Esterbrook Steel Pen Manufacturing Co. v. Ahern , 30 N.J. Eq. 341 ( 1879 )

The Chancellor.

The decree for an account in this cause was made on the 8th of January, 1878. The master’s report of the account was made on the 28th of May following. By the decree entered thereon it was ordered and adjudged that the complainants pay into this court the amount found to be due from them to the defendant, on the accounting, less the amount of their taxable costs of this suit; and that, on the production to the defendant of the clerk’s receipt therefor, the complainants were entitled to have and receive from the defendant all notes, cheeks, drafts and other evidences or debt received from them by him, as alleged in the bill of complaint, and that he forthwith deliver them up accordingly. The last-mentioned decree was made on the 25th of June, 1878. The defendant was adjudged a bankrupt on the 16th of April, 1878, and James J. Gerber was appointed his assignee, and accepted the appointment on the 20th of May following. As before stated, the master’s report was made on the 20th of May, 1878, and the decree upon the accounting on the 25th of June, 1878, both after the appointment of the assignee.

For the proper steps where one of two defendants becomes a bankrupt, see Gibson v. Green, 45 Miss. 209; or, one of two plaintiffs, Murray v. Murray, 5 Johns. Ch. 60. Mere.bankruptcy of a party pending a suit in a state court, is not sufficient ground for withdrawing such suit therefrom into theUnitecl States court. Samson v. Burton, 5 Ben. 325 ; Haber v. Klauberg, 3 Mo. App. 342 ; see Southern v. Fisher, 6 liich. (N. S.) 345, 350; Need v. Bullington, 49 Miss. 223; Stanley v. Sutherland, 54 Ind. 339. It is no ground for a non-suit that the plaintiff has been adjudged a bankrupt since the suit was begun. Woddail v. Holliday, 44 Ga. 18; or for abating the suit, Noonan v. Orton, 34 Wis. 259. For the mode of prosecuting an appeal or writ of error in such case, see Dormiré v. Cogley, 8 Blackf.nl; O'Neil v. Dougherty, 46 Cal. '575; Alston v. Wingfield, 53 Ga. 18 ; Herndon v. Howard, 9 Wall. 664; Collins v. Marshall, 10 Rob. (La.) 112; Haggerty v. Morrison, 59 Mo. 324. Where the bankrupt died after the appeal was taken, Mojfit v. Cruise, 7 Cold. 137; where a substituted assignee died, Avery v. Ryerson, 34 Mich. 362.

The adjudication in bankruptcy and the appointment of the assignee were made pending the accounting. The complainants could not regularly or effectively proceed with the suit, after the appointment of the assignee, without bringing him in. Where a party, who is a defendant to a suit, becomes bankrupt, it will be necessary for the complainant, if he proceeds with the suit, to bring the assignee before the court by supplemental bill. 1 Dan. Ch. Pr. 159 (4 Am. ed.); Mitf. Eq. Pl. by Jeremy 66-68; Deas v. Thorne, 3 Johns. 551; Williams v. Winans, 5 C. E. Gr. 392. The bankrupt law confers on the assignee power to prosecute and defend all suits at law or in equity pending at the time of the adjudication of bankruptcy, in which the bankrupt is a party, in his own name, in the same manner and with the like effect as they might have been • prosecuted or defended by the bankrupt.

If the assignee desires to be substituted, he must show that some right or interest of the bankrupt’s estate will be affected (Fritsch v. Van Mittendorf, 2 On. 261; Gunther v. Greenfield, 8 Abb. Pr. (N. 8.) 191; Streeter v. Sumner, 11 Fost. 542; McHenry v. La Societe &c., 5 Otto 58); and elect to be made a party within a reasonable time (Smith v. Gordon, 2 N. Y. Leg. Obs. 325 ; Home Ins. Co. v. Hollis, 53 Ga. 659). The assignee should apply by petition (Eyster v. Graff, 1 Otto 521); or by an original bill in the nature of a supplemental bill (Northman v. Liverpool Ins. Co., 1 Tenn. Ch. 312); and not by motion founded on affidavits (Fellows v. Hall, 3 McLean 487; Hecht v. Wassell, 27 Arle. 412 ; Stone v. Brookville Bank, 39 Ind. 284). The decision of the state court will be binding on him (Mays v. Fritton, 20 Wall. 414; Rowe v. Page, 54 N.H. 190), and the assignee personally liable for costs (Reade v. Waterhouse, 12 Abb. Pr. (N. S.) 255, 52 N. Y. 587).—Rep.

It may be remarked that the decree in this case, made after the appointment of the assignee, requires the defendant to deliver up certain notes, checks, drafts or other evidences of debt, although all the defendant’s interest therein had passed over to the assignee, and when the decree was made the defendant had no control over it. It is enough, however, to say that the proceedings from the time of the appointment of the assignee are not regular, and are not binding on him.

The petition of the Elizabethtown Savings Institution, therefore, cannot be entertained. Its merits will not be considered. It will be dismissed.

The assignee has a right to be admitted as a defendant on his application. Herndon v. Howard, 9 Wall. 664; Devaynes v. Morris, 1 Myl. & Cr. 213. And he may apply by petition. Melick v. Melick’s ex’r, 2 C. E. Gr. 156. His petition will be granted, and he will be made a party-defendant, to the end that the cause may be reheard, unless, within ten days from the time of entering the order on this decision, the complainant shall apply to vacate the proceedings subsequent to the assignment, and to make the assignee a party defendant.