supra. But as applied to the fund' in controversy, that peril is now past. The fund is in court to be distributed to rival claimants, with the Government discharged irrespective of the outcome. The very fact that an assignment is permitted even as between the contractor and the Government itself when the warrant is outstanding, if the transfer be executed with prescribed formalities, is significant that the Government is not concerned to regulate the equities of claimants growing out of irregular assignments when collection is complete and liability is ended. The purpose of the statute "was not to dictate to the contractor what he should do with the money received on his contract after the contract had been performed.” Hobbs v. McLean, supra. A transfer of a warrant has need to be accompanied by safeguards lest the assignor may avoid it afterwards for forgery or fraud. A transfer of the fund after payment is perfected is of no concern to any one except the parties to the transaction, and this quite irrespective of the time of the assignment or the manner of its making.

If the Government has any interest in the outcome of this controversy it is in sustaining the assignment to the surety rather than destroying it. The contractor undertook that materialmen would receive their

money promptly while the work was going on. In failing to pay them, he violated a duty to them, but a duty also to the Government, for the default was a breach of the condition of the bond. If the assignment to the surety creates a lien upon the fund, the contractor will be compelled to fulfill the duty thus assumed. A different question would be present if the surety were seeking to keep the money for itself. Cf. American Surety Co. v. Westinghouse Electric Co., supra; Jenkins v. National Surety Co., 277 U. S. 258, 266. There is no such effort here. On the contrary, the surety, claiming nothing for

itself, is devoting the full proceeds of the assignment to the satisfaction of the liabilities covered by the bond. Has the assignment been so obliterated through the condemnation of the statute that when used by the surety in aid of such a purpose it does not generate an equity worthy of recognition?

The advocates of literalism find color of support in a line of decisions made in very different circumstances from these, but tending none the less to a strict construction of the statute. National Bank of Commerce v. Downie, 218 U. S. 345; Nutt v. Knut, 200 U. S. 12; Spofford v. Kirk, 97 U. S. 484; United States v. Gillis, 95 U. S. 407. We do not pause to inquire with reference to all the cases whether the necessities of the judgment were as broad as the words of the opinion. Thus, in National Bank of Commerce v. Downie, supra, to give a single illustration, where the controversy was between the trustee in bankruptcy of the contractor and prior assignees, the claims against the Government which were the subject of the assignment had never been allowed, much less collected, though the decision cannot be said to have been put on that ground. Another line of cases exhibit an opposing tendency. Lay v. Lay, 248 U. S. 24; Portuguese-American Bank v. Welles, 242 U. S. 7, 11, 12; McGowan v. Parish, supra; Freedman's Saving & T. Co. v. Shepherd, 127 U. S. 494, 506; Hobbs v. McLean, supra; Bailey v. United States, 109 U. S. 432, 439; Goodman v. Niblack, 102 U. S. 556, 559; McKnight v. United States, supra; Erwin v. United States, 97 U. S. 392. Cf. York v. Conde, 147 N. Y. 486; 42 N. E. 193, dismissed 168 U. S. 642. These cases teach us that the statute must be interpreted in the light of its purpose to give protection to the Government. After payments have been collected and are in the hands of the contractor or subsequent payees with notice, assignments may be heeded, at all events in equity, if they will not frustrate the ends to which the

prohibition was directed. See Lay v. Lay, supra, aff'g

, 118 Miss. 549; 79 So. 291. To the extent that the two lines of cases are in conflict, the second must be held to be supported by the better reason. Many an analogy from fields uncovered by the statute reinforces that conclusion. An assignment ineffective at law may none the less amount to the creation of an equitable lien when the subject matter of the assignment has been reduced to possession and is in the hands of the assignor or of persons claiming under him with notice. Western Union Telegraph Co. v. Shepard, 169 N. Y. 170; 62 N. E. 154; Walker v. Brown, 165 U. S. 654; Fourth Street Bank v. Yardley, 165 U. S. 634; Ketchum v. St. Louis, 101 U. S. 306. All this is familiar law. No reason is discoverable in the policy of the statute why the analogy should be rejected in its application to the case at hand. Far from defeating or prejudicing the interests of the Government, the recognition of the equities growing out of the relation between the contractor and the surety will tend, as already has been suggested, to make those interests prevail. Cf. Equitable Surety Co. v. McMillan, 234 U. S. 448, 456. It would be a strange construction of the statute that would make it necessary for the Government to declare the equities illusory when they serve its own good.

In what has been written we have assumed that the failure to pay materialmen was a default of such a nature as to impose a duty on the contractor to turn over the payments to the surety upon appropriate demand. There is argument to the contrary. According to that argument the moneys were to be assigned in the event of default in the performance of the contract between the contractor and the Government, and not upon the failure to pay persons other than the Government who had claims against the contractor for materials or labor. But the statute directs that a bond for the prompt payment of

materialmen and laborers shall be executed by the contractor before the commencement of the work. Not only that, but the contract with the Government, which was drawn in the standard form, is a confirmation and adoption of the statutory duty. The terms of the bond are read into the contract, and there is default under the contract when there is default under the bond.

We conclude that Martin's interest in the fund was correctly held to be subordinate to the interests of other claimants. Without denying the possibility of arriving at the same conclusion through other avenues of approach, we follow the pathway that has been marked in this opinion. The decree should be

Affirmed.

BROWN v. O'KEEFE, RECEIVER.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE

THIRD CIRCUIT.

No. 575. Argued March 8, 1937.-Decided March 29, 1937.

1. Shares of national bank stock, scheduled by their registered owner

in his voluntary petition in bankruptcy, were disclaimed by the trustee as burdensome assets, by direction of the court. Held that notwithstanding the adjudication of bankruptcy, their ownership remained in the bankrupt,' continuously, or by relation, from

the date of filing the petition. P. 602. 2. The statutory liability of a shareholder in a national bank in

course of voluntary liquidation (12 U. S. C. 181, 182), is enforcible by a creditor or creditors suing for themselves and for

others similarly situated. P. 603. 3. An assessment by the Comptroller is not a condition precedent,

in cases of voluntary liquidation, to proceedings by creditors.

P. 604. 4. Creditors of a national bank which is in course of voluntary liq.

uidation and known to be insolvent, may enforce the statutory liability of a bankrupt shareholder by filing their claims in the court of bankruptcy. That court has authority to liquidate, or to

direct the liquidation of, such claims, when, as in this case, their

amount is susceptible of prompt ascertainment. P. 604. 5. The liability of the shareholder of a national bank to creditors,

though statutory, is a liability upon quasi or implied contract, in

kind provable and dischargeable in bankruptcy. P. 606. 85 F. (2d) 885, reversed.

CERTIORARI, 299 U. S. 539, to review the affirmance of a judgment against a shareholder of a national bank in a suit by the Receiver of the bank based on a Comptroller assessment. The shareholder interposed a discharge in bankruptcy.

Mr. Wm. Elmer Brown, Jr., pro se.

Mr. George P. Barse, with whom Messrs. Wm. B. Hunter, Ernest Russell, and James Louis Robertson were on the brief, for respondent.

MR. JUSTICE CARDOZO delivered the opinion of the Court.

In a suit for the enforcement of the personal liability imposed by the statute then in force upon shareholders in national banks, petitioner, the defendant in the suit, disclaimed liability, first, upon the ground that before the assessment of the shareholders his ownership of the shares was divested by the filing of a bankruptcy petition and the appointment of a trustee thereunder, and, second, upon the ground that if ownership continued, liability was extinguished by virtue of a discharge in bankruptcy. Whether the defense should have prevailed is now to be determined.

Petitioner was adjudicated a bankrupt on April 21, 1933, and on July 31, 1933, was granted a discharge. At the filing of the bankruptcy petition he was the owner of ten shares of stock of the Union National Bank of Atlantic City, New Jersey. Since September 30, 1931, the Union bank had been in course of voluntary liquidation (under