Arnold v. Kahn

Foote, C. Action by an assignee to recover from a purchaser the value of goods bought from an involuntary insolvent previous to adjudication as such, the sale being in violation of the provisions of the Act of 1880.

The only point made or relied on by the appellant in his brief is that service of notice to show cause made upon the insolvent by publication, was insufficient in law to uphold an adjudication of involuntary insolvency.

He insists that in such a case personal service was necessary, and in his brief virtually concedes that all the proceedings [473]were regular, and according to the requirements of that act, but claims they were not in rem, and that the adjudication of the status of the insolvent was in personam and void, and the contention of the plaintiff in this action Avithout legal support.

We understand the proceedings such as Avere had against Lawson to have for their object the fixing of his status as an insolvent, and the reaching of his property as such, and its distribution ratably among his creditors.

The Lav under examination is similar to the late bankrupt Iuav of the United States, and it has been declared by the federal judicial tribunals that “ a decree adjudging a debtor to be a bankrupt is in the nature of a decree in rem as respects the status of the party.” (Michaels v. Post, 21 Wall. 398.)

In Pennoyer v. Neff, 95 U. S. 723, the Supreme Court of the United States, Avliile affirming personal service to be necessary in that case, distinctly stated that the principle there contended for did not affect cases “ Avhere the object of the action is to reach and dispose of property in the State,” and said “ such service,” meaning that by publication, “ may ansAver in all proceedings Avhich are substantially in rem.” And this ruling has been folloAved by this court, in Belcher v. Chambers, 53 Cal. 639.

An adjudication of a debtor to be an involuntary insolvent is like a decree of the same nature under the bankrupt Iuav above mentioned, and may properly be considered as in rem as regards the status of such debtor; and publication of the notice required by section 10, Act of 1880, is sufficient.

The debtor’s status being thus legally fixed, the right to recover and distribute his property and rights in action, etc., accrues to the assignee, and he may prosecute actions against and have recovery from parties under said act in the same manner as if personal service prior to the order adjudicating his status had been had on the debtor.