Source: https://openjurist.org/299/us/217
Timestamp: 2019-04-20 05:06:25+00:00

Document:
Messrs. George P. Barse, of Washington, D.C., and Otis F. Glenn, of Chicago, Ill., for petitioner.
Mr. Franz W. Castle, of Chicago, Ill., for respondent.
In this case we are concerned with the bearing of state law upon the enforcement of an assessment against the estate of a stockholder of a national bank.
Elvira J. Parks died March 20, 1928, owning twelve shares of the capital stock of the Austin National Bank of Chicago. May 17, 1928, the probate court of Cook county, Illinois, granted letters testamentary to the executors named in her will, who filed an inventory and supplemental inventory in the probate court within one year of the date of the letters. March 30, 1931, the Comptroller of the Currency declared the bank insolvent, closed it, and appointed the petitioner receiver, and May 21, 1931, assessed all stockholders, including the executors of Elvira J. Parks, 100 per cent. of the par value of their stock. The executors refused to honor the receiver's demand for payment, and on September 1, 1933, he filed his claim in the probate court for $1,327.17, the amount of the assessment with interest to the date of filing. January 13, 1934, the court disallowed the claim. The receiver appealed to the circuit court where the case was tried de novo. That court, applying a state statute, disallowed the claim as against undistributed assets in the hands of executors inventoried within one year from the date of the grant of letters because the claim did not accrue and was not presented to the probate court within that period, but allowed it as to assets not inventoried within the year. (From a stipulation filed in this court it appears that there are in the executors' possession inventoried assets in excess of the amount of petitioner's claim; that the estate is solvent; and that there are no assets not inventoried within one year from the granting of the letters, or discovered after the expiration of that period.) The Appellate Court of the First District of Illinois affirmed the judgment. A certificate of importance, requisite for a review by the Supreme Court of the state, was refused. Certiorari was granted to resolve a conflict respecting the construction of relevant federal statutes.
The petitioner asserts these sections give his claim a quality so superior to that of other contingent claims against a decedent's estate that it must be recognized by state tribunals without regard to limitations upon allowance imposed by state laws.
The statute evidences no intent to prefer the assessment over other claims against the estate, or to exempt the receiver from the pursuit of the remedy prescribed by the local law for collection of claims of the same sort.
The statute creates an unsecured and unpreferred claim against a decedent's estate. Where the assessment has been made in the decedent's lifetime an accrued and provable debt exists against his estate; if made after his death a claim against the funds and assets of the estate accrues as of the date of assessment.
'The laws of the several States, except where the Constitution, treaties, or statutes of the United States otherwise require or provide, shall be regarded as rules of decision in trials at common law, in the courts of the United States, in cases where they apply'.
In such a proceeding the state statute of limitations will be applied;6 and it seems that the local substantive law governing property rights in stock will be observed.7 Nor does the principle that the jurisdiction of courts of the United States cannot be defeated by a state's laws limiting redress of its own citizens to certain tribunals8 create such inconsistency or conflict as to require the overriding of the law of the state with respect to distribution of the estate of a decedent. Where, as here, a res has come into the possession and under the control of a state court, one having a right to go into the federal court, either by reason of diversity of citizenship, or because he is a federal officer, cannot obtain a judgment or decree entitling him to interfere with the administration of the res by the court having its possession. While he may not be denied his right to prosecute an action to judgment or a suit to final decree in the federal court, such judgment or decree can do no more than adjudicate the validity and amount of his claim. The marshaling of that claim with others, its priority, if any, in distribution, and all similar questions, are for the probate court upon presentation to it of the judgment or decree of the federal court.9 Thus, though a receiver should resort to the United States District Court he would need to present, in a probate court, any judgment obtained, if he desired payment from the assets under the control of the latter.
If the state law requires a claim for an assessment to be prosecuted in an action of debt the receiver cannot elect to bring some other form of action or to sue in equity; conversely, if the law prescribes a suit in equity the receiver cannot bring an action at law. And if under the state statutes demands against a decedent's estate must be proved in a probate court the receiver cannot pursue some other form of action. This is not to say that a state may deny all remedy for the substantive right arising out of the federal statute (see Seabury v. Green, supra); it is merely to say that if the state does not discriminate against the receiver's claim in favor of others of equal dignity and like character, there is no warrant for exempting the claim from the effect of local statutes governing procedure or limiting the time for prosecution of action.
The petitioner, having elected to prove his claim in the appropriate state court, is bound by the laws of Illinois as to the enforcement of such claims, provided those laws are nondiscriminatory and operate equally upon all claims of the class in which his belongs.
'Sixth. All other debts and demands of whatever kind without regard to quality or dignity, which shall be exhibited to the court within one year from granting of letters as aforesaid.
It is apparent that the decision under review enforces the policy of the state evidenced by section 70 of the Administration Act as it has been uniformly applied to claims of like character.
The petitioner relies on Mortimer v. Potter, 213 Ill. 178, 72 N.E. 817, but it is not in point. The claim of the receiver for an assessment in that case accrued after the estate had been fully administered and while the stock with respect to which assessment was levied was in the hands of a trustee to whom it was devised by the testator. Under the principles of Illinois law, as has been shown, such a devisee who received assets from the decedent's estate is liable for the assessment to the extent of those assets.
The petitioner also cites Zimmerman v. Carpenter (C.C.) 84 F. 747, as authority in his favor. In that case a circuit court of the Unied States entered a decree charging the assets in the hands of an executor with the amount of an assessment levied after the decedent's death. It is not clear from the opinion whether the court thought that section 66 creates a lien on estate assets from the date of the bank's failure or construed the section as creating a claim sui generis enforceable directly against assets in the possession of the executrix and under the control of a state court of competent jurisdiction. As we have shown above, either theory is wrong.
In the absence of federal legislation giving priority to a claim for an assessment of stockholders' liability over other debts, or a lien upon the assets of a deceasd stockholder's estate, or a special remedy, the claim is not entitled to distribution otherwise than as specified in a nondiscriminatory statute of the domicile. The judgment is affirmed.
McClaine v. Rankin, 197 U.S. 154, 161, 25 S.Ct. 410, 49 L.Ed. 702, 3 Ann.Cas. 500; Christopher v. Norvell, 201 U.S. 216, 225, 26 S.Ct. 502, 50 L.Ed. 732, 5 Ann.Cas. 740; McDonald v. Thompson, 184 U.S. 71, 73, 74, 22 S.Ct. 297, 46 L.Ed. 437; Forrest v. Jack, 294 U.S. 158, 162, 55 S.Ct. 370, 371, 79 L.Ed. 829, 96 A.L.R. 1457.
Matteson v. Dent, 176 U.S. 521, 20 S.Ct. 419, 44 L.Ed. 571; Forrest v. Jack, supra; Seabury v. Green, 294 U.S. 165, 55 S.Ct. 373, 79 L.Ed. 834, 96 A.L.R. 1463.
In Witters v. Sowles (C.C.) 32 F. 130, 140, and in Drain v. Stough (C.C.A.) 61 F.(2d) 668, 87 A.L.R. 490, there are statements that the statute imposes a lien on estate assets. In Rankin v. Miller (D.C.) 207 F. 602, 611, one ground of decision was that such a lien existed. So in Drake v. Dilatush, 16 F.Supp. 120, the District Court for Eastern Illinois by decree imposed a lien upon the assets of a decedent's estate held by the executor, under circumstances like those presented in the instant case.
Kennedy v. Gibson, 8 Wall. 498, 19 L.Ed. 476; Price v. Abbott (C.C.) 17 F. 506; Armstrong v. Trautman (C.C.) 36 F. 275; Brown v. Smith (C.C.) 88 F. 565; Stephens v. Bernays (D.C.) 41 F. 401, affirmed (C.C.) 44 F. 642; Rankin v. Herod (C.C.) 140 F. 661. See, also, United States v. Weitzel, 246 U.S. 533, 541, 38 S.Ct. 381, 62 L.Ed. 872.
McDonald v. Thompson, supra; McClaine v. Rankin, supra; Morgan v. Hamlet, 113 U.S. 449, 5 S.Ct. 583, 28 L.Ed. 1043.
Keyser v. Hitz, 133 U.S. 138, 10 S.Ct. 290, 33 L.Ed. 531; Christopher v. Norvell, supra.
Suydam v. Broadnax, 14 Pet. 67, 10 L.Ed. 357; Union Bank v. Vaiden, 18 How, 503, 15 L.Ed. 472; Hyde v. Stone, 20 How. 170, 15 L.Ed. 874; Lawrence v. Nelson, 143 U.S. 215, 12 S.Ct. 440, 36 L.Ed. 130.
Yonley v. Lavender, 21 Wall. 276, 22 L.Ed. 536; Byers v. McAuley, 149 U.S. 608, 13 S.Ct. 906, 37 L.Ed. 867; Security Trust Co. v. Black River National Bank, 187 U.S. 211, 227, 23 S.Ct. 52, 47 L.Ed. 147.
McDonald v. Thompson, supra; McClaine v. Rankin, supra.
Matteson v. Dent, supra; Forrest v. Jack, supra; Seabury v. Green, supra.
Chapter 3, § 71, Smith-Hurd Ill.Stats., Chapter 3, par. 71, Ill.Rev.Stats. 1935.
An earlier statute fixed the time at two years. Many of the Illinois cases cited arose under the prior law.
Smith-Hurd Ill.Stats. c. 3, § 68, Cahill's Ill.Rev.Stats.1923, c. 3, par. 68; Johnson v. Tryon, 78 Ill.App. 158; Dunnigan v. Stevens, 122 Ill. 396, 13 N.E. 651, 3 Am.St.Rep. 496; Foreman Trust & Sav. Bank v. Tauber, 348 Ill. 280, 180 N.E. 827.
Stone v. Clarke's Administrators, 40 Ill. 411; Dugger v. Oglesby, 99 Ill. 405; Mackin v. Haven, 187 Ill. 480, 58 N.E. 448; Union Trust Co. v. Shoemaker, 258 Ill. 564, 101 N.E. 1050; Chicago T. & T. Co. v. Fine Arts Bldg., 288 Ill. 142, 123 N.E. 300; Robison v. Harrington, 61 Ill.App. 543; Brown v. Rouse, 116 Ill.App. 513; Bocock v. Leet, 210 Ill.App. 402.
Waughop v. Bartlett, 165 Ill. 124, 46 N.E. 197; Durflinger v. Arnold, 329 Ill. 93, 160 N.E. 172.
Peacock v. Haven, 22 Ill. 23; Russell v. Hubbard, 59 Ill. 335; Shephard v. Rhodes, 60 Ill. 301; Shepard v. National Bank, 67 Ill. 292; Snydacker v. Swan Land Co., 154 Ill. 220, 40 N.E. 466; Union Trust Co. v. Shoemaker, 258 Ill. 564, 101 N.E. 1050; Chiago T. & T. Co. v. Fine Arts Bldg., 288 Ill. 142, 123 N.E. 300; People v. Small, 319 Ill. 437, 150 N.E. 435.
Snydacker v. Swan Land Co., 154 Ill. 220, 40 N.E. 466; Union Trust Co. v. Shoemaker, 258 Ill. 564, 101 N.E. 1050; Beebe v. Kirkpatrick, 321 Ill. 612, 152 N.E. 539, 47 A.L.R. 891; Durflinger v. Arnold, 329 Ill. 93, 160 N.E. 172; Whittemore v. Weber, 217 Ill.App. 628.
Hurd v. Slaten, 43 Ill. 348; Matter of Corrington, 124 Ill. 363, 16 N.E. 252; Matthews v. Kerfoot, 167 Ill. 313, 47 N.E. 859; Trego v. Cunningham's Estate, 267 Ill. 367, 108 N.E. 350; Pollock v. Cantlin, 253 Ill.App. 229; Kinsey v. Bushman, 261 Ill.App. 481.
Rosenthal v. Magee, 41 Ill. 370; Wells v. Miller, 45 Ill. 33; Mason v. Tiffany, 45 Ill. 392; Darling v. McDonald, 101 Ill. 370; Roberts v. Flatt, 142 Ill. 485, 32 N.E. 484; Bradwell v. Wilson, 158 Ill. 346, 42 N.E. 145.
Aldrich v. Aldrich, 287 Ill. 213, 224, 122 N.E. 472; Crawley v. Howe, 223 Ill.App. 394, 398.
Kittredge v. Nicholes, 162 Ill. 410, 412, 44 N.E. 742; Dyer v. Hall, 201 Ill.App. 183.
See the cases in note 19. Welch v. Wallace, 3 Gilman (8 Ill.) 490; Peck v. Stevens, 5 Gilman (10 Ill.) 127; Bull v. Harris, 31 Ill. 487; Dye v. Noel, 85 Ill. 290.
Bradford v. Jones, 17 Ill. 93; Peacock v. Haven, 22 Ill. 23; Rosenthal v. Magee, 41 Ill. 370; Mulvey v. Johnson, 90 Ill. 457; Darling v. McDonald, 101 Ill. 370, 374.
Roberts v. Flatt, 142 Ill. 485, 32 N.E. 484; Union Trust Company v. Shoemaker, 258 Ill. 564, 101 N.E. 1050.
Guy v. Gericks, 85 Ill. 428; Wilding v. Rhein, 12 Ill.App. 384.
Pearson v. McBean, 231 Ill. 536, 83 N.E. 173.
Strauss v. Phillips, 189 Ill. 9, 23, 59 N.E. 560; compare Blanchard v. Williamson, 70 Ill. 647. The petitioner cites cases to the effect that probate courts in Illinois act upon equitable principles. Some of these are collected in note 13, supra, but they go only to the point that in probating claims against an estate those courts recognize equitable doctrines, and do not remit a creditor to a court of equity if his claim is equitable rather than legal. No statute or case has been found indicating that these tribunals have independent equity jurisdiction.

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