Hammond v. Whittredge , 27 S. Ct. 396 ( 1907 )

204 U.S. 538 (1907)

HAMMOND
v.
WHITTREDGE.

No. 164.

Supreme Court of United States.

Argued January 17, 1907. Decided February 25, 1907. ERROR TO THE SUPREME JUDICIAL COURT OF THE STATE OF MASSACHUSETTS.

Mr. Hollis R. Bailey, for plaintiff in error, submitted.

Mr. Warren Ozro Kyle, with whom Mr. Fred Joy was on the brief, for defendants in error, the assignees in bankruptcy.

MR. JUSTICE McKENNA, after stating the case as above, delivered the opinion of the court.

A motion is made to dismiss, which, we think, should be denied. Plaintiff in error sets up rights under § 5057 Rev. Stat., which were adjudged against him. The court said:

"The defendant Hammond admits that when the testator died Elbridge had either a vested remainder in one-half of the trust fund of $25,000 subject to the life estates created by this item of the will, and subject to the class being opened on the birth of further child or children of the life tenants, or a vested interest in a contingent remainder, and that ``in either case' his interest was ``assignable.'

"His contention, however, is that the assignees are barred by U.S. Rev. Sts. § 5057."

The court decided against the contention, and decided, besides, that "the title of the assignees in bankruptcy became complete on the assignment to them of this interest in remainder," and that "the ownership drew after it the possession," which has continued ever since, "and all persons are barred by U.S. Rev. Sts. § 5057, from controverting it." In other words, the court decided that § 5057, did not preclude the assignees from asserting rights against plaintiff in error, but precluded him from asserting rights against them. Defendants in error, however, urge that the court's decision resulted from facts found or admitted and from general principles of law, and "there remained in the case no question as to any title, right, privilege or immunity under a statute of the United States; and that the court expressly declined to choose ``between the opinion in Dushane v. Beale, 161 U.S. 513, and the decision in Rock v. Dennett, 155 Massachusetts, 500.'" But rights under a statute of the United States were claimed by plaintiff in error and that statute was referred to by the Supreme Judicial Court and was an element in its decision. We think also that the decree rendered was final for the purposes of this writ of error. We therefore overrule the motion to dismiss and go to the merits.

On the merits nine errors are assigned, but plaintiff in error asserts that the questions really involved are only four, namely; Had Sweetser such "amount of title" in the trust fund that the Florence Machine Company could make an equitable attachment? Did § 5057, render it necessary for the assignees to intervene and contest the attachment within two years? If not within two years, then within a reasonable time? Was the machine company, in November, 1881, barred by § 5057 from bringing the attachment suit?

Section 5044 of the Revised Statutes required the register in bankruptcy to transfer by instruments under his hand all of the estate of the bankrupt. The assignment related back to the commencement of the proceedings, and operated to vest the title in the assignee. Section 5046, in most comprehensive terms, vested in the assignees all rights in equity and choses in action which the bankrupt had, and 5047, all of his remedies. Section 5057 reads as follows:

"No suit either at law or in equity shall be maintainable in any court between an assignee in bankruptcy and a person claiming any 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 accrues for or against such assignee."

Under these provisions the contention of plaintiff in error is, that, notwithstanding the bankruptcy and the broad language of the sections referred to, Sweetser had an interest in the trust fund that could be assigned or attached, and in such way a title could be acquired good against all the world except the assignees, and good against the assignees by their inaction within the time prescribed by § 5057, or by their abandonment. Applying this principle plaintiff in error contends that "three years having elapsed without anything having been done by the assignees in the way of disposing of this equitable asset, the bankrupt, in November, 1881, had such an amount of title that he could have brought a suit against the trustees under the will to obtain his share, assuming that the contingency had then happened upon which the right to a distribution depended." And that Sweetser, having such title, it followed, it is contended, that the Florence Machine Company, a subsequent creditor, could make an equitable attachment and make it incumbent upon the assignees to assert their rights within two years, in accordance with § 5057. The Supreme Judicial Court met this contention by the effect of the local law. The court said:

"The title of the assignees in bankruptcy became complete on the assignment to them of this interest in remainder. In this commonwealth notice to the trustees is not necessary to complete the title of an assignee of an interest in the property held in trust by them. Thayer v. Daniels, 113 Massachusetts, 129, and cases there cited. See also Putnam v. Story, 132 Massachusetts, 205; Butterfield v. Reed, 160 Massachusetts, 361. By virtue of the assignment in bankruptcy, the complete ownership in this incorporeal interest in this personal property became vested in the assignees, and the ownership drew after it possession, so far as the interest here in question (an incorporeal interest because an interest in remainder) is capable of possession. This result is not affected by the fact that the assignees were for a time ignorant of the existence of this property of the bankrupt. This ownership and possession in the assignees has continued ever since, and all persons are barred by U.S. Rev. Sts. § 5057, from controverting it. The contention that one in possession of property is barred from exercising the rights, which that ownership confers on the owner, by not having brought an action, is groundless. Under these circumstances we have not found it necessary to choose between the opinion in Dushane v. Beale, 161 U.S. 513, and the decision in Rock v. Dennett, 155 Massachusetts, 500."

The cases referred to are antagonistic in their construction of § 5057. In Rock v. Dennett, it was held that the limitations expressed by that section applied to adverse claims arising after the assignment in respect to property vested in the assignee.

In Dushane v. Beale, 161 U.S. 513 the court said: "That limitation [Section 5057, Rev. Stat.] is applicable only to suits growing out of disputes in respect of property and of rights of property of the bankrupt which came to the hands of the assignee to which adverse claims existed while in the hands of the bankrupt and before assignment."

Defendant in error contends for the construction expressed in Rock v. Dennett, 155 Massachusetts, 500 against that expressed in Dushane v. Beale, and insists that the latter case does not overrule prior cases upon which Rock v. Dennett was based. We will not stop to reconcile Dushane v. Beale, with prior cases. It is a later utterance by this court, and disposes of the contention of plaintiff in error based on § 5057, Rev. Stat.

The Supreme Judicial Court also found adversely to plaintiff in error's contention that the assignees had abandoned the property. The court said: "The only other contention made by the defendant Hammond is equally groundless, to wit, that the assignees abandoned this property. The contention is put on the ground that they did not sell their interest in remainder in this fund. Were that all that appeared the argument would be without merit. But that is not all." And, referring to the suit brought by the assignees in the District Court in 1882, said further: "This bill apparently was brought by the assignees as soon as they learned of the existence of the fund and of the fact that creditors of Elbridge were seeking to reach and apply this interest of Elbridge in satisfaction of the debt due from him to them. The bringing of this bill (which seems to have been a bill in the nature of a bill quia timet) disposes of the contention that it was in fact the intention of the assignees to abandon this property."

We think that the record sustains the conclusion of the court.

These views dispose of all the questions in the case.

Decree affirmed.