assignees when necessary.1 The reasonable wishes of a large majority of the creditors will be followed by the courts in appointing such inspectors or additional assignees.2

§ 294. Assignment cannot be Collaterally Impeached. The decree or assignment, like other decrees in bankruptcy, cannot be collaterally impeached. In an action by the trustees, therefore, it is enough for them to allege their appointment without alleging the acts of bankruptcy and other facts which prove it to have been well founded. The only objections which can be made in a collateral suit, are that the law under which they were appointed is unconstitutional, or that the court was without jurisdiction.3 It has been held that even want of jurisdiction cannot be shown in a collateral action," and this is true if the jurisdiction depends on facts which the court of bankruptcy has actually passed upon; but if the proceedings have been ex parte, it would seem to be otherwise.

This doctrine has been but lately adopted in England. There it was formerly permitted to any creditor who had not become a party to the proceedings to prosecute his action at law and seize the property of the debtor, and the questions were then tried, collaterally, whether the bankrupt were a trader, and had committed an act of bankruptcy, and so on. In one case, £20,000 was spent to ascertain whether a banker had become bankrupt, and then was settled by a compromise. By gradual amendments the law has at last been brought to the point where it has always stood in the United States.

§ 295. The Assignees as Officers of the Court. The assignees are, in a certain sense, officers of the court of bank

1 Act of 1867, § 13, 14 Stats. 522, R. S. § 5034. [There is no such provision in the act of 1898.]

159; Tua v. Carriere, 117 U. S. 201; Cloutier v. Lemée, 33 La. An. 305; Platt v. Crawford, 8 Abb. Pr. N. s. 297;

2 Re Assn. of Land Financiers, 10 Palmer v. Jordan, 163 Mass. 350. Ch. D. 269.

Michaels v. Post, 21 Wall. 398; Sloan v. Lewis, 22 Wall. 150; Lamp Chimney Co. v. Brass Co., 91 U. S. 656; Graham v. Bost. H. & E. R. R. Co., 118 U. S. 161; Chapman v. Brewer, 114 U. S. 158. See Cadle v. Baker, 20 Wall. 650; Shryock v. Basehore, 82 Penn. St.

4 Carr v. Gale, Davies (2 Ware), 328, Fed. Cas. No. 2434; Lakin v. First Nat. Bank, 13 Blatch. 83, Fed. Cas. 7999.

5 Re Ives, 5 Dillon, 146, Fed Cas. No. 7115.

6 See infra, § 427.

7 Ex parte Chambers, 1 Dea. 197, 2 Dea. 494, 3 Dea. 1.

ruptcy. As such they are subject to summary proceedings in respect to the execution of their trust. It has sometimes been held that their custody is that of the court, as fully as is the case with receivers.2 But the authorities do not support this view. They are trustees appointed by and accountable to the court; but their legal title is absolute, and they may act or be proceeded against as owners of the assigned property subject to their responsibility to the court. This was early decided and is the law, and a great many cases cited in this chapter take the point for granted and implicitly decide it. The opposite theory was founded upon the dicta under the act of 1841, that all controversies could be settled by petition in the bankruptcy; but this doctrine is exploded.*

§ 296. Assignees represent the Creditors and the Debtor. The assignees occupy the double relation of representatives of the debtor and representatives of his creditors. In the former relation they own all property which the debtor could himself have assigned, or in the quaint language of one of the early statutes could "depart withal;"5 or, as put in another statute, all effects and estate to which he was any ways interested, or which any person hath in trust for him or whereby he hath any profit, possibility of profit, benefit or advantage whatsoever. This, of course, includes all equitable interests of which he has the disposal.

As representing creditors, the assignees may set aside conveyances which creditors could impeach at common law or by statute, as well as such as the bankrupt act itself avoids, such as preferences. The law of maintenance has never been applied to assignees in bankruptcy, so that they may sell rights of action which the bankrupt himself could not.

1 Ex parte Clegg, 1 Mont. & A. 91; Ex parte Pearce, 2 M. D. & De G. 142; Ex parte Law, De G. 378.

2 Re Vogel, 2 N. B. R. 427, Fed. Cas. No. 16,983; Hewett v. Norton, 1 Woods, 68, Fed. Cas. No. 6441.

3 Anon., 1 Atk. 102; Ex parte Plummer, ib. 103; Briggs v. Sowry, 8

M. & W. 729; Leighton v. Harwood, 111 Mass. 67.

4 Smith v. Mason, 14 Wall. 419;
Marshall v. Knox, 16 Wall. 551.
5 13 Eliz. c. 7, § 2.

6 5 Geo. II. c. 30, § 1.
7 Act of 1898, § 70 e.

§ 297. Time of vesting; Relation. In England a trader was bankrupt from the time he had committed an act of bankruptcy, and the title of the assignees related back to the act, which may have been committed secretly and years before the adjudication. This rule led to great injustice, and has been often modified by shortening the time of relation and by protecting certain classes of transactions; but even in its most mitigated form it appears to be liable to great objection. The doctrine has not been adopted in the United States, and it will not be needful for us to explain it in full. Our various bankrupt laws have usually made the commencement of the proceedings the date to which the assignees' title shall relate. In Massachusetts it relates to the first publication of the notice of the warrant in voluntary cases, and of the notice that a petition has been filed in cases in invitum.

That there should be some relation back in order to prevent frauds by the bankrupt is generally though not universally admitted. There may be occasionally hardship to innocent persons dealing with the bankrupt; but this evil is thought to be less than would arise if the bankrupt after a petition was filed by or against him could deal with his property freely. The best safeguard appears to be the early and full publication of notice to the world of the existence of the proceedings.1

§ 298. Relation, continued. — If a certain date, such as the filing of a petition in bankruptcy, or the publication of a warrant, is fixed by statute for the vesting of the assignee's title by relation, notice to a judgment creditor or to any one dealing with the debtor (not, of course, by way of preference), that a petition is about to be filed, or a warrant will presently be published, has not the effect to carry the relation back to the notice.2

1 See the remarks in Garland v. Carlisle, 4 Clark & Fin. 693, 703; Re Gregg, 3 N. B. R. 529, Fed. Cas. No. 5796; Mays v. Manuf. Bank, 64 Pa. St. 74; Miller v. O'Brien, 9 Blatch. 270; Fed. Cas. No. 9586; Ex parte Rabbidge, 8 Ch. D. 367. [Under the act of 1898 the trustee's title relates to the time

of adjudication. $ 70 a. See infra, § 533.]

2 Briggs v. Parkman, 2 Met. 258; Fogg v. Willcutt, 1 Cush. 300; Clarke v. Minot, 4 Met. 346; Ex parte Hallifax, 2 M. D. & De G. 544; Brewin v. Short, 5 E. & B. 227; Conway v. Nall, 1 C. B. 643; Ex parte Wright, 3 Ch. D. 70.

§ 299. Relation, continued. It has often been held that unless there is some exception in the statute, the relation avoids all acts, even such as are done under an order of court, such as a levy of execution or a payment by a garnishee. There are, however, cases of very high authority which decide that a sheriff or garnishee acting under a decree or order without actual notice, even when the adjudication has been made and there is no question of relation, shall be excused from responsibility to the trustees.2 All agree that the judgment creditor is responsible to the trustees, and that the sheriff or garnishee, if obliged to pay a second time, could have his remedy against the creditor. The difference between the decisions, therefore, is important only when the creditor is unable to respond.

§ 300. Assignment; Notice. - It is a rule in equity that as between two purchasers of equitable choses in action, such as a claim upon a trust fund, he has the better right who first acquires the legal title; and this is acquired by notice to the trustee or holder of the fund. Courts of chancery in England applied this rule in bankruptcy and preferred an innocent purchaser from the bankrupt after his bankruptcy, who had given such notice, before his assignees who had given none, unless the trustee had actual knowledge of the bankruptcy. decisions did not rest upon estoppel.

These

The reasoning appears fallacious, because the decree vests in the assignees all legal as well as equitable titles, and is notice to all the world. This doctrine has been doubted, and the decisions on the point are not easily reconcilable. I am not

1 Garland v. Carlisle, 4 Cl. & Fin. 693; Edwards v. Sumner, 4 Cush. 393; Butler v. Mullen, 100 Mass. 453; Stevens v. Mech. Bank, 101 Mass. 109.

2 Wood v. Dunn, L. R. 2 Q. B. 73; Conner v. Long, 104 U. S. 228. And see under the earlier statutes: Cary v. Crisp, 1 Salk. 108; Foster r. Allanson, 2 T. R. 479; Prickett v. Down, 3 Camp. 131; Belcher v Mills, 2 C. M. & R. 150; Reynolds v. Wedd, 4 Bing. N. C. 694.

3 Re Barr's Trusts, 4 K. & J. 219; Re Brown's Trusts, L. R. 5 Eq. 88;

Stuart v. Cockerell, L. R. 8 Eq. 607;
Re Russell's Policy Trusts, L. R. 15 Eq.
26; Birmingham Bank. Co. v. Carter, 20
W. R. 354; Lysaght v. Edwards, 2 Ch.
D. 499.

4 Lloyd v. Banks, L. R. 3 Ch. 488.
5 See § 300, infra.

6 Compare Re Bright's Settlement, 13 Ch. D. 413, approving Re Coombe's Trustee, 1 Giff. 91; Palmer v. Locke, 18 Ch. D. 381; Re Atkinson, 2 De G. M. & G. 140; Re Brown's Trusts, L. R. 5 Eq. 88, and cases supra, note 1.

aware that the rule was ever applied in this country. I refer, in rejecting it, to cases in which the assignees are not estopped by conduct. Where the trustee of the fund has in good faith transferred it to the purchaser, an estoppel might be easily discovered in order to protect him.

With the exceptions above mentioned notice of the assignees' title is not necessary even against bona fide purchasers from or debtors making payment to the bankrupt, because the title devolves absolutely, and the proceedings are judicial and therefore notorious. And it makes no difference that the law requires the assignees to record their assignment and they have failed to do so.2

§301. All the Property of the Debtor vests in the Assignees. - Every existing interest, legal or equitable, of the bankrupt, in any property or contract, however remote or contingent its enjoyment may be, and however small the present value, vests in his assignees, subject, of course, to the contingencies.3

A policy on the bankrupt's life passes, and whenever thereafter it becomes payable the assignees may recover the whole money; so of other policies owned by him. It was said in one case that they can only claim the surrender value

1 Penny v. Pickwick, 16 Beav. 246; Meggy v. Imp. Disc. Co., 3 Q. B. D.711; Ex parte Ford, 1 Ch. D. 521.

2 Willis ". Freeman, 12 East, 656; Cole v. Coles, 6 Hare, 517; Re Calcott's Contract (1898), 2 Ch. 460; Johnson v. Neale, 6 Allen, 227; Re Lake, 3 Biss. 204, Fed. Cas. No. 7992; Howard v. Crompton, 14 Blatch. 328, Fed. Cas. No. 6758; Stevens v. Mech. Bank, 101 Mass. 109; Butler v. Mullen, 100 Mass. 453; Davis v. Anderson, 6 N. B. R. 145, Fed. Cas. No. 3623; Re Gregg, 3 N. B. R. 529, Fed. Cas. 5796.

3 Jacobson v. Williams, 1 P. Wms. 382; Higden v. Williamson, 3 P. Wms. 132; Churchill v. Marks, 1 Coll. 441; Morgan v. Taylor, 5 C. B. N. s. 653; Davidson v. Chalmers, 33 Beav. 653; Gardner v. Hooper, 3 Gray, 398; Pierce v. Lee, 9 Gray, 42; Beecher v. Gillespie,

6 Ben. 356, Fed. Cas. No. 1224; Nash v. Nash, 12 Allen, 345; Dunn v. Sargent, 101 Mass. 336; Minot v. Tappan, 122 Mass. 535; Daniels v. Eldredge, 125 Mass. 356; Belcher v. Burnett, 126 Mass. 230; Russell v. Clark, 7 Cranch, 69; Smith v. Scholtz, 68 N. Y. 41; Ex parte Bolton, 1 M. D. & De G. 667; Putnam v. Story, 132 Mass. 205; Evans v. Wall, 159 Mass. 164.

Schondler v. Wace, 1 Camp. 487; West v. Reid, 2 Hare, 249; Ex parte Tierney, Mont. 78; Ex parte Carbis, 4 Dea. & Ch. 354; Williams v. Thorp, 2 Sim. 257; Edwards v. Scott, 1 M. & G. 962; Re Newland, 7 Ben. 63, Fed. Cas. No. 10,171; Re Miller, 6 Ch. D. 790; Gibson v. Overbury, 7 M. & W. 555; Bassett v. Parsons, 140 Mass. 169; Vetterlein v. Barnes, 124 U. S. 169.