Greene v. Taylor 132 U.S. 415, 10 S. Ct. 138, 33 L. Ed. 411, 1889 U.S. LEXIS 1889, SCDB 1889-056

GREENE v. TAYLOR.

APPEAL FROM THE' CIRCUIT COURT OF THE UNITED STATES FOE THE NORTHERN DISTRICT OF ILLINOIS.'

No. 128.

Argued November 20, 21,1889.

Decided December 16, 1889.

The right of action of a plaintiff under a title derived from an assignee in bankruptcy, to redeem from a sale under a deed of trust, was held in this case to be barred by the two years’ limitation contained in § 5057 of the Revised Statutes.

That section does not apply only to a suit to which the assignee in bankruptcy is a party; but it applies to a case where nearly a year of the two years had run against the right while the assignee owned it, after his appointment, and the rest of the two years ran against ii in the hands *416of the plaintiff, his transferee, so that more than two years elapsed between such appointment and the bringing'of the spit to redeem, and the property covered by the trust deed was held adversely by the defendant, under a sale under the trust deed, for more than two years before the bringing of that suit.

On the facts of this case-there was no fraudulent concealment by the de- fendants from the assignee in bankruptcy or the plaintiff.

Sufficient information as to the trust deed, and its contents, was given in the bankruptcy schedule, filed more than eleven months before the assignee was. appointed, and more than one month before the sale under the trust deed, to put the assignee in bankruptcy and the plaintiff on inquiry.

Moreover it appeared that, two days before the sale under the deed of trust, ’ the plaintiff knew of the contents of the schedule in bankruptcy and who held the debt secured by the deed of trust.

The plaintiff having^ by a petition to the bankruptcy court, procured' the sale of the property by the assignee in bankruptcy; and the application, of its proceeds on the debt on which his suit to redeem was founded, waived any right to redeem-arising under a judgment before recovered by him for his debt.

The court, in its opinion, stated the case aá follows:

Oh the 1st of April, 1871, Nathan S. Grow, of Chicago, Illinois, executed a trust deed to Benjamin E. Gallup, of the same place, to secure the payment of a. promissory note for $35,000, payable in five years from that date, with interest at the rate of 9 per cent per annum, payable half-yearly on October 1 and April 1, as evidenced by 10 interest coupons, bearing the same date, for $1575 each. The note was payable ’ to the order of Grow, and was endorsed by'him payable to David R. Greene or order. The trust deed stated that the $35,000 was a loan to Grow made by the legal holder of the note. Greene was the person who loaned the money. He resided in New Bedford, Massachusetts. The real estate covered by that trust deed was at the northeast corner of West Madison and Sheldon streets, in Chicago, being 73'feet on "West Madison Street, in front, 116 feet deep, on Sheldon Street, 73 feet in the rear, on a line parallel with West Madison Street and on a 16-feet alley, running east.and west, and 116 feet on the east line, parallel with Sheldon Street. It was described as having on it three four-story, brick stores with stone fronts, fronting-on West *417Madison. Street; and it was stated that a block of two-story and basement brick dwelling-houses was about to be erected on the property. The front piece was 60 feet deep; then came a 12-feet. court; and the rear part was 44 ieet deep. The entire property came afterwards to be known as “the Jefferson-Park Hotel property.” This trust deed was recorded April 1,1871.

Grow on the 9th of February, 1876, conveyed the entire property to '"William Scott Eobertson, subject to an incumbrance of $35,000, by a warranty deed, which was recorded February 18, 1876. The loan to Grow matured on the 1st of April, 1876, and in the spring of 1877 negotiations were had between Eobertson and Greene for a renewal of the loan. These' negotiations were successful, and Eobertson executed a trust deed dated April 2, 1877, (the 1st of April, 1877, being Sunday,) covering the same property, to Francis B. Peabody, of Chicago, to secure the payment of a promissory note for $35,000, which, the trust deed stated, was for a loan of that sum, made on the day of the date of the trust deed, by the legal holder of the note, to Eobertson, the note being payable three years after date, with interest at the rate of 7-J per cent per annum, payable half-yearly on the 2d of October and 2d of April, with six interest coupons for $1312.50 each. The name of David E. Greene was not mentioned in the trust deed or in 'the promissory note. The six interest coupons were each of them signed by Eobertson, and made, payable to his order, and each was endorsed by him payable to the Order of David E. Greene. The note was payable to the order of Eobertson and was endorsed by him payable to David E. Greene or order. It stated that it was expressly agreed that if default should be made in the payment of any instalment of interest when it should become due, and such default should continue for 30 days thereafter} the principal sum should, at the election of the legal holder of the note, at once become due and payable, such election to be made at any time after the expiration of said 30 days, without notice; and this provision of the note was recited in the trust deed. It was provided in the trust deed, that if default should be made in the payment of the *418principal. sum secured by the note, whether it should have become due by election or by the regular maturity of the note,, .or,if Robertson should fail to perform its agreements, it should be lawful for the trustee, on application of, the legal holder of the note, with or. without a previous entry on the premises, to sell and dispose of them and all right, title, benefit, and equity of redemption of Robertson, his heirs and assigns, therein, at public .auction, to the highest bidder, for cash, having first given notice of the time and place of such sale, (such sale to be made at some place in Cook County, Illinois,) by publication once in each week for four successive weeks, the first publication to be at least 30 days before the day of sale, in some newspaper published in Cook County, authorized by law to .publish legal notices, personal notice to Robertson, his heirs or assigns, or any person claiming by, through) or under him, of such sale, being expressly waived, and in the name of the trustee to execute and deliver to the' purchaser at the sale a deed -of conveyance of the premises in fee simple; 'and that all the recitals that might be contained in such deed, setting forth the fact of such default, due notice, advertisement and sale, and- any and all such other facts and statements as might be proper, to evidence thé legality of such sale and conveyance, .should be considered and taken, on all occasions' and as between all persons, to be prima facie evidence of the truth of all the facts and matters set forth in such recitals, and súch deed should- be effectual to pass the title, and all the right and equity of redemption of Robertson, his heirs and assigns, in and to the -premises sold. This trust deed was acknowledged by Robertson on the 23d of July, 1877, and was recorded on the same day.

On the 30th of July, 1877, James Taylor and John Bruce recovered a judgment against Robertson in the Circuit Court of the United States for the Northern District of Illinois, for $21,666.66 damages and $120.05 costs. Robertson took steps toward bringing a writ of error to review that judgment, and for that purpose procured one Hugh Templeton to sign a bond as surety, and, to indemnify Templeton therefor, executed to him a bond and a mortgage covering the real estate aforesaid, *419subject to the encumbrance of the trust deed to Peabody. This mortgage was acknowledged August 17, 1877, and recorded August 22, 1877. As the writ of error was never perfected; Templeton did not become liable, and the mortgage to him was no encumbrance on the premises.

Robertson, on the 1st of September, 1877, leased to John McAllister the second, third and fourth stories of the three stores fronting on West Madison Street, and known as the Jefferson-Park Hotel, for two years, at a rent of $300 a month. This rent was afterwards reduced to $30 a month from January 1,1878.

On the 15th of October, 1877, Taylor and Bruce issued to the marshal an execution on their judgment. This was returned wholly unsatisfied on the 12th of January, 1878; and, on the 24th of January, 1878, they, being aliens, filed a bill in equity, in the form of a creditors’ bill, in the Circuit Court of - the United States for the Northern District of Illinois, against Robertson, Templeton, McAllister, Gallup and Peabody. The bill was founded on their judgment and the issuing of their execution and its return unsatisfied. It set forth that Robertson was interested in a large quantity of real estate, including the before-mentioned property, 73 feet by .116 feet, at the corner of West Madison Street and Sheldon Street, which, it stated, brought in a lai’ge rental monthly. It contained the allegations usual in creditors’ bills, and alleged that Robertson had property which ought to be applied to the payment of the plaintiffs’, judgment, and prayed that he might discover on oath what' assignments or transfers he had made of his property. It averred that the defendants other than Robertson^ held the title to real estate belonging to Robertson, for the purpose of defrauding the plaintiffs, and prayed for a discovery on oath, by such defendants of all-such real estate. It did not mention the trust deed to Gallup, or the trust deed to Peabody, or the mortgage to Templeton, or the lease to McAllister.

The plaintiffs, on the 29th of January, 1878, issued to the marshal a second execution on their judgment, which, on the 15th of February, 1878, was levied on real estate of Robertson, not including the premises at the corner of West Madison and Sheldon streets.

*420On the 2d of March, 1878, the five defendants to the bill filed a general demurrer to it, for want of equity. On the 25th of March, 1878, the court entered an-order sustaining the demurrer.

Robertson failed to pay to Gyeene any of his interest due October 2, 1877, and April 2, 1878,. being two instalments, amounting to $2625, and was pressed for payment by Greene, through Peabody, in April and May, 1878. This pressure continued through the summer of 1878, and Greene complained directly to Robertson that the latter was receiving the rents of the property and paying him no interest. This, pressure took the shape of a request by Greene to Robertson .that the latter should turn over to the foi’mer the rents of the property, and a statement that otherwise the trust deed would be foreclosed.

Greene, on the 27th of August, 1878, notified Peabody in writing that, by reason of the default, continued for more than 30 days, in the payment of the- instalments of interest due' October 2, 1877, and April 2, 1878, on the note secured by the trust deed of April 2,1877, Greene had elected to make the principal note at once due and payable; and that, default having been made in its payment, he requested Peabody to proceed at once, under the powers contained in the trust deed, to advertise and sell the premises.

Robertson, on the 29th of August, 1878, notified Peabody and Greene that he intended to file a petition in bankruptcy; and that he proposed to go to Scotland (which was his native country) to see what arrangement could be made of his affairs, and to turn over to Greene, from the 1st of September, 1878, the rents of the property monthly.

On the 30th of August, 1878, Robertson signed a paper, addressed and delivered to Peabody as trustee, which stated that the note secured by the deed of trust was held by Greene; that Peabody had that day demanded of Robertson the possession of the premises covered by the deed of trust, on account of a breach of the covenants contained therein; that Robertson consented to Peabody’s taking possession of the premises; that he thereby delivered'such possession to Peabody, and requested the tenants of the premises severally to attorn to Peabody; and *421that it was understood that Peabody should respect the leases granted by Robertson and his reservation of certain rooms mentioned in the lease to McAllister. On this paper Peabody, as trustee, wrote an order addressed to Edmund A. Cummings, directing him, for Peabody and as his agent, to receive from Robertson possession of the premises and the attornment of the tenants. Six of the tenants, including McAllister, on the same day signed a paper by which they recognized the transfer of the possession of the premises from Robertson to Peabody as trustee, and respectively attorned to Peabody as to the premises occupied by them.

Robertson, on the 31st of August, 1878, filed in the District Court of the United States for the Northern District of Illinois his voluntary petition in bankruptcy, with schedules. In the schedule of “ Bankrupt creditors holding securities,” there appeared, under the heading “ names of creditors,” “ David R. Greene; ” under the heading “ residence and occupation,” “ New Bedford, Mass.; ” under, the heading “ when and where contracted,” “ April-2,1877, at Chicago, Illinois ;” under the heading, “value of securities,” “unknown;” under the. heading, “ amount of debt,” “ $35,000 and interest at 7£ per.cent since April 2, 1877;” and under the heading, “particulars,” “note for money borrowed to take up old mortgage upon property when bought, and secured by trust deed to F. B. Peabody upon lot 26 (except the east two feet thereof) and lots 27 & 28, all in block 6, in-McNeill’s subdivision, in Wright’s addition to Chicago, with improvements and appurtenances; property known as 487 & 489 and 491 West Madison Street, Chicago, and 52 and 54 Sheldon Street; ” being the premises in question.

Peabody, on the 2d of September, 1878, notified Greene that he would forthwith proceed to advertise the foreclosure sale. On the same day, Peabody, as successor in trust to Gallup under the trust deed of April 1-, 1871, made to Gallup by Grow, executed and acknowledged a paper releasing to Grow all the interest acquired under the trust deed, the paper stating that the indebtedness secured by that deed had been can-celled.

*422On the 3d of September, 1878, Peabody, as trustee, prepared a notice of sale, dated that day, setting forth the facts of the date and record of the trust deed of April 2, 1877; the contents of the note secured by it; the fact that its legal holder, as thereby authorized, had elected to make the principal sum therein mentioned, and the same had thereby become, at once due and payable, by reason of the default, continued for more than 30 days, in the payment of the instalments of interest due thereon October 2, 1877, and April 2, 1878, respectively ; that there was due on the note the principal sum of $35,000, fyith interest thereon at the rate of 7J per cent per annum, from April 2, 1878, and the two defaulted instalments of interest, of $1312.50 each, with interest on each at the rate of 10 per 'cent per annum, from the dates when they respectively became due; that default had been made in the payment thereof; that, on the demand of the legal holder of the note, the trustee, on October 7, 1878, at 11 o’clock in the forenoon, at the southwest corner of Dearborn and Monroe streets, in Chicago, at the door of No. 174 Dearborn Street, would sell at public auction to the highest bidder for cash, for the uses and purposes specified in the trust deed, the premises described therein, (repeating the description contained in the trust deed,) together with all the right, title, benefit and equity of redemption of Robertson, his heirs and assigns, therein; and that the records of the recorder’s office showed that Templeton had acquired some title or interest in the premises, as assignee of Robertson, subject to the trust deed. This notice was published in the “ Chicago Journal,” a newspaper of general circulation, printed and published in Chicago, four times, being one time a week for four successive weeks, the date of the first paper containing the same being September 4, 1878, .having been published and issued on that day, and the date of' the last paper containing the same being September 23, 1878, having been published and issued on that day.

Robertson, on the 7th of September, 1878, left Chicago for Scotland; arid on the same day he was adjudicated a bankrupt. He has never since been in Chicago.

On the 5th of October. 1878, Taylor and Bruce, as creditors *423of Eobertson, filed a petition in the District Court, in bankruptcy,sworn to by Charles B. McCoy, their agent at Chicago, setting forth their judgment, and stating that no assignee of the estate of Eobertson had yet been chosen; that Eobertson, in his inventory of assets, had scheduled a large amount of property, which required the immediate personal attention of some person properly authorized to care therefor and preserve the same for the benefit of the estate, and prevent waste, injury and loss thereof; that among the assets so scheduled, with other real estate, was “ the property known as the Jeffer- . son-Park Hotel, ón West Madison Street, Chicago.” The petition prayed, that a provisional assignee be appointed for the estate of Eobertson, with the usual powers in such cases, to act' in the premises until the regular assignee should be chosen. On the same day, Bradford Hancock was appointed by the District'Court provisional assignee of the estate of Eobertson, “ with full powqr and authority to take possession of, manage, and control the same, and to collect the rents due said estate.”

The sale under the trust deed took place on the 7th of October, 1878, at the hour and place named in the published notice. Greene became the purchaser, and Peabody, as trustee, on the same day executed and acknowledged a deed to him, which was recorded October 10,1878. That deed recited the making of the note and its contents, including the provision for election by the legal holder of the note as to the becoming due of the entire principal; the making and recording of the trust deed; the power of sale given by it to the trustee; and the provisions in it for notice and for giving a deed to the pur- ' chaser. It also recited the default in the payment of the two instalments of intérest; the election by the legal holder of the note that the principal sum should at once become due and payable; the amount that was due for principal and interest; that the legal holder had applied to the trustee to advertise and sell the premises; that he had advertised them, and all right, title, benefit and equity of redemption of Eobertson, his heirs and assigns, therein, for sale at public auction to the highest bidder for cash, on the day and at the place before mentioned ; *424the notice he had given ; that the contents of the notice were in conformity with the provisions of the trust deed and of the statute; that, in pursuance of said notice, and at the time and place of sale therein mentioned, he had offered the premises described in the trust deed, and all right, title and equity of- redemption of Eobertson, his heirs and assigns, therein, for sale at public auction to the highest bidder for cash; that Greene was such highest bidder, and bid therefor. $30,000, which was thé highest bid; and that the same were accordingly struck off and sold to Greene at that price. The deed then conveyed to Greene, his heirs and assigns forever, the premises described in the trust deed, by the description therein contained, together with all the right, title, benefit and. equity of redemption of Eobertson, his heirs and assigns, therein, to have find to hold the same, with the appurtenances, to Greene, his heirs and assigns forever. It further stated that Peabody covenanted to the extent, and no more,' that he had fulfilled all the powers and trusts in said deed contained, in respect to the sale, in accordance with the terms of the trust deed.

The $30,000 for which Greene purchased the property was applied to pay the first and second interest coupons, with interest thereon to October 17,1878, and interest on the note to that • date from April 2, 1878, the expense of advertising, the fees of the trustee, and sundry back taxes, and the balance' of. the amount, $24,107.43, was endorsed by the trustee as paid on the principal of the note for $35,000, .on the 17th of October, 1878.

• On the 23d of October, 1878, the release by Peabody, as successor in trust, of the trust deed from Grow to Gallup, was recorded.

Greene died at New Bedford on the 19th of May, 1879.

Oh the 7th of July, 1879, a warrant in'bankruptcy was issued against the estate of'Eobertson. •

Bradford Hancock was, .on the 24th of July, 1879, appointed assignee in bankruptcy of Eobertson, and on the same day the register assigned to him' all the estate real and personal, of Eobertson, including all the property, of whatever kind, of *425which he was possessed, or in which he was interested, or entitled to have, on the 81st of August, 1878, except property exempt by § 5045 of the Revised Statutes..

Taylor & Bruce, on the 23d of Mareh, 1880, filed in the bankruptcy court a proof of debt against Robertson, founded on their judgment and on the levy made February 15, .1878, under the execution issued January 29, 1878. They claimed therein a lien, by virtue of the judgment, on all the real estate of Robertson, and, by virtue of such levy, on the portion thereof on which it was levied, and a first preference on all the proceeds of the property covered by the lien of the judgment and the levy.

On the 25th of March, 1880) Taylor and Bruce filed a petition in .the bankruptcy court, setting forth the recovery of their -judgment; the issuing and return unsatisfied of their execution of October 15, 1877; the filing of their creditors’ bill in the Circuit Court on the 24th of January, 1878; the fact that they had proved their debt in the bankruptcy court; that on the 30th of July, 1877, the date of, the recovery of their judgment, Robertson owned'real estate, all of which was encumbered with sales for taxes, and the greater part with mortgages or deeds of trust to about or near.the full value thereof, so that of the latter class he was, at the time of the filing of the petition in bankruptcy, at best, only invested with an equity of redemption; that at the time their judgment was rendered, and at the time of the filing of the petition in bankruptcy, he owned sundry real estate which was unencumbered except by tax sales and judgments (describing it); that, at those times, he. owned or had interest in real estate encumbered by mortgages and trust deeds, and also by tax liens, describing it, and as part of it describing the property 73 feet by 116 feet, on the corner of West Madisoii Street and Sheldon Street, “incumbrance, $35,000, besides interest and taxes;” that on the 29th of January, 1878, they issued a second execution on their judgment; that on the 15th of February, 1078, it was' levied on all the real estate described in the petition, except a small portion in Cook County, Illinois, which was heavily encumbered ; that before any sale.was made by the marshal, *426Bobertson went into bankruptcy, and no sale had ever been made under the execution, but the levy was in force as a first lien of any judgment; that they were entitled to have the amount of their judgment paid out of the proceeds of the sale of the property, to the exclusion of all the other creditors of Bobertson, except those who held mortgages or liens prior to their judgment; and that they were willing and desirous to have the administration and enforcement of the lien of their judgment transferred to the bankruptcy court, and established by that court, and enforced against the property of the bankrupt estate. They prayed that their lien might be established against the described real estate; that Hancock, the assignee, might be ordered to sell said real estate and apply the proceeds to pay their judgment; and that they might be permitted to purchase at the sale and credit their bids on the judgment.

Hancock, the assignee, on the 2d of April, 1880, presented a petition to the bankruptcy court, in answer to a rule for him to show cause, issued on the filing of the petition of Taylor and Br,uce of March 25, 1880, setting forth that he believed the allegations of that petition to be substantially correct, and that he believed it was for the best interest of the bankrupt’s estate that said real estate should be sold without further delay. He prayed for an order directing him to sell it; that it be sold subject to all taxes, liens and incumbrances thereon, except the judgment of Tay.or and Bruce and judgments rendered subsequently thereto; and that he be ordered to bring the proceeds of sale into court or make such other disposition of them as the court should direct. On this petition, and on the same day, an order was made by the bankruptcy court, on the consent of the assignee, of Taylor and Bruce, of the bankrupt, and of two creditors by a judgment subsequent to that of Taylor and Bruce, directing the assignee to sell all the real estate of the bankrupt, free and clear of the lien of the judgments mentioned, “ but subject to all other liens and incumbrances thereon, and all taxes and' assessments • thereon,” and to bring the proceeds of the sale into court, to be paid to such judgment creditors according to the priority of their liens on the property sold, to the amount of their'respective judgments.

*427On the 26th of April, 1880, the assignee made a report to the bankruptcy court, setting forth that, on the 24th of April, 1880, he had sold to the highest bidder for cash all the right, title and interest of the bankrupt, and of himself as assignee, to real estate which he described, free and clear of the lien of the judgment and execution-levy of the creditors mentioned in the order of sale, “but subject to all other liens and incumbrances thereon, and taxes and assessments thereon.” The description included the premises at the corner of "West Madison Street and Sheldon Street, with the buildings thereon, at the sum of $250, to L. G. Pratt, trustee. The gross proceeds of sale were $6122, and the net proceeds $.5107.42, which the assignee reported to the" register on the 27th of May, 1880.

The register, on the 14th of June, 1880, made an order directing the assignee'to pay to Taylor and Bruce $5053 out of the proceeds of the sale.

On the 17th of June, 1880, the assignee, by a deed recorded, on the 30th of August, 1880, conveyed to Lorin G. Pratt, trustee, certain real estate purchased, by him at said sale, including the premises at the corner of West Madison and Sheldon streets. The deed recited the prior proceedings ,in bankruptcy, the order of sale- and its confirmation, and the order for a deed, and conveyed all the right, title and interest of the bankrupt, which he had on the 31st of August, 1878, and of the assignee, subject to all unpaid taxes and to all liens and incumbrances, unless by the terms of sale expressly excepted, to the real estate described in the deed.

Bobertson, on the 4th of December, 1880, filed his petition for a discharge in bankruptcy.

Taylor and Bruce, on the 22d of December, 1880, directed the marshal to release the levy made February 15, 1878, and to return the execution of January 29, 1878, unsatisfied. This was done.

On the 5th of January, 1881, under an execution issued tb the marshal on the previous day, on the judgment of Taylor and Bruce, he levied on-certain real estate of Bobertson, including'the premises at the corner of West Madison and Sheldon *428streets, with all' the buildings and improvements thereon, and on the 27th of January, 1881, sold the premises at the corner of West Madison and Sheldon streets, to Lorin G-. Pratt, trustee, for the sum of $5000. No deed appears to have been made under this sale.

No proceedings having been taken in this suit since the demurrer to the original bill was sustained, an order was made, on the 6th of July, 1881, after an interval of more than three years and three months, giving leave to the plaintiffs to amend their bill and also.to file a supplemental bill.

On the 17th of September, 1881, they filed an. amended and supplemental bill, dismissing the original bill as to all the real estate.except that situated at the corner of West Madison and Sheldon streets, 73 feet by 116 feet, with-the buildings thereon erected. This new bill recited the contents of the original bill, and stated that, on a demurrer thereto, the court held that all the property and estate of Eobertson, so far as it could be discovered, must first be exhausted, before the court could interfere, in equity to compel the discovery and relief sought, and required the plaintiffs to wait until all such visible property and estate- was so sold and exhausted. It set- forth the con-. tents of the trust deed from Grow to Gallup ; that Peabody was the successor in trust of Gallup ; that the deed was made to secure the payment of an indebtedness of $35,000 to Greene; that Peabody had been in possession .of the premises, and receiving the rents and profits, amounting to more than sufficient to pay all the interest on. the debt, and the taxes, insurance and expenses of carrying the property; that, in pursuance of a fraudulent scheme to place the property beyond the reach of the plaintiffs, Eobertson, on the 23d of July, 1877, which was two days after the verdict was returned in-their suit against Eobertson and seven days prior to the rendering of their judgment, executed a second deed of trust to Peabody, to secure an alleged additional indebtedness of Eobertson of $35,000; that, for the purpose of making it appear that the trust deed had been made before the verdict was rendered, it and the note were dated, back to April 2, 1877; that, for the purpose of preventing the plaintiffs from learning who was *429the real holder of the note and the interest coupons, or whether the deed was a bona fide lien in addition to the first lien, the note was made payable to the order of Bobertson and endorsed by him in blank; that said trust deed was only a renewal of the former trust deed from Grow to Gallup, and was made to secure to Greene said debt to him, and was not an additional incumbrance on the property; that said first mortgage should have been released of record so that the plaintiffs might ascertain from the record the true amount iff the encumbrance, but it was withheld, making it appear that the property was subject to $70,000 incumbrance, instead of only $35,000 ; and that Bobertson prayed an appeal from said judg-, ment to the Supreme Court of the United States,'which appeal was not perfected, but on account of its pendency the plaintiffs were unable to issue an execution on their judgment until October-15, 1877. The new bill then recited the mortgage to Templeton, and averred that it ought to be cancelled of record. It then set forth the making of the lease to McAllister for two years from September 1, 1877, at a rent of $300 a month, and the reduction of the rent to $30 a month from January 1, 1878, and averred that this was done for the purpose of lessening the income -from the property, so that it would be insufficient to pay the -taxes, insurance and expenses, and the interest on the loan ; and that the plaintiffs used due diligence to reach the estate of Bobertson, but were- unable to realize anything therefrom by execution. It then set forth the turning over by Bobertson to Peabody, as agent and trustee for Greene, of all the leases, rents and profits of the premises; and alleged that this was done in pursuance of the fraudulent scheme aforesaid, and- under an arrangement substantially as follows : Bobertson was to go through bankruptcy and obtain a discharge; Greene and Peabody were to carry the property and collect the income from it, but by reason of such reduction of the rent the income would be insufficient to carry -it; Peabody was thereupon to declare a forfeiture for non-payment of interest, and sell the property under the deed of trust, and thus cut out the lien of the plaintiffs’ judgment, and also prevent the property from coming to the hands of -the assignee in *430bankruptcy, but Robertson, or his agent, said McAllister, was to be allowed to redeem from such sale, after Robertson had procured his discharge, upon paying the amount actually due according to the terms of the loan, and the expenses incurred in carrying the property, less the amount received from the rents and profits thereof, the same as if no sale had been made; the release of the trust deed to Gallup was to be withheld from record, so as to prevent any outside bidder and the plaintiffs from bidding at the sale; such arrangement was made with Robertson and McAllister, his agent, and Peabody, as agent for Greene, began to collect the rents of the premises under the leases, and they were, if judiciously and honestly applied, more than sufficient to carry the property and pay the interest on the loan, but they were, not applied to that purpose. The new bilí further set forth that, immediately on the making of such arrangement, Robertson filed his petition in bankruptcy, and very soon afterwards lefi; the United States and had since remained continuously absent therefrom; so that he could not be examined; that Peabody proceeded to declare a forfeiture ' of the trust deed for non-payment of interest on the loan, and, on October 7,1878, pretended to sell the premises, and executed a deed thereof to Greene for a pretended bid at the sale of $30,000; that after the sale an agreement was made by Robertson, either in person or by his agent McAllister, with . Greene, and Peabody, as the agent of Greene, whereby Greene was to' hold the property and collect the rents and apply them to carrying the property, and to allow Robertson or McAllister to redeem on payment of the amount of the incumbrance and interest, and the cost of carrying the property, less the amount of rents received, the same .as if no sale had been made; that the notice of sale was insufficient and defective; that the release of the trust-deed to Gallup was purposely withheld from record; that the plaintiffs had no actual notice of the sale, but it was concealed from them and -they did not learn of it until long afterwards ; and that the deed of June 17, 1880, by the assignee in bankruptcy, on his sale, -was made to Lorin • Grant Pratt as trustee for the plaintiffs. It then set forth the purchase of the property by the- plaintiffs for $5000, .at the *431marshal’s sale; that Greene died after the pretended purchase by him of the premises at' the sale by Peabody; that on his death whatever right, title, or interest he had in and to the premises passed to and became vested in Mehitable B. Greene, his widow; William W. Crapo and Charles W. Clifford, as trustees of Robert B. Greene, Susan G. Page, Horatio N. Greene, and Francis B. Greene; and said Robert B. Greene, Susan G. Page, Horatio N. Greene, and Francis B. Greene, as the heirs at law or devisees of said David R. Greene, and was still so held by and vested in them; that such heirs at law or devisees are citizens of Massachusetts and of full age.; and that E. A.Cummings, a citizen of Illinois, is the agent for the property, and collecting the rents for the heirs or devisees of Greene.

The new bill made as defendants the five persons who were defendants to the original bill, and also the widow, and the heirs or devisees above named of Greene, and their trustees, and Cummings, their agent. . Its prayer was that the mortgage to Templeton might be declared void; that the deed from Peabody to Greene might be set- aside as against the rights of the plaintiffs ; that Greene, during his lifetime, and his heirs or devisees, and Cummings as their agent, might be decreed to be mortgagees in possession; that they and Peabody make full answer in the premises; thát an account be taken; and that the plaintiffs be allowed to redeem on paying the amount found to be due.

All the defendants, except Robertson and Templeton, entered an appearance in the suit on the 21st of November, 1881:

The plaintiffs, on the 15th of December, 1881, consented to the discharge of Robertson in bankruptcy.

On the 31st of December, 1881, all of the defendants who so appeared, except McAllister, put in an answer to the original bill and the' amended and supplemental bill, denying all the allegations imputing fraud to-the said defendants or to Greene in his lifetime, and claiming that the foreclosure proceedings by Gréene and Peabody were had in go.od faith.

On the 6th of February, 1882, a replication to this answer was filed, and on the 6th of June, 1882, the cause was referred to a master, to take proofs and report them.

After some proofs had been taken on the part of the plain*432tiffs, and on the 4th of January, 1883, the plaintiffs filed an amendment to their amended and supplemental bill, which averred that Peabody, in order to conceal the time of the sale from the' plaintiffs, caused the notice of sale to be published in “The Chicago Weekly Journal,” a newspaper which was not read in the city of Chicago and had no circulation in said city or in Cook County; that the premises sold were composed of three separate lots'; that the north 44 feet of the property was separated from the south portion, fronting on West Madison. Street, by an alley, or court 12 feet wide; that such north 44 feet were divided into two lots of 22 feet each, on each of which stood a brick dwelling-house 22 feet wide and fronting on Sheldon Street, which were used for private dwelling-houses, and were entirely distinct from the hotel part of the premises; that Peabody sold the property in bulk to Greene, at half its value, when it was his duty to have sold it in Separate, lots; and that, if he had so offered it; the part of it used for a hotel, and fronting on Madison Street, south of the alley or cpurt, would have brought more than sufficient to pay off the debt, interest and costs.

On the 6th of January, 1883, the defendants answered this amendment, denying its allegations; and, on the 29 th of January, 1883, they amended their answer by averring that, as to so much of the bill, amended bill, and supplement, as alleged any agreement between Greene and Robertson for the redemption or repurchase of the premises by Robertson, such supposed agreement was not in writing, signed by Greene or by any person by him authorized in writing, .according to the statute of Illinois in such case made and provided.

On the 27th of October, 1883, the master reported the proofs to the court, and the cause was heard before Judge Blodgett, in November, 1883; and, on the 14th of April, 1884; he filed an opinion, which is reported in 21 Fed. Rep. 209, deciding the case in favor of the plaintiffs.

A motion for a rehearing was made and overruled on the 7th of July, 1884, and on the 29th of July, 1884, an interlocutory decree was entered, finding that the equities of the cause were with the plaintiffs; that they were entitled to redeem the *433premises in question from the indebtedness secured thereon in favor of tbe heirs and representatives of tbe estate of David R. Greene, deceased, upon sucb terms as might be thereafter fixed by tbe courtand that a reference be bad to a master, who was named, to.take and report to tbe court an.account of what was due to sucb beirs and representatives, for principal and interest, on the debt secured by tbe trust deed to Peabody, and of tbe amounts paid for taxes, assessments, and charges provided for in such trust deed, and an account of what bad been paid by said defendants for necessary repairs and improvements, and an account of the rents and profits of the premises, and to report sucb accounts with tbe evidence.

Those accounts were taken, and tbe master filed his report on the 15th of July, 1885, finding due to tbe defendants oil tbe 12th of June, 1885, on tbe principles stated in the interlocutory decree, $45,641.66. Both parties filed exceptions to this report. Before they came on for hearing, and on tbe 4th of January, 1886, tbe defendants moved for leave to amend their answer, so as to. set up the limitation of actions provided by the bankruptcy statute. Tbe consideration of tbe motion was postponed until tbe'final bearing of the cause.

The case came on to be beard on the 1st of April, 1886, and on the 3d of April,' 1886, the court made an order allowing tbe defendants so to amend their answer, and also granting leave to tbe plaintiffs to amend their bill, and ordering the replication to tbe original answer to stand as a replication to sucb amendment thereto, and giving leave to eithér party. to put in before tbe master further evidence on tbe subject matter of sucb amendments, directing tbe master to continue tbe account from June 12th, 1885, to April 1,1886, and ordering that sucb additional evidence and statement of account be considered as if taken before tbe bearing, and that all exceptions to the former report of the master be considered as exceptions to such supplemental matters.

In pursuance of sucb leave, the- plaintiffs amended their amended and supplemental bill, by averring that neither they nor tbe assignee in bankruptcy bad any knowledge that tbe sale by Peabody had been made, until the 24th of April, 1880; *434that they did not have any knowledge of such collusive agreement between ‘ Robertson and his agents, and Peabody as trasteé for Greene, until on or about September 13,1881; that the details of such agreement did not come to their knowledge untii the taking of the evidence in the cause; that such sale and agreement were purposely concealed by all parties thereto, notwithstanding all due diligence was used to discover the same; that Peabody having been, prior to the making of the sale, placed in possession of the property as agent and trustee, and there being no apparent- change in the possession of the property thereafter, there was nothing to advise the plaintiffs of the sale, unless they had accidentally discovered the record of the deed from Peabody to Greene, and they made no examination for that, for the reason that, by the conduct of Robertson and his agents and of Peabody, they had, been lulled into the belief that no foreclosure or sale would be made, at least prior to April 2, 1880, when the debt secured by the trust deed to Peabody vrould. mature; that the sale' made by Peabody, October 7, 1878, was made after the filing of the petition of Robertson in bankruptcy, August 31, 1878, and before the appointment of his assignee, July -24, 1879; and while there was no representative of the estate of Robertson and of his equity of redemption in the property, on whom the notice of sale could operate, or who could protect the estate and the creditors ; that the sale was, therefore, void as against-the rights of the plaintiffs, and as against the assignee in bankruptcy and the plaintiffs as purchasers of the title and right of such assignee, under the provisions of the bankruptcy statute; that such sale, made under- such circumstances, should not inequity be allowed to cut off .the plaintiffs from their right to redeem from the trust' deed notwithstanding the sale and the deed thereunder; and that the plaintiffs should be decreed to have taken the title of -Robertson in and to the property in the same condition as it was on the 31st of August, 1878, unaffected by the sale by Peabody, and with full right to redeem from the trust deed as if no sale had been made.

The defendants filed the proposed amendment to their answer. As to the allegation that the sale by Peabody took *435place, and his deed to Greene was made, pending the proceedings in bankruptcy, and before the election of an assignee, or at a time when the power of sale under the trust deed was suspended, and as to any other irregularity in the notice of sale, or any right in the plaintiffs or in said Pratt, derived from the assignee in bankruptcy, to set aside the deed from Peabody to Greene for any matter alleged, it said that the-right to do so, if it ever existed, belonged to the assignee and the provisional assignee, as representing the creditors in the bankruptcy proceeding; that the assignees and the plaintiffs waived such claims and equities and failed to assert them; that at the time Peabody made the deed to Greene, on October 7, 1878, Hancock was provisional assignee in the bankruptcy matter, and on the 24th of July, 1879, became assignee; that the supposed equities and claims under which the plaintiffs pretended to have derived a right, under such assignee, to vacate such foreclosure and redeem the premises, did not accrue within two years next before the bringing, of the amended and supplemental bill of September 17, 1881, wherein the defendants, excepting Peabody, were for the first time impleaded in this suit, and wherein, as to all of the defendants, said pretended rights were for the first time asserted; and that those claims and equities, if they ever existed, were barred by such laches and by the statute at the time when the supplemental bill was filed. The amendment set up such laches as an equitable bar and defence to so much of the bill as rested upon such pretended equities, and averred that, by the bankruptcy act, the plaintiffs, by reason of such lapse of time and of the said facts, were barred from claiming any relief by reason of such pretended equities, and set up said bar and limitation of two years. The amendment to the answer also denied the allegations contained in thé amendment so filed by the plaintiffs to the amended and supplemental bill.

The master, on the 12th of April, 1886, filed a supplemental report, bringing down the account to the 1st of April, 1886, and finding to be due to the defendants on that day $45,342.86.

The case was brought to a hearing before Judge Blodgett, *436and he filed his opinion on the 24th of May, 1886 ( 27 Fed. Rep. £37). He adhered to his former Views.

On the 28th of May,' 1886, Robertson, Templeton and Mc-Allister filed an answer disclaiming all interest in the property in controversy, admitting that the plaintiffs. were entitled to the relief prayed by them, and consenting' to the entry of such decree as might seem proper to the court.

The court, on the 1st of July, 1886, made a final decree, adjudging that there was due to the defendants, the widow, heirs" and representatives of the estate of I)avid R. Greene, deceased, on their lien on the premises in question, $45,342.86, with interest thereon from April 1,1886, at six per cent per annum; that the plaintiffs pay to them that sum, with the interest, within 90 days, in redemption of all lien of the defendants on the premises; and that, on such payment being made, the defendants convey the premises to the plaintiffs by a quitclaim deed.

The widow, heirs and representatives of the estate of David R. Greene, deceased, with Peabody & Cummings, appealed to this court from that decree.

Mr. John Lowell and Mr. George L. Paddock, for appellants,

cited: Anderson v. Strauss, 98 Illinois, 485; Strother v. Law, 54 Illinois, 413; Bergen v. Bennett, 1 Caines’ Cas. 1; S. C. 2 Am. Dec. 281; Hall v. Bliss, 118 Mass. 554; Hunt v. Rousmaniere, 2 Mason, 244; Sargent v. Helton, 115 U. S. 348; Bank v. Sherman, 101 U, S. 403; Gifford v. Helms, 98 U. S. 248; Jenkins v. International Bank, 106 U. S. 571; Wisner v. Brown, 122 U. S. 214; Miller's Heirs v. McIntyre, 6 Pet. 61; Phelps v. Illinois Central Railroad, 94 Illinois, 548; Dunphy v. Riddle, 86 Illinois, 22; Crowl v. Nagle, 86 Illinois, 437; Norton v. De la Villebeuve, 1 Woods, 163; McIwer v. Ragan, 2 Wheat. 25; Phelps v. Elliott, 29 Fed. Rep. 53; Nugent v. Boyd, 3 How. 426; Jerome v. McCarter, 94 U. S. 734; Eyster v. Gaff, 91 U. S. 521; In re Grinnell, 9 Nat. Bankr. Reg. 137; Sedgwick v. Grinnell, 9 Ben. 429; In re Moller, 8 Ben. 526, affirmed 14 Blatchford, 207; Bradley v. Adams Ex. Co., 3 Fed. Rep. 895; Goddard v. Weaver, 6 Nat. Bankr. Reg. 440; *437 Washburn v. Tisdale, 143 Mass. 376; Ex parte Belcher, 2 Deac. & Ch. 587; Ex parte Rolfe, 3 Mont. & Ayr., 305; Ex parte Geller, 2 Madd. 262; McHenry v. La Société Francaise,, 95 U. S. 58; Dudley v. Easton, 104 U. S. 99; In re Iron Mountain Co., 9 Blatchford, 320; In re Diuard, 9 Nat. Bankr. Reg. 8, 12; Expacrte Cooper, L. R. 10 Ch. 510.

Mr. Gharries B. McCoy and Mr. Charles E. Pope (with whom was Mr. Alexander McCoy on the brief) for appellees.

I. The trustee’s sale, having béen made after the adjudication in bankruptcy, without leave of the bankrupt court, while the equity of redemption was part of the bankrupt’s estate, and before the assignee was appointed and capacitated to exercise the right of redemption, was subject to the right of the assignee, (which became vested in him, when he was appointed, as of August 31st, 1878, the date of filing of the petition in bankruptcy,) to redeem and discharge the mortgage; and the sale was void as against the assignee and his grantees, and redemption should be allowed on the application now made by the grantees of the assignee holding a conveyance of this right of redemption.

¥e submit that the following authorities fully sustain the foregoing proposition of law:

Yeatman v. Savings Institution, 95 U. S. 764 ; Conner v. Long, 104 U. S. 228; Bank v. Sherman, 101 U. S. 403; In re Grinnell, 9 Nat. Bankr. Reg. 137 (Blatchford, J.); Foster v. Ames, 2 Nat. Bankr. Reg. 455 (Lowell, J.); In re Snedaker, 3 Nat. Bankr. Reg. 629, 636 (Hawley, J.); Davis Ass’n v. Anderson, 6 Nat. Bankr. Reg. 145 (Treat, J.); Smith Ass’n v. Kehr, 7 Nat. Bankr. Reg. 97 (Treat, J.); In re Brinkman, 7 Nat. Bankr. Reg. 421 (Blatchford, J.); Hutchings Ass’n v. Muzzy Iron Works, 8 Nat. Bankr. Reg. 458 (Box, J.); Whitman v. Butler, 8 Nat. Bankr. Reg. 487 (Knowles, J.); Barron v. Newberry, 1 Bissell, 149 (McLean, J., Drummond, J., concurring); Dooley v. Va. Fire Ins. Co., 2 Hughes, 482 (Hughes, J.); Ex parte Christy, 3 Blow. 292; Houston v. City Bank, 6 How. 486.

*438II. The appellees acquired the assignee’s right to redeem. It was undoubtedly the intention of Congress, in enacting the bankrupt law, that the assignee’s sale and deed to the purchaser — in a case of this kind — should transfer to him the whole title of the assignee, including all objections to the trustee’s voidable sale, together with the right of redemption from the trust deed. The mere fact that he advertised to sell, subject to a prior lien, could no more waive any . right which he was selling to the purchaser, than an administrator would by advertising, the equity of redemption to land of his decedent, subject to a prior lien or mortgage.

III. This case was not within the terms of the statute of limitations. . The limitation clause of the bankrupt act, by its terms, only applies to contests between an assignee in bankruptcy and' a person .claiming- an interest adverse to such assignee. Bailey v. Glover, 21 Wall. 342; Sargent v. Helton, 115 U. S. 348; Bartles v. Gibson, 17 Fed. Rep. 293; Gifford v. Helms, 98 U. S. 248; Jenkins v. International Bank, 106 U. S. 571; Wisner v. Brown, 122 U. S. 214.

IY. The .Trustees’ sale was improper while the original bill was pending. Freedman's Saving and Trust Co. v. Earle, 110 U. S. 710; Minnesota Co. v. St. Paul Co., 2 Wall. 609; Kervison v. Stewart, 93 U. S. 155; Ryan v. Newcomb, 125 Illinois, 91; Miller's Heirs v. McIntyre, 6 Pet. 61; Phelps v. Illinois Central Railroad, 94 Illinois, 548; Crowl v. Nagle, 86 Illinois, 437; Dumphy v. Riddle, 85 Illinois, 22.

Y. Where the interest adverse to that of the assignee has been acquired through fraud and the fraud has been concealed, the two years’ statute of limitation does not commence to run until the discovery of the fraud. Bailey v. Glover, supra; Upton v. McLaughlin, 105 U. S. 640; Rosenthal v. Walker, 111 U. S. 185; Traer v. Clews, 115 U. S. 528; Bartles v. Gibson, 17 Fed. Rep. 293; Retzer v. Wood, 109 U. S. 185; Kilbourn v. Sunderland, 130 U. S. 505; De Bussche v. Alt, 8 Ch. Div. 286.