services in collecting the bills for paving. As to these there was error. The decree is reversed, and the case is remitted to the Circuit Court, with directions to enter a decree in accordance with these views. Mr. Justice Field and Mr. Justice Bradley concur in the judgment of reversal, but dissent from the opinion, they holding that the contractors ought to be charged with the full amount of bonds received by them, inasmuch as the City of Memphis had no authority to sell its bonds for less than their par value. THE FIRST NATIONAL BANK OF TROY, v. MARVILLE W. COOPER, WALTER VAIL, (See S. C., 20 Wall., 171-178.) Bill to procure reversal of order of court. Where an assignee in bankruptcy contested a claim, after two decisions allowing the claim, a bill will not lie against the assignee and the creditor claimant, to procure a reversal of the order allowing the claim when there is no collusion between the claimant and the assignee, nor other special ground for equitable interference. [No. 257.] complainant and other creditors requested the assignee to appeal from the above decree of the district court, but that he refused so to do, and though requested, never consented to allow the creditors to appeal in his name. The bill asked that the decree of the district court, confirming the claim of Cooper, Vail & Co., should be examined and annulled, and an injunction issued to the assignee, enjoining him from paying dividends on said claim. The defendants demurred, and the circuit court sustained the demurrer and dismissed the bill. The complainant appealed to this court. Mr. Justice Strong delivered the opinion of the court: The demurrer presents the question whether the complainants' bill sets forth any equity sufficient to justify the court in granting the relief sought against the defendants. The object of the bill is to procure a reversal of an order of the district court made under the following circumstances: on the 4th day of February, 1870, the Troy Woolen Company was adjudged a bankrupt by that court, and on the 11th of March, 1870, Shepard Tappin, one of the defendants, became the assignee. Soon after the other defendants, Cooper, Vail & Co. proved 029.81, and on the 24th day of July, 1870, they a debt against the bankrupt amounting to $67,filed the probate with the assignee. Subsequent Argued Mar. 25, 1874. Decided Apr. 13, 1874.ly, on the 29th of November next following, on APPEAL from the Circuit Court of the Unit York. ed States for the Northern District of New petition of the appellants, who had also proved a debt against the bankrupt, the district court made an order allowing them and the assignee to contest the validity of the claim of Cooper, This was a bill in equity, filed in the court Vail & Co. It was then referred to Worthingbelow by the appellant. The bill stated that the ton Frothingham, Esq., to take the proofs and Troy Woolen Company was, upon the petition accounts respecting the claim, to determine its of certain creditors, adjudged a bankrupt by legality and amount, and to report his concluthe District Court of the United States for the sions to the court. Permission was also given Northern District of New York; that the com- to the assignee, and to any creditor of the bankplainant proved a debt in its favor against said rupt, if they desired to contest the claim, to atbankrupt to the amount of $14,943.46 which tend the proceedings before the referee; and it was allowed by the register; that Cooper, Vail appears that the complainants did attend; that & Co., appellees, formerly proved a debt against evidence in opposition to the claim was submitsaid bankrupt amounting to $67,029.81, with in- ted, and that the referee reported the whole of terest; that, on petition, the district court made it as due from the bankrupt. To his report, an order allowing complainant and appellees to joint exceptions were filed on behalf of the comcontest this claim, and referred the matter to a plainants and assignee, and argued in the disreferee; that the complainant and other credit-trict court, upon the evidence taken before the ors requested the appellees to contest the bill referee. These exceptions were overruled, and and employ counsel for that purpose; that the on the 13th of July, 1871, the court made an said Cooper, Vail & Co. did not then have any order allowing the debt as proved by Cooper, legal or valid debt or claim against said bank- Vail & Co., and directing the complainants rupt, and the said assignee well knew that fact to pay the costs and expenses of the reference. at the time he was requested to defend the same, The bill, after setting forth these facts, makes but he then and there refused to contest said a general averment that Cooper, Vail & Co. claim or employ counsel for that purpose, or to have no legal claim against the bankrupt; that pay any of the expenses of the contest out of they have fraudulently proved their claim; that the trust fund; that evidence was given before they knew this when the exceptions were taken the referee to show that the claim was invalid to the referee's report as well as when the court but that the referee reported that the whole of made the decree allowing the debt, and that it was such claim was due; that exceptions to his re- thus proved before the district court. The comport were filed, signed by the attorney of the plainants then aver that the decree was erroassignee and by the attorney of this complain-neous, because there was no legal debt due by ant; that the district court made a decree allow ing the said debt; that the assets in the hands of the assignee will not pay fifty cents on the dollar if said claim should be disallowed; that this the bankrupt to Cooper, Vail & Co., because the evidence before the court proved that there was no such debt, and because the court should have disallowed it. This is one aspect of the bill. The complain- | further litigation or the delay which might have ants, however, further charged that the assets in been consequent upon an appeal. The bill, then, the hands of Cooper, Vail & Co. are insufficient wholly fails in exhibiting any equity against to pay fifty cents on the dollar of the legal debts the assignee. of the bankrupt, even if the claim of Cooper, It is equally without equity as against Cooper, Vail & Co. be disallowed, and they aver that Vail & Co. It is true the averment is made that the assignee refused to appeal from the decision they have no legal or valid claim against the of the district court, or to allow the creditors to bankrupt, and that their claim was frauduappeal in his name, stating that he was advised lently proved and made, but there is no allegathe complainant had a right to have the decree tion wherein the fraud consists, or of any step reviewed under section 2 of the Bankrupt Act, they have taken in the assertion of their claim and that if the creditors desired a review they which they might not lawfully take. Such a must take that course. They then charged that general averment of fraud can be no foundathe assignee was guilty of neglect of duty in tion for an equity. Moreover, it is apparent that omitting to appeal from the decree of the dis- the only fraud intended in the averments of the trict court, and they renewed the averment that bill is the assertion of a claim which the comthe bankrupt is not, and never was, liable for plainants insist is not sufficiently sustained by the debt proved against him by Cooper, Vail evidence. They objected to the claim at the & Co., or for any part of it. It is upon these outset. They appealed to the district court, facts they base the prayer of the bill, which is and they were allowed to contest its validity. that the decree made by the district court may It was at their instance a referee was appointed be "reviewed, examined, revised and annulled, to examine and report upon it. Before that and that the proof of debt filed with the as-referee they went to trial, without objection. signee by Cooper, Vail & Co. may be rejected and expunged." When defeated they brought the contest into court and renewed it there, but unsuccessfully. No doubt when an executor or administrator And they do not now allege that in either of colludes with a fraudulent claimant against a these trials there was anything unfair, or that decedent's estate, and refuses to take steps to Cooper, Vail & Co. were guilty of any fraud in resist the claim, any person interested in the es- maintaining their claim, other than the assertate may maintain an action against such fraud- tion of its existence, or that they themselves ulent claimant and the executor or administra- made any mistake, or that they have any other tor for the purpose of contesting the claim. case now than they had and urged before the Bills in equity of this nature have been main- referee and the district court. Their only tained. And if an assignee in bankruptcy, with ground of complaint is that the referee and disknowledge, or with reason to believe that one trict court came to a different conclusion from claiming to be a creditor of the bankrupt had that which they think should have been adoptproved a debt against the bankrupt's estate ed. The court thought the evidence established which had no existence, or which was tainted the existence of a debt due Cooper, Vail & Co. with fraud, should neglect or refuse to contest They are of a different opinion. They think the allowance of such debt, there is no reason the evidence did not establish the existence of why the other creditors, having proved their such a debt and, therefore, they have filed this debts, should not be permitted to interpose and bill in the circuit court to annul the action of seek the aid of a court of equity to annul the the district court. In effect they are seeking a allowance. But the bill before us presents no new trial of a question of fact which has been such case. The assignee has resisted the allow-decided against them, and this without averance of the debt claimed by Cooper, Vail & Co. ring anything more than that the district court. He took part with the appellants in contesting drew a wrong conclusion from the evidence. the debt before the referee to whose consideration Very plainly they have made no case for equiit was submitted. He joined with them in filing table interference. There are some bills in exceptions to the report allowing the claim. equity which are usually called bills for a new There is no averment of any collusion between trial. They are sustained when they aver some him and the claimants. The bill exhibits noth- fact which proves it to be against conscience to ing which ought to cast discredit upon his fidel-execute the judgment obtained, some fact of ity to his trust. The referee decided against the appellants after hearing all the evidence they had to submit. The district court reviewed his decision upon exceptions taken to it, and came to the same conclusion, allowing the debt claimed by Cooper, Vail & Co. Nor is it pretended that any new evidence exists which ought to lead the circuit court to any other conclusion than that at which the district court arrived. In such a state of facts it cannot be maintained that it was the duty of the assignee to enter an appeal to the circuit court, or even to allow an appeal in his name. After two trials, in which he was aided by the appellants; after all the evidence had been made use of in opposition to the claim which could then be produced, or which can now be obtained, and after two decisions allowing the claim, he may well have concluded, as he did, that his duty to his trust did not require either expenditure of the bankrupt's estate in which the complainant could not have availed himself in the court when the judgment was given against him, if a court of law, or of which he might have availed himself, but was prevented by fraud or accident unmixed with any fault or negligence of his own. But a court of equity will never interfere with a judgment obtained in another court, because it is alleged to have been erroneously given, without more. And such is substantially this case. But though the bill is destitute of equity, when considered as an original bill, it is contended that it may be regarded as an application for the exercise of the supervisory jurisdiction of the circuit court authorized by the 2d section of the Bankrupt Act. 14 Stat. at L., 517. That section declares that "The sev eral Circuit Courts of the United States, within and for the districts where the proceedings in bankruptcy shall be pending, shall have a gen eral superintendence and jurisdiction of all cases and questions arising under this Act, and, except when special provision is otherwise made, may, upon bill, petition or other process of any party aggrieved, hear and determine the case (as) in a court of equity." The complainants, having proved their debt against the bankrupt, contend that they may be considered parties aggrieved by any order of the district court allowing the probate of other debts against the same bankrupt, when the assignee refuses to appeal from the order, or allow an appeal to the circuit court. It is true their bill was not filed in the circuit court until about four months and a half after the order complained of was made. But the Act of Congress prescribes no time within which the application for a review must be presented. An appeal is required to be taken within ten days. Not so with a petition or bill for a review. Undoubtedly the application should be made within a reasonable time, in order that the proceedings to settle the bankrupt's estate may not be delayed, but neither the Act of Congress nor any rule of this court determines what that time is. At present therefore, it must be left to depend upon the circumstances of each case. Perhaps, generally, it should be fixed in analogy to the period designated within which appeals must be taken. Littlefield v. Del. & Hud. Can. Co., 4 Bank. cided in the same way, when it is not averred that there has been any collusion between the assignee and the creditor who has proved a debt, or that the complaining party has any evidence which he has not already submitted, or that he has been hindered by any accident or fraud from presenting his case as fully in the district court as he can in another tribunal, when the substance of all he alleges is that, in his opinion, the court should have determined the facts differently, it may well be that the circuit court, in the exercise of its discretionary power, looking also at the delay of the application, may properly conclude that no sufficient case is presented calling for a retrial of the facts. We do not perceive, therefore, in the action of the Circuit Court anything that requires correction, and the decree is affirmed. S. C.--9 Blatchf., 191. Cited 2 Wood, 393; 14 Blatchf., 44. UNITED STATES, Piff.in Err. v. FRANCIS J. HERRON. (See S. C., 20 Wall., 251-264.) charge in bankruptcy. Debts due to the United States are not within the Reg., 77. It is, however, to be observed that Debts due the United States not barred by disthe bill does not charge any fraudulent collusion between the assignee and Cooper, Vail & Co. At most it charges neglect of duty by the assignee in omitting to contest the debt claimed, and in failing to appeal from a decree of the district court allowing the debt. Whether this presents a proper case for a review under the 2d section of the Bankrupt Act need not now be decided. For should it be conceded that the complainants had a right to apply to the circuit court for a review of the order of the district court, and conceded also that this bill may be regarded as such an application, the question would still remain whether the court erred in dismissing it. Had the court, in the exercise of its superintending jurisdiction, heard the case and decided it, as the district court did, the decision would have been final, and no appeal could have been taken to this court. Morgan v. Thornhill, 11 Wall., 65 [78 U. S., XX., 60]; Tracey v. Altmyer, 46 N. Y., 598. True, if the court had decided that it had no jurisdiction to review, this court might have entertained an appeal, not for the purpose of reviewing, but for the purpose of correcting an erroneous decision respecting the power of the circuit court and enabling the complainants to be heard on their application. People v. R. R. Co., 29 N. Y., 418. But it does not appear that this bill was dismissed because the court thought it had no power to review the action of the district court at the suit of these complainants. On the contrary, it rather appears the bill was dismissed because it presented no case that called for the exercise of the superintending jurisdiction of the court. The Statute, though conferring the power, does not make it obligatory upon the circuit court to retry every decision of the district court which a creditor supposing himself aggrieved may ask the court to retry. And it may well be that when, as in this case, a question of fact has been twice tried, and twice de provisions of the Bankrupt Act, and are not barred by a discharge under such Act. [No. 252.] Argued Mar. 25, 1874. Decided Apr. 13, 1874. IN ERROR to the Circuit Court of the United States for the District of Louisiana. The case is stated by the court. Mr. C. H. Hill, Asst. Atty-Gen., for plaintiff in error: A discharge under the Bankrupt Law does not bar a debt due the United States. As the United States is not mentioned by name, according to a familiar principle of law, re-asserted at this term in the most explicit manner, it is not bound by this statute, broad as the words seem to be. Dollar Savings Bank v. U. S. (ante, 80). And this has been the uniform construction of similar Bankrupt Acts in England and this country. Anon., 1 Atk., 262; U. S. v. King, Wall. (C. C.), 12; People v. Herkimer, 4 Cow., 345; Commonwealth v. Hutchinson, 10 Pa., 466; Eden, Bankr. L, 413; Hill, Bankr., 2d ed., 295; Robson, Bankr., 553; 1 Christian, Bankr., 535; 1 Deac. Bankr., 784; 1 Cooke, Bankr. L., 246, 329; Shelf. Bankr., 303; Audley v. Halsey, Sir W. Jones, 202; Atty-Gen. v. Capell, 2 Show., 480; People v. Gilbert, 18 Johns., 229; Magdalin Coll. case, 11 Co., 74; Bac. Abr. (No counsel appeared for the defendant in error). Mr. Justice Clifford delivered the opinion of the court: Proceedings in bankruptcy are deemed to be commenced from the filing of the petition in bankruptcy, either by a debtor in his own behalf or by any creditor against a debtor; and if it appear to the court that the bankrupt has in all things conformed to the requirements of the Bankrupt Act, it is made the duty of the court to grant him a certificate, under the seal of the court, that he be forever discharged from all debts and claims that by said Act are provable against his estate, which existed on the day the petition for adjudication was filed, excepting such debts, if any, as are by said Act,excepted from the operation of a discharge in bankruptcy. 14 Stat. at L., 533. With the exception of the debts specified in the 33d section, the Act provides that a discharge duly granted under the Act shall release the bankrupt from all debts, claims, liabilities and demands which were or might have been proved against his estate in bankruptcy. Collectors of internal revenue taxes are required by law to give bond for the faithful discharge of their duties, and the record shows that Lewis B. Collins, having been duly appointed to that office for the Third District of Louisiana, gave the required bond, and that the present defendant was one of his sureties. Default having been made by the principal, the United States brought an action of debt on his official bond, joining all the sureties with the principal. They allege two breaches, as follows: (1) That the principal did not pay over all the public moneys he received for the use and benefit of the plaintiffs. (2) That he did not do and perform all such Acts and things as were required of him by the Treasury Department. Service was made and the defendant appeared and pleaded, as a peremptory exception, that on the 30th day of May, 1868, he filed his petition in the district court to be adjudged a bankrupt, and that the court, on the 18th of January following, in due course of law, granted him a discharge under the provisions of the Bankrupt Act in the words and figures set forth in the record, which, as he alleges, is a full and complete bar to the plaintiff's demand. Hearing was had and the court awarded judgment for the defendant and the plaintiffs sued out a writ of error and removed the cause into this court. Since the case was entered in this court the plaintiffs assign for error that a discharge under the Bankrupt Law does not bar a debt due the United States. laration. 14 Stat. at L., 533; U. S. v. Davis, 3 McLean, 483. Instead of that, the question presented by the assignment of error in this court must depend upon other provisions of the Bankrupt Act, when properly construed, in view of the settled rule of construction that the sovereign authority of the country is not bound by the words of a statute unless named therein, if the statute tends to restrain or diminish the powers, rights or interests of the sovereign. Anonymous, 1 Atk., 262; Rex v. Earl, Bunb., 33; Rex v. Pixley, Bunb., 202. Where an Act of Parliament is made for the public good. as for the advancement of religion and justice, or to prevent injury and wrong, the King is bound by such Act, though not particularly named therein; but where a statute is general, and thereby any prerogative, right, title or interest is devested or taken from the King, in such case the King is not bound, unless the statute is made to extend to him by express words. 8 Bac. Abr., by Bouv., tit. Prerog., E, 5. U. S. v. Knight, 14 Pet., 315. Acts of Parliament, says Chitty, which would devest or abridge the King of his prerogatives, his interest or his remedies, in the slightest de gree, do not in general extend to or bind the King, unless there be express words to that effect. Therefore, says the same learned author the Statutes of Limitation, bankruptcy, insolvency, set off, etc., are irrelevant in the case of the King, nor does the Statute of Frauds relate to him, which last proposition is doubted by high authority. Prerog., 383; 19 Vin. Abr., tit. Stat. E," 10. Exceptions exist to that rule undoubtedly, as where the statute is passed for the general advancement of learning, morality and justice, or to prevent fraud, injury and wrong, or where an Act of Parliament gives a new estate or right to the King, as in that case it will bind him as to the manner of enjoying or using the estate or right as well as the subject. Debts due to the United States, it is expressly provided, shall be entitled to preference or priority over all other claims except the claims for fees, costs and expenses of suits and other proceedings under the Bankrupt Act, and for the custody of the bankrupt's property. Five classes of claims are recognized as claims 1. Debts created by fraud or embezzlement entitled to priority or preference by the 28th of the bankrupt, or by his defalcation as a pub-section of the Bankrupt Act, and the provision lic officer, or while acting in any fiduciary char- is that they shall be first paid in full in the acter, are not discharged by the certificate re- following order:" First, fees, costs and exquired to be given to the bankrupt by the 32d penses; second, all debts due to the United section of the Bankrupt Act, nor will any such States and Federal taxes and assessments; third, certificate release, discharge or affect any person all debts due to the State in which the proceedliable for the same debt for or with the bank-ings in bankruptcy are pending, and all State rupt, either as partner, joint contractor, indorser, surety or otherwise. Such debts, that is, debts created by the fraud or embezzlement of the bankrupt, or by his defalcation as a public officer, or as a fiduciary agent, may be proved, and the dividend thereon, it is provided, shall be a payment on account of said debt, but the provision that no such certificate shall release, discharge or affect any person liable for the same debt, for or with the bankrupt as surety, does not apply to this case, as it is the surety here who pleads the certificate of discharge, and not the principal in the bond set forth in the dec taxes and assessments; fourth, wages due to any operative, clerk or house-servant, to an amount not exceeding $50, for labor performed within the period therein specified; fifth, all debts due to any persons who, by the laws of the United States, are or may be entitled to a priority or preference, in like manner as if the Act had not been passed. Attempt is made in argument to show that the preference given to debts of the United States does not exclude such debts from the operation of the certificate of discharge, because such debts are not named in the proviso annexed to the description of the fifth class of claims entitled to priority and full payment in preference to general creditors, but the court is not able to concur in that proposition, as it is quite clear that the proceedings in bankruptcy would very much embarrass tax collectors without some saving clause in that behalf, and to that end it was provided that "nothing contained in this Act shall interfere with the assessment and collection of taxes by the authority of the United States or any State." Consequently, taxes, whether Federal or State, may be collected in the ordinary mode, but if not collected and the property of the bankrupt passes to and is administered by the assignee, the taxes are then entitled to the priority and preference provided in the same section of the Bankrupt Act. Nothing, therefore, can be inferred from that proviso inconsistent with the proposition that the sovereign authority is not bound by the provisions of the Bankrupt Act, unless therein named. Confessedly the United States is not named in any of the provisions of the Act providing for the discharge of the bankrupt from his debts, nor in any of the required proceedings which lead to that result, unless it can be held that the sovereign authority, having debts against the bankrupt, is included in the words creditor or creditors," as used many times in the several sections of the Bankrupt Act. Examples of the kind are numerous, of which the following are some of the most material: Persons applying for the benefit of the Bankrupt Act are required to annex a schedule to the petition, verified by oath, containing a full and true statement of all their debts and, as far as possible, to whom due, with the place of residence of each creditor, if known to the debtor; and if not known the fact must be so stated, and the sum due to each, and the nature of each debt or demand, whether founded on written security, obligation, contract or otherwise, and also the true cause or consideration of such indebtedness in each case, and the place where such indebtedness accrued, and a statement of any existing mortgage, pledge, lien, judgment or collateral or other security given for the payment of the same. Where the debts exceed $300 it is the duty of the judge to issue a warrant, directed to the marshal, authorizing him to publish notices in such newspapers as the warrant specifies, and to serve written or printed notices on all creditors whose names are included in the schedule or whose names may be given to him in addition by the debtor, and to give such personal or other notice as the directions of the warrant require. (1) That a warrant in bankruptcy has been issued against the estate of the debtor. (2) That the payment of any debts or the delivery of any property belonging to such debtor to him or the transfer of any property by him are forbidden by law. (3) That a meeting of the creditors of the debtor will be held at a court of bankruptcy to be holden at the time designated in the warrant. Due notice to the creditors in that regard is indispensable, as the provision is that if it be not given the meeting shall be adjourned and a new notice given as required. Asssignees of the estate of the debtor are to be chosen by the creditors at their first meeting. Creditors not See 20 WALL. U. S., Book 22. only appoint the assignee or assignees, but in certain cases and under certain conditions they may remove any assignee, and vacancies in certain cases may be filled by the creditors, as provided in the 18th section of the Act. Debts due and payable from the bankrupt, at the time he is adjudged as such, and all debts then existing, but not payable until a future day, a rebate of interest being made, when no interest is payable by the terms of the contract, may be proved against the estate of the bankrupt. Contingent debts and liabilities of the bankrupt may also be claimed by creditors, and such claims may be allowed, with the right to share in the dividends, if the contingency shall happen before the order for the final dividend. When a creditor has a mortgage or pledge of real or personal property of the bankrupt, or a lien thereon for securing the payment of a debt owing to him from the bankrupt, he shall be admitted as a creditor only for the balance of the debt. No creditor proving his debt shall be allowed to maintain any suit at law or in equity therefor against the bankrupt. Resident creditors are required to make proofs before one of the registers of the court in the district where the proceedings are pending, but all such proofs, in behalf of non-resident creditors, may be made before a commissioner or before a register in the judicial district where the creditor resides, and corporations may verify their claims by the oath or affirmation of their president, cashier or treasurer. Claims against the estate of the bankrupt are required to be signed by the claimant and to be verified by his oath, and the requirement also is, that the assignee shall register, in a book to be kept by him for the purpose, the names of the creditors who have proved their claims, in the order in which such proof is received, stating the time of its receipt and the amount and nature of the debt. Claimants are forbid den to accept any preference, and the provision is that if anyone does so, contrary to the prohibition of the Act, he shall not prove the debt or claim, nor shall he receive any dividend until he shall first have surrendered to the assignee all property, money, benefit or advantage received by him under such preference Preferences are forbidden in order that equal distribution may be effected, and the Act provides that all creditors, whose debts are duly proved and allowed, shall be entitled to share in the bankrupt's property and estate pro rata, without any priority or preference whatever, except that wages due from the bankrupt to any operative or clerk or house-servant, to an amount not exceeding $50, for labor performed within six months next preceding the adjudication of bankruptcy, shall be entitled to priority and shall be first paid in full. Annexed to that clause there is also a proviso that any debt proved by any person liable as bail, surety, guarantor, or otherwise for the bankrupt, shall not be paid to the person so proving the same until satisfactory evidence shall be produced of the payment of such debt by such person so liable. Just and true accounts are to be kept by the assignees, and they are to make full report of the same to the creditors at a meeting to be called for the purpose, and the creditors are to determine whether any and what part of the net proceeds of the estate shall be distributed as a 18 277 |