By a statute of Pennsylvania, passed in 1836, "assignees for the
benefit of creditors and other trustees" were directed to record
the assignment, file an inventory of the property conveyed, which
should be sworn to, have it appraised, and give bond for the
faithful performance of the trust, all of which proceedings were to
be had in one of the state courts.
This Court was vested with the power of citing the assignees
before it at the instance of a creditor who alleged that the trust
was not faithfully executed.
The assignees of the Bank of the United States chartered by
Pennsylvania recorded the assignment as directed and filed accounts
of their receipts and disbursements in the prescribed court, which
were sanctioned by that court.
A citizen of the State of Kentucky afterwards filed a bill in
the Circuit Court of the United States for the Eastern District of
Pennsylvania against these assignees, who pleaded to the
jurisdiction of the court.
The principle is well settled that where two or more tribunals
have a concurrent jurisdiction over the same subject matter and the
parties, a suit commenced in any one of them may be pleaded in
abatement to an action for the same cause in any other.
But the proceedings in the state court cannot be considered as a
suit. The statute was not complied with, and even if it had been,
the circuit court would still have had jurisdiction over the
matter.
The complainant was a citizen of Kentucky, and the defendants
were all citizens of Pennsylvania. The latter, under three
assignments bearing date 7 June and the 4 and 6 September, 1841,
were trustees of the Bank of the United States, a banking
institution incorporated by the Legislature of the State of
Pennsylvania by an Act passed on 18 February, 1836.
It appeared that the bank, being unable to meet its liabilities,
made an assignment of a part of its property on 1 May, 1841, to
certain trustees, to secure the payment of sundry post notes held
by certain banks of the City and County of Philadelphia.
Afterwards, on 7 June, 1841, it made another assignment of a
portion of its property to the defendants Bacon, Symington, and
Robins in trust to secure the payment of its bank notes and
deposits. Subsequently, two other assignments were made by the bank
to the defendants Robertson, Bayard, Newbold, Cope, and Taylor, in
trust for the payment of its debts generally, the first of which
was executed on 4 and the other on 6 September, 1841. These several
assignments were duly recorded, and the trustees accepted and
proceeded to minister the trusts.
The bill and amended bill, after setting forth the
chartering
Page 51 U. S. 57
of the bank, and the assignment of its property to the
defendants in trust, alleged that on 6 September, 1841, one George
Beach, a citizen of Pennsylvania, recovered a judgment in the
District Court for the City and County of Philadelphia, against the
said bank, for the sum of $53,688.66, besides interest and costs;
that this judgment was founded on promissory notes of said bank,
called post notes. That subsequently the said George Beach, in a
suit on said judgment, in the Commercial Court of New Orleans,
recovered a judgment for the sum of $53,688.66, with interest
thereon and costs; on which the sum of $4,075 was paid; and that
the residue of both said judgments remains unpaid. The bill then
alleged, that through several mesne assignments the complainant
became invested with all right under said judgments; that the debt
due is provided for in said assignments, but that the trustees have
refused to pay any part thereof; and that they have kept
complainant and other creditors in ignorance of the situation of
the trust funds. Prayer for a decree for an account of the trust,
for the payment of complainant's debt in full or a distributive
share thereof, and for general relief.
The defendants Robertson, Bayard, Newbold, Cope, and Taylor
pleaded as follows:
"That the said corporation mentioned in said complainant's bill,
viz., the President, Directors, and Company of the Bank of
the United States, incorporated by the State of Pennsylvania, and
having its banking house and chief place of business in the City of
Philadelphia, did, on the fourth and sixth days of September, in
the year one thousand eight hundred and forty-one, execute and
deliver to these defendants assignments and transfers of certain
property upon trusts therein particularly set forth -- as by
reference to copies of said assignments attached hereto, and made
by reference part of this their plea, will fully and at large
appear; that said assignments, after having been duly proved, were
afterwards, to-wit, on the fourth and seventh days of September,
A.D. 1841, recorded, according to the statute of Pennsylvania in
such case made and provided, in the office for the recording of
deeds &c., for the City and County of Philadelphia -- the
execution of the trusts thereof having been previously accepted by
these defendants. And these defendants further aver, that, in
accordance with the provisions of the laws of the said State of
Pennsylvania, full and complete jurisdiction of and over the said
trust fund so conveyed to these defendants, and of and over the
execution of the said trusts, and of and over these defendants
personally, as trustees as aforesaid, was and is vested in the
Court of Common Pleas of the City and County of Philadelphia, which
now
Page 51 U. S. 58
has cognizance of the same, with ample power and authority in
said tribunal to enforce the execution of the said trusts, to
decide upon the rights of all parties claiming an interest therein,
and right and justice fully to administer in the premises; that, in
the execution of the trusts aforesaid, and the collection of the
assets so assigned to them, these defendants have been governed by
the laws of Pennsylvania, and, among other things, by certain laws
of the said state, by which they have been compelled to accept and
receive from their debtors, in payment of debts due to the said
bank or to the said trustees, at par, the notes and other evidences
of debt issued or created by the said bank; and the defendants
further aver, that, having in part executed the trusts so as above
committed to them, they did, on the seventh day of January, A.D.
1843, file in the office of the prothonotary of the Court of Common
Pleas aforesaid an account, duly verified, of their receipts and
disbursements, and of their acts and doings, as trustees as
aforesaid, from the commencement of said trust down to the first
day of January, A.D. 1843; and subsequently, to-wit, on the
thirteenth day of January, A.D. 1844, they did file a further
account in the office aforesaid, and duly verified as aforesaid, of
their receipts and disbursements, acts and doings, as aforesaid,
down to the first day of January in the year 1844, which said
accounts were absolutely confirmed by the said court, agreeably to
the laws of the said state; and the defendants further aver that on
the seventeenth day of January, 1845, and on the thirteenth day of
January, 1846, respectively, they filed additional accounts as
aforesaid, in the office aforesaid, showing their receipts and
disbursements, acts and doings, aforesaid, down to 1 January, A.D.
1846, which said last-mentioned accounts were referred by the said
court to auditors, who have made reports thereon, respectively, to
the said court; and the defendants further aver that on 14 January,
A.D. 1847, they filed another accounts as aforesaid, showing their
administration of said trust down to the first day of January, A.D.
1847, which said last-mentioned account was likewise referred by
the said court to auditors, before whom the same is now pending --
as by reference to the records of the said court will fully appear;
and these defendants further aver, that, in pursuance of the
direction and decree of the said court, they have distributed and
paid over large sums of money, being the proceeds of the assets
assigned to them as aforesaid, and have likewise, under the
direction of the said court, invested large sums of money to await
the result of pending litigation, and in all other respects have
conformed to the directions of the said court in relation to the
trust aforesaid. "
Page 51 U. S. 59
"All which matters and things these defendants do aver to be
true, and plead the same to the whole of the said bill, and humbly
demand the judgment of this Honorable Court, whether they ought to
be compelled to make answer to the said bill of complaint, and
humbly pray to be hence dismissed, with reasonable costs and
charges in this behalf most wrongfully sustained."
The other defendants pleaded the same plea in substance,
reddendo singula singulis.
The cause coming on to be heard on the amended bill and pleas,
the judges were divided in opinion on the following points:
"First. Whether the facts stated in the plea to the amended bill
filed by John Bacon, Alexander Symington, and Thomas Robins,
deprive this Court of jurisdiction of the case, and whether the
said plea is a sufficient plea to the plaintiff's bill, and ought
to be allowed."
"Second. Whether the facts stated in the plea to the amended
bill, filed by the defendants, James Robertson, Richard H. Bayard,
James S. Newbold, Herman Cope, and Thomas S. Taylor, deprive this
Court of jurisdiction of the case, and whether the said plea is a
sufficient plea to the plaintiff's bill, and ought to be
allowed."
The following sections of the Act of Assembly of Pennsylvania of
14 June, 1836, were relied on in argument, and are therefore
inserted.
"Sec. VII. It shall be lawful for the court of common pleas of
the proper county, on the application of any person interested or
co-trustee or co-assignee, to issue a citation to any assignee or
trustee for the benefit of creditors, whether appointed by any
voluntary assignment or in pursuance of the laws relating to
insolvent debtors and domestic attachments, requiring such assignee
or trustee to appear and exhibit, under oath or affirmation, the
accounts of the trust in the said court, within a certain time, to
be named in such citation."
"Sec. IX. The several courts of common pleas shall, by a general
order, or by such order as the circumstances of any particular case
may require, direct the prothonotary of the same court to give
notice of the exhibition and filing of every account as aforesaid,
during such time, and in such public newspapers, as they shall
appoint, setting forth in such notice, that the accounts will be
allowed by the courts at a certain time, to be stated in such
notice, unless cause be shown why such account should not be
allowed."
"Sec. XI. Whenever it shall be made to appear in a court of
common pleas, having jurisdiction as aforesaid, that an
assignee
Page 51 U. S. 60
or trustee as aforesaid has neglected or refused, when required
by law, to file a true and complete inventory, or to give bond with
surety, when so required by law, or to file accounts of his trust,
or that such assignee or trustee is wasting, neglecting, or
mismanaging the trust estate, or is in failing circumstances, or
about to remove out of the jurisdiction of the court, in any such
case it shall be lawful for such court to issue a citation to such
assignee or trustee to appear before the court, at a time to be
therein named, to show cause why he should not be dismissed from
his trust."
"Sec. XII. On the return of such citation, the court may require
such security, or such other and further security from such
assignee or trustee, as they may think reasonable, or may proceed
at once to dismiss such assignee or trustee from the trust."
"Sec. XIII. The like proceedings may be had whenever it shall be
made to appear to such court, that any person who shall have become
surety for any assignee or trustee as aforesaid, in any bond, given
for the due execution of the trust, is in failing circumstances, or
has removed out of this Commonwealth, or signified his intention so
to do. "
Page 51 U. S. 67
MR. JUSTICE McLEAN delivered the opinion of the Court.
This case comes before us from the Circuit Court of the Eastern
District of Pennsylvania, on a certificate of a division of opinion
between the judges.
The complainant, who is a citizen of Kentucky, filed his bill
against John Bacon and others, assignees of the late Bank of the
United States under the charter from the State of Pennsylvania. The
bank, being in a failing condition, executed assignments of its
assets for the benefit of its creditors, and of certain creditors
of the Bank of the United States chartered by Congress.
The complainant represents himself to be a creditor of the late
bank, to a large amount, which is shown by judgments recovered in
the "district court" for the City and County of Philadelphia, and
in the Commercial Court of New Orleans. That on application to the
trustees aforesaid, they refused to pay the said judgments or any
part of them, although they have funds in their hands or under
their control, to pay the debts of the bank &c.
Page 51 U. S. 68
The defendants pleaded to the jurisdiction of the court. They
admit the trust as alleged, and aver that the assignments were
recorded as required by the acts of Pennsylvania, and they aver
that the court of common pleas of the City and County of
Philadelphia has ample power to enforce the trust, in regard to the
rights of all parties claiming an interest therein. That the
defendants under those laws, at different periods down to 1
January, 1847, filed their accounts, duly verified, "of their
receipts and disbursements, with the prothonotary of the said
court," which were sanctioned by the court. That under its
direction they have vested large sums of money to await the result
of pending litigations. And they submit to the court whether they
ought to be compelled to answer.
On the hearing, the judges were opposed in opinion on the
following points:
1. Whether the facts stated in the plea to the amended bill
filed by John Bacon, Alexander Symington, and Thomas Robins,
deprive the court of jurisdiction of the case, and whether the plea
to the plaintiff's bill is sufficient and ought to be allowed.
2. Whether the facts stated in the plea to the amended bill
filed by the defendants James Robertson, Richard H. Bayard, James
S. Newbold, Herman Cope, and Thomas S. Taylor, deprive the court of
jurisdiction of the case, and whether the said plea is a sufficient
plea to the plaintiff's bill, and ought to be allowed.
There is no principle better settled, than that, where two or
more tribunals have a concurrent jurisdiction over the same subject
matter and the parties, a suit commenced in anyone of them may be
pleaded in abatement to an action for the same cause in any other.
And the question we are now to consider is whether the procedure in
the court of common pleas, above stated, under the special acts of
Pennsylvania, abates the suit of the plaintiff.
Can the proceeding stated in the plea be considered a suit? The
revised act of Pennsylvania, of 14 June, 1836, entitled, "An act
relating to assignees for the benefit of creditors and other
trustees," requires in the first six sections the assignment to be
recorded in thirty days, and the assignment being voluntary, "the
assignees shall file an inventory or schedule of the estate or
effects so assigned, which shall be sworn to," on which it is made
the duty of the court to appoint appraisers, who shall return an
inventory and appraisement, on the return of which the assignees
are required to give bond
"to the Commonwealth, that they will in all things comply with
the provisions of the act of assembly, and shall faithfully execute
the
Page 51 U. S. 69
trust confided to them"
&c. The defendants aver,
"that having in part executed the trust so as above committed to
them, they did, on 7 January, 1843, file in the office of the
prothonotary of the court of common pleas aforesaid an account,
duly verified, of their receipts and disbursements,"
&c. And several other and similar returns are averred to
have been made.
By the seventh section of the act, the court is authorized, on
the application of any person interested, to issue a citation to
any assignee or trustee for the benefit of creditors, whether
appointed by a voluntary assignment or in pursuance of the laws
relating to insolvent debtors &c., requiring him "to appear and
exhibit, under oath or affirmation, the accounts of the trust in
the said court," &c. The ninth section authorizes the court to
give notice by publication when the accounts will be acted on that
objections to them may be made. And by the eleventh section, where
a trustee has neglected or refused, when required by law, to file a
true and complete inventory or to give bond with surety when so
required by law, or to file the accounts of his trust, "it shall be
lawful for the court" of common pleas "to issue a citation &c.,
to show cause why he should not be dismissed."
Now it does not appear from the plea that the assignees ever
filed the inventory of the assets in their hands with the
prothonotary of the court, as required by the first section, and it
would seem that not only the inventory must be filed, where the
assignment is voluntary, to give jurisdiction to the court, but
also that it must be sworn to, an appraisement of the trust
property made and returned, and bond given by the assignees. This
is a proceeding under a statute, and to bring the case within the
statute, every material requirement of the act must be complied
with. And if the above requisites have not been observed, it is not
perceived how the court could take jurisdiction of the case.
In the plea it is stated that accounts have been filed by the
assignees at different times and moneys distributed among the
creditors. But how can this give jurisdiction? The court has no
evidence of the extent and value of the trust, and no bond of the
assignees faithfully to account. If these important steps have been
taken, they should have been stated in the plea, as it must show,
to be effectual, that the court had jurisdiction of the whole
matter. The plea is defective in not setting out the above
requirements.
But if the plea had been perfect in this respect, it would not
follow that the complainant could not invoke the jurisdiction of
the circuit court. He, being a nonresident, has his option
Page 51 U. S. 70
to bring his suit in that court unless he has submitted or is
made a party in some form to the special jurisdiction of the court
of common pleas.
It appears from the bill, that the assignees have refused to
allow the claim of the plaintiff, or any part of it. To establish
this claim as against the assignees, the complainant has a right to
sue in the circuit court, which was established chiefly for the
benefit of nonresidents. Not that the claim should thus be
established by any novel principle of law or equity, but that his
rights might be investigated free from any supposed local prejudice
or unconstitutional legislation. On the most liberal construction
favorable to the exercise of the special jurisdiction, the rights
of the plaintiff, in this respect, could not, against his consent,
be drawn into it.
It is difficult to define the character of this procedure under
the Pennsylvania law. There being no court of chancery in that
state, statutory provision was made for the execution of trusts.
The statutes adopt some of the principles of chancery, but do not
invest the court with the powers of a court of equity which are
necessarily exercised in administering trusts.
It is not strictly a proceeding
in rem. The proceeding
is intended to adjust the rights of debtors and creditors of the
bank, beyond the jurisdiction of the State of Pennsylvania.
Citizens residing, perhaps, in a majority of the states of the
Union, are debtors or creditors of the bank. It is difficult to
perceive by what mode of procedure the State of Pennsylvania can
obtain and exercise an exclusive jurisdiction over the rights of
persons thus situated. From the plea, it does not appear that any
notices have been given, or citations issued, as authorized by the
statute. Nothing more seems to have been done by the assignees than
to file their accounts, have them referred to auditors, and finally
sanctioned by the court. Whether this procedure is evidence of a
faithful discharge of the trust so far as the accounts have been so
adjusted, it is not necessary to inquire. We suppose that it could
not be contended, that fraud or collusion might not be shown to
avoid the proceeding before any tribunal having jurisdiction.
No suit seems to be pending in the common pleas. The action of
the assignees appears to be voluntary, for their own justification,
and not in obedience to the order of the court. By the statute, any
person interested may, on application to the court, obtain a
citation to the assignees to appear and answer. But this is nothing
more than the ordinary exercise of a chancery power to compel them
to account. And it is only an exercise of jurisdiction over them
from the time the bill is filed and a notice served, or the
application for a citation is made
Page 51 U. S. 71
on due notice. If no such proceeding is had, the assignees, it
would appear, file their accounts or omit to do so at their
pleasure.
This is not in the nature of a bankrupt or insolvent procedure.
Neither the person nor the property of the assignor is entitled to
exemption, under the statute, from the claims of creditors. But in
such a proceeding, notice to the creditors and a schedule of debts,
as well as assets, are required by law.
Under the laws of Pennsylvania a debtor may assign his property
for the benefit of his creditors, giving a preference to some of
them over others. This may be done by the common law. The
assignment made by the late Bank of the United States specifies
different classes of creditors, but none is excluded from the
benefits of the assignment.
The assignees admit in their plea that they have vested a large
amount of assets to await the determination of certain suits still
pending. Suppose they had reduced to possession the whole amount of
the assets of the bank and held them ready for distribution; could
it be doubted that the complainant would have a right to file his
bill in the circuit court, not only to establish his claim against
them, but also for a proportionate share of the assets? The circuit
court could not enjoin the court of common pleas nor revise its
proceedings as on a writ of error, but it could act on the
assignees and enforce the rights of the plaintiff against them. The
debts due by the bank being ascertained, and the amount of its
assets, after the payment of all costs, the equitable distribution
would not be difficult.
Not doubting that the complainant may file his bill in the
circuit court for the purposes stated against the defendants, we
deem it unnecessary at this time to consider questions which may
arise in the exercise of the jurisdiction. The questions certified
by the circuit court are both answered in the negative.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Eastern
District of Pennsylvania, and on the points and questions on which
the judges of the said circuit court were opposed in opinion, and
which were certified to this Court for its opinion, agreeably to
the act of Congress in such case made and provided, and was argued
by counsel. On consideration whereof it is the opinion of this
Court 1st, that the facts stated in the amended plea to the amended
bill filed by John Bacon, Alexander Symington, and Thomas Robins do
not deprive
Page 51 U. S. 72
the said circuit court of jurisdiction of this case; 2d, that
the facts stated in the plea to the amended bill filed by the
defendants James Robertson, Richard H. Bayard, James S. Newbold,
Herman Cope, and Thomas S. Taylor, do not deprive the said circuit
court of jurisdiction of this case, and that this opinion renders
it unnecessary for this Court to answer the remainder of the
questions certified. Whereupon it is now here ordered and adjudged
by this Court that it be so certified to the said circuit
court.
