1. Where a judgment in a state court is rendered against one
shortly thereafter declared to be a bankrupt, a writ of error to
that judgment brought by his assignee is a suit within the meaning
of Sec. 5057 of the Revised Statutes.
2. The limitation of time in that section applies to a suit by
the assignee to recover a debt or other moneyed obligation, as well
as to a controversy concerning property or rights of property to
which there are adverse claims.
MR. JUSTICE MILLER delivered the opinion of the Court.
In the course of a complicated litigation in the Circuit Court
of Cook County, Illinois, between Samuel J. Walker and his
creditors, it became a question whether the International Bank of
Chicago, which was a party to the litigation, had a just and
paramount right to certain promissory notes, secured by mortgage on
real estate which it held as collateral security for debts due by
him to it.
In the progress of the case, the bank filed its cross-bill,
alleging that they held the notes and mortgage not only as
Page 106 U. S. 572
for the specific loan made on them at the time they were
received, but for a large balance due to the bank from him, and
praying for a decree for this balance.
Walker denied this, and asserted that by reason of usury, the
bank had been overpaid and was indebted to him. A decree was
rendered in favor of the bank finding the amounts due as follows:
on the collateral notes, $23,116.66; on Walker's three principal
notes to the bank, $17.092.86; on the entire indebtedness of Walker
to the bank, $172,474; and adjudging 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 28th of February, 1878. Shortly
afterwards, Walker was adjudged to be a bankrupt. Jenkins became
his assignee, and on the 5th of March, 1881, sued out a writ of
error from the Court of Appeals for the First District of Illinois.
The decree was then reversed. 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 thereupon brought the case here, and the only
question that we can consider is the correctness of the ruling on
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. In accordance with its own
previous decisions, that court held that a writ of error was the
beginning of a new suit. This question concerning the nature and
effect of a writ of error in the courts of Illinois would seem not
to be reviewable here, or, if it were, we should follow the
decisions of that court on the subject.
We are, however, satisfied that within the meaning of the
Page 106 U. S. 573
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 the property consisting of 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
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 § 5057 of Revised Statutes. It reads thus:
"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
It is asserted by appellants that this limitation can have no
application to a case
Page 106 U. S. 574
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 sec. 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 of March
2, 1867, c. 176. On reference to that, it will be found that it was
a part of the second section of that act -- the 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
Page 106 U. S. 575
action shall have accrued for or against such assignee,
that nothing herein contained shall revive a
right of action barred at the time such assignee is appointed."
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 twelve 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
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 Bailey v.
21 Wall. 342, and repeated in numerous
"It is obviously one of the purposes of the bankrupt law," says
"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
Page 106 U. S. 576
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 ten days."
To prevent the estate's being wasted in litigation and
"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."
The language of the Revision in sec. 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.