Jenkins v. International Bank, 106 U.S. 571 (1883)

106 U.S.
571
2 S.Ct. 1
27 L.Ed. 304
JENKINS, Assignee, etc.,

v.
INTERNATIONAL BANK OF CHICAGO and others.
January 29, 1883.
W. T. Burgess, for plaintiff in error.

A. M. Pence and Julius Rosenthal, for defendants in error.
MILLER, J.
This is a writ of error to the supreme court of Illinois. In the course of a

complicated litigation between Samuel J. Walker and his creditors, it became a
question whether the International Bank, which was a party to the litigation,
had a just and paramount right to certain securities held by it as collateral to
debts due by him to the bank. These were promissory notes, secured by
mortgage on real estate. In the progress of the case the bank filed its cross-bill,
alleging that they held the notes and mortgage not only as security for the
specific loan made on them at the time they were received, but for a large
balance due to the bank from Walker, and praying for a decree for this balance.
Walker denied this, and asserted that by reason of usury he had overpaid the
bank, which was indebted to him. The result was a decree in favor of the bank,
finding the amount due on the collateral notes to be $23,116.66; amount due on
Walker's three principal notes to the bank, $17,092.86; and the amount due on
the entire indebtedness of Walker to the bank, $172,474; and that the sum to be
realized from the collaterals should be first applied on the three notes aforesaid,
amounting to $17,092.76, and the remainder on the general balance due the
bank.
This decree was rendered on the twenty-fifth day of April, 1878. Shortly
afterwards Walker was adjudged to be a bankrupt, and Robert E. Jenkins, the
plaintiff in error here, became his assignee. On March 5, 1881, he sued out a
writ of error from the court of appeals for the first district of Illinois, on which
this decree was reversed, and the bank having removed the case to the supreme
court of the state, the decree of the court of appeals was reversed, on the ground
that Jenkins, the assignee, had not brought his writ within the two years
allowed to him by the bankrupt law. He brings the case to this court by writ of
error to the supreme court of Illinois, in which the only question that we can
consider is the correctness of the ruling of that court on that point.
3
Without searching the record for the precise date at which Jenkins became
assignee of Walker, and as such had authority to assert his rights, it is conceded
that it was more than two years prior to any movement of his to bring the
decree of the circuit court of Cook county before the appellate court. The
question was raised in the argument of the case, in the supreme court of Illinois
whether the writ of error sued out by Jenkins from the court of appeals was the
beginning of a suit, or was so far a mere continuance of the former suit that the
language of the act of congress did not apply. That court held, in accordance
with its own previous decisions, that a writ of error was the beginning of a new
suit, and as this was a question concerning the nature and effect of a writ error
in their own courts, it would seem that it is not reviewable here, or, if so, we
should follow the decisions of that court on the subject. We are, however,
satisfied that, within the meaning of the limitation clause of the bankrupt law,
this first appearance of the assignee, more than two years after the decree of the
court, and the termination of the litigation between Walker and the bank, is a
suit brought by him after that time.
There remains, however, the question, mainly argued before us, whether the
suit thus commenced between the assignee of Walker and the bank was one
involving an adverse interest touching any property or rights of property
transferable to or vested in the assignee. We can see but little reason to doubt
that, so far as the controversy related to the right to the collateral securities
resting on the mortgage, it was a suit touching adverse interests to property; the
property being the notes, and the equitable interests in the real estate mortgaged
to secure them, and the adverse claims being that coming to Jenkins as assignee
of Walker, and the claim of the bank. But in that decree there was an
adjudication against Walker of a debt to the bank of more than $150,000 after
these collaterals had been applied in payment of the debt thus established, and
this decree would be evidence, whether conclusive or not, of the right of the
bank to share in the dividends of the bankrupt's estate. So that, apart from the
collaterals, here was a decree for money which the assignee was interested in
reversing if he came in time. We must, therefore, inquire whether, as to this
personal judgment, the assignee is barred by the limitation of the bankrupt law.
This question is one which has received the consideration of many of the courts
of bankruptcy in this country, but with no unanimity in the result, and its
solution depends upon the construction of section 5057 of Revised Statutes. It
reads thus:
5
'No suit, either at law or in equity, shall be maintainable in any court between
an assignee in bankruptcy and a person claiming an adverse interest touching
any property, or rights of property, transferable to or vested in such assignee,
unless brought within two years from the time when the cause of action
accrued for or against such assignee. And this provision shall not in any case
revive a right of action barred at the time an assignee is appointed.'
It is asserted by appellants that this limitation can have no application to a case

where an assignee is suing to recover on a simple debt or other money
obligation, and as the sentence stands in this section there is plausibility in the
argument.
It is, however, true, in one sense, that debts are property, and this sense of the
word is coming more into use in legislation every day. If it be permissible to
hold that it was so used in this act, then the interest of the assignee in the debts
due to the bankrupt is an interest adverse to the parties who have to be sued on
them before they will pay, and the debts claimed to be due by the bankrupt are
matters in which the interest and the duty of the assignee, when they come into
contest, are adverse to the creditor. If a debt secured by a mortgage raises, as it
unquestionably does when a suit is brought to foreclose it, an interest adverse to
the mortgagor, or to some purchaser from him of the equity of redemption, it
would be a strange construction which requires the assignee to bring his
foreclosure suit to enforce a debt, well secured, within the two years, while as
to a simple note, unsecured, he can sue at any time, unless barred by the statute
of the state. No reason can be seen for such a discrimination.
Assuming that there is some ambiguity in section 5057, as we find it in the

Revised Statutes, we may be permitted to examine the connection in which it
stood in the original bankrupt act. On reference to that it will be found that it
was a part of the second section of that actthe one which conferred upon and
defined the jurisdiction of the circuit courts in bankruptcy cases. The part of the
section pertinent to the matter in hand is this:
'Said circuit courts shall also have concurrent jurisdiction with the district
courts of the same district of all suits, at law or in equity, which may or shall be
brought by the assignee in bankruptcy, claiming an adverse interest, or by such
person against said assignee, touching any property or rights of property of said
bankrupt transferable to or vested in such assignee; but no suit at law or in
equity shall in any case be maintainable by or against such assignee, or by or
against any person claiming an adverse interest touching the property or rights
of property aforesaid, in any court whatsoever, unless the same shall be brought
within two years after the cause of action shall have accrued for or against such
assignee: provided, that nothing herein contained shall revive a right of action
barred at the time such assignee is appointed.'
10
We are not aware that it has ever been held that this section did not confer upon
the assignee the right to bring a suit, whether it was at law or in equity, to
recover a debt or other moneyed obligation in the circuit court of the district. If
any such doubt was ever entertained, it was put at rest by the third section of
the act of June 22, 1874, which was an act amending the bankrupt law of 1867
in many particulars. This section declares that after the words 'adverse interests,'
in line 12 of the section we have quoted, should be inserted, 'or owing any debt
to such bankrupt,' thereby making it clear that the jurisdiction did extend to the
collection of debts owing to the bankrupt. The limitation clause of the section,
however, needed no amendment, for it applied to all suits brought in any court,
federal or state, by or against the assignee; and using the word 'or'
distributively, it applied to all suits touching an interest in property transferable
to the assignee, no difference who was the suitor. The reason of this is that
there might be suits brought concerning property or rights of property vested in
the assignee, in which he was not a necessary party, as ejectment against his
tenant, or foreclosure of liens paramount to his, to which the plaintiff did not
choose to make him a party. It was intended to say that in any such case, in any
court where the suit touched property or rights to property of the bankrupt
passing to the assignee, it would be a good defense that it was not brought
within two years after the right of action accrued. This construction is
consistent with the language of the original statute, and with the policy of it as
declared by this court in Glover v. Bailey, 21 Wall. 342, and repeated in
numerous cases since.
11
'It is obviously one of the purposes of the bankrupt law,' says the court, that
there should be a speedy disposition of the bankrupt's assets. This is only
second in importance to securing equality of distribution. The act is filled with
provisions for quick and summary disposal of questions arising in the progress
of the case, without regard to usual modes of trial attended by some necessary
delay. Appeals in some instances must be taken within 10 days.'
12
To prevent the estate being wasted in litigation and delay, 'congress has said to
the assignee, you shall begin no suit two years after the cause of action has
accrued to you, nor shall you be harassed by suits when the cause of action has
accrued more than two years against you. Within that time the estate ought to
be settled up and your functions discharged, and we close the door to all
litigation not commenced before it has elapsed.'

13
The language of the Revision in section 5057, though slightly varied from that
of the original act, was not intended to give a different meaning. As it is
susceptible of the interpretation that no suit shall be brought by or against the
assignee, or by or against any person, touching an adverse interest in property
transferred to him by the assignment, which is clearly the meaning of the
original act, this latter construction must be given to the section under
consideration.
14
The judgment of the supreme court of Illinois is affirmed in this case, and also
in the three other cases between Jenkins and the bank and other parties, which
depend on the same question.

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106 U.S.

JENKINS, Assignee, etc.,

W. T. Burgess, for plaintiff in error.

This is a writ of error to the supreme court of Illinois. In the course of a

It is asserted by appellants that this limitation can have no application to a case

Assuming that there is some ambiguity in section 5057, as we find it in the

litigation not commenced before it has elapsed.'

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