Platt v. Archer. validity as against the assignee, when subjected to those tests? The tests are applied by the inquiry: 1. Under section fourteen, whether these processes were in fraud of creditors? 2. Under section thirty-five, whether they were made to or in favor of a person having reasonable cause to believe the bankrupt to be insolvent or acting in contemplation of insolvency; or to a person having reasonable cause to believe that they were made with a view to prevent the bankrupt's property from coming to its assignee in bankruptcy, or to prevent the same from being distributed under the act, or to defeat, &c., the object of the act; and whether they were made in the usual and ordinary course of business of the debtor? 3. Under section thirty-nine, whether they were made with intent to delay, defraud or hinder creditors or to defeat or delay the operation of the act? Sixth. The assignment, transfer and conveyance effected by operation of law in this case to the defendant, vested the property of the bankrupt in the plaintiff upon his appointment, under section fourteen of the bankrupt act, because such property was thereby conveyed in fraud of creditors, within the meaning of that section. Such assignment, transfer, and conveyance are said to have been made under, and the legal process through the medium of which the conveyance was effected, are alleged by the defendant and his advisers to have been authorised by the general law of the state of New York relative to insolvent corporations. Those laws are above referred to; and they, together with continued usage and judicial decisions, constituted, at the time of the passage of the bankrupt law, a partial system of bankruptcy or insolvency as to corporations; that is, they fulfilled so much of the office of a bankrupt law as concerns the distribution of the property of an insolvent corporation. This system gave the body of the creditors no choice in the selection of a person to execute the trust, but authorised Platt v. Archer. one creditor or the attorney general to force a trustee upon creditors. The bankrupt act has, within the state of New York, the same operation and effect as if it had been enacted by the legislature of that state. It is in pari materia with the statutes last referred to, and may be treated and applied as if it were a state law. As such, it has additional weight as a supersedeas of former legislation, from the fact that the Legislature passed it with the design (avowed in its title) of making the bankrupt system of New York uniform with the bankrupt system of every other state, the same law being enacted in every other state. The question then arising is, how does the bankrupt law of March second, eighteen hundred and sixty-seven, considered as a law of paramount authority in the state of New York, act upon the assignment impliedly sanctioned and expressly regulated by pre-existing statutes of the same state, the new statute being passed with a view not only to distribute the debtor's property, but to harmonise the insolvent laws of New York with those of other states? Referring to the words of the bankrupt law, as above quoted, it is probable, if not indisputable, that if any of those words, or similar words, had been used in like statutes in this and other countries, and if so used, they had received a well considered construction, then, when the words were re-enacted, the established construction was enacted with them. In England, some form of bankrupt law has been in force since before the time of James I. All the bankrupt acts there passed have provided in substance, that "fraudulent conveyances" should be deemed acts of bankruptcy, and that such conveyances might be set aside as against the assignee in bankruptcy. Of course, the question soon arose as to what was a fraudulent conveyance within the meaning of those laws; and in determining that question it was held that the term "fraudulent conveyance" (which is synonymous with "conveyance in fraud of creditors," as used in section fourteen of our present Platt v. Archer. bankrupt law; and with "assignment with intent," &c., as used in section thirty-nine) refers not only to conveyances which were covinous and fraudulent at common law and under the statutes of Elizabeth, but also to those which, although not fraudulent and covinous in that sense, become so, when compared with the operation and effect of the bankrupt law. In other words, a conveyance not fraudulent before, might becomes so under the bankrupt law, because contrary to the policy of that law. Assignments of all a trader's effects, under certain circumstances, were held contrary to the policy, spirit, operation and effect of the bankrupt law, and out of the ordinary course of business, and therefore fraudulent. And there was no exception in cases where the assignment was for the benefit of all the creditors of the assignor. Griffith & Thomas' Archbold on Bankruptcy, 119; Wilson v. Day, 2 Burrow, 830; Worsley v. De Mattos, 1 Burrow, 467; Alderson v. Taylor, 4 Burrow, 235; Linton v. Haskett, 3 Wilson, 47; Compton v. Bedford 1 W. Blackstone, 362; Law v. Skinner, 2 W. Blackstone, 996; Rust v. Cooper 2 Cowp. 629; Newton v. Chandler, 7 East. 138; Hassell v. Simpson, 1 Dougl. 92; Butcher v. Easto, id. 96; Eckhardt v. Wilson, 8 T. R. 140; Nunns v. Wilmore, id. 528; Tappenden v. Burgess, 4 East. 230; Kittle v. Hammond, Cooke's Bkt. Law, 86; Hoffman v. Pitt, 5 Esp. 22; Botcherley v. Lancaster, 1 Ad. & El. 77; Siebert v. Spooner, 1 M. & W. 714; Bowker v. Bendekin, 11 M. &. W. 128. And this has been so well understood in England that the bankrupt acts of George IV., of eighteen hundred and fortynine and eighteen hundred and sixty-one, specially save voluntary assignments for the benefit of creditors from avoidance, unless proceedings in bankruptcy are commenced within a limited period afterwards; and such assignments are drawn as acts of bankruptcy; and in the costs of bankrupt proceedings allowances are made for the expense of such assignments, when drawn for that purpose. 2 Archbold on Bankruptcy, edition of 1869, sec. 68 of act, also, page 1271 of same volume. Platt v. Archer. In this country we have had the bankrupt law of eighteen hundred and forty-one. Its first and second sections provided as follows: * * shall Law of eighteen hundred and forty-one, 6 Stat. at Large, 441.-Sec. 1. "All persons being merchants, &c., be liable to become bankrupts * * whenever such pershall make any fraudulent conveyance, assign son * * ment," &c. SEC. 2. "All future payments, conveyances, &c., made by any bankrupt, in contemplation of bankruptcy for the purpose of giving a preference; and all other conveyances or transfers of property made by such bankrupt in contemplation of bankruptcy to any person or persons whatever, not being a bona fide creditor or purchaser for a valuable consideration, without notice, shall be deemed utterly void, and a fraud upon this act," &c. Under these sections, voluntary assignments were held void by judges MCLEAN, PRENTISS, WARE, aud CONKLING, in Barton v. Tower, 5 L. R. 214, CONKLING, J.; McLean v. Meline, 3 McLean, 199, MCLEAN, J.; McLean v. Johnson, id. 202, MCLEAN, J.; Gassett v. Morse, 21 Vermont, PRENTISS, J.; Jones v. Sleeper, 2 N. Y. Leg. Obs., WARE, J. In New York there was an insolvent system in force when the case of Hurst, 7 Wend. 241, arose in eighteen hundred and thirty-one. It was there held that a disposition of property for the benefit of creditors, although otherwise untainted with fraud, and not prohibited in terms, was against the policy of the statute and in fraud of the law, and was, therefore, prohibited by necessary implication, and was void. Judge Nelson was a member of the court which decided that case. is All through the cases above quoted, it was held that the its motive and intention of an act was to be tested by natural and necessary consequences, and that the actor conclusively presumed to intend those consequences; fundamental principle which is very strongly stated by NEL SON, J., in Cunningham v. Freeborn, 11 Wend. 240. a Platt v. Archer. Such was, or had been, the state of the law in this country and in England, when the bankrupt law of eighteen hundred and sixty-seven was passed. It used language synonymous with what had thus been construed. If the legislature had intended to except assignments or other insolvency trusts, the exception would have been made expressly. In view of these authorities, it hardly admits of a doubt that the act of eighteen hundred and sixty-seven, in transferring, by section fourteen, to the assignee in bankruptcy property conveyed "in fraud of creditors," and in nullifying, by section thirty-nine, assignments made with "intent to defraud creditors," meant to include such an assignment as the one now in question, without regard to peculiar features of it arising from the state laws. There are, however, special inconsistencies between the operation of such an assignment and the operation of the bankrupt law, more glaring than those which existed under the English bankrupt laws. A review of these inconsistencies fortifies the position, that if the legislature of New York had passed the bankrupt law of eighteen hundred and sixty-seven, it would, by necessary construction, have repealed the system previously in force. 1. Under the law of New York, the trustee is forced upon creditors by one creditor or the attorney-general. Under the act of congress, the creditors force the assignee on the debtor. 2. Under a state law of eighteen hundred and fifty-eight, (Chap. 314, p. 506,) certain rights of action, for instance, to recover property conveyed by the assignor in fraud of creditors, are given to the voluntary assignee. By the fourteenth section of the federal law, which has the same force and effect as if enacted by the state legislature, the same right of action is vested in the assignee in bankruptcy. Which shall prevail? 3. The state law regulates the adjustment of the trustee's |