the Company. The bill was read in the presence of the three directors and one of them, Meddaugh, acted as a solicitor in the case.

It is impossible to read the testimony of the president contained in the record, with his hesitating and evasive answers to the interrogatories of counsel, and not be convinced that the refusal, which constituted the basis of the pres

the bill, without prejudice to a suit in the State
Courts; and it is so ordered.
True copy. Test:

James H. McKenney, Clerk, Sup. Court, U. S.
Cited 106 U. S., 589; 114 U. S., 146.

v.

JOHN T. KEITH.

(See S. C., 16 Otto, 464, 465.)

Former adjudication.

Whatever has been decided in this court on one

sequent writ brought in the same suit.

[No. 1159.] Submitted Dec. 19, 1882. Decided Jan 22, 1883.

TN ERROR to the Supreme Court of the State

IN ERROR to th

On motion to affirm.

For the history and facts of the case, see the report of the decision by this court when the case was here before. Keith v. Clark, 97 U. S., 454, XXIV., 1071.

ent suit, was made for the express purpose of E. A. CLARK, Collector, etc., Piff. in Err., enabling a suit to be brought in the Federal Court, and that no such refusal would have been given if that result had not been desired. It was an attempt to get into the Federal Court, upon a pretense that justice was impossible in the state courts, owing to the excited condition of the public mind. The only party who could seek redress in a Federal Court, by reason of his citizenship, was willing to trust the local writ of error cannot be re-examined here on a subcourts; and if a determination had not existed to force the controversy away from them, we have no doubt that the other directors would readily have agreed with him. The refusal to take legal proceedings in the local courts was a mere contrivance; a pretense; the result of a collusive arrangement to create for one of the directors a fictitious ground for federal jurisdiction. The case comes, therefore, within the purview, if not the letter, of the provisions of section 5 of the Act of March 3, 1875, defining the jurisdiction of the Circuit Courts of the United States. 18 Stat. at L., 472, ch. 137. That section declares: "That if, in any suit commenced in a circuit court or removed from a state court to a Circuit Court of the United States, it shall appear to the satisfaction of said circuit court, at any time after such suit has been brought or removed thereto, that such suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of said circuit court, or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable or removable under this Act, the circuit court shall proceed no further therein, but shall dismiss the suit or remand it to the court from which it was removed, as justice may require."

A single stockholder in a corporation has, undoubtedly, the same right to institute legal proceedings against the corporation for the protection of his individual rights that a third party, not a stockholder, possesses; but when he resorts to such proceedings, to protect not simply such interests but the property and rights of the corporation against the action or threatened action of third parties, thus assuming duties properly devolving upon its directors, he must show a clear breach of duty on their part in neglecting or refusing to act in the matter, amounting to such grossly culpable conduct as would lead to irremediable loss to him if he were not permitted to bring the matter before the courts. And such neglect and refusal must not be simulated but real, and persisted in, after earnest efforts to overcome it. The opinion in the case of Hawes v. Oakland is full of instruction on this head, and to it we refer for a statement of the law; we can add nothing to its cogent reasoning. 104 U. S., 450 [XXVI., 827].

The decree of the court below must be reversed and the case remanded, with directions to dismiss

Messrs. Benjamin J. Lea, Horace H. Harrison, Henry Cooper and John H. Savage, for plaintiff in error.

Messrs. R. McPhail Smith, Sparrel Hill and A. S. Colyer, for defendant in error.

Mr. Chief Justice Waite delivered the opinion of the court:

When this case was here on a former writ of error, it was decided that Keith [Clark], the Collector, was bound in law to receive the genuine notes of the Bank of Tennessee, issued after May 6, 1861, in payment of taxes due the State of Tennessee, unless he showed in defense that the notes tendered were issued for the purpose of aiding the rebellion. The affirmative of this issue was put on the Collector. Keith v. Clark, 97 U. S., 454 [XXIV.,1071]. That question is no longer open in this case, for the reason that it has long been settled that whatever has been decided here on one writ of error cannot be re-examined on a subsequent writ brought in the same suit. This rule was distinctly stated in Supervisors v Kennicott,94 U.S.,499 [XXIV., 260], where numerous authorities are cited beginning as early as Himely v. Rose, 5 Cranch, 314.

On the trial of an issue framed to meet the case as it was sent back from here for further proceedings, the court instructed the jury as follows:

"If a part of the Torbett issue (that after May 6, 1861) was made and signed by the proper officers of the bank to aid the rebellion, and the other part of said issue was made, signed and issued for the purpose of doing a legitimate banking business, and you cannot say from the evidence in the case that the notes here sued on were issued in aid of the rebellion or were signed and issued for legitimate banking business, then you should find for the plaintiff. In other words: the law presumes that the notes here sued upon were issued for a lawful purpose, and the burden of proof is upon the defendant to

show otherwise before this defense can be sus- James W. Davis & Associates. The court betained."

The ruling of the Supreme Court of Tennessee sustaining this instruction, is the only error assigned on the record brought up with the present writ. As the instruction was in exact conformity with our former decision, which we cannot re-examine in the present case, the judgment is affirmed.

low, while inclining to the opinion that it had no jurisdiction, did not decide the case upon that ground, but upon the merits and dismissed the bill generally.

The testimony introduced to show the loss of the drafts, construing it most favorably for the plaintiff, proves no more than this: in a former suit in the Supreme Court of New York, to wind up the affairs of the firms of James W. Davis & James H. McKenney, Clerk, Sup. Court, U. S. Associates, and of Davis, Sprague & Company, Cited-108 U. S., 101.

True copy. Test:

HENRY J. ROGERS, Appt..

v.

WILLIAM F. DURANT, Impleaded with
JAMES W. DAVIS ET AL.

(See S. C., 16 Otto, 644-646.)
Proof of loss of instrument—dismissal on merits—
when erroneous.

*1. The loss of a draft is not sufficiently proved, to support a suit in equity thereon against the drawer or acceptor, by evidence that it was left with a referee appointed by order of court to examine and report claims against an estate in the hands of a receiver, and that unsuccessful inquiries for it have been made of the referee, the receiver and the attorney for the present defendant in those proceedings, without evidence of any search in the files of the court to which the report of the referee was returned, or any application to that court to obtain the draft. 2. A decree of the circuit court, dismissing upon the merits a bill of which this court on appeal holds that there is no jurisdiction in equity, will be reversed and the cause remanded, with directions to dismiss the bill without prejudice to an action at law, and with costs in the court below and each party to pay his own costs on the appeal.

[No. 148.]

Submitted Jan. 18, 1883. Decided Jan. 29, 1883.
PPEAL from the Circuit Court of the United

nois.

a receiver was appointed and the claims of creditors, including the plaintiff's, were presented to a referee appointed by the court, and by him reported to the court, and a dividend ordered and paid in part thereof. The drafts in question were handed by the plaintiff to Steiger, his attorney in New York, to be filed before the referee, and were so filed, and were afterwards delivered by the referee to the receiver; neither the plaintiff nor Steiger had since seen them or known where they were; and Steiger had applied for them to the receiver, to his clerk, to the referee and to Bell, Durant's attorney in New York, and believed, without any foundation beyond his own suspicion, that they were in Bell's possession.

The original papers presented to the referee would properly be returned with his report to the files of the court which appointed him. Yet no search appears to have been made in those files, nor any application presented to that court for the delivery of the drafts to the plaintiff or his attorney. The plaintiff, having made no inquiry in the place in which the drafts would be most likely to be found, utterly fails in his attempt to prove their loss.

There being no sufficient evidence of loss, there can be no doubt that the case is one within the exclusive jurisdiction of a court of law; and it becomes unnecessary to consider the varying decisions in England and in this country upon the question under what circumstances a court of equity has jurisdiction of a suit upon a lost bill or note; or the voluminous proofs contained in the record upon the question whether Durant was a member of the firm of James W. Davis & Associates, a question of

The history and facts of the case are suffi-a
ciently stated in the opinion of the court.
Messrs. Henry C. Whitney and Lewis L.
Coburn, for appellant.

Messrs. Lawrence, Campbell and Lawrence, for Durant, appellee.

Mr. Justice Gray delivered the opinion of

the court:

This is a bill in equity, by which Rogers seeks to recover of Durant and seven others, as co

partners under the name of James W. Davis & Associates, the amount due upon several drafts, some drawn and some accepted or promised to be accepted by that firm, and all alleged to have been held by the plaintiff and lost without his fault after maturity.

The defense of Durant is twofold: first to the jurisdiction, because there is no sufficient proof of the loss of the drafts; second, to the merits, because he was never a member of the firm of

*Head notes by Mr. Justice GRAY.

no jurisdiction in this case, and which, being pure question of fact, can never be brought to this court in any future action at law.

The decree of the Circuit Court, dismissing the bill generally, might be considered a bar to an action at law and should, therefore, be reversed and the cause remanded, with directions to enter a decree dismissing the bill for want of jurisdiction, without prejudice to the right of the plaintiff to sue at law. Horsburg v. Baker, 1 Pet., 232; Barney v. Baltimore, 6 Wall.,280 [73 U. S., XVIII., 825]; Kendig v. Dean, 97 U. S., 423 [XXIV., 1061]. In accordance with the spirit of the 24th General Rule of this court, and under the discretionary power therein reserved, costs should not be allowed to the plaintiff, because, so far as concerns the present suit, the decree is wholly against the relief that he seeks; but the dismissal is to be with costs in the court below, and each party is to pay his own costs on this appeal.

ROBERT E. JENKINS, As Assignee in
Bankruptcy of SAMUEL J. WALKER, Piff. in
Err.,

V.

versed, and the Bank having removed the case to the Supreme Court of the State, the decree of the Court of Appeals was reversed, on the ground that Jenkins, the assignee, had not brought his writ within the two years allowed

INTERNATIONAL BANK OF CHICAGO to him by the bankrupt law.

ET AL.

(See S. C., 16 Otto, 571-577.)

Writ of error by assignee of bankrupt-limitation of time.

He brings the case to this court by writ of error to the Supreme Court of Illinois, in which the only question that we can consider is the correctness of the ruling of that court on that point.

Without searching the record for the precise date at which Jenkins became assignee of Walker, and as such had authority to assert his rights, it is conceded that it was more than two

1. Where a judgment in a state court is rendered against one who is shortly thereafter declared to be a bankrupt, a writ of error to that judgment sued out by the assignee is a suit brought by such assignee within the meaning of section 5057 of the Re-years prior to any movement of his to bring the decree of the Circuit Court of Cook County before the appellate court.

vised Statutes.

2. The limitation of time in that section applies to suits by the assignee to recover debts and other moneyed obligations, as well as to controversies concerning adverse interests in property, more strictly speaking.

[No. 1135.]

Submitted Jan. 3, 1883. Decided Jan. 29, 1883

IN ERROR to the Supreme Court of the State

of Illinois.

The history and facts of the case appear in the opinion of the court.

Mr. W. T. Burgess, for plaintiff in error. Messrs. Julius Rosenthal and A. M. Pence, for defendants.

Mr Justice Miller delivered the opinion of

the court:

This is a writ of error to the Supreme Court

of Illinois.

In the course of a complicated litigation between Samuel J. Walker and his creditors, it became a question whether the International Bank, which was a party to the litigation, had a just and paramount right to certain securities held by it as collateral to debts due by him to the Bank. These were promissory notes secured by mortgage on real estate.

The question was raised in the argument of the case in the Supreme Court of Illinois, whether the writ of error sued out by Jenkins from the Court of Appeals was the beginning of a suit, or was so far a mere continuance of the former suit that the language of the Act of Congress did not apply. That court held, in that a writ of error was the beginning of a new accordance with its own previous decisions, suit, and as this was a question concerning the nature and effect of a writ of error in their own courts, it would seem that it is not reviewable here, or, if so, we should follow the decisions of that court on the subject.

We are, however, satisfied that, within the meaning of the limitation clause of the bankrupt law, this first appearance of the assignee, more than two years after the decree of the court and the termination of the litigation between Walker and the Bank, is a suit brought by him after that time.

There remains, however, the question, mainly argued before us: whether the suit thus commenced, between the assignee of Walker and the Bank, was one involving an adverse interest In the progress of the case, the Bank filed its touching any property or rights of property cross-bill, alleging that they held the notes and transferable to or vested in the assignee. We mortgage not only as security for the specific the controversy related to the right to the colcan see but little reason to doubt that, so far as loan made on them at the time they were re-lateral securities resting on the mortgage, it was ceived, but for a large balance due to the Bank

from Walker, and praying for a decree for this

balance.

Walker denied this and asserted that, by reason of usury, he had overpaid the Bank, which

was indebted to him.

The result was a decree in favor of the Bank, finding the amount due on the collateral notes to be $23,116.66; amount due on Walker's three principal notes to the Bank, $17,092.86, and the amount due on the entire indebtedness of Walker to the Bank, $172,474, and that the sum to be realized from the collaterals should be first applied on the three notes aforesaid, amounting to $17,092.76, and the remainder on the general balance due the Bank.

the property being the notes and the equitable a suit touching adverse interests to property, interests in the real estate mortgaged to secure them, and the adverse claims being that coming to Jenkins as assignee of Walker, and the claim of the Bank.

But in that decree there was an adjudication against Walker of a debt to the Bank of more than $150,000 after these collaterals had been applied in payment of the debt thus established, and this decree would be evidence, whether conclusive or not, of the right of the Bank to share in the dividends of the bankrupt's estate.

So that, apart from the collaterals, here was a decree for money which the assignee was inThis decree was rendered on the 25th day of terested in reversing if he came in time. We April, 1878. Shortly afterwards, Walker was ad- must, therefore, inquire whether, as to this perjudged to be a bankrupt, and Robert E. Jen-sonal judgment, the assignee is barred by the kins, the plaintiff in error here, became his limitation of the bankrupt law. assignee.

This question is one which has received the On March 5, 1881, he sued out a writ of er- consideration of many of the courts of bankruptror from the Court of Appeals for the First Dis- cy in this country, but with no unanimity in the trict of Illinois, on which this decree was re-struction of section 5057 of the Revised Statresult, and its solution depends upon the con*Head notes by Mr. Justice MILLER. utes. It reads thus: "No suit either at law or

in equity shall be maintainable in any court be- | amending the Bankrupt Law of 1867 [14 Stat. tween an assignee in bankruptcy and a person at L., 517] in many particulars. claiming an adverse interest touching any property, or rights of property, transferable to or vested in such assignee, unless brought within two years from the time when the cause of action accrued for or against such assignee. And this provision shall not in any case revive a right of action barred at the time an assignee is appointed." It is asserted by appellant that this limitation can have no application to a case where an assignee is suing to recover on a simple debt or other money obligation, and as the sentence stands in this section there is plausibility in the argument.

This section declares that after the words "adverse interests," in line 12 of the section we have quoted, should be inserted "or owing any debt to such bankrupt," thereby making it clear that the jurisdiction did extend to the collection of debts owing to the bankrupt.

The limitation clause of the section, however, needed no amendment, for it applied to all suits, brought in any court, federal or state, by or against the assignee, and using the word "or" distributively, it applied to all suits touching an interest in property transferable to the assignee, no difference who was the suitor. The reason of this is that there might be suits brought concerning property or rights of property vested in the assignee, in which he was not a necessary party, as: ejectment against his tenant, or foreclosure of liens paramount to his, to which the plaintiff did not choose to make him a party. It was intended to say that, in any such case, in any court where the suit touched property or rights to property of the bankrupt passing to the assignee, it would be a good defense that it was not brought within two years after the right of

It is, however, true in one sense, that debts are property, and this sense of the word is coming more into use in legislation every day. If it be permissible to hold that it was so used in this Act, then the interest of the assignee in the debts due to the bankrupt is an interest adverse to the parties who have to be sued on them before they will pay, and the debts claimed to be due by the bankrupt are matters in which the interest and the duty of the assignee, when they come into contest, are adverse to the creditor. If a debt secured by a mortgage raises, as it un-action accrued. questionably does when a suit is brought to foreclose it, an interest adverse to the mortgagor, or to some purchaser from him of the equity of redemption, it would be a strange construction, which requires the assignee to bring his foreclosure suit to enforce a debt well secured, within the two years, while as to a simple note, unsecured, he can sue at any time, unless barred by the statute of the State. No reason can be seen for such a discrimination.

Assuming that there is some ambiguity in section 5057, as we find it in the Revised Statutes, we may be permitted to examine the connection in which it stood in the original Bankrupt Act. On reference to that it will be found that it was a part of the 2d section of that Act, the one which conferred upon and defined the jurisdiction of the circuit courts in bankruptcy cases. The part of the section pertinent to the matter in hand is this: "Said circuit courts shall also have concurrent jurisdiction with the district courts of the same district of all suits, at law or in equity, which may or shall be brought by the assignee in bankruptcy, claiming an adverse interest, or by such person against said assignee, touching any property or rights of property of said bankrupt transferable to or vested in such assignee; but no suit at law or in equity shall in any case be maintainable by or against such assignee, or by or against any person claiming an adverse interest touching the property or rights of property aforesaid, in any court whatsoever, unless the same shall be brought within two years after the cause of action shall have accrued for or against such assignee; Provided, That nothing herein contained shall revive a right of action barred at the time such assignee is appointed."

We are not aware that it has ever been held that this section did not confer upon the assignee the right to bring a suit, whether it was at law or in equity, to recover a debt or other moneyed obligation in the circuit court of the district. If any such doubt was ever entertained, it was put at rest by the 3d section of the Act of June 22, 1874 [18 Stat. at L., 178], which was an Act See 16 OTTO. U S., Book 27.

This construction is consistent with the language of the original statute and with the policy of it as declared by this court in Bailey v. Glover, 21 Wall., 342 [88 U. S., XXII., 636], and repeated in numerous cases since.

66

"It is obviously one of the purposes of the bankrupt law," says the court, 'that there should be a speedy disposition of the bankrupt's assets. This is only second in importance to securing equality of distribution. The Act is filled with provisions for quick and summary disposal of questions arising in the progress of the case, without regard to usual modes of trial attended by some necessary delay. Appeals in some instances must be taken within ten days." To prevent the estate being wasted in litigation and delay "Congress has said to the assignee, you shall begin no suit two years after the cause of action has accrued to you, nor shall you be harassed by suits when the cause of action has accrued more than two years against you. Within that time the estate ought to be settled up and your functions discharged, and we close the door to all litigation not commenced before it has elapsed."

The language of the revision in section 5057, though slightly varied from that of the original Act, was not intended to give a different meaning. As it is susceptible of the interpretation that no suit shall be brought by or against the assignee, or by or against any person, touching an adverse interest in property transferred to him by the assignment, which is clearly the meaning of the original Act, this latter construction must be given to the section under consideration.

The judgment of the Supreme Court of Illinois is affirmed in this case, and also in the three other cases between Jenkins and the Bank and other parties, which depend on the same question. True copy. Test:

James H. McKenney, Clerk, Sup. Court, U. S. Cited-110 U S., 643.

20

305