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summons, or at any time afterward, may have the property of the defendant attached, as security for the satisfaction of any judgment that may be recovered, unless the defendant gives security to pay such judgment as in this act provided in the following

cases:

"First. In an action upon a contract, express or implied, for the direct payment of money where the contract is made or is payable in this territory, and is not secured by any mortgage or lien upon real or personal property, or any pledge of personal property. "Second. When any suit be pending for [127]damages, and the *defendant is about to dispose of or remove his property beyond the jurisdiction of the court in which the action is pending, for the purpose of defeating the collection of the judgment.

"Third. In an action upon a contract, express or implied, against the defendant not residing in this territory or a foreign corporation doing business in this territory.

"Sec. 2. Paragraph 41, being section 2, chapter 1, title 4, Revised Statutes of Arizona, 1887, is hereby amended so as to read as follows:

"Section 2. The clerk of the court or justice of the peace must issue the writ of attachment upon receiving an affidavit by or on behalf of plaintiff, showing

flict with this act are hereby repealed, and this act shall take effect and be in force from and after its passage.

"Approved March 6, 1891."

The amending act is more than a revision of the provisions of the statute of 1887; it is a substitute for them. It, however, does not expressly repeal paragraph 42. Does it do so by implication? Expressing the rule of repeal by implication, Mr. Justice Strong, in Henderson's Tobacco, 11 Wall. 657 [20: 238], said:

"Statutes are indeed sometimes held to be repealed by subsequent enactments, though the latter contain no repealing clauses. This is always the rule when the provisions of the latter acts are repugnant to those of the former, so far as they are repugnant. The enactment of provisions inconsistent with those previously existing manifests a clear intent to abolish the old law. In United States v. Tynen, 11 Wall. 92 [20: 154], it was said by Mr. Justice Field, that 'when there are two acts upon the same subject, the rule is to give effect to both, if possible. But if the two are repugnant in any of their provisions the latter act, without any repealing clause, operates to the extent of the repugnancy as a repeal of the first and even where two acts are not in express terms repugnant, yet, if the latter act covers the whole subject of the first, and embraces new provisions, plainly showing that it was intended as a substitute for the first act, it will operate as a repeal of that act.' For this several authorities were cited, some of which have been cited on the present argument. This is undoubtedly, a sound exposition of the law. But it must be observed that the doctrine asserts no more than that the former statute is impliedly repealed, so far as the provisions of the subsequent statute are repugnant to it, or so far as the latter statute, making "Second. That the defendant is indebted to new *provisions, is plainly intended as a sub-[129] the plaintiff, stating the amount and char-stitute for it. Where the powers or direcacter of the debt; that the same is due over tions under several acts are such as may and above all legal set-offs and counter- well subsist together, an implication of reclaims; and that the defendant is a nonres- peal cannot be allowed." ident of this territory or is a foreign corporation doing business in this territory; or,

"First. That the defendant is indebted to the plaintiff upon a contract, express or implied, for the direct payment of money, and that such contract was made or is payable in this territory, and that the payment of the same has not been secured as provided in section 1 of this act, and shall specify the character of the indebtedness, that the same is due to plaintiff over and above all legal set-offs or counterclaims, and that demand has been made for the payment of the amount due; or,

"Third. That an action is pending between the parties, and that defendant is about to remove his property beyond the jurisdiction of the court to avoid payment of the judgment: and,

"Fourth. That the attachment is not sought for wrongful or malicious purpose, and the action is not prosecuted to hinder or delay any creditor of the defendant.

"Sec. 3. Paragraph 43, being section 4, chapter 1, title 4, Revised Statutes of Arizona, 1887, is hereby repealed.

"Sec. 4. Paragraph 47, being section 8, chapter 1, title 4, Revised Statutes of Ari[128]zona, 1887, is hereby amended by *striking out the word 'original' where it occurs in the

first line of said section.

"Sec. 5. Paragraph 50, being section 11, chapter 1, title 4, Revised Statutes of Arizona, 1887, is hereby amended by striking out the word 'repleviable' where it occurs in line five of said section.

"Sec. 6. All acts and parts of acts in con

with paragraph 42? Certainly not, if the May paragraph 40, as amended, subsist former prescribes the time when the writ of attachment may be issued, and not the time when it may be levied. Its identical language was section 120 of the practice act of California, and was continued as 537 of the Code of Civil Procedure of said state, and was such at the time the act of 1891 of Arizona was passed. When part of the practice act, it was construed by the supreme court of California in the case of Low v. Henry, 9 Cal. 538. Mr. Justice Burnett, speaking for the court, said:

"The twenty-second section of the practice act provides that a suit shall be commenced by the filing of a complaint and the issuance of a summons; and the one hundred and twentieth section allows the plaintiff, 'at the time of issuing the summons, or at any time afterwards,' to have the property of the defendants attached. These provisions must be strictly followed, and the attachment, if issued before the summons, is a nullity. Ev parte Cohen, 6 Cal. 318. The issuance of the

summons afterwards cannot cure that which
was void from the beginning."

Counsel for appellee, however, urges that this decision is explained by the fact that by the California laws a suit was commenced by filing a complaint and the issuance of a summons, and that the decision of the court was that the attachment having been issued before summons was issued, it was issued before the commencement of suit, and hence was void on that ground. We think not. "To have the property of the defendant attached" was construed to mean the issuance of the attachment, and it was held to be a nullity if done before the summons was issued. If, however, ambiguity could arise under the practice act and the Code of Civil Procedure as originally passed, it could not arise after the Code was amended in 1874, and as it existed at the time of the Arizona enactment of 1891. At that time the issu[130]ance of summons *was not the commence

1.

2.

solvent national bank-basis of dividends -bankruptcy rule.

A decree of the circuit court of appeals reversing a decree of the circuit court, with specific directions to enter a decree in accordance with the mandate, is final for the purposes of an appeal to this court.

The entry of a decree by the circuit court in conformity with a mandate of the circuit court of appeals, after reversal, with specific directions, does not cut off the right to an appeal not yet prosecuted from the decree of reversal.

3. A controversy as to the basis on which dividends should be declared by a receiver of a national bank, which involves the enforcement of the administration of the trust, is within the jurisdiction of equity.

4.

A secured creditor of an insolvent national bank is not estopped from claiming the right to prove his full claim, by temporarily submitting to an adverse ruling of the comptroller, when other creditors have not been harmed thereby.

5. A secured creditor of an insolvent national bank may prove and receive dividends upon the face of his claim as it stood at the time of the declaration of insolvency, without crediting either his collaterals or collections made therefrom after such declaration, subject always to the proviso that dividends must cease when from them and from collaterals realized the claim has been paid in full.

6.

ment of the action. The amendment of 1874
(Amendment of the Codes 1873-4, 296) pro-
vided that "civil actions in the courts of the
state are commenced by filing a complaint,"
(section 405) and summons may be issued
at any time within one year thereafter (sec-
tion 406). Section 537, which provided for
the issuance of an attachment and which
was adopted by the Arizona statute, was not
changed. Notwithstanding the amendment
of 1874, we have been cited to no case revers-
ing or modifying Low v. Henry, nor is it
claimed that the practice did not continue in
accordance with the ruling in that case. In-
deed, how could there be change? The pro-
visions of the Code did not need further in-
terpretation. The procedure was clearly de-
fined. An action was commenced by filing a
complaint. Within a year summons might Argued October 20, 21, 1898. Decided Feb-
be issued, and when issued the plaintiff
might have the property of the defendant at-

tached, that is, have an attachment issued
The language of paragraph 40, as amended
in 1891, having been taken from the Califor-
nia Code, it is presumed that it was taken
with the meaning it had there, and hence we
hold it worked a repeal of paragraph 42 of
the Revised Statutes of Arizona of 1887;
and the judgment of the Supreme Court of
the Territory is reversed and the cause re-
manded for further proceedings in accord-
ance with this opinion.

[131]T. B. MERRILL, as Receiver of the First National Bank of Palatka, Florida, Appt.,

v.

The bankruptcy rule which requires the holder of collateral security to exhaust it and credit the proceeds on his claim, or else to surrender it, before he can prove his claim, is not adopted for national banks by U. S. Rev. Stat. § 5236, providing for a ratable dividend on claims proved or adjudicated. [Nos. 54 and 55.]

ruary 20, 1899.

APPEALS from decrees of the United States Circuit Court of Appeals for the Fifth Circuit in a suit by the National Bank of Jacksonville against T. B. Merrill, as receiver of the First National Bank of Palatka, Florida, one decree reversing the decree of the Circuit Court of the United States, for the Southern District of Florida, and remanding the case with directions to enter a decree that the Jacksonville Bank was entitled to prove its claims to the entire amount of the indebtedness to it of the Palatka Bank, etc.; and the other decree dismissing an appeal taken by the receiver of the Palatka Bank. Decree of the Circuit Court of Appeals, first mentioned, affirmed; and decree of the Circuit Court entered in pursuance of the mandate of the Court of

NATIONAL BANK OF JACKSONVILLE. Appeals, also affirmed.

T. B. MERRILL, as Receiver of the First
National Bank of Palatka, Florida,
Appt.,

v.

See same case below, 41 U. S. App. 529, and 645.

Statement by Mr. Chief Justice Fuller: On the 17th day of July, A. D. 1891, the NATIONAL BANK OF JACKSONVILLE. First National Bank of Palatka, Florida, a banking association incorporated under the laws of the United States, having its place of business at Palatka, Florida, failed and closed its doors. Subsequently T. B. Merrill was duly appointed receiver of the bank

(See S. C. Reporter's ed. 131-179.) Decree, when final right to appeal-jurisdiction of equity-secured creditor of in

by the Comptroller of the Currency, and entered upon the discharge of his duties. At the time of the failure of the bank, it was indebted to the National Bank of Jacksonville in the sum of $6,010.47, on sundry drafts, which indebtedness was unsecured; and also in the sum of $10,093.34, being $10,000, and interest, for money borrowed June 5, 1891, evidenced by a certificate of deposit, which was secured by sundry notes belonging to the First National Bank of Palatka, attached to the certificate as collateral. These notes aggregated $10,896.22, the largest being a note of A. L. Hart for [132]$5,350.22. The National Bank of Jacksonville proved its claim upon the unsecured drafts for $6,010.47, and as to this there was no controversy. It also offered to prove its claim for $10,093.34, but the receiver would not permit it to do this, and, under the ruling of the Comptroller of the Currency, it was ordered first to exhaust the collaterals given to secure the certificate of deposit, and then to prove for the balance due after applying the proceeds of the collaterals in part payment.

ler and would demand payment upon a different basis."

Sundry exceptions were taken to the answer, which were overruled, and the cause was set down for final hearing on bill and answer.

The circuit court entered its decree, January 29, 1896, that complainant was entitled to receive dividends on the whole face of the indebtedness due July 17, 1891, less the dividends actually paid to it; that the receiver declare the dividend on the basis of the whole claim, and pay it out of any assets which were in his hands March 15, 1894; and that he render an account.

From this decree the receiver prosecuted an appeal to the circuit court of appeals for the fifth circuit. That court, differing from the circuit court as to the form of its decree, reversed it and remanded the cause, with directions to enter a decree that the Jacksonville Bank was entitled to prove its claims to the entire amount of the indebtedness, and to the payment thereon of the same dividends as had been paid on other indebtedness of the Palatka Bank, with interest on such The Jacksonville Bank collected all the dividends from the date of the declaration notes excepting that of A. L. Hart, obtained thereof, less a credit of the sums which had a judgment on the latter, which it assigned been paid as dividends on the part of the and transferred to the receiver, applied the claim theretofore allowed, provided the diviproceeds of the collaterals which it had col-dends theretofore paid and thereafter to be fected to its claim on the certificate, and paid on the sum of $10,093.34, together with proved for the balance due thereon, being the the amounts theretofore and thereafter resum of $4,496.44. On December 1, 1892, a ceived on the collaterals securing that individend of $1,573.75 was paid on the claim debtedness, should not exceed one hundred as thus proved and on May 17, 1893, a sec- cents on the dollar of the principal and interond dividend of $449.64 was paid. est of said debt; that the receiver recognize the Jacksonville Bank as creditor of the Palatka Bank in said sum of $10,033.34 as of July 17, 1891, and pay dividends as aforesaid thereon, or certify the same to the Comptroller of the Currency, to be paid in due course of administration; and that the Jacksonville Bank receive, before further payment to other creditors, its due proportion of the dividends as thus declared, with interest. 41 U. S. App. 529. From that decree, after the mandate of the circuit court[134] of appeals had been sent down to the circuit court, and proceedings had thereunder, an appeal was taken and perfected to this court, and is numbered 54 of this term.

On the 11th of September, 1894, the Jack sonville Bank filed its bill of complaint in the Circuit Court of the United States for the Southern District of Florida against Merrill as receiver, which set forth the foregoing facts, complained of the action of the receiver in not permitting proof for the full amount of the certificate of deposit, and alleged that it "gave due notice that it would demand a pro rata dividend upon the whole amount due your orator, without deducting the amount collected on collateral security, -to wit, that it would demand a pro rata dividend upon $16,103.81, and interest thereon from the 17th day of July, ▲. d. 1891.”

The prayer of the bill was, among other things, for a pro rata distribution on the entire amount of the indebtedness.

The defendant demurred to the bill, and, the demurrer having been overruled, answered, denying "that the complainant gave due notice that it would demand a pro rata dividend upon the whole amount due to it without deducting the amount collected on collateral security;" and averring, to the contrary, that "the complainant accepted the said ruling of the said Comptroller without demur, and accepted from the said Comptroller, through this defendant, without protesting notice of any kind, the checks of the 1133]said Comptroller in payment of the dividends mentioned in the bill, and that it was not until the 15th of March, 1894, that the complainant gave notice of any kind that it dissented from the said ruling of the Comptrol173 Ú. S. U. S.. BOOK 43.

41

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*Mr. Chief Justice Fuller delivered the[134) opinion of the court:

The circuit court of appeals reversed the decree of the circuit court, with specific di641

to.

"Rule 4. The creditor can prove for, and receive dividends upon, the full amount of his claim, regardless of any sums received from his collateral after the transfer of the assets from the debtor in insolvency, provided that he shall not receive more than the full amount due him."

rections. Nothing remained for the circuit | sums received from his security prior there-
court to do except to enter a decree in ac-
cordance with the mandate, and, for the pur-
poses of an appeal to this court, the decree
of the circuit court of appeals was final. The
mandate went down and the circuit court
entered its decree in strict conformity there-
with before the appeal in No. 54 was prose-
cuted to this court. This promptness of ac-
tion did not, however, cut off that appeal,
and any difficulty in our dealing with the
cause in the circuit court was obviated by
the second appeal, which brings before us in
No. 55 the record subsequent to the first de-
cree of the circuit court of appeals.

It is contended that the bill should have been dismissed because of adequate remedy [185]at law, and on the ground of *laches and estoppel. As the controversy involved the question on what basis dividends should have been declared, and therein the enforcement of the administration of the trust in accordance with law, we have no doubt of the jurisdiction in equity.

The circuit court and the circuit court of appeals held the fourth rule applicable, and decreed accordingly.

This was in accordance with the decision of the circuit court of appeals for the sixth circuit, in Chemical National Bank v. Armstrong, 16 U. S. App. 465, Mr. Justice Brown, Circuit Judges Taft and Lurton, composing the court. The opinion was delivered by Judge Taft, and discusses the question on principle with a full citation of the authorities. We concur with that court in the proposition that assets of an insolvent debtor are held under insolvency proceedings in trust for the benefit of all his creditors, and that a Nor was the lapse of time such as to raise creditor, on proof of his claim, acquires a any presumption of laches, nor could an es- vested interest in the trust fund; and, this toppel properly be held to have arisen. Less being so, that the second rule before menthan two years had elapsed from the pay- tioned must be rejected, as it is based on the ment of the first dividend to the filing of the denial, in effect, of a vested interest in the bill, and the other creditors of the insolvent trust fund, and concedes to the creditor simbank had not been harmed by the temporary ply a right to share in the distributions submission of complainant to the ruling of made from that fund according to the the Comptroller. The decree affected only amount which may then be due him, requirassets on hand or such as might be subse-ing a readjustment of the basis of distribuquently discovered; and if the other creditors had no rights superior to that of complainant, they lost nothing by the reduction of their dividends, if any, afterwards declared to be paid out of such assets.

The inquiry on the merits is, generally speaking, whether a secured creditor of an insolvent national bank may prove and receive dividends upon the face of his claim as it stood at the time of the declaration of insolvency, without crediting either his collaterals or collections made therefrom after such declaration, subject always to the proviso that dividends must cease when from them and from collaterals realized the claim has been paid in full.

Counsel agree that four different rules have been applied in the distribution of insolvent estates, and state them as follows:

"Rule 1. The creditor desiring to participate in the fund is required first to exhaust his security and credit the proceeds on his claim, or to credit its value upon his claim and prove for the balance, it being optional with him to surrender his security and prove

for his full claim.

"Rule 2. The creditor can prove for the full amount, but shall receive dividends only on the amount due him at the time of distribution of the fund; that is, he is required to credit on his claim, as proved, all sums received from his security, and may receive dividends only on the balance due him. [136] *"Rule 3. The creditor shall be allowed to prove for, and receive dividends upon, the amount due him at the time of proving or sending in his claim to the official liquidator, being required to credit as payments all the

tion at the time of declaring every dividend, and treating, erroneously as we think, the claim of the creditor to share in the assets of the debtor, and his debt against the debtor, as if they were one and the same thing.

The third and fourth rules concur in holding that the creditor's right to dividends is to be determined by the amount due him at the time his interest in the assets becomes vested, and is not subject to subsequent change, but they differ as to the point of time when this occurs.

In Kellock's Case, L. R. 3 Ch. 769, it was held that the creditor's interest in the gen-[137] eral fund to be distributed vested at the date of presenting or proving his claim; and this rule has been followed in many jurisdictions where statutory provisions have been construed to require an affirmative election to become a beneficiary thereunder. For instance, the cases in Illinois construing the assignment act of that state, which are well considered and full to the point, hold that the interest of each creditor in the assigned his assent to the assignment by filing his estate "only vests in him when he signifies National Bank, 158 Ill. 88 [30 L. R. A. 330]; claim with the assignee." Levy v. Chicago Furness v. Union National Bank, 147 Ill.

570.

On the other hand, the supreme court of Pennsylvania in Miller's Appeal, 35 Pa. 481, and many subsequent cases, has held, necessarily in view of the statutes of Pennsylvania regulating the matter, that the interest vests at the time of the transfer of the assets in trust. In that case the debtor executed a general assignment for the benefit of creditors. Subsequently the assignor became en

titled to a legacy which was attached by a | Eq. Jur. (13th ed.) § 633; Re Butes, 118 III. creditor, who realized therefrom $2,402.87. 524 [59 Am. Rep. 383]. And it is well esIt was held that such creditor was, notwith- tablished that in marshalling assets, as restanding, entitled to a dividend out of the spects creditors, no part of his security can assigned estate on the full amount of his be taken from a secured creditor until he is claim at the time of the execution of the as- completely satisfied. Leading Cases in signment. Mr. Justice Strong, then a mem- Equity, White & Tudor, vol. 2, pt. 1, 4th ber of the state tribunal, said: "By the deed Am. ed. pp. 258, 322. of assignment the equitable ownership of all the assigned property passed to the creditors. They became joint proprietors, and each creditor owned such a proportional part of the whole as the debt due to him was of the aggregate of the debts. The extent of his interest was fixed by the deed of trust. It was, indeed, only equitable; but whatever it was, he took it under the deed, and it was only as a part owner that he had any standing in court when the distribution came to be made. It amounts to very little to argue that Miller's recovery of the $2,402.87 operated with precisely the same effect as if a voluntary payment had been made by the assignor after his assignment; that is, that it extinguished the debt to the amount recovered. No doubt it did, but it is not as a creditor that he is entitled to a [138]distributive share of the trust fund. His rights are those of an owner by virtue of the deed of assignment. The amount of the debt due to him is important only so far as it determines the extent of his ownership. The reduction of that debt, therefore, after the creation of the trust and after his ownership had become vested, it would seem, must be immaterial."

*In Greenwood v. Taylor, 1 Russ. & M. 185,[139] Sir John Leach applied the bankruptcy rule in the administration of a decedent's estate, and remarked that the rule was "not founded, as has been argued, upon the peculiar ju risdiction in bankruptcy, but rests upon the general principles of a court of equity in the administration of assets;" and referred to the doctrine requiring a creditor having two funds as security, one of which he shares with others, to resort to his sole security first. But Greenwood v. Taylor was in effect overruled by Lord Cottenham in Mason v. Bogg, 2 Myl. & C. 443, 488, and expressly so by the court of appeal in chancery in Kellock's Case; and the application of the bankruptcy rule rejected.

Differences in the language of voluntary assignments and of statutory provisions naturally lead to particular differences in decision, but the principle on which the third and fourth rules rest is the same. In other words, those rules hold, together with the first rule, that the creditor's right to dividends is based on the amount of his claims at the time his interest in the assets vests by the statute, or deed of trust, or rule of law, under which they are to be administered.

The first rule is commonly known as the bankruptcy rule, because enforced by the bankruptcy courts in the exercise of their peculiar jurisdiction, under the bankruptcy acts, over the property of the bankrupt, in virtue of which creditors holding mortgages or liens thereon might be required to realize on their securities, to permit them to be sold, to take them on valuation, or to surender them altogether, as a condition of proving against the general assets.

The fourth rule is that ordinarily laid down by the chancery courts, to the effect that, as the trust created by the transfer of the assets by operation of law or other wise is a trust for all creditors, no creditor can equitably be compelled to surrender any other vested right he has in the assets of his debtor in order to obtain his vested right under the trust. It is true that, in equity, a creditor having a lien upon two funds may be required to exhaust one of them in aid of creditors who can only resort to the other, but this will not be done when it trenches on the rights or operates to the prejudice of the party entitled to the double fund. Story,

In Kellock's Case, Lord Justice W. Page Wood, soon afterwards Lord Chancellor Hatherly, said:

"Now, in the case of proceedings with reference to the administration of the estates of deceased persons, Lord Cottenham put the point very clearly, and said: 'A mort gagee has a double security. He has a light to proceed against both, and to make the best he can of both. Why he should be deprived of this right because the debtor dies, and dies insolvent, it is not very easy to see.'

"Mr. De Gex, who argued this case very ably, says that the whole case is altered by the insolvency. But where do we find such a rule established, and on what principle can such a rule be founded, as that where a mortgagor is insolvent the contract between him and his mortgagee is to be treated as altered in a way prejudicial to the mortga gee, and that the mortgagee is bound to realize his security before proceeding with his personal demand?

"It was strongly pressed upon us, and the argument succeeded before Sir J. Leach in Greenwood v. Taylor, that the practice in bankruptcy furnishes a precedent which ought to be followed. But the answer to that is, that this court is not to depart from its own established practice, and vary the nature of the contract between mortgagor and mortgagee by analogy to a rule which has been adopted by a court having a peculiar jurisdiction, established for administering the property of traders unable to meet[140] their engagements, which property that court found it proper and right to distribute in a particular manner, different from the mode in which it would have been dealt with in the court of chancery. are asked to alter the contract between the parties by depriving the secured creditor of one of his remedies, namely, the right of standing upon his securities until they are redeemed."

We

And it was the established rule in England prior to the judicature act, 38 & 39 Vict. chap. 77, that in an administration suit a

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