In re William Moller and others, Bankrupts.

after that event and the appointment of an assignee. We decided that the validity of the suit or of the decree was not affected by the intervening bankruptcy; that the assignee might or might not be made a party; and, whether he was or not, he was equally bound with any other party acquiring an interest pendente lite."

The principle of these cases derives confirmation, if that be necessary, from the cases of Norton v. Switzer, (3 Otto, 355,) and Claflin v. Houseman, (Id., 130.) I entertain no doubt, therefore, that the general proposition on which the appellant in these cases relies is unfounded, and that the State Courts had jurisdiction to maintain the several actions which were instituted to foreclose the mortgages involved in them. No question is presented as to the power of the District Court to enjoin the prosecution of any of those suits, if, in its judgment, that course had been deemed conducive to justice. Such an injunction was asked for in only two of the cases and was denied in each. The grounds of these applications do not appear upon the appeal papers, and no question was made in respect to them, at the bar.

In the next place, it is claimed, on the part of the appellant, that the District Court had not power to allow the mortgage creditors to prove for a deficiency in four of the cases in which no preliminary permission to institute the foreclosure suits had been obtained from the District Court. The appellant's position is based upon the provisions of section 5075 of the Revised Statutes, which enacts, that a mortgage creditor of the bankrupt shall be admitted as a creditor only for the balance of the debt, after deducting the value of the mortgaged property, to be ascertained by agreement between him and the assignee, or by a sale thereof, to be made in such manner as the Court shall direct; or the creditor may release or convey his claim to the assignee upon such property, and be admitted to prove his whole debt. It then provides, that, "if the value of the property exceeds the sum for which it is so held as security, the assignee may release to the creditor the bankrupt's right of redemption therein, on receiving such

In re William Moller and others, Bankrupts.

excess; or he may sell the property subject to the claim of the creditor thereon; and, in either case, the assignee and creditor, respectively, shall execute all deeds and writings necessary or proper to consummate the transaction." It then enacts, that, "if the property is not so sold or released and delivered up, the creditor shall not be allowed to prove any part of his debt." Upon this section, it must be observed, in the first place, that the secured creditor may proceed, without the order or the sanction of the bankrupt Court, to realize his security; and, in the second place, that, with the sanction of the Court or of the assignee, he may avail himself of the full value of his security, and be admitted as a creditor for the deficiency. The statute is not modal in its provisions, but substantial. It does not concern itself with the order of time in which the business shall be transacted, but with the fact that the Court approves, or the assignee agrees.

In four of the cases before the Court, which are in the papers respectively designated as the Fifth Avenue, Westchester, Sugar-house, and Sloane cases, the circumstances are slightly different, though, in each, dower rights or other incumbrances existed, which made a title under the decree of a Court of general jurisdiction more marketable than any that could be given under the direction of the bankrupt Court alone.

In the Fifth Avenue case, the assignee was made a party defendant, but did not answer, and a decree was regularly passed by the State Court, and a sale was had, in which the creditor, being the highest bidder, became the purchaser. He then, without attempting to take possession, applied to the Court in bankruptcy, averring that he had bid the full value of the property, asking the sanction of the Court, and offering to submit to a resale of the clear title, and to convey accordingly, if the bankruptcy Court should so order. In answer to this application, it was not shown that the full value had not been bid for the property, nor was any ground taken in opposition, except the somewhat inconsistent legal grounds, that the proceedings in the State Court were inoperative, and that, having taken them, the creditor ought not

In re William Moller and others, Bankrupts.

to be allowed to prove for the deficiency. The Court refused to sustain either of these grounds, sanctioned the sale which had taken place and permitted the creditor to prove for the deficiency. This decision is supported by the case of In re The Iron Mountain Co., (9 Blatchf. C. C. R., 320,) before Judge Woodruff, in all points except as to the deficiency. In regard to that, Judge Woodruff remarks, at the close of his opinion, that, by electing to pursue the mortgaged premises, the claimants of the lien would deprive themselves of any right to prove their debt for the deficiency. This remark was not necessary to the decision of the cause, and was not, probably, intended to refer to anything but a final election not to submit to the authority of the bankruptcy Court, in ascertaining the value of the property.

The Westchester case did not differ greatly from that which has just been considered. The assignee answered in the State Court, setting up, in substance, the alleged want of jurisdiction and was beaten in that Court. He had also previously applied to the District Court to enjoin the further prosecution of the suit, and this application was denied. These circumstances do not serve to take the case out of the rule previously stated.

In the Sugar-house case, after the suit in the State Court was ready for a decree, the assignee being a party, and having applied to the District Court for an injunction, which was denied, the creditor applied to the District Court to order a sale and to fix the deficiency, and this was granted, and correctly granted, unless what has been already said in this opinion is completely erroneous.

In the Sloane case the assignee was made a party defendant, answered the bill in the State Court, then, by stipulation, withdrew his answer, reserving the right to special notice of the sale, received such notice, and himself also advertised the sale. In respect to this part of the case, the circumstances of which are particularly discussed in the opinion of Judge Blatchford, in the District Court, (In re Moller, 8 Benedict, 526,) I think it unnecessary to add anything.

Bright v. The Milwaukee and St. Paul Railroad Company.

The Sloane case, as well as those of Gerdes and of Cooper, present questions in respect to the payment of taxes, assessments and water rates by the assignee, as debts entitled to priority in payment, under section 5101 of the Revised Statutes, sub-division third. These questions are amply discussed in the opinion of Judge Blatchford, and are disposed of in accordance with my understanding of the law. In both branches of the Sloane case, and in the Gerdes and Cooper cases, that opinion is adopted by this Court.

The orders appealed from are affirmed, with costs.

William H. Scott, for the assignee in bankruptcy.

John E. Parsons, Edmund Coffin, Jr. and Jacob F. Miller, for the creditors.

AARON S. BRIGHT

vs.

THE MILWAUKEE AND ST. PAUL RAILROAD COMPANY AND OTHERS. IN EQUITY.

The plaintiff in a suit in equity in a State Court presented to that Court, on the 4th of February, 1876, a petition for its removal to this Court, under the Act of March 3d, 1875, (18 U. S. Stat. at Large, 470,) with the proper bond. The session of this Court next after the 4th of February began, by law, on the last Monday of February. The plaintiff did not file in this Court a copy of the record until the first day of the ensuing April term of this Court; Held, that the suit must be remanded to the State Court, with costs, as not removed to this Court according to law.

(Before JOHNSON, J., Southern District of New York, May 7th, 1877.)

JOHNSON, J. This is an application, on the part of the defendant company, to set aside an order, entered on the 3d day of

Bright v. The Milwaukee and St. Paul Railroad Company.

April, 1876, that being the first Monday of April in that year, and the first day of the April term of this Court, in the equity rule book, by which it was ordered that the above cause should proceed in this Court in the same manner as if the same had been originally brought in this Court. This order, being taken by the party on his own motion, is operative only in case he was entitled by law to enter it. The action was pending in the Supreme Court of the State of New York, and was of that class which, if it had been originally brought in this Court, would have taken the form of a bill in equity. The steps on which the plaintiff relies to make out his right to remove the cause, and its actual removal, are disclosed in the papers. They consist of the presentation and filing in the Supreme Court of New York, on the 4th day of February, 1876, of a petition for removal, in the form required by the Act of Congress of March 3d, 1875, (18 U. S. Stat. at Large, 470,) and a proper bond conditioned for entering in this Court, on the first day of its then next session, a copy of the record in such suit, and conforming in other respects to the requirements of the statute. It is only by compliance with the requirement of the condition before mentioned, that this Court becomes possessed of the cause. Now, in this District, the session of the Circuit Court next after the 4th day of February, 1876, commenced upon the last Monday of February, which, in that year, happened on the 28th. It was on the first day of this term that it was necessary for the plaintiff to file the copy of the record, in order to transfer the cause to this Court. The February, April and October terms are the three regular terms of this Court, each of which in succession supersedes the preceding term, differing, in this respect, from the special and exclusive criminal terms, as to which it is provided by law, that they shall not in any way affect the holding of any other term at the same time. (Rev. Stat., sec. 658.) These criminal terms have been held not to be sessions of the Court, within the meaning of the statutes concerning the removal of causes. (Jones v. Oceanic S. Nav. Co., 11 Blatchf C. C. R., 406.) The order of the 3d of April, 1876, was,