Baum v. Creditors

Ross, J. Section 8 of the Insolvent Act of 1880 provides : “An adjudication of insolvency may be made on the petition of five or more creditors, residents of this state, whose debts or demands accrued in this state, and amount in the aggregate to not less than five hundred dollars; provided that said creditors, or either of them, have not become creditors by assignment within thirty days prior to the filing of said petition.” (Statutes 1880, p. 84.)

The real question in the case is whether assignments made by non-resident creditors to persons residing in the state, without consideration and solely to enable such persons to become petitioning creditors, can make of such assignees “creditors resident of this state,” within the fair meaning of the statute. The legislature has seen fit to enact that only creditors resident of the state shall institute such proceedings, and for the courts to hold that mere colorable transfers of claims to persons residing within the state will make such persons “creditors resident of the state,” would be to sanction a plain evasion of the statute. Apart from the presumption which must be indulged, that when the legislature speaks of creditors it means bona fide creditors, the proviso would seem quite clearly to indicaté an intention on the part of the law-making power to guard against assignments, even in good faith and for value, being made for the purpose of commencing involuntary proceedings.

Judgment reversed and cause remanded.

McKinstry, J., and McKee, J., concurred. ,