1. Where the assignee in bankruptcy of a mortgagor is appointed
during the pendency of proceedings for the foreclosure and sale of
the mortgaged premises, he stands as any other purchaser would
stand on whom the title had fallen after the commencement of the
suit. If there be any reason for interposing, the assignee should
have himself substituted for the bankrupt, or be made a defendant
2. A court cannot take judicial notice of the proceedings in
bankruptcy in another court, and it is its duty to proceed as
between the parties before it, until, by some proper pleadings in
the case, it is informed of the changed relations of any of such
parties to the subject matter of the suit.
3. The jurisdiction conferred upon the federal courts for the
benefit of an assignee in bankruptcy is concurrent with and does
not divest that of the state courts in suits of which they had full
MR. JUSTICE MILLER delivered the opinion of the Court.
This suit was an action of ejectment brought originally by
Thomas and James Gaff against plaintiff in error in the
Page 91 U. S. 522
Court of Arrapahoe County, Colorado, in which the plaintiffs
below had a recovery, and that judgment was affirmed on appeal by
the supreme court of that territory.
The title to certain lots in Denver City is the subject of
controversy; and there seems to be no difficulty in considering
George W. McClure as the source of title, common to plaintiffs and
defendant. McClure had made a mortgage on the lots to defendants in
error to secure payment of the sum of $18,000.
A suit to foreclose this mortgage was instituted in the district
court in 1868, which proceeded to a decree and sale, and plaintiffs
became the purchasers, receiving the master's deed, which was duly
confirmed by the court.
This decree was rendered July 1, 1870. On the ninth day of May
preceding, the mortgagor, McClure, filed a petition in bankruptcy,
and on the eleventh day of May he was adjudged a bankrupt, and on
the fourth day of June John Mechling was duly appointed assignee.
The bankrupt filed schedules in which these lots and the mortgage
of the Gaffs on them were set out. It will thus be seen, that,
pending the foreclosure proceedings which had been instituted
against McClure, he had been declared a bankrupt, and Mechling had
been appointed his assignee, and that the decree of sale and
foreclosure under which plaintiffs asserted title in the present
suit was rendered about a month after the appointment of the
assignee, and nearly two months after the adjudication that McClure
was a bankrupt. The defendant in the ejectment suit was a tenant
under McClure, and defends his possession on the ground of the
invalidity of the foreclosure proceedings after the adjudication of
bankruptcy and the appointment of the assignee.
The plaintiffs in this suit seem to have relied at first upon
the right to recover under the mortgage, and did not give in
evidence the proceedings in foreclosure; but when the defendant had
read them, so far as the decree and sale, in order to show that the
mortgage was merged, the plaintiffs then produced the master's
deed. The Supreme Court of Colorado held that the mortgage alone
was sufficient to sustain the action, one of the judges dissenting,
and the counsel for defendant below insists here that this was
error, because the laws of Colorado give to a mortgage only the
effect of an equitable lien, and not that of
Page 91 U. S. 523
conveying a legal title. He also insists that all the
proceedings in the foreclosure suit after the appointment of the
assignee in bankruptcy are absolutely void, because he was not made
We will consider this latter proposition first, for if the
foreclosure proceedings conveyed a valid title to plaintiffs, the
judgment must be affirmed, whatever may be the true solution of the
question of local law.
It may be conceded for the purposes of the present case that the
strict legal title to the land did not pass by the mortgage, and
that it did pass to the assignee upon his appointment, and
consequently, if that title was not divested by the foreclosure
proceedings, it was in the assignee at the trial of the ejectment
suit. On the other hand, if these proceedings did transfer the
legal title to plaintiffs, they were entitled to recover as they
did in that action.
At the time that suit was commenced, the mortgagor, McClure, was
vested with the title, and was the proper and necessary defendant.
Whether any other persons were proper defendants does not appear,
nor is it material to inquire. But for the bankruptcy of McClure,
there can be no doubt that the sale under the foreclosure decree
and the deed of the master would have vested the title in the
purchaser, and that this would have related back to the date of the
mortgage. Nor can there be any question that, the suit having been
commenced against McClure when the title or equity of redemption
(no difference which it is) was in him, any person who bought of
him, or took his title or any interest he had pending the suit,
would have been bound by the proceedings, and their rights
foreclosed by the decree and sale. These are elementary principles.
Is there anything in the Bankrupt Law, or in the nature of
proceedings in bankruptcy, which takes the interest in the
mortgaged property acquired by the assignee out of this rule?
There is certainly no express provision to that effect. It is
maintained by counsel that because the assignee is vested by the
assignment under the statute with the legal title, there remains
nothing from that time for the decree of foreclosure to operate on,
and it cannot thereafter have the effect of transferring
Page 91 U. S. 524
the title which is in a party not before the court. But if this
be true in this case, it must be equally true in other suits in
which the title is transferred pendente lite.
We have already said, and no authority is necessary to sustain
the proposition, that a sale and conveyance by the mortgagor
pending the suit would not prevent the court from proceeding with
the case without the purchaser, nor affect the title of him who
bought under the decree. So, in a suit against the vendor of real
estate for specific performance, his conveyance of the legal title
after suit was brought would not suspend the proceeding or defeat
the title under the decree of the court. The obvious reason for
this is -- that if, when the jurisdiction of the court has once
attached, it could be ousted by the transfer of the defendant's
interest, there would be no end to the litigation, and justice
would be defeated by the number of these transfers. Another reason
is that when such a suit is ended by a final decree transferring
the title, that title relates back to the date of the instrument on
which the suit is based, or to the commencement of the suit, and
the court will not permit its judgment or decree to be rendered
nugatory by intermediate conveyances.
We see no reason why the same principle should not apply to the
transfer made by a bankruptcy proceeding. The Bankrupt Act
expressly provides that the assignee may prosecute or defend all
suits in which the bankrupt was a party at the time he was adjudged
a bankrupt. If there was any reason for interposing, the assignee
could have had himself substituted for the bankrupt, or made a
defendant on petition. If he chose to let the suit proceed without
such defense, he stands as any other person would on whom the title
had fallen since the suit was commenced.
It is a mistake to suppose that the Bankrupt Law avoids of its
own force all judicial proceedings in the state or other courts the
instant one of the parties is adjudged a bankrupt. There is nothing
in the act which sanctions such a proposition.
The court in the case before us had acquired jurisdiction of the
parties and of the subject matter of the suit. It was competent to
administer full justice, and was proceeding, according to the law
which governed such a suit, to do so. It could not
Page 91 U. S. 525
take judicial notice of the proceedings in bankruptcy in another
court, however seriously they might have affected the rights of
parties to the suit already pending.
It was the duty of that court to proceed to a decree as between
the parties before it, until by some proper pleadings in the case
it was informed of the changed relations of any of those parties to
the subject matter of the suit. Having such jurisdiction, and
performing its duty as the case stood in that court, we are at a
loss to see how its decree can be treated as void. It is almost
certain that if at any stage of the proceeding, before sale or
final confirmation, the assignee had intervened, he would have been
heard to assert any right he had, or set up any defense to the
suit. The mere filing in the court of a certificate of his
appointment as assignee, with no plea or motion to be made a party
or to take part in the case, deserved no attention, and received
none. In the absence of any appearance by the assignee, the
validity of the decree can only be impeached on the principle that
the adjudication of bankruptcy divested the other court of all
jurisdiction whatever in the foreclosure suit. The opinion seems to
have been quite prevalent in many quarters at one time that the
moment a man is declared bankrupt, the district court which has so
adjudged draws to itself by that act not only all control of the
bankrupt's property and credits, but that no one can litigate with
the assignee contested rights in any other court except insofar as
the circuit courts have concurrent jurisdiction, and that other
courts can proceed no further in suits of which they had at that
time full cognizance; and it was a prevalent practice to bring any
person who contested with the assignee any matter growing out of
disputed rights of property or of contracts into the bankrupt court
by the service of a rule to show cause, and to dispose of their
rights in a summary way. This Court has steadily set its face
against this view.
The debtor of a bankrupt, or the man who contests the right to
real or personal property with him, loses none of those rights by
the bankruptcy of his adversary.
The same courts remain open to him in such contests, and the
statute had not divested those courts of jurisdiction in such
actions. If it has for certain classes of actions conferred a
Page 91 U. S. 526
jurisdiction for the benefit of the assignee in the circuit and
district courts of the United States, it is concurrent with and
does not divest that of the state courts.
These propositions dispose of this case. They are supported by
the following cases decided in this Court: Smith v.
14 Wall. 419; Marshall v.
16 Wall. 501; Mays v.
20 Wall. 414; Doe v.
21 Wall. 642. See also Bishop v.