In re Addison Moore.

noticed that this is the spirit of nearly all the modern legislation of the states on this subject. With few exceptions, the forfeiture of the illegal interest, or the whole of the interest reserved, is the penalty declared. And can it be reasonably doubted that the congress of the United States, in the enactment of the 30th section of the national banking law, intended the same result, but superadding to the forfeiture of the entire interest, and as a further penalty, a liability to pay twice the sum of the entire interest reserved.

The counsel for Moore have referred to the 9th and 15th sections of the national banking law, as showing the excess of the corporate power of the bank in discounting the note in question at the rate of ten per cent. per annum. The 9th section requires each director of a national bank to take an oath that he will not knowingly violate, or willingly permit to be violated, any of the provisions of the act. . And the 53d section provides that the knowingly violating, or permitting the violation of any of the provisions of the act by a director, shall be a ground of forfeiture of all the rights and franchises granted, to be adjudged by a court of the United States in a suit for that purpose, prosecuted by the comptroller of the currency.

These are doubtless wise and just provisions to secure the faithful performance of the duties of directors. If complaint is made against them under the provisions of the 53d section, in the manner prescribed, the corporation is subject to forfeiture of all its rights and franchises, upon a proper adjudication by a court of the United States. But it is not perceived that this provision can affect the construction of the 30th section, fixing the rate of interest which may be charged, and the penalty for charging a rate in excess of that prescribed. The illegal interest is made a ground for the forfeiture of the charter, but it does not follow that a contract of loan by which illegal interest is reserved, shall be void as to the principal debt, or that as between the parties to the transaction any other result would follow beyond the liability of the bank to forfeit twice the sum of interest received. On

In re Addison Moore.

this subject the remark of Judge Story, in the case of Fleckner v. The Bank of the United States, 8 Wheaton, 388, seems directly in point. That learned judge, delivering the opinion of the court, says: "The taking of interest by the bank beyond the sum authorized by the charter, would doubtless be a violation of its charter for which a remedy might be applied by the government; but as the act of congress (the charter of the bank) does not declare that it shall avoid the contract, it is not perceived how the original defendant could avail himself of this ground to defeat a recovery."

In closing this opinion, I may remark that the pressure of other duties has prevented me from noticing in detail the several cases cited by the counsel for Moore, to sustain the exception to the debt of the petitioning creditor. It did not seem to the court necessary that this should be done. The cases cited from the Ohio reports, and the reports of courts in other states, have no direct application to the questions before this court. The decisions referred to were based on state statutes, the language of which, in relation to the reservation of illegal interest, was not, in terms, or substantially, the same as that used in the national banking act, under which the present question arises.

In reaching the conclusion indicated, namely: that the debt of the National Exchange Bank of Columbus, so far as the principal is concerned, was not intended to be invalidated by the 30th section of the national banking law, and is a debt provable under the bankrupt act, candor requires me to say that I am not altogether free from doubt. The question, as it bears upon the present proceeding, is not important to the parties. Under the bankrupt law, if the debt of the petitioning creditor is not valid, any other creditor may, by leave of the court, be made a party to the proceeding, and the petition may be brought to a final hearing on the merits. But in reference to the banking and commercial interests of the community the question is one of vast practical importance. And doubtless it will soon be raised before other courts, and will be definitely settled by the court of the last resort. It

In re R. H. Barrow, &c.

will not greatly surprise me, nor will it be a source of any mortification if the question should be finally settled adversely to the views I have presented.

The exception to the petition is overruled, and the case will be heard on the facts which it alleges.

U. S. DISTRICT COURT, LOUISIANA.

The jurisdiction of the United States district courts sitting as courts of bankruptcy is superior and exclusive in all matters arising under the bankrupt act. The United States district court for Louisiana has judicial power to authorize the sale, by the assignees, of real estate surrendered by bankrupts, free and discharged of all debts secured by mortgage thereon.

In re R. H. BARROW; Re LOEB, SIMON & Co.; Re W. D. WINTER.

DURELL, J. The assignees of the bankrupts have, in the above entitled cases, filed petitions praying for orders authorizing the sale of real estate surrendered by the bankrupts, free and discharged of all debts secured by mortgage thereon; thus transferring the security of the mortgage creditor and his right to priority of payment from the land to the proceeds of its sale. The judicial power of the court to issue orders in conformance with the prayers of the petitioners is called in question.

The jurisdiction of a district court of the United States sitting as a court of bankruptcy, is superior and exclusive in all matters arising under the statute. The estate surrendered is placed in the custody of the court so sitting in bankruptcy, and the officer appointed to manage it is accountable to the court appointing him, and to that court alone. No court of an independent state jurisdiction can withdraw the property surrendered, nor determine, in any degree, the manner of its disposition. These principles have been settled in cases which have declared the relations existing between federal and state jurisdictions. Taylor v. Carryl, 20 Howard, 583.

In re R. H. Barrow, &c.

The court being possessed of jurisdiction over the bankrupt's estate, and entitled to its exclusive administration, this question arises: How far does the power of administration extend? Does it extend to a suspension of proceedings taken for the purpose of subjecting portions of the estate surrendered to a sale under state process?

The answer to this question is to be found in the general powers conferred upon the court.

Until sale is made, the bankrupt is not divested of his interest in the property under seizure.

The assignee, appointed before sale is made, acquires the bankrupt's interest, and he acquires it for the general benefit of the creditors.

The interest of creditors in a suit wherein property is seized, is represented by the debtor, who has a standing in court and a power to intervene at any stage of the proceedings of the case. But by bankruptcy a new class of rights and interests are created, and each and every creditor has, through the assignee, a direct claim upon the estate. To permit a single creditor to follow his personal claim without reference to the common interest, might work great injustice.

The debtor, by his bankruptcy, is made incompetent to act. The law strips him of his property by a summary decree, and assumes the administration of his effects. It is in the nature of a bankrupt act to deal potentially (for the good of a class) with private and personal interests, and to uphold a general and just policy.

The bankrupt act of 1867 undertakes to establish a uniform system of bankruptcy. Without such uniformity the bankrupt could receive but a partial relief; for the insolvent laws of a state operate effectively only upon creditors residing within, and upon property being within the state of the insolvent's residence. Baldwin v. Hale, 1 Wallace, 223. A bankrupt law, operating upon creditors wherever resident throughout the Union, must have a perfect control over all the property of the bankrupt in order to fulfil its purposes. A creditor residing without the state in which the bankrupt

In re R. H. Barrow, &c.

resides, is brought involuntarily into a court of the United States, sitting as a court of bankruptcy, and a decree of that court discharging the bankrupt, binds the creditor. It is due, then, to the creditor, that the court should collect all the assets, adjust and liquidate all the incumbrances, and dispose of and distribute all of the effects of the bankrupt. And such are the powers given to the district courts of the United States, under and by virtue of the bankrupt act.

In the case of Ex parte Christie, 3 H. 221, the supreme court says: "Prompt and ready action, without heavy charges or expenses, could be safely relied on when the whole jurisdiction was confined to a single court, in the collection of the assets; in the ascertainment and liquidation of the liens, and other specific claims thereon; in adjusting the various priorities and conflicting interests; in marshalling the different funds and assets; in directing the sales at such time and in such manner as should best subserve the interests of all concerned; in preventing, by injunction or otherwise, any particular creditor from obtaining an unjust and inequitable preference over the general creditors by an improper use of his rights and remedies in the state tribunals; and finally, in making a due distribution of the assets, and bringing to a close within a reasonable time, the whole proceedings in bankruptcy." The first section of the bankrupt act of 1867 is but a repetition of a portion of this extract from the opinion of the supreme court; and the whole of it is to be found in the act. The act says that the court has the entire direction of sales to be made and of accounts to be rendered; that it has full power and authority to compel obedience to all orders and decrees made by it in bankruptcy, by process, to the same extent that the circuit courts have in any suit pending in equity. Such being the origin of the law, the court must suppose that the expositions of the opinion upon which it is based have been recognized as correct.

* The estate of the mortgagee, at common law, is a 126 fee simple estate. A tender after the law day does not

discharge a mortgage; a reconveyance is necessary. The