. The toip,ake: B;f. the cO.ilrtfol'd.,review and decision:. . .. "'.' '.;' I, . ., I .. , " ' , ,.' ·· .. . . .a h . .. ..e. reque . t . t>..r fh ..s. .·.a.s:cert.Ifi.e.d.t to th.e.b .',]V;l1en bank becap:te the 'at- the sherIff's sale, It bought the same to' lienor the taxes then upon it. If. had been. a:. bankrupt, he be n m ,the property untU the perjoij of no fll"cts to holdillg cop.ldhave comp'elleq to apply his the payment of';the taxes.' The presumptWD IS, ,that the amoullt bid by the bank at the sale. was the sum the})ai;lk,,,,as to give property in Its then condition; that is, subject to the lien of the 'unpaid' taxes; ,If the property' should be redeemed from this sale by anyone, the bank will receive the amount of its bid, plus the amount of the prior liens paid by it, If 1:'¢emption is not made, which would include the then the bank will obtain the title to the property for the considerground ation it bid at the sale, and there seems to be no for granting the relief prayed for by the bank. If)! were true that: the o:};fili, by reason of at the foreclosure sale, had beco;:u{entitled to prbpert:r during the year of reas against the JI}.ortgagQI.' might claim the same as its, property, even. though: they. bad been collected by the tl"llsteetl but it is bank 'had the right to the rentals, and therefore itha's tight' ol'equity and there the bank ,entitled to be reimexists no ground for bursed, out of the rentals, for the amounts advanced by it in payment of the taxes upon the realty which itpurchasoo at the sheriff's sale. The ruling of the referee is therefore affirmed.
no
-_.------, Inre CURTIS et at (Circuit Court ot Appeals;;Sevellth Circuit. Jupe 6, 1899.) No. 575. A debtor made a general assignment for the benefit ot.creditors undt'l'& state statute providing tor the administration and distribution by the staur courts ot .estates so assigned, and requiring' creditors to file their claim. within three. mpnths aftell notice from the assignee. on pain of being postponed Hntil :all. proving c:t:editors were paid m full. The time having not yet ari'ived 'when a petition in involuntary bankruptcy couId be filed under the' act ot '18'9S, certain creditors filed their claims with the assignee; being then i'11 'Ignorance ot facts tending to show that the assignment was ' aJl,d that the debtor l\ad, disposed of property in fraud of cred, itors. Noilividend was declared under the assignment, nor any judicial action taken on the claims filed. Held, . tha1 such creditors were not es.toppedtomitintain a petition in involuntary bankruptcy agalnstthe debtor. I'
-PETITiONING CREDITORS-EsTOPPEL.
Appeal from,the District Court of the u'Ilited States for the Southern District of Ulinois. 'I · "
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,In bankrUprey. On August 11, 1898, the banJumpts, who are surviving partners of Levi H. Henry, deceased, doing business as the Bank ot Waverly, in
IN RE CURTIS.
631
the Southern district of Illinois, made a voluntary assignment for the benefit of their creditors, under the statutes of the state of Illinois (2 Starr & C. Ann. St. [2d Ed.] p. 2174 et seq., c. 72, §§ 37-51), to AUsben W. Reagal, who dUly qualified and entered upon the discharge of his duties, and, pursuant to section 38 of the chapter, notified creditors to present their claims within three months. The forty-sixth section of the chapter provides that creditors not so filing their claims shall not participate in dividends until after payment In full of all claims so presented. Under that notice the creditors who subsequently presented the petition in bankruptcy in the court below filed their respective claims with the assignee in the months of August and October, 1898. On November 1, 1898, the requisite number of creditors filed their petition in the district court, seeking an adjudication of bankruptcy against their debtors. By an amended petition filed by leave of the court on November 25, 1898, the creditors set forth, not only the general assignment as an act of bankruptcy, but also certain fraudulent transfers by the debtors, of which they asserted they were Ignorant at the time of the filing of their claims under the assignment. No proceedings were had upon the claims filed with the assignee, with the exception of the claim of Caruthers, which proceeding is not considered by the court, for the reason that, omitting this claim, a sufficient number of creditors joined in the petition. No dividend was declared under the assignment, and no action by the court was had upon the claims presented, with the exception stated, until the 29th of November, 1898, and after the filing of the amended petition In bankruptcy, and that merely an order allowing the claims unless objections thereto should be filed within 30 days thereafter, and such action was without the knowledge or consent of the petitioning creditors. On the 24th of January, 1899, a decree of bankruptcy passed, from which decree on the 1st day of February, 1899, an appeal was allowed to this court. The opinion In the court below Is reported in 91 Fed. 737,1 Nat. Bankr. News, 163.
Logan Hay and Samuel P. Wheeler, for appellants. Bluford Wilson and P. B. Warren, for appellee. Before WOODS, JENKINS, and GROSSOUP, Circuit Judges. JENKINS, Circuit Judge, upon the foregoing statement of fads, delivered the opinion of the court. ' We do not find occasion upon this appeal to deal with the intereating and important question by the court below upon the going into effect of the bankrupt law a general assignment for the benefit of creditors under a state law is void, or voidable merely upon attack by creditors through proceedings in bankruptcy, for upon other grounds we are of opinion that the adNdication was correct. The question is one not free from difficulty, and one, upon which the coux:ts are' not wholly at agreement. In re Gutwillig, 90 Fed. 475, affirmed upon appeal in 92 Fed. 337; In re Smith" Id. 135;. In re Ro;manow, Id. 510. It is urged that the petitionIng creditors, from the mere fact of filing their"claims with the assignee under the geneTal assignment, are estopped to attach: that assignment. We do not think that, strictly speaking, there is here any estoppel in pais. Such an estoppel arises from acts or conduct which have induced change of position by another in accordance with the real or apparent intention of the party against whom the estoppel is asserted. But here there has occuTred no action induced by the presentation to the assignee of the claims of the petitioning creditors. There was no change of position by him. No dividend was declared, no action taken upon the claims until subsequent to the filing of the ame!?,ded petition in
632
94 FEDERAL REPORTER.
bankmptcy., If ttre precludedfrq;m asserting their supposed Jlights in: the bankruptcy co-urt, it is not because Of any estoppel that has been wrought by their conduct, but because have elected a particulal.'. remedy, and ca:unot be heard to invoke another or inconsistent remedy. We are not inclined to dispute the general principle which underlies the .doctrine of theeledion of'remedies, nor have we any contention with the rule which denies, to.a creditor who knowingly participated in the execution of a conveyance prohibited by law the right to impugn that conveyance. \Veneed not, therefo're" review the numerous cases presented to our consideration upon that question.' Attbe time of thefi1jng of these claims the creditors were in a peculia,r Unless such clainls were presented within three months.· from the 19th of August, 1898, payment of any part of them would be postponed to the payment in full of all claims presented, within that time. It was not permitted by the law to file an involuntary petition in bankruptcy prior to the 1st day of November, 1898, and whether the proper combination of creditors in number and amount could then be procured to join in such petition may have be pwblematical. Under such circumstances, it would n hardly have been the part of prudence to have delayed the filing of the elaims; for, if the bank in question had possessed quick assets, a dividend might have been declared and paid before the bankrupt court could be properly invoked in protection of thei'r rights. This, however, may possibly not excuse, if. the election of remedy was deliberate and intelligent. The principle which underlies the doctrine of election is held, in general, to be as stated by Mr. Bigelow in his work on Estoppel .(5th Ed. pp. 679, (83),-that any decisive act done by a: person witli' knowledge of his right and oJ all other faets material, to him is binding. And this is, in substance, the rule asserted by the supreme court in Robb v. Vos, 155 tJ. S.13, 43, 15 Sup. Ct. 4. vVe had occasion to consider this question of election of remedies in OilOo.v. Hawkins, 46 U. S. App. 115,20 C. C. A. 468, and 74 Fed. 395;, we there held that, to constitute a valid election, the act. must be with the full knOWledge of the circUll1stances of the case, and of the right to the person put to his election was entitled, and that, if one party eJects a remedy in ignorance that he may have,pursued abetter remedy, he milY change bis position, if the change' impose no o.etriment, in a legal sense, upon the opP9singparty.. We do not thinkit needful, in view of that decision, the stI'bject, and 'need only inquire whether the facts here present a case which' fa;lls within the princiJ?le there declared. It is. s,hoi,'nby the record that ,certain transfers, 'of property by the ,were made" which the petitioning insisted were fraudulent,. and certain other frauds are asserted, which need not be here and thit knowledge of these fraudulent transactions was not possessed by the petitioning creditors prior to the 1st day of November, 1898, when this' petition was presented; that their claims ",ere filed under the .llsSigIlnlent in ig)1orance of these alleged f.raudulent transactions. Under flie circum8tances, and considering that no legal detriment 'has resulted to anyone from the filing of
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IN RE RICHARD.
claims under the assignment, we are of opinion that the petitioning creditors are not precluded by the mere fact of filing their claims with the assignee from selecting another forum, in which, as they think, their rights as against supposed fraudulent transactions may be the better protected. The claims were filed in the belief that the transactions of the bankrupts were fair and honest and in the interest of their creditors. No one has been harmed by that act. No any detr'iment beone has received any benefit from it, or cause of it. Having now discovered facts which tend to I'how that this assignment Was fraudulent, and that the debtors have disposed of propert.r with a view to defraud creditors, we pel'ceive no just reason to deny the petitioning creditors the right to appeal to the :ourtl' of bankruptcy, where such matters are properly, if not now exclusively, cognizable, ff)r the assertion of their rights. The decree is affirmed. GROSSCUP, Circuit Judge, sat at the hearing, and concurred in the decision of this cause, but, by reason of illness, had no share in the preparation of the opinion.
In re RICHARD. (District Court, E. D. Nortb Carolina. May 23. 18\l9.) LAWS.
1.
BANKRUPTCy-SUSPENSION OF STATE
The national bankruptcy law supersedes state insolvency laws; and. upon an adjudic'ation in bankruptcy, the court of bankruptcy takes jurisdiction of the estate of the bankrupt and all matters pel1aining thereto, and will administer the same to a final settlement. 'Vhere an Insolvent debtor, being sued on several claims. appeared in court and acknowledged the validity of the claims, and consented to the entry of judgment thereon, and in one case consented to the separation of an indivisible claim into two causes of action. to bring it within the jurisdiction of a justice of the peace, and to the entry of judgment thereon. and executions were issued and levied on the defendant's property, and he made an agreement with the creditors as to the custody and sale of the property, held, that the liens of such executions were dissolved by the debtor's adjudication in bankruptcy within four months after the bringing of the suits, and the trustee was entitled to the property or it3 proceeds. 'Vhere a bankrupt selected from his personal property articles amounting in value to the sum exempted by the law of the state, but, by agreement with the trustee, allowed these articles to be sold with the rest,-that eourse being for the benefit .,r the estate, in that it made the stock. as a Whole, more salable,-held, tllll.t the trustee should allow to the bankrupt, as his exemption, out of the proceeds of the sale, a sum of money equal to the value of the goods originally selected. DEBTS.
2.
SAME-DISSOLUTION OF EXISTING LIE!'S.
B. SAME-EXEMPTIONS.
4. SAME- PROV
'Vhere. in a contest between the trustee in bankruptcy and an execution creditor of the bankrupt, it is adjudged that the lien of the execution previously levied on property of the bankrupt was dissolved by the adjudication in bankruptcy, beeause sought and permitted in fraud of the bankruptcy act. but there was no actual fraud in the judgment on which it was based, the creditor, if he will surrender the amount collected by means ot his execution, may then prove his elailll against the estate as an unsecured creditor.