Mr. Chief Justice Fuller,
after stating the case, delivered the opinion of the court.
In
Hyde
v.
Woods,
94 U. S. 523, it was ruled that the ownership of a seat in a stock and exchange board is property, not absolute and unqualified, but limited and restricted by the rules of the association; that such rules in imposing the .condition upon the disposition of memberships that the proceeds should be first applied to the benefit of creditor members are not open to objection on the ground bf public policy, or because in. violation of the bankrupt act; and that in the case of the bankruptcy of a member his right to a.seat.would pass to his assignees, and the balance of tbe proceeds upon sale, could be recovered for the benefit of the estate. While the property is peculiar and in its nature a personal privilege, yet such value as it may possess, notwithstanding the restrictions to which it is subject, is susceptible of being realized by creditors.
Ager
v.
Murray,
105 U. S. 126;
Stephens
v.
Cady,
14 How. 528;
Powell
v.
Waldron,
89 N. Y. 328;
Belton
v.
Hatch,
109 N. Y. 593;
Habenicht
v.
Lissak,
78 California, 351;
Weaver
v.
Fisher,
110 Illinois, 146.
Under the rules of the exchanges in question, suspension of membership followed upon insolvency, and if the debts due
members were not settled, the seats were to be sold, and .the. proceeds, after the charges due the associations were deducted, were to be distributed
pro rata,
among, those creditors. Reinstatement in or readmission to membership was provided for upon a settlement in full by the suspended member, and the action of the governing board in his favor. By the assignment in bankruptcy, all the bankrupt’s rights of action for property or estate and of redemption, together with his right' and authority to sell, manage, dispose of and sue for the same, as they existed at the time the petition was filed, passed, to the assignees. Rev. Stat. § 5046. They might, therefore, as -the master pointed out, have settled and arranged the bankrupt’s affairs with the creditor members, and applied for readmission and a transfer in such manner, with the assent of the exchanges, as would have enabled them to avail themselves of the seats. They could have properly required the bankrupt to assist them in taking the necessary steps as between' him and them and the associations, and in case of necessity might have resorted to the courts.
They were not- bound, however, to accept property of an onerous and unprofitable nature, which would burden instead of benefiting the estate, and they could elect whether th'ey would accept or not, after due consideration and within a reasonable time, while, if their judgment was unwisely exercised, the bankruptcy court was open to the creditors to compel a different conclusion.
Glenny
v.
Langdon, 9
8 U. S. 20;
American, File Co.
v.
Garrett,
110 U. S. 288.
At the time of the filing of the petition in bankruptcy, November 10,1871, and of the bankrupt’s discharge, October 3, 1873, these suspended memberships were confessedly of no value to the estate and were so appraised, because no possible dividend could be paid equal to the excess of the debts due members over the then value of the memberships.
It may be assumed that the assignees regarded the expenditure of money in the payment of annual dues and charges, and in settlement with creditor members, as not justifiable under the circumstances. At all events, for twelve years after their appointment, and ten years after the bankrupt’s discharge,
.they took no steps to obtain possession, and asked no assistance in that regard from either the bankrupt or the courts; made no payments to the associations and attempted no settlements with the creditor members ; considered the realization of anything as substantially impracticable in view of the situation and of judicial decision; and contented themselves with the hope that masterly inactivity might enable them to assert a claim if by the efforts of the bankrupt the load of debt which weighed down the right to the. seats was lifted, and in the progress of years the value of such seats happened to increase instead of diminish.
Nor did they seek a sale, nor to compel the creditor members to realize upon or agree to a valuation of the seats and prove only for the balance of their claims, under Rev. Stat. § 5075, if applicable, or otherwise to gain the benefit of such reduction as might thus be. obtained, but, on the contrary, .allowed these creditors to prove their debts in full, and paid dividends thereon, without objection:
Except that they notified the exchanges of their appointment, they did nothing in the way of taking possession or of the preservation of the property, and for several years prior to the reinstatement they communicated neither with the bankrupt nor the exchanges in regard to the matter. Their conduct can be viewed in no other light than that of an election not to accept these rights as property of the estate.
. The policy of the bankrupt law was, after taking from the bankrupt all his property -,not exempt by law, to discharge him from his debts and liabilities and enable him to take a fresh start. Henceforward his earnings were his own, and after his adjudication and the surrendering of his property to be administered, he- was as much at-liberty to purchase any of the property so surrendered as any other person.
Traer
v. Clews, 115 U. S. 528.
In order to reacquire his seats Terkes paid the annual dues to the exchanges, and the assessments for their gratuity or trust funds,, a scheme of life insurance for the benefit of members, which added to the value of the memberships when payments were kept up, and which funds were established after
the bankruptcy. He induced his creditor fellow-members, out of personal consideration for him, and for his personal benefit, to withhold a demand for a sale under the rules, and finally paid them all in full. Those payments were made, in cash or personal services, out of his earnings subsequent to his bankruptcy, and, as appears from his sworn answer, as well as his testimony, under the belief that the assignees never expected to set up any claim to the seats.
The assignees admit in substance that they knew that Yerkes wished to retain his seats; that he was of opinion that they could do nothing with them ; that he was preventing by his own exertions any sale by the board creditors; and that he was paying off their claims.
Thus, by the devotion of his own time and earnings, this worthless and abandoned property became valuable, and the assignees acquiesced in the transmutation, as it was accomplished, without action and without objection.
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Mr. Chief Justice Fuller,
after stating the case, delivered the opinion of the court.
In
Hyde
v.
Woods,
94 U. S. 523, it was ruled that the ownership of a seat in a stock and exchange board is property, not absolute and unqualified, but limited and restricted by the rules of the association; that such rules in imposing the .condition upon the disposition of memberships that the proceeds should be first applied to the benefit of creditor members are not open to objection on the ground bf public policy, or because in. violation of the bankrupt act; and that in the case of the bankruptcy of a member his right to a.seat.would pass to his assignees, and the balance of tbe proceeds upon sale, could be recovered for the benefit of the estate. While the property is peculiar and in its nature a personal privilege, yet such value as it may possess, notwithstanding the restrictions to which it is subject, is susceptible of being realized by creditors.
Ager
v.
Murray,
105 U. S. 126;
Stephens
v.
Cady,
14 How. 528;
Powell
v.
Waldron,
89 N. Y. 328;
Belton
v.
Hatch,
109 N. Y. 593;
Habenicht
v.
Lissak,
78 California, 351;
Weaver
v.
Fisher,
110 Illinois, 146.
Under the rules of the exchanges in question, suspension of membership followed upon insolvency, and if the debts due
members were not settled, the seats were to be sold, and .the. proceeds, after the charges due the associations were deducted, were to be distributed
pro rata,
among, those creditors. Reinstatement in or readmission to membership was provided for upon a settlement in full by the suspended member, and the action of the governing board in his favor. By the assignment in bankruptcy, all the bankrupt’s rights of action for property or estate and of redemption, together with his right' and authority to sell, manage, dispose of and sue for the same, as they existed at the time the petition was filed, passed, to the assignees. Rev. Stat. § 5046. They might, therefore, as -the master pointed out, have settled and arranged the bankrupt’s affairs with the creditor members, and applied for readmission and a transfer in such manner, with the assent of the exchanges, as would have enabled them to avail themselves of the seats. They could have properly required the bankrupt to assist them in taking the necessary steps as between' him and them and the associations, and in case of necessity might have resorted to the courts.
They were not- bound, however, to accept property of an onerous and unprofitable nature, which would burden instead of benefiting the estate, and they could elect whether th'ey would accept or not, after due consideration and within a reasonable time, while, if their judgment was unwisely exercised, the bankruptcy court was open to the creditors to compel a different conclusion.
Glenny
v.
Langdon, 9
8 U. S. 20;
American, File Co.
v.
Garrett,
110 U. S. 288.
At the time of the filing of the petition in bankruptcy, November 10,1871, and of the bankrupt’s discharge, October 3, 1873, these suspended memberships were confessedly of no value to the estate and were so appraised, because no possible dividend could be paid equal to the excess of the debts due members over the then value of the memberships.
It may be assumed that the assignees regarded the expenditure of money in the payment of annual dues and charges, and in settlement with creditor members, as not justifiable under the circumstances. At all events, for twelve years after their appointment, and ten years after the bankrupt’s discharge,
.they took no steps to obtain possession, and asked no assistance in that regard from either the bankrupt or the courts; made no payments to the associations and attempted no settlements with the creditor members ; considered the realization of anything as substantially impracticable in view of the situation and of judicial decision; and contented themselves with the hope that masterly inactivity might enable them to assert a claim if by the efforts of the bankrupt the load of debt which weighed down the right to the. seats was lifted, and in the progress of years the value of such seats happened to increase instead of diminish.
Nor did they seek a sale, nor to compel the creditor members to realize upon or agree to a valuation of the seats and prove only for the balance of their claims, under Rev. Stat. § 5075, if applicable, or otherwise to gain the benefit of such reduction as might thus be. obtained, but, on the contrary, .allowed these creditors to prove their debts in full, and paid dividends thereon, without objection:
Except that they notified the exchanges of their appointment, they did nothing in the way of taking possession or of the preservation of the property, and for several years prior to the reinstatement they communicated neither with the bankrupt nor the exchanges in regard to the matter. Their conduct can be viewed in no other light than that of an election not to accept these rights as property of the estate.
. The policy of the bankrupt law was, after taking from the bankrupt all his property -,not exempt by law, to discharge him from his debts and liabilities and enable him to take a fresh start. Henceforward his earnings were his own, and after his adjudication and the surrendering of his property to be administered, he- was as much at-liberty to purchase any of the property so surrendered as any other person.
Traer
v. Clews, 115 U. S. 528.
In order to reacquire his seats Terkes paid the annual dues to the exchanges, and the assessments for their gratuity or trust funds,, a scheme of life insurance for the benefit of members, which added to the value of the memberships when payments were kept up, and which funds were established after
the bankruptcy. He induced his creditor fellow-members, out of personal consideration for him, and for his personal benefit, to withhold a demand for a sale under the rules, and finally paid them all in full. Those payments were made, in cash or personal services, out of his earnings subsequent to his bankruptcy, and, as appears from his sworn answer, as well as his testimony, under the belief that the assignees never expected to set up any claim to the seats.
The assignees admit in substance that they knew that Yerkes wished to retain his seats; that he was of opinion that they could do nothing with them ; that he was preventing by his own exertions any sale by the board creditors; and that he was paying off their claims.
Thus, by the devotion of his own time and earnings, this worthless and abandoned property became valuable, and the assignees acquiesced in the transmutation, as it was accomplished, without action and without objection.
It is to be observed that Yerkes was in no sense the agent or trustee for the assignees or for the creditors, in thus expending his money and labor for the preservation of the seats. Whatever information he could impart, or assistance he could render, in facilitating the action of the assignees in the line of their duties, was to be expected of him, and up to the time of his discharge he could have been compelled by summary order to assist in perfecting possession in the assignees of property which had passed to them, and which they had accepted; but he was not bound to contribute his own time and money to the removal of burdens which they declined to assume, and whose ■ existence put the rights to readmission out of the category of available assets, and justified the election of the assignees not to accept them.
We hold that the assignees, after sedulously avoiding for years any responsibility in the premises, the assumption of any relations to the' exchanges, the taking of any steps to free the rights from encumbrance, or to realize upon them as encumbered, and allowing the bankrupt, by the use of after acquisitions, to create a value not theretofore possessed, cannot be allowed to come into a court of equity, and, in spite of
laches and acquiescence of the most pronounced character, invoke its aid to wrest from him the fruit of his independent and lawful exertions, and reap where they had not sown. Under such circumstances they do not come with clean hands.
Clearly the sale of the present memberships to a nominee of the assignees, and the admission of such nominee upon the ouster of Yerkes cannot now be coerced, and if Yerkes’s title is not open to attack he cannot be decreed to account for the market value thereof to the extent, in whole or in part, of the dividends which the creditor members received. In order to obtain the seats their claims had to be settled in full, and such settlement was not waived by their being proved in the bankruptcy proceedings, without objection then or for thirteen years thereafter. The dividends were not paid in order to protect the rights of the assignees or to save the memberships, and while, by reason of the extinguishment of the debts
pro
tanto, Yerkes may be said to have paid less than he otherwise would, yet he paid much more than the value of the seats at the time of the bankruptcy, in addition to the amount of the dividends. The parties well understood that the dividends could not at best reach more than a certain percentage, and that the debts due the members of the association, after that percentage was deducted, far exceeded the value of the seats. The assignees deemed it unwise and -impracticable to attempt to speculate upon a future rise in that value, and, declining to settle with the creditor members, to pay the periodical charges, and to enter into relations with the exchanges and those creditors, proceeded to close up the estate, without regard to these remote expectancies, apparently with commendable promptitude. As we have said, they cannot now be permitted to avail themselves of the results of what Yerkes did and they did not do, nor can they lay hold of his property to work out a return of what the estate paid to these particular creditors in common with the others.
Deorees affirmed.
Mr. Justice Brewer, with whom concurred Mr. Justice Harlan, dissenting.
Mr. Justice Harlan and myself dissent from the foregoing opinion and judgment.
By the assignment in 18Y1 the memberships in the two .exchanges were transferred to the assignees. They were then worth $6000. By the rules of the exchanges, debts to members were a prior lien. Those debts then amounted to $30,-365.10. In other words, the assignees took title to property wórth $6000, subject to a lien of $30,365.10. If then sold, the debts of the bankrupt would have- been reduced by the amount of $6000. By making the sale the assignees- would have assumed no special obligation for the balance of the debts having a lien upon these memberships. They should have sold at once, or waited to see if 'there was a rise in value. They chose the latter. They never, in terms, relinquished their claim upon the property. The
ad interim
payments made by the bankrupt only kept alive certain insurance, which on his death would, have enured to the heirs, and not gone to the assignees. Such payments, therefore, were wholly for his benefit, and not for the assigned estate, or for the creditors.
The assignees have paid dividends aggregating 28 per cent, or to the creditors holding such liens $8502.22. The bankrupt, the assignor, availing himself of this payment, by services and money/pays .off the balance of these lien claims and appropriates to himself the seats in the exchanges, now worth $35,000 to $42,000. The result is that the delay of the assignees, wise as it would seem from the increased value of the property, is adjudged an abandonment. Property then worth $6000 is not appropriated to the reduction of the debts against the estate; on the contrary, the bankrupt gets the benefit of $8500 paid out of the estate assigned for the benefit of creditors, uses that payment to reduce the claims against this property, and, paying off the balance, repossesses himself of the property, now worth over $35,000.
We see neither equity nor law in this conclusion, and therefore dissent.
Mr. Justice Bradley and Mr. Justice Gray did not hear . the argument, and took no part in the decision of these cases.