First National Bank of Troy v. Cooper

47 How. Pr. 108
CourtSupreme Court of the United States
DecidedOctober 15, 1873
StatusPublished

This text of 47 How. Pr. 108 (First National Bank of Troy v. Cooper) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
First National Bank of Troy v. Cooper, 47 How. Pr. 108 (U.S. 1873).

Opinion

By the Court, Strong, J.

The demurrer presents the question whether the complainant’s bill sets forth any equity sufficient to justify the court in granting the relief sought against the defendants. The object of the bill is to procure a reversal of an order of the district court made under the following circumstances: On the 4th day of February, 1870, the Troy Woolen Company was adjudged a bankrupt by that court, and on the 11th of March, 1870, Shepard Tappin, one of the defendants, became the assignee. Soon after, the other defendants, Cooper, Yail & Co., proved a debt against the bankrupt amounting to $67,029.81, and on the 24th day of July, 1870, they filed the probate with the assignee. Subsequently, on the 29th of November next following, on petition of the appellants, who had also proved a debt against the bankrupt, the district court made an order allowing them and the assignee to contest the validity of the claim of Cooper, Yail & Co. It was then referred to Worthington Frotliingham, Esq., to take the proofs and accounts respecting the claim, to determine its legality and amount, and to report his conclusions to the court. Permission was also given to the assignee, and to any creditor of the bankrupt, if they desired to contest the claim, to attend the proceedings before the referee; and it appears that the complainants did attend, that evidence in opposition to the claim was submitted, and that the referee reported the whole of it as due from the bankrupt. To his report joint exceptions were filed on behalf of [112]*112the complainants and the assignee, and argued in the district court upon the evidence taken before the referee. These exceptions were overruled, and on the 13th of July, 1871, the court made an order allowing the debt as proved by Cooper, Yail & Co., and directing the complainants to pay the costs and expenses of the reference. The bill, after setting forth these facts, makes a general averment that Cooper, Yail & Co. have no legal claim against the bankrupt; that they have fraudulently proved their claim; that they knew this when the exceptions were taken to the referee’s report as well as when the court made the decree allowing the debt, and that it was thus provéd before the district court. The complainants then aver that the decree was erroneous, because there was no legal debt due by the bankrupt to Cooper, Yail & Co.; because the evidence before the court proved that there was no such debt, and because the court should have disallowed it.

This is one aspect of the bill. _ The complainants, however, further charge that the assets in the hands of Cooper, Yail& Co. are insufficient to pay fifty cents on the dollar of the legal debts of the bankrupt, even if the claim of Cooper, Yail & Co. be disallowed; and they aver that the assignee refused to appeal from the decision of the district court, or to allow the creditors to appeal in his name, stating that he was advised the complainant had a right to have the decree reviewed under section 2 of the bankrupt act, and that if the creditors desired a review they must take that course. They then charge that the assignee was guilty of neglect of duty in omitting to appeal from the decree of the district court, and they renew the averment that the bankrupt is not, and never was, liable for the debt proved against him- by Cooper, Yail & Co., or for any part of it. It is upon these facts they base the prayer of the bill, which is that the decree made by the district court may be reviewed, examined, revised and annulled, and that the proof of debt filed with [113]*113the assignee by Cooper, Vail & Co. may be rejected and expunged.”

No doubt, when an executor or administrator colludes with a fraudulent claimant against a decedent’s estate, and refuses to take steps to resist the claim, any person interested in the estate may maintain an action against such fraudulent claimant and the executor or administrator for the purpose of contesting the claim. Bills in equity of this nature have been maintained. And if an assignee in bankruptcy, with knowledge, or with reason to believe, that one claiming to be a creditor of the bankrupt had proved a debt against the bankrupt’s estate which had no existence, or which was tainted with fraud, should neglect or refuse to contest the allowance of such debt, there is no reason why the other creditors, having proved their debts, should not be permitted to interpose and seek the aid of a court of equity to annul the allowance. But the bill before us presents no- such case. The assignee has resisted the allowance of the debt claimed by Cooper, Vail & Co..; he took part with, the- appellants in contesting the debt before the referee to whose consideration it was- submitted. He joined with them in filing exceptions to the-report allowing the claim. There is no averment of any collusion between him and the claimants. The bill exhibits nothing which ought to cast discredit upon 'his fidelity to- his trust. The referee decided against the appellants after hearing all the evidence they had to submit. The district count reviewed his decision upon exceptions taken to it, and came to the same conclusion, allowing the debt claimed by Cooper, Vail & Co. Nor is it pretended that any . new evidence exists which ought to lead- the circuit court to any other conclusion than that at which the district court arrived1.. In such a state of facts it cannot be- maintained that it was the duty of the assignee to enter an appeal to the circuit court or even to allow an appeal in his name. After two trials, in which he was aided by the appellants, after all the evidence had been made use of in opposition to the claim which could [114]*114then be produced, or which can now be obtained, and after two decisions allowing the claim, he may well have concluded, as he did, that his duty to his trust did not require either expenditure of the bankrupt’s estate in further litigation, or the delay which might have been consequent upon an appeal. The bill, then, wholly fails in exhibiting any equity against the assignee.

It is equally without equity as against Cooper, Vail & Co. It is true the averment is made that they have no legal or valid claim against the bankrupt, and that their claim • was fraudulently proved and made, but there is no allegation wherein the fraud consists, or of any step they have taken in the assertion of their claim which they might not lawfully take. Such a general averment of fraud can be no foundation for an equity. Moreover, it is apparent that the only fraud intended in the averments of the bill is the assertion of a claim which the complainants insist is hot sufficiently sustained by evidence. They objected to the claim at the outset. They appealed to the district court, and they were allowed to contest" its validity. It was at their instance a referee was appointed to examine and report upon it; before that referee they went to trial, without objection. When defeated they brought the contest into court and renewed it there, but unsuccessfully. And they do not now allege that in either of these trials there was anything unfair, or that Cooper, Vail & Co. were guilty of any fraud in maintaining their claim, other than the assertion of its existence, or that they themselves made any mistake, or that they have any other ease now than they had urged before the referee and the district court. Their only ground of complaint is that the referee and district court came to a different conclusion from that which they think should have been adopted. The court thought the evidence established the existence of a debt, due Cooper, Váil & Co.

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Bluebook (online)
47 How. Pr. 108, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-national-bank-of-troy-v-cooper-scotus-1873.