Davis v. Anderson et al. any person claiming an adverse interest touching the property and rights of property aforesaid, [viz: of said bankrupt, transferable to or vested in the assignee], in any court whatever, unless the same shall be brought within two years from the time the cause of action accrued for or against such assignee." If the sheriff's levies and sales were valid, unless set aside by direct proceedings had for the purpose, then the causes of action may be said to have accrued at the date of the respective sheriff's deeds, and the bar of the act to be complete as to the first two sales, if the terms of the act are to be followed without regard to the ordinary statutory and equitable exceptions, making statutes commence to run in cases of fraud only from the date of the discovery thereof, or of knowledge or information of facts inducing a reasonable belief that a fraud has been perpetrated. Martin v. Smith, et al. 4 N. B. R. 83. Whether section two is to be construed so as to admit such an exception, it is not now necessary to decide. The defendants were no parties to the Goodin fraud, and do not claim under the Goodin title. If that title be, as it has been adjudged, fraudulent and void, their title is in nowise affected thereby. The assignee not having discovered that fraud, had no reason for proceeding against the defendants unless that fraud existed; for the bankrupt's case could not be benefited by setting aside the sheriff's deeds. If those deeds are merely voidable at the option of the assignee, and he cannot maintain a suit to avoid them after two years, then the fraud, so far as the bankrupt's estate is concerned, has effectively worked its purpose. It is, perhaps, wise that such a limitation should be made in order to compel a speedy settlement of the bankrupt's estate, and also to close the many vexing suits that might arise under sections thirty-five and thirty-nine after knowledge of the facts was lost. There should be as early an end to litigation as is consistent with the rights of parties. It has been held that section two does not apply to ordinary money demands not barred by the state statutes of limitation. Sedgwick v. Casey, 4 N. B. R. 161. Davis v. Anderson et al. But the full force and effect of that provision seem not to have been judicially determined. 5 N. B. R. 252. It has, however, been held by the United States circuit court here, that the concurrent jurisdiction vested by that section in the circuit courts does not reach actions of assumpsit. It would seem, therefore, that the limitation is to be confined to controversies about property rights, or legal and equitable titles to property. What titles? Those existing at the date of proceedings in bankruptcy, or those supposed to have accrued subsequently? The assignee must unquestionably bring his suit against an adverse possessor or claimant that is, adverse to the bankrupt originally-within the time specified. But how is it with regard to suits which the bankrupt could not maintain, but his creditors could, as under the statute of frauds and fraudulent conveyances, wherein the statute begins to run only from knowledge or information first had of the fraud? However that may be, the question still remains, does section two cover cases of fraudulent concealment of assets from the assignee? Is a fraud, successfully concealed for two years, to ripen into a valid title, or the assignee to be barred from unravelling it? Such questions may arise and have to be decided hereafter; but the present case has its solution in the legal rule which this court holds to be the true one under the bankrupt act, viz: That all liens, whether of judgments or mortgages, or by pledges, &c., must, after proceedings had in bankruptcy, be enforced solely through the intervention of proper bankrupt courts, and that a subsequent sale, whether under judgment or mortgage, without the consent of that court, is subject to be set aside by the bankrupt court. In no other way can the property, which is in its custody or under its control, be preserved for the equal benefit of creditors. Nor is this rule any more variant from those ordinarily governing litigation in state courts, than the direct provisions of the bankrupt act concerning new or pending suits against the bankrupt. If it be the supreme law within the purview of the constitutional grant concerning bankrupts, it overrides state statutes, not only Davis v. Anderson et al. as to assignments, preferences, &c., but also as to proceedings under insolvent and other conflicting laws, not as to the legal rules governing such transactions, but as to the forum where justiciable. On what legal theory do United States. courts enjoin proceedings in state courts affecting the interest of bankrupt estates, if not on the theory that such questions should be determined exclusively in the bankrupt courts or under its direction? The bankrupt act expressly provides that by its own operation attachments in the state courts, in prescribed cases, are dissolved and suspends all other suits in state courts against the bankrupt, except by leave of the court in bankruptcy, and when that leave is granted, the suit proceeds merely "for the purpose of ascertaining the amount due," but execution is stayed. In re Kahley et al. 4 N. B. R. 125, HOPKINS, J. held: "Under sections one and twenty the bankrupt court has the right through its officers to take possession of the mortgaged property after a default in payment, and sell it free of the lien without first satisfying the lien, in which case the lien is transferred to the fund in court. It is a matter of discretion with the court to sell subject to or free from the encumbrance of the lien." He cites in support of his views, Houston v. Bank of New Orleans, 6 How. 846; Foster et al. v. Ames, 2 N. B. R. 14; ex parte Christy, 3 How 308. And again in re Cook & Gleason, 3 C. L. N. 410, the same learned judge holds that the liens of mechanics and all others should be presented to and read by the bankruptcy court, and the parties claiming those liens have no right to proceed in such suits without first obtaining leave of the bankrupt court. In support of his view he cites Angel v. Smith, 9 Ves. 335, and Wiswall v. Sampson, 14 How. 52. He held further that parties who proceed in the state courts to enforce their lien demands without leave of the bankrupt court were guilty of contempt; that the principle is applicable to every interference with the possession of a receiver or custodian who holds property as an officer of the court, for his possession is in law the possession of the court itself. Davis v. Anderson et al. Edwards on Receivers, 129; 3 Paige, 199; 1 Hogan R. 216; Mad. R. 406; 5 Paige, 489; 14 How. 365; 20 How. 583. And therefore the bankrupt court was bound to insist upon its exclusive right to administer and distribute the bankrupt's property, and not permit anyone with impunity to interfere through state process with such property. In re Hanna, 5 N. B. R. 292; Swope et al. v. Arnold, 5 N. B. R. 148; Beers v. Place, 4 N. B. R. 150; Shaffer v. Fitchery & Thomas, 4 N. B. R. 179. There are many other cases to the same effect, and this court has never hesitated to act upon the foregoing principles. The levy and sale by the sheriff under the executions named were in violation of the well settled rules governing these cases-an interference with property in the custody of this court-and therefore could give no right or title thereunder. Taylor v. Carryl, 20 How. 583. As between the assignee and the defendants, the title is still in the assignee. The defendant, William B. Anderson, is in no better position than his co-tenant in common and subsequent grantor. The decree of the court will therefore be that said sheriff's deed be set aside, and held for naught; that the assignee proceed to sell said real estate free from all encumbrances, reserving to defendants the right to proceed against the fund for any demand they may have. If any question should arise concerning the residue of the fund, the court will determine it at the proper time and in the proper way. To the case of Davis v. Campbell, which has also been heard, the foregoing views apply, so far as the sheriff's deed is concerned. The facts are that an execution on a prior judgment was issued and levy was made and sale was had after bankruptcy proceedings commenced; that the defendant, who was assignee of a mortgage, became the purchaser at the sheriff's sale; that his deed, it is contended, was filed for record before the assignment, although it appears from the clerk's Davis v. Anderson et al. certificate it was filed afterwards, and that Campbell had no actual notice of the proceedings in bankruptcy when he purchased. The lien demand of neither the judgment nor mortgage was ever presented to the bankrupt court, nor has any leave to proceed thereunder been granted. The property was sold for a sum far below its value. But in this case as the defendant is, perhaps, a mortgagee in possession, although his sheriff's title is valueless, the court will enter a decree to sell the property free from all encumbrances, reserving to the defendant the right to prove any demand he may have against the fund. The following doctrines on this subject have been frequently held and have passed into some of the text-books as settled law: "The commencement of proceedings in bankruptcy operates as a supersedeas of all process in the hands of the officer of any other court, and as an injunction against all other proceedings than such as may afterwards be had under the authority of the court of bankruptcy until the case is closed. Thus the levy of an execution, or the filing of a bill to forclose a mortgage, or the filing of a libel in rem, or the issuing of a distress warrant, or the filing of a mechanic's lien claim, where the lien only exists from the time of such filing, or the issuing of a writ of replevin for the purpose of affecting the estate, are null and void when such proceedings are instituted in any other court after that time. Claims against the bankrupt's property can only be enforced in the court of bankruptcy during the pendency of the proceedings, and this principle extends not only to liens, but to all controversies concerning even the title to property which was in his possession at the time of filing the petition." The supreme court of Iowa in Stuart v. Hines et al. 6 W. Jur. 22, and several other cases passed upon at the same time, quote the foregoing, and add that the several cases cited in support of the doctrines thus laid down fully sustain the text. Indeed, as previously shown in this opinion, no other rules are consistent with the bankrupt act. And the custody VOL. VI-11 |