Source: https://supreme.justia.com/cases/federal/us/324/4/
Timestamp: 2019-04-22 04:51:27+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 324 › Herget v. Central National Bank & Trust Co.
Section 11(e) of the Bankruptcy Act bars, after two years from the date of adjudication in bankruptcy, an action brought by the trustee in bankruptcy to set aside and recover a preferential transfer, and a state statute of limitations cannot operate to extend the period. P. 324 U. S. 8.
Certiorari, 323 U.S. 691, to review the affirmance of a judgment dismissing the complaint in a suit by a trustee in bankruptcy to set aside and recover an alleged preferential transfer.
two years from the date of adjudication in bankruptcy, an action brought by the trustee in bankruptcy to set aside and recover a preferential transfer.
On April 11, 1938, N. L. Rogers & Company, Inc., filed a voluntary petition in bankruptcy, and was duly adjudged a bankrupt on the same day. On March 3, 1943, the petitioner trustee filed a complaint under Section 60 of the Bankruptcy Act, 11 U.S.C. § 96, against the respondent bank to set aside and recover payments totalling over $300,000 alleged to have been given illegally by the bankrupt to the respondent within four months prior to the filing of the bankruptcy petition. The District Court dismissed the complaint on the ground that the suit had been instituted more than two years subsequent to the date of adjudication in bankruptcy, and hence was barred by Section 11e. It thus overruled the trustee's contention that Illinois law allowed him five years in which to bring this action, and that this five-year limitation was controlling, since it fell within the provision of Section 11e allowing suits "within such further period of time as the Federal or State law may permit." 53 F.Supp. 265. The court below affirmed this judgment. 141 F.2d 150. In our view, such a result is plainly right.
of the Bankruptcy Act apparently was not raised or determined.
"applies to all judicial contests between the assignee and other persons touching the property rights of property of the bankrupt transferable to or vested in the assignee."
See also Gifford v. Helms, 98 U. S. 248, 98 U. S. 252; Jenkins v. International Bank, 106 U. S. 571, 106 U. S. 575. The inference seems clear from this that suits to set aside preferential transfers made prior to the assignment would have been held to fall within the reach of the two-year limitation.
"A receiver or trustee may, within two years subsequent to the date of adjudication or within such further period of time as the Federal or State law may permit, institute proceedings in behalf of the estate upon any claim against which the period of limitation fixed by Federal or State law had not expired at the time of the filing of the petition in bankruptcy."
expressly restricted the field within which the two-year limitation was to be operative had it so wished. Its failure to do so cannot be ignored.
The actual language used in Section 11e is clearly appropriate to an action under Section 60. Section 11e is not limited by its words to actions inherited by the trustee; nor does it discriminate against actions by the trustee accruing to him under the Act. It provides simply that the trustee must bring action on any claim in behalf of the estate within two years subsequent to the date of adjudication or within such further time as the federal or state law permits, provided that such law did not bar the action on the date when the petition was filed.
behalf of the estate" to set aside and recover any preferential transfers "within two years subsequent to the date of adjudication." More than two years having elapsed between the date of adjudication and the commencement of the suit in this instance, the courts below properly held that the action was barred under Section 11e.
Inasmuch as the federal Bankruptcy Act has created the liability and has also fixed the limitation of time for commencing actions to enforce it, we have no occasion to consider the trustee's arguments concerning the applicability and construction of the Illinois statutes of limitation. Cf. Campbell v. Haverhill, 155 U. S. 610; McClaine v. Rankin, 197 U. S. 154; Rawlings v. Ray, 312 U. S. 96; Davies Warehouse Co. v. Bowles, 321 U. S. 144, 321 U. S. 155-156.
See In re Conant, Fed.Cas.No.3,086; Stevens v. Hauser, 39 N.Y. 302. Cf. 69 U. S. Ogden, 2 Wall. 57, 69 U. S. 70.
See Bowen v. Delaware, L. & W.R. R. Co., 153 N.Y. 476, 47 N.E. 907. Cf. Phelan v. O'Brien, 13 F. 656.
Davis v. Willey, 273 F. 397; Meikle v. Drain, 69 F.2d 290; Arnold Grocery Co. v. Shackelford, 140 Ga. 585, 79 S.E. 470.
Among those cases holding that Section 11d applied are Isaacs v. Neece, 75 F.2d 566; Engebretson v. West, 133 Neb. 846, 277 N.W. 433, and Callaghan v. Bailey, 293 N.Y. 396, 57 N.E.2d 729. Cases holding that the state statutes of limitation applied include Davis v. Willey, 273 F. 397, and Silverman v. Christian, 123 N.J.Eq. 506, 198 A. 832. See also Charlesworth v. Hipsch, Inc., 84 F.2d 834; Nairn v. McCarthy, 120 F.2d 910.
"A new provision in subdivision e permits receivers and trustees, within 2 years after the adjudication, to institute suits on claims against which the period of limitation fixed by Federal or State law had not expired at the time of the bankruptcy or within such further time as the Federal or State law may permit."
"The provisions of the existing law in regard to suits by or against trustees have been revised and modified, and receivers are included. The period of limitations in respect to such suits has been restricted in the bill to 2 years after the date of adjudication, instead of 2 years after the date of the closing of the estate."

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