Ligon v. Allen
Ligon v. Allen
Opinion of the Court
delivered the opinion of the court.
B. T. and C. A. Ligón were merchants and partners in the city of Jackson. Upon their own petition they were adjudicated bankrupts by decree of the District Court of the United States for the Southern District of Mississippi. A temporary trustee (styled a provisional assignee) was appointed to take charge of their stock of goods until an assignee could be chosen, and power was vested in this temporary appointee to make sales for cash, from day to day, in the usual course of retail business.
A meeting of creditors, for the election of an assignee, was duly convened, and at that meeting a proposition was made to and accepted by the creditors, to the effect that C. A. Ligón, one of the bankrupts, should pay into the hands of the register the sum of $5,000, that the bankrupts should be discharged, and all the assets should become the property of C. A. Ligón; in other words, that C. A. Ligón should purchase the assets for $5,000, and the bankrupts be discharged.
Ligón paid the $5,000 and took possession of the assets, among which was the account sued on in this case. He has brought the suit in his own name.
Can it in this form be maintained? That he is the equitable owner of the account is not disputed, but it is objected that he is not clothed with the legal title.
We think the objection is well taken. The proceedings in the bankrupt court, by which he became the purchaser of the assets, were evidently based upon the composition clauses of the Bankrupt Act, though not strictly in form a composition. They certainly cannot be supported bjr any other clauses of the law.
Now, the legal title to the property of a bankrupt, real or personal, is wholly unaffected by the adjudication of bankruptcy. It remains in the owner until the appointment of an assignee, and is not divested except by such appointment, followed by a written assignment by the register, or some equivalent act by the court transferring title to the assignee. Hampton v. Rouse, 22 Wall. 263; Zantzinger v. Ribble, 4 Bank. Reg. 728.
The title to the assets of B. T. & C. A. Ligón remaining in the firm, the court has no power to divest it except by the appointment of an assignee. If we leave the composition features of the law out of view, or if we regard the arrangement made as amounting to a composition, the court was equally powerless to affect the legal title. A composition is a mere conventional agreement between the creditors and the bankrupt, by which, in consideration of a sum paid, the cred
In any point of view, therefore, it follows that the legal title to the assets of the firm of B. T. & C. A. Ligón has ever remained and is now in said firm, and not in C. A. Ligón individually.
It is urged that this view is a refusal to acknowledge the legal force and effect of the decree of the bankrupt court, which, having been rendered with full jurisdiction of the subject-matter and of the parties, is conclusive.
By no means. We recognize to the fullest extent the rights acquired by plaintiff, by virtue of his purchase in the bankrupt court, and are prepared to enforce them; but when he seeks our aid, he must do so in the mode and manner prescribed by our laws. The bankrupt court cannot confer upon its litigants a right to disregard the forms of actions observed in the State courts, and when we are called upon to enforce rights acquired in that court, we must be permitted to ascertain the nature of the title there acquired, with a view of determining the form of action to be here observed.
Affirmed.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.