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are a few late cases which hold that a fiduciary debt creates a lien on the general assets. But this doctrine is unsound.2

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§ 369. Suits by Bankrupt as Trustee. A bankrupt may maintain an action in his own name as trustee to recover a debt which he had lawfully transferred before his bankruptcy or in any other case in which he is a trustee. If he has pledged or conveyed by delivery or otherwise a note or other property in a mode which will give a lien or title in equity to his transferree, he may complete the legal title after his bankruptcy or his trustees may do so, or may be required by the court of bankruptcy or a court of equity to do so.1

If the case is a clear one and no discovery is needed, a court of equity may refuse to entertain a bill by the third party quia timet, on the ground that, even at law, equitable defences are sufficient against trustees in bankruptcy. In such cases, therefore, trustees in bankruptcy of the legal holder of the claim can maintain no action even at law.6

§ 370. Onerous Property.-A doctrine of the English law which has been adopted here is that assignees are not bound to take onerous property, that is, property which would bind them to pay money or enter into obligations which in their opinion would be of disadvantage to the creditors; but that they had an election to take or reject such property. This rule, too, as established by the courts, has led to misapprehension. In the leading case presently to be mentioned, the King's Bench held that onerous property remained in the

1 People v. City Bank, 96 N. Y. 32; McLeod v. Evans, 66 Wis. 401; Harrison v. Smith, 83 Mo. 210.

2 See Phil. Nat. Bank v. Dowd, 38 Fed. Rep. 172 and cases.

3 Winch v. Keeley, 1 T. R. 619; Wood v. Owings, 1 Cranch, 239; Ex parte Mowbray, 1 Jac. & W. 428; Watkins v. Maule, 2 Jac. & W. 237; Tucker v. Daly, 7 Gratt. 330; Partee v. Corning, 9 La. An. 539; Ex parte Douglas, 3 Dea. & Ch. 310; Webster v. Scales, 4 Doug. 7; Carpenter v. Marnell, 3 B. & P. 40; Blin v. Pierce, 20 Vt. 25; Hopkins v. Banks, 7 Cow. 650; Tibbits v.

George, A. & E. 107; Parnham v. Hurst, 8 M. & W. 743; D'Arnay v. Chesneau, 13 M. & W. 796; Ex parte Byas, 1 Atk. 124.

4 Ex parte Greening, 13 Ves. 206; Ex parte Price, 3 M. D. & De G. 586; Smith v. Pickering, Peake, 50: Ex parte Pike, 40 L. T. 529; Anon. 1 Camp. 492; Lempriere v. Pasley, 2 T. R. 485; Fogg v. Willcutt, 1 Cush. 300; Ex parte Rhodes, 2 Dea. 364; 3 Mont. & A. 217.

6 Ex parte Painter, 2 Dea. & Ch. 584; Ex parte Gennys, Mont. & McA. 258.

6 Morton v. Austin, 12 Cush. 389.

bankrupt until the assignees exercised their election. This rule has been supposed to favor the view that whatever the assignees did not choose to take, whether really onerous or not, remained in the bankrupt.

§ 371. What Property is Onerous. The following description of onerous property in the English statute1 is substantially declaratory of the law as laid down in earlier decisions. "Land of any tenure burdened with onerous covenants,2 of unmarketable shares in companies,3 of unprofitable contracts,* or of any other property that is unsalable, or not readily salable, by reason of its binding the possessor thereof to the performance of any onerous act or to the payment of any sum of money." "Shares or stock in companies" in this connection means such as are subject to calls, or assessments, for which the owner is personally bound, or such as render the owner responsible for debts of the company.

In most of our companies the shares are not onerous, for while the law is substantially like that of England, and makes the shareholders liable to pay the full nominal value of their shares, it is usual to make these payments rather than to trade on a capital.

§ 372. Leaseholds; Copeland v. Stephens. In the leading case of Copeland v. Stephens, it was held that a term of years remains in the bankrupt until the assignees accept it. The decision in this case which is called by Eden a luminous and ingenious judgment has been generally followed in this country. It has had two unfortunate consequences. It has left the bankrupt liable to debts and obligations without the means of satisfying them; and has obscured the true principle of.

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the vesting of all the bankrupt's property in the assignees, and has induced bankrupts and their creditors to suppose that whatever was not claimed by the assignees belonged to the bankrupt.

Late statutes in England have so changed the law as to vest onerous property in the assignees, subject to their right of disclaimer and to relieve the bankrupt whether they disclaim or not. This puts the doctrine on a just and intelligible basis.1

§ 373. Acceptance of Onerous Property by Assignees. The question whether, in a given case in which there has been no application to the court, the assignees have accepted onerous property is one of fact. The recent decisions require, in order to charge assignees with the payment of rent or other dues, some unequivocal act on their part proving their intent to adopt the property. Such an act is an acceptance.2 No mere neglect to act is accounted an act, and it has been held that offering a lease for sale, accepting rent from an under-tenant, keeping the bankrupt's goods upon the premises, and paying rent from time to time to save a distress, are not, as matter of law, an acceptance. Some of the earlier authorities are less

liberal to the assignees.1

§ 374. Rejected Property. There is very respectable authority in the United States for the proposition to the effect that the bankrupt owns all property, whether onerous or not, which his assignees have refused or intentionally neglected to take and that creditors may set aside fraudulent conveyances

1 Robson, 7th ed. p. 460. [If the trustee does not intervene, the bankrupt may dispose of the lease. Re Clayton's Contract (1895), 2 Ch. 212.]

2 Hanson v. Stevenson, 1 B. & Ald. 303; Ex parte Dressler, 9 Ch. D. 252; Ansell v. Robson, 2 C. & J. 610; Young v. Peyser, 3 Bosw. 308; Astor v. Lent, 6 Bosw. 612; Morton v. Pinckney, 8 Bosw. 135.

8 Goodwin v. Noble, 8 E. & B. 587; Hill v. Dobie, 8 Taunt. 325; Comm . Franklin Ins. Co., 115 Mass. 278; Dor rance v. Jones, 27 Ala. 630; Lindsay v.

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if the assignees do not see fit to act, and the special statute of limitations has barred the assignees.1

Notwithstanding these decisions, the principle of law is clear that all property not onerous vests absolutely in the trustees, and cannot be divested by mere neglect,2 unless when there is estoppel for the benefit of innocent purchasers.

But no mere lapse of time, though it should be thirty years or more, will prove abandonment as against the bankrupt himself, or his fraudulent grantee, or any one whose interests have not been injuriously affected by the delay. If the statute of limitations does not apply to the case, the assignees may recover such property at any time. The statute does not apply in favor of the bankrupt himself, because his relation is fiduciary.

Knowledge of property which is omitted from the schedules is not attributed to the assignee, and if he was in fact ignorant of his rights in such a case, they will be preserved, even against a purchaser from the bankrupt, because the purchaser had at least constructive knowledge of the bankruptcy.*

The prudent course for assignees is to apply to the court promptly for leave to disclaim onerous property, upon due notice to creditors. If the assignees fail to apply, the other party or parties interested would do well to file a petition. The courts of bankruptcy in this country may make all necessary orders in such cases, under their equitable jurisdiction, though the statute should neglect to deal with the subject.

§ 375. Accepted Property. If the assignees accept a lease, they become bound by the covenants so long as they remain the owners of the term, but no longer, because they are bound by privity of estate and not of contract. The ordinary covenant not to assign is relaxed in their favor, and they may therefore, sell the term at any time and thus escape further

1 Davis v. Lumpkin, 57 Miss. 506. 2 Minot . Tappan, 122 Mass. 535; Kenyon v. Wrisley, 147 Mass. 476.

3 Penny v. Pickwick, 16 Beav. 246; Roseboom v. Mosher, 2 Denio, 61; Gay v. Kingsley, 11 Allen, 345.

4 Cole v. Coles, 6 Hare, 517; Hall v. Whiston, 5 Allen, 126.

5 Powell v. Lloyd, 2 Y. & J. 372; Wilkins v. Fry, 1 Mer. 244; Robson, 7th ed. p. 469.

liability. So, it seems, they may sell shares, or abandon a contract, and relieve themselves for the future.2

They have no right to insist that a purchaser from them shall indemnify the bankrupt for his liability upon any covenants or undertakings which are not relieved by his bankruptcy, because they are bound to obtain the best results for the creditors without regard to the personal interests of the bankrupt.3

§ 376. Rejected Lease. If the term is rejected, the landlord can recover in the court of bankruptcy a sum quantum meruit for any actual occupation by the messenger and the trustees.* This is an equitable practice adopted by the courts of bankruptcy and applied even in cases where the lease being under seal, there could be no action for use and occupation at law. Under this practice, the amount is not necessarily the same as the rent reserved. This is in the nature of expenses, and therefore a charge upon the assets, but the landlord has no right to distrain for it.7

In England

§ 377. Trustees under a Deed of Arrangement. trustees for creditors under a deed or act of the party or under insolvent laws where the petition is filed by the debtor, are held bound to accept onerous property, which is part of the assigned premises, without privilege of election. This rule does not apply to deeds, which, by statute, are to operate like decrees in bankruptcy, and in one case where it was contended that the

1 Onslow v. Corrie, 2 Mad. 330; Cas. No. 8592; Re Breck, 12 N. B. R. Robson, 7th ed. p. 469. 215, Fed. Cas. No. 1822; Re Commercial Bulletin Co., 2 Woods, 220, Fed. Cas. No. 3060.

2 See Gallup v. Fox, 64 Conn. 491; Re Sneezum, 3 Ch. D. 463. [This is apparently changed in England by B. A. 1883, § 55, sub-s. 4.]

3 Wilkins v. Fry, 1 Mer. 244.

4 Re Webb, 6 N. B. R. 302, Fed. Cas. No. 17,315; Re Butler, 6 N. B. R. 501, Fed. Cas. No. 2236; Re Metz, 6 Ben. 571, Fed. Cas. No. 9509; Re Lynch, 7 Ben. 26, Fed. Cas. No. 8634; Re Hamburger, 12 N. B. R. 277, Fed. Cas. No. 5975; Re Hufnagel, 12 N. B. R. 554, Fed. Cas. No. 6837; Re Lucius Hart Mfg. Co. 17 N. B. R. 459, Fed.

5 Gabriel v. Blankenstein, 13 Q. B. D. 684.

6 Cases supra, note 1, and Ex parte Isherwood, 22 Ch. D. 384.

7 Bailey v. Loeb, 2 Woods, 578, Fed. Cas. No. 739.

8 White v. Hunt, L. R. 6 Ex. 32, overruling an early case at Nisi Prius ; Doe v. Andrews, 4 Bing. 348; Jones v. Binns, 10 Jur. N. s. 119; Metropolitan Bank v Offord, L. R. 10 Eq. 398.

9 Porter v. Kirkus, L. R. 2 C. P. 590.

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