Thatcher v. Rockwell — 105 U.S. 467

Majority — Waite C.J.

p. 467

Thatcher v. Rockwell.

Syllabus

After suit brought, proceedings were instituted wherein the plaintiff was duly-adjudged to be a bankrupt and assignees were appointed. Held, that his bankruptcy cannot be set up by the defendants to bar its further proseem tion in his -name, if either the assignees expressly consent thereto, or. the claim sued on was, four months, before the proceedings, transferred by him in good faith - and for a valuable consideration to a party for whose use and benefit the suit was .'brought.

Motion to dismiss a writ of error to the Supreme Court of the State of Colorado, with which is united under Rule 6 a motion to- affirm the judgment.

On/the 10th óf June, 1875, Rockwell, the defendant, in error, brought an action of assumpsit against ThatcherStandley-, the plaintiffs in error, in a State court of Colorado. The declaration on which the trial was had contained the common counts only. The original pleas were the general issue, payment, and'.set-off; but-on the 26fh of- -March, 1877, a supplemental plea- was filed, to - the effect that on the 26th of May, 1876, Rockwell had been adjudicated a bankrupt, and on the 14th of July, 1876, an assignee appointed, to whom, the claim in suit passed under the operation of the bankrupt law; wherefore thé defendants “prayed judgment if said plaintiff 'could longer have or maintain- his action against them.” To this plea a replication was filed confessing the bankruptcy and the appointment of an assignee, but averring that the; claim in suit had been assigned to Kate Rockwell and L. C. Rockwell in November, 1875, and did not pass to'the assignee. It was also, averred that the suit was prosecuting for the use and benefit of the persons to whom the .transfer had -been made, and that the assignee in bankruptcy claimed ho interest whatever therein. To the replication the defendants rejoined,' denying the assignment to the Rockwells.

■ Upon this issue, among others, a trial was had, and ar the conclusion of the testimony the defendants asked the court to instruct the jury, “That if they believe from the evidence that the plaintiff, after the commencemeht-of the suit,, filed his petition in bankruptcy and was, adjudged a bankrupt, and an assignee in bankruptcy was appointed, then the plaintiff..

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cannot recover in-this action-; for if he had any legal claim against the defendants at the time the assignee in bankruptcy was appointed, the same vested in the assignee in bankruptcy.”,

This instruction waá refused,-and the court charged: “That if the jury believe from the evidence that Watson B. Rockwéll, previous to his bankruptcy, assigned the claim now in suit to his wife -Kate and L. C. Rockwell,- one-half to each, for a valuable consideration, that this suit is well maintained in W. B. Rockwell's name for their use and benefit, notwithstanding you may believe from the evidence that Rockwell was adjudged a bankrupt in May, A. D. 1876.

“ That the defendants gannot avail themselves of the bankruptcy of the plaintiff if the jury believe from the evidence that the money claimed was assigned to the said Kate Rockwell and L. C. Rockwell four months before Rockwell’s petition in bankruptcy was filed, and even if there had been no assignment of this claim the defendants could not avail themselves of the bankruptcy,, if it appeared from the evidence that the assignee in bankruptcy expressly consented that the plaintiff might continue to prosecute the claim in his own name in this court.”

Exceptions were -taken in due form and incorporated into the record. The case is here on a writ of error fo the Supreme Court of the State for the review of a judgment overruling these exceptions.

Mr. J. Q. Charles and Mr. James B. Belford in support of the motion.

Mr. Henry M. Teller, contra.

after stating the case, delivered the opinion of the Court.

By -the. exceptions to the charge a Federal question is undoubtedly presented upon the record. The Court was asked to decide that the proceedings in bankruptcy-were. a bar to. the further prosecution of - the suit in the name of the bankrupt. This was refused, and the’jury were told that they might bring in a verdict for the plaintiff notwithstanding the bankruptcy, if they found in his favor "on the other issues, and the claim

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had been assigned, as alleged in the replication, more than four months before the petition in bankruptcy was filed. We must,, therefore, overrule the motion to dismiss, but what the court did was so clearly right, that we are not inclined to retain the cause fpr further consideration on its merits. An assignment in bankruptcy only transfers to the assignee such property as the bankrupt had. when the petition in bankruptcy was filed. If in point of fact the claim in suit had been transferred by the bankrupt more than four months before the proceedings in bankruptcy were begun, the assignee in bankruptcy had no interest whatever in the suit that was’pending,' because, from the time of the transfer the transferees became entitled to the benefit of any recovery that might be had.

The suit, though in the name of the bankrupt, was in fact for and on account of the transferees, whose trustee the bankrupt became when the transfer was completed.

The further charge of the court to the effect that if the assignee expressly consented that the bankrupt might continue to prosecute the suit in his own name, the defendants could not avail themselves of the bankruptcy as a defence, was also right. By sect. 5047, Rev. Stat., the assignee may prosecute or defend suits pending in the name of the bankrupt at the time of the bankruptcy, but there is nothing .which renders it necessary for him to make himself a party on the record to do what is thus allowed. What was said in Herndon v. Howard ( 9 Wall. 664 ) must be construed in .connection with the case then under consideration, which was an application by an assignee.to be substituted in this court for the original appellant, who had become bankrupt after the appeal was taken. The true rule is stated in Eyster v. Gaff, 91 U. S. 521 ; Burbank v. Bigelow, 92 id. 179; Norton v. Switzer, 93 id. 355; Jerome v. M’Carter, 94 id. 734; M'Henry v. La Société Française, &c., 95 id. 58; and Davis v. Friedlander, 104 id. 570. These cases, although the bankrupt happened to be a defend^ ant, establish the doctrine that under the late bankrupt law the validity of a pending suit, of of the decree or judgment therein, was not affected by the’ intervening bankruptcy of one of the parties;' that the assignee might or might not be made a party; and whether he was so or not, he was equally bound 'with any

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other party acquiring an intérest pendente lite. • It is no defence to the debt that the creditor has become a bankrupt; and if an assignee, after notice, permits a pending suit to proceed in the name of the bankrupt for its recovery, he is bound by any judgment that may be rendered. This is a sufficient -protection for ■the debtor.

The motion to dismiss is denied, but that to affirm

Granted.

Cases cited

Herndon v. Howard 9 Wall. 664 SCOTUS p. 469
Eyster v. Gaff 91 U. S. 521 SCOTUS p. 469