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EXCELSIOR Ins. Co. v. ROYAL IN8. Co.
is affected, and may call upon the insurer to make him as good again as he was when he effected bis insurance.
Another consideration : It is settled that where a mortgagee, or one in like position toward property, is insured thereon, at his own expense, upon his own motion and for his sole benefit, and a loss happens to it, the insurer on making compensation is entitled to an assignment of the rights of the insured. This is put upon the analogy of the situation of the insured to that of a surety. If this analogy be made complete, then has the insurer no more right to refuse payment of the loss so long as the insured has other remedy for his debt, than has the surety. One as well 'as the other, as soon as the creditor's right to make demand is fixed, must respond to it, and seek his reimbursement through his right of subrogation. And indeed the application of this equitable right of subrogation makes our view of this subject harmonious and consistent with all the rights and interests of all the parties.
As we have viewed and treated this case, we are not required to meet the contention of the defendants, that though the two policies of the plaintiffs and the policy of the defendants be treated as subsisting contracts nominally for $15,000, yet as the premium on but half that sum was paid, there was really insured only the amount of $7,500. We have not considered it necessary to pass definitely upon the question, whether Mrs. Connolly could pursue the plaintiffs upon the policies issued by them. The fact that the proofs of loss show that these were insurance upon the property running to James Connolly, the mortgagor, as the insured, but with a memorandum that the loss, if any, should be payable to David Dows & Co., does not affect the relations of the defendants with Mrs. Connolly and her assignees. It does not appear from the proofs of loss that the loss on the policies should be payable to David Dows & Co., as mortgagees of the property, and we are not called upon to make an inference to that effect. They may have had other claims against Connolly, and liens
property. This point does not appear to have been raised until the case reached this court. This consideration is of force, for James Connolly, as the insured, had an interest in the policies the loss whereon was payable to Dows & Co., and any loss paid upon them would need be in some way applied to his benefit.
There are other considerations which suggest themselves growing out of the reciprocal rights and obligations of debtor and creditor and insured under such a policy, and of Mrs. Connolly and Dows & Co. under their contract, which cannot have a satisfactory or safe determination without all the facts which both sides might furnish.
The varied suggestions interrogatively put by the learned counsel for the defendants on his points, show that there may be many facts lacking, necessary to a satisfactory solution, and which might perhaps have been produced had the points been made at the trial court. We have considered the many interesting points presented by the learned counsel for the defendants, but are not
able to find sufficient ground for the reversal of the judgment appealed from.
All concur, except CHURCH, Ch. J., not voting.
IN RE DECKERT.
CIRCUIT COURT OF THE UNITED STATES.- EASTERN DIS
TRICT OF VIRGINIA.
[JUNE, 1874.] UNCONSTITUTIONALITY OF AMENDATORY BANKRUPTCY ACT OF 1873.
THE VIRGINIA CONSTITUTION AND EXEMPTIONS.
IN RE DECKERT.
The amendatory bankruptcy act of March 3, 1873, is unconstitutional, in that it is
not uniform in its operation. The Constitution of Virginia took effect, so far as it relates to the provisions for
exemptions, on the 6th day of July, 1869 — the day it was ratified.
THE opinion states the facts.
WAITE, C. J. Deckert was adjudged a bankrupt upon his own petition on the 31st of March, 1873. An assignee was appointed May 16, 1873, to whom he assigned his real and personal property in due form. So much of the personal property as was exempt under the bankrupt law was duly set off by the assignee. Its value was estimated at $337.75. The bankrupt, however, claimed a homestead exemption in the real property under the provisions of the Constitution and laws of Virginia and the act of March 3, 1873, amendatory of the bankrupt law; and on the 20th of August, 1873, he filed his petition in the District Court of the Western District of Virginia to have such homestead set off to him. On the 30th of August, an order was made by that court granting the prayer of this petition.
Certain creditors have filed petitions for a review of this order. The cases made by the several petitioners are as follows:
1. Henry Smith. On the 24th January, 1868, the bankrupt and J. L. Deckert executed to one Robert Wason, at Chambersburg, Pennsylvania, a note for the payment of $2,500 in one year after date, with interest. This note was afterwards assigned to Smith, who obtained a judgment upon it in the Washington County Circuit of Maryland, at the August term, 1871, for $1,441.80, that being the balance then due. At the April term, A. D. 1872, of the Circuit Court of Halifax, Virginia, another judgment was obtained by Smith against the bankrupt upon the Maryland judgment. This last judgment was daly docketed in Halifax, and became a lien upon the real estate afterwards assigned under the proceedings in bankruptcy. Smith having been cited to show cause why the prayer of the petition of the bankrupt for the assignment of the homestead should not be granted, appeared and submitted an abstract of his Virginia judgment, but he did not furnish the complete record, and did not submit the record of the Maryland judgment upon which that in. Virginia was rendered. This judgment remains unpaid.
2. D. K. Wanderlink. On the 1st day of April, 1868, the bankrupt, as surety, executed a note with one J. L. Deckert, as principal, for the
IN RE DECKERT.
payment to Wanderlink of $651.50 in six months after date. Proof of this note was made against the bankrupt's estate April 23d, 1873.
3. E. A. Roberts, John A. Roberts, and Robert R. Roberts, under the name of Roberts & Co. On the 15th November, 1869, one Gaines entered into a contract in writing with the bankrupt to construct for him (the bankrupt) a dike upon his lands. For this he was to be paid at the rate of ten cents per yard, a portion being payable as the work progressed, and the balance in ninety days after its completion. It does not appear at what time work under this contract was commenced, but it was completed on the 23d of September, 1870, when there was a balance remaining unpaid of $500.25. This was assigned by Gaines to Roberts & Co., and they proved it against the estate on the 23d of April, 1873. The cost of the whole work was 1,944.83. This had been reduced by payments so that only the above balance remained unpaid at the time of the bankruptcy.
4. George Schindel. The bankrupt was on the 1st day of April, 1870, indebted to him in the sum of $175 for rent of a house for one year from April 1, 1869. He and the bankrupt, on the 30th of June, 1868, executed their joint note to Sarah Lee for $100, payable, with interest, in six months after date thereof. Schindel paid the whole of this note. In 1872 he commenced his action against the bankrupt in the Circuit Court of Washington County, Maryland, to recover the amount due him for the rent and one half the amount paid on the note, and on the 25th of March, 1873, judgment was rendered in his favor for $270.52, and costs, $8.30. On the 22d of April, 1873, this judgment was also duly proved as a debt against the estate.
By Article XI. of the Constitution of Virginia, adopted in 1869, it was provided that every householder or head of a family should be entitled, in addition to the articles then exempt from levy or distress for rent, to hold exempt from levy and sale under execution, &c., issued on any demand for any debt theretofore or thereafter contracted, his real and personal property, &c., to the value of $2,000, to be selected by him. An act of the General Assembly of Virginia, approved June 27, 1870, gave effect to this provision by prescribing in what manner and upon what conditions such householder could set apart and hold such exemption.
Under the bankrupt law, as originally enacted, there was exempted from the assignment of property required to be made by the bankrupt to his assignee, among other things, such property as was exempt from levy and sale under execution by the laws of the State in which the bankrupt had his domicil at the time of the commencement of the proceedings in bankruptcy, to an amount not exceeding that allowed by such state exemption laws in force in the year 1864.
By an amendatory act passed on the 8th June, 1872, this provision was changed so as to give the bankrupt the benefit of exemptions under laws in force in 1871. In 1872 the Court of Appeals of Virginia unanimously decided (22 Gratt. 266) that the provision of the Constitution just referred to, and the statute giving effect to the same, so far as they applied to contracts entered into, or debts contracted before their adoption, were in violation of the Constitution of the United States, and therefore void. After this decision, on the 3d March, 1873, Congress passed another act in the following words :
IN RE DECKERT.
“ Be it enacted, &c., That it was the true intent and meaning of an act approved June 8, 1872, entitled, &c., that the exemptions allowed the bankrupt by the said amendatory act should, and it is hereby enacted that they shall be the amount allowed by the Constitution and laws of each state respectively as existing in the year 1871; and that such exemptions be valid against debts contracted before the adoption and passage of such state Constitution and laws, as well as those contracted after the same, and against liens by judgment or decree of any state court, any decision of any such court rendered since the adoption and passage of such Constitution and laws to the contrary notwithstanding.”
The first question which presents itself for our consideration is whether the act of 1873, in so far as it seeks, in the administration of the bank. rupt law, to give an effect to the exemption laws of a state different from that which is given by the State itself, is constitutional.
Congress has power to " establish uniform laws on the subject of bankruptcies throughout the United States.” Constitution, art. I., sec. 8. A bankrupt law, therefore, to be constitutional must be uniform.' Whatever rules it prescribes for one, it must for all. It must be uniform in its operations, not only within a state, but within and among all the states. If it provides that property exempt from execution shall be exempt from assignment in one state, it must in all. If it specially sets apart for the use of the bankrupt certain property, or certain amounts of property, in one state, without regard to exemption laws, it must do the same in all. If it provides that certain kinds of property shall not be assets under the law in one place, it must make the same provision for every other place within which it is to have effect.
The power to except from the operation of the law property liable to execution under the exemption laws of the several states, as they were actually enforced, was at one time questioned upon the ground that it was a violation of the constitutional requirement of uniformity, but it has thus far been sustained, for the reason that it is made a rule of the law, to subject to the payment of debts under its operation only such property as could by judicial process be made available for the same purpose. This is not unjust, as every debt is contracted with reference to the rights of the parties thereto under existing exemption laws, and no creditor can reasonably complain if he gets his full share of all that the law, for the time being, places at the disposal of creditors. One of the effects of a bankrupt law is that of a general execution issued in favor of all the creditors of the bankrupt, reaching all his property subject to levy, and applying it to the payment of all his debts according to their respective priorities. It is quite proper, therefore, to confine its operation to such property as other legal process could reach. A rule which operates to this effect throughout the United States is uniform within the meaning of that term, as used in the Constitution.
The act of 1873 goes further, and excepts from the operation of the assignment not only such property as was actually exempted by virtue of the exemption laws, but more. It does not provide that the exemption
, laws as they exist shall be operative and have effect under the bankrupt law, but that in each State the property specified in such laws, whether actually exempted by virtue thereof or not, shall be excepted. It in effect
IN RE DECKERT.
declares by its own enactment, without regard to the laws of the states, that there shall be one amount or description of exemption in Virginia and another in Pennsylvania. In this we think it is unconstitutional, and therefore void. It changes existing rights between the debtor and the creditor. Such changes, to be warranted by the Constitution, must be uniform in their operation. This is not. The consequence is that the act of 1872 remains unchanged, notwithstanding its attempted amendment in 1873.
The act of 1872 gives effect to the exemption laws of Virginia as they existed in 1871. The particular law under which the bankrupt in this case claims his exemption was passed in 1870 ; it does not apply to contracts made or debts incurred previous to the time the new Constitution went into effect. That certainly was not before July 6, 1869, and the debts due to Smith, Wanderlink, and Schindel were all incurred previous to that date. That of Smith dates from the time the note was given upon which his judgment was rendered, that of Schindel from the making of the contract out of which the indebtedness arose, and that of Wanderlink from the time of the execution of the note which he holds. As against these creditors, the bankrupt is not entitled to the benefit of the exemption.
The claim of Roberts & Company requires us to determine at what time the Constitution, as far as it relates to the provision in question, took effect. It is claimed by the bankrupt that this was on the 6th July, 1869, when the Constitution was ratified by the people ; and by the creditors, that it was postponed until the 26th of January, 1870, when the act was approved admitting the State to representation in Congress. The contract upon which Roberts & Company base their claim was made, as has been seen, on the 15th of November, 1869.
This Constitution was adopted in accordance with the provisions of the reconstruction acts of Congress. These acts provided, in substance, that when the people of the rebel States should have formed a constitution in conformity with the Constitution of the United States, and should have done certain other things named, such State should be entitled to representation in Congress. It was also further provided, that until the people of any of such States should be by law admitted to representation in Congress, any civil government which might exist therein should be deemed provisional only, and in all respects subject to the paramount authority of the United States, at any time to abolish, modify, control, or supersede
In pursuance of these acts, a convention duly elected assembled in Richmond on the 3d December, 1867, and proceeded forthwith to frame a Constitution, which was certified to Congress as required by law, and thereupon an act was passed by Congress and approved on the 10th of April, 1869, authorizing its submission to a vote of the people, and an election of the state officers provided for and of members of Congress. The same act provided that if the Constitution should be ratified at such election, the legislature of the State then elected should assemble at the capital of the State on the fourth Tuesday after the promulgation of the ratification, and that before the State should be admitted to representation in Congress the legislature, that might thereafter be lawfully organized, should