BEBER V. GUNDY.
Assignee, etc., v.
(Oircuit Uourt, W. D. Pennsylvania. January 7,1883.)
1. LIMITATIONS IN BANKRUPTCy-REV. ST. § 5057-SUIT TO ANNUL JUDGMLlNT. Section 5057 of the Revised Statutes is not confined to contests involving the
title to or ownership of the bankrupt's property, but, in explicit terms, it com· prehends all claims of adverse interests which touch or relate to any property or rights of property transferahle to or vested in the assignee; and a suit in equity by an assignee, to annul a judgment confessed by a bankrupt under circumstances that make it a preference in fraud of the bankrupt law, will be barred by this section, "unless brought within two years from the time when the cause of action accrued." 2.
SAME-SUIT, WHEN BEGUN-PROCEEDINGS BEFORE REGISTER.
The antecedent proceedings before the register, in which he unwarrantably assumed to decide that the judgment was fraudulent, cannot be considered as a part of this suit; and as, until the bill was filed, no suit was begun, and the bill was not filed until more than two years after the cause of action stated in it accrued to complainant, the suit is barred.
In Equity. Appeal from the decree of the United States district court. Charles S. Wolfe, Andrew A. Leiser, and George C. WilBon, for appellant. A. H. Dill and John M. Kennedy, for appellee. McKENNAN, J. The respondent in this bill of complaint was a creditor of the bankrupt, and on the eleventh of March, 1878, tqok from him a bond with warrant of attorney to confess judgment, in pursuance of which judgment was duly entered on the thirteenth of March, 18'78, in the court of common pleas of Union county, Pennsylvania, and thus became a lien upon the bankrupt's real estate in that county. On the thirtieth of March, 1878, a petition was filed by creditors of the bankrupt in the district court in bankruptcy, he was in due course adjudged a bankrupt, and on the eleventh day of June, 1878, an assignment of all his property was duly made to the complainant in this bill. On the twenty-second day of March, 1882, this bill was filed, "with like effect," as agreed in writing by the parties, "as if th\3 same had been filed the sixth September, 1880." The latter date is, therefore, to be taken as the date of the commencement of this suit. As more than two years elapsed after the assignment to the complainant and the commencement of this suit, and this appearing upon the face of the bill, the respondent has interposed a plea alleging that this suit is barred by the limitation prescribed in the second v.16,no.8-51
section of the bankrupt act. The effect of this plea is the only ques. tion to be determined. The second section of the bankrupt act (now section 5057 of the Revised Statutes) enacts that-"N 0 suit, either at law or in equity, shall be maintainable in any court between an assignee in bankruptqy and a person claiming an adverse interest, touching any property or rights of property transferaole to or vested in such assignee, unless brought within two. years from the time when the cause of action accrued for or against 8uchassignee."
It is urged that this section is applicable .only to contests between an assignee in bankruptcy and an 'adverse claimant of the title to or ownership of property transferrtld to such assignee, and hence that this case is not within its operation. There is some warrant for this contention in a few decisions by judges of the district court, and others, in the earlier existence of the bankrupt law, but it rests upon avery narr6w construction of that law. Indeed, it does not accord with either the terms or spirit of the enactment. It is not confined to contests involving the title to or ,ownership of the bankrupt's property, but, in explicit terms, it comprehends all claims of adverse inteJ'ests whicl+1 touch or relate, to any property or rights of property transferable to or vested in the assignee. The character of the present case furnishes an apt illustration of the scope of the limitation. The bill charges that the contested judgment was confessed and entered under such circumstances as make it a preference in fraud of the bankrupt law, and therefore prays that it may be decreed to be fraudulent and void. The assignee then seeks to annul this judgment, and the respondent to maintainjt. It is obvious that the parties represent and claim adverse interests, and their adversary relations grow out of the entry of the judgment, are coincident with the appointment of the assignee, and have so continued ever since. Does the respondent's claim involve property vested in the assignee? His judgment became a lien upon the bankrupt's real estate, and, thus incumbered; this real estate passed to the assignee. As an inseparable incident of the lien, the real estate bound by it might be seized in execution, sold and conveyed, and a sufficient amount of the proceeds of sale applied to the payment of the judgment. It makes no difference that the real estate has been sold by the assignee discharged of liens, because the fund thus arising is substituted for the land, and is subject to all the liens which bound the land. This fund is as clearly property vested in the assignee as