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Parmenter Manufacturing Company vs. H. Warren Hamilton & others

Massachusetts Supreme Judicial Court1898-11-01
172 Mass. 178

Summary

Holding. Congress possessed the power to supersede state insolvency laws through the 1898 bankruptcy act, and the statutory language demonstrated a clear congressional intent to establish exclusive federal bankruptcy jurisdiction over all insolvency proceedings commenced after the act's passage. The demurrer was overruled.

The 1898 federal bankruptcy law included language stating it would take full force and effect upon passage, with only limited delays before petitions could be filed. The court examined whether this language superseded state insolvency laws and deprived state courts of jurisdiction to hear insolvency petitions filed after the law's enactment. The court concluded that Congress intentionally chose language designed to establish a uniform federal bankruptcy system that would replace all conflicting state insolvency laws from the effective date forward, except for proceedings already commenced in state courts before the law took effect.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether the 1898 federal bankruptcy law superseded state insolvency laws
  • Congressional intent regarding state court jurisdiction over insolvency proceedings
  • Scope of the savings clause for proceedings commenced before the statute's passage

Procedural posture

A demurrer was filed challenging the jurisdiction of state courts to entertain insolvency petitions filed after the federal bankruptcy law's passage.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Knowlton, J.

The United States bankruptcy law passed on July 1,1898, ends with the following provision: “ This act shall go into full force and effect upon its passage; provided, however, that no petition for voluntary bankruptcy shall be filed within one month of the passage thereof, and no petition for involuntary bankruptcy shall be filed within four months of the passage thereof. Proceedings commenced under State insolvency laws before the passage of this act shall not be affected by it.”

The question in this case is whether this act so far superseded the insolvency laws of this Commonwealth from the time of its passage as to deprive our courts of jurisdiction to entertain petitions for the commencement of insolvency proceedings filed after July 1, 1898. This depends upon the intention of Congress, as manifested by the language above quoted. Of the power of Congress to pass an act having this effect, there is no. doubt. Const. U. S. Art. 1, § 8, cl. 4. Griswold v. Pratt, 9 Met. 16. In re Klein, 1 How. 277, 280, 281. Sturges v. Crowninshield, 4 Wheat. 122, 192. Ogden v. Saunders, 12 Wheat. 213, 369. The language is materially different from that of the bankruptcy act of 1867, and from that of the earlier bankruptcy law of 1841. See U. S. St. March 2, 1867; Day v. Bardwell, 97 Mass. 246; Judd v. Ives, 4 Met. 401; Swan v. Littlefield, 4 Cush. 574. The argument that the change in question was intentional is almost irresistible. The act is to “ go into full force and effect upon its passage.” That is to say, the rights of all persons, in the particulars to which the act refers,

are to be determined by the act from the time of its passage. Among these rights is the right to have insolvent estates settled in bankruptcy under the provisions of the act, including the rights to have acts of bankruptcy affecting the settlement of estates determined by it (§ 3), to have the rights of debtors to file voluntary petitions, and of creditors to file involuntary petitions determined by it (§ 4), and to have preferences and liens governed by the provisions of it (§§ 60 and 67). These various provisions affecting the rights and conduct of debtors and creditors are different from those previously existing in most of the States, and perhaps different from those found in the laws of any State, and they supersede all conflicting provisions. The only limitation upon the full and complete operation of the act upon its passage is that the right to begin proceedings is postponed one month in the case of voluntary petitions and four months in the case of involuntary petitions. Whenever the proceedings are commenced, the conduct of the parties after the passage of the act is to be tested by its requirements. The only saving clause affecting the jurisdiction of State courts provides for cases commenced in those courts before the passage of the act. The plain implication is that proceedings commenced in the State courts after the passage of the act are unauthorized. This is in accordance with the earlier language giving the statute full force and effect from tlie time of its passage, except that the filing of petitions is to be postponed for a short time.

We are of opinion that the language was chosen to make clear the purpose of Congress that the new system of bankruptcy should supersede all State laws in regard to insolvency from the date of the passage of the statute.

Demurrer overruled.