the --give standing room for the poeffect of vesting in the trustee the sition assumed by appellant, that rights, remedies, and powers of a payment to the bankrupt after the judgment or other creditor having a filing of the petition is invalid, but, lien, and of an unsatisfied execution we believe, other pronouncements of creditor without a lien, at the time the Federal courts negative the of instituting bankruptcy proceed- idea which he contends for, as, for ings. In other words, the trustee instance, Re Mertens (1906) 75 was given the power to assert every C. C. A. 548, 553, 144 Fed. 823, right which such creditors could where it was said: “Under the Act have asserted during the period of of 1867, no lien could be acquired four months immediately preceding after the filing of the petition in the filing of the petition in bank- bankruptcy, because the title of the ruptcy.”
assignee vested as of the commenceCertain declarations by the Fed- ment of the proceeding in bankrupteral courts, such as:
cy. Now the trustee takes the prop"The filing of the petition by erty of the bankrupt in the condition proper parties,
making the in which he finds it at the date of requisite jurisdictional allegations, the adjudication, unless it has been
• operates as a lis pendens, and encumbered fraudulently or in connotice to all the world." Re Billing travention of some of the provisions (1906; D. C.) 145 Fed. 395.
of the act.
The change in the “The filing of the petition in bank- present act, by which the trustee's ruptcy is. judicial process,' title is that only which exists at the and operates as an attachment or date of the adjudication, removes sequestration from that time of the any uncertainty which arose under property of the bankrupt, for the the Act of 1867. It was intended, equal benefit of all of his creditors, we think, to permit all legitimate and as a restraint upon its disposi- business transactions between a tion by him.” Re Smith (1904; D. debtor and those dealing with him C.) 132 Fed. 303.
to be carried out and consummated “The filing of the petition was a as freely, until he has been adjudicaveat to all the world. It was in cated a bankrupt, as though no pro
(278 Pa. 400, 123 Atl. 333.) ceeding were pending.
While demand Zotti's funds until after the the filing of a petition in bankruptcy bank had honored Zotti's checks, as is a caveat to all the world, the no- it was bound to do without any notice ought not to have the effect of tice of the filing of the petition. paralyzing all business dealings Payments after notice would, no with the debtor, or to prevent lien- doubt, be in contempt of the order ors or pledgees from enforcing their appointing the receiver, but to recontracts. This is its practical ef- quire it to pay that sum over again fect, if the rights and remedies of to the trustee under the circumall concerned are in suspense, until stances of this case would be in the it can be ascertained whether an highest degree inequitable." adjudication is or is not to follow the In Re Perpall (1921; C. C. A.) commencement of the proceeding." 271 Fed. 466, 468, it was said: "A
Re Zotti (1911) 108 C. C. A. transfer made by a bankrupt sub196, 186 Fed. 84, Ann. Cas. 1914A, sequent to the filing of the petition 240, determined that a bank could is not necessarily void. It is merely not be required to pay money to a voidable, if made under such cirtrustee which it already had paid cumstances as to constitute such out on checks of the bankrupt, transfer of preference to the transdrawn after the filing of the peti- feree within the provisions of § 60a tion, but before the adjudication, and g 60b of the Bankruptcy Act. In that case the referee ordered the
Until adjudication in bankbank to pay over on the ground that ruptcy, the title of the bankrupt's the petition was a caveat attach- property remains in the bankrupt, ment, and injunction, of which the and a valid transfer can be made by bank' must be held to have had con
The Bankruptcy Act structive notice, and any payment does not provide that any and all by it thereafter was invalid as transfers made by the bankrupt subagainst the trustee. The circuit sequent to the filing of the petition court of appeals, in reversing, used and prior to the adjudication are abthis language: "Section 70a of the solutely void. The act provides that Bankruptcy Act of 1898
pro- transfers may be voided by the trusvides that the title of the bankrupt tee if they constitute a preference, shall vest in the trustee, as of the and a preference is described by the date of adjudication, inter alia, to act. It is only preferential trans(5) property which prior to the fil- fers which are voidable. Preference ing of the petition
he could have implies paying or securing a pretransferred, etc. This latter lan- existing debt of a person preferred. guage is intended to define the prop
Where one gives an insolvent erty which passes, viz., such as the person value for a transfer of propbankrupt owned at the time the pe- erty, where he makes an exchange tition was filed. The indebtedness of property, there is no preference." of the bank to Zotti was property It will be noticed that, when Inwhich he could have transferred. ternational Bank v. Sherman, supra Until the adjudication the title to it (the language of which has given remained in him, and if no receiver rise to most of the difficulties in dehad been appointed we can conceive cision), was decided, the old Act of no ground on which the trustee's 1867 was still in effect, so that the present claim could be rested. As language used was perfectly correct, the court did appoint a receiver, it is since under that statute title vested to be presumed, in the absence of in the trustee as of the date of the specific directions, that he was to filing of the petition. The same hold as custodian, without title, for phrase used in that case was used in the purpose of preservation, and not a number of others, but they all for the purpose of distribution. The seem to relate to situations where alleged bankrupt might never be the alleged bankrupt attempted to adjudicated. The receiver did not colorably transfer some of his prop