UNITED STATES SUPREME COURT DECISIONS ON-LINE

On the facts as stated in the opinion of the Court, it is held that this suit is one between an assignee in bankruptcy and one claiming an adverse interest touching the property which is the subject of controversy within the meaning of Rev.Stat. § 5057, prescribing a limitation for the commencement of such an action.

The omission by a bankrupt to put upon his schedules, or the omission by him or by his administrator to disclose to his assignee in bankruptcy the existence of policies of insurance on his life which had been taken out by him and had, before the bankruptcy, been assigned to a trustee for the benefit of his daughters, does not amount to a fraudulent concealment of the existence of the policies so as to take an action against the administrator (who was also guardian of the daughters) to recover from him the amount of insurance paid to him as administrator out of operation of the limitation prescribed in Rev.Stat. 5057.

Mere ignorance of the existence of a cause of action by an assignee in bankruptcy does not remove the bar against such action prescribed by a statute of limitation, but, in order to set aside such bar, within the rule as announced in Bailey v. Glover, 21 Wall. 342, there must be no laches on the part of the assignee in coming to the knowledge of the fraud which is the foundation of the suit.

In the year 1867, the Connecticut Mutual Life Insurance Company issued three policies of insurance upon the life of Matthias Ellis, numbered, respectively, 68,428, 68,429, and 68,430, the first two being for $10,000 each, and the last for $5,000. Each policy was payable to the executors, administrators, and assigns of the assured upon proof of his death.

On the 19th of May, 1877, the assured, in writing, transferred and assigned these policies, and all profits, dividends, nonforfeiture policies, money, or other property that might arise from or be paid for or on account of them, to E. Rollins Morse in trust, to pay the income, profits, or proceeds thereof to his two daughters, Helena and Marie. This assignment was lodged with the insurance company, though it does not clearly appear by whom, nor when, except that it must have been prior to March 1, 1879. clubjuris

Page 132 U. S. 605

Ellis filed, July 3, 1878, in the District Court of the United States for the District of Kentucky, his petition in bankruptcy, and, having been adjudged a bankrupt, his estate was transferred by the register to Horace W. Bates, who acted as assignee until May, 1882. He was succeeded by the present defendant in error.

The schedules in bankruptcy made no mention of the above policies of insurance.

On the 1st day of March, 1879, policy 68,430 was surrendered to the company for the sum of $1,054, which amount was applied in payment as well of the premiums due in that year on policies 68,428 and 68,429 as of future premiums, in cancellation of premium note or credit, and in discharge of the accrued interest on that note. The receipt showing the details of this transaction was signed by Ellis and by Morse as trustee.

The bankrupt died November 21, 1879, and on the 31st of December in the same year the company paid to his administrator, the plaintiff in error (he being also the guardian of the children of the assured), the sum of $9,390.43, the proceeds of policy 68,428, and $258.21, the balance of the surrender value of policy 68,430.

The present action was brought September 30, 1882, by the assignee in bankruptcy to recover from Ellis' administrator the sums so received by the latter. It proceeds upon the ground that the policies constituted part of the bankrupt's estate and passed to his assignee. The declaration alleges that the existence of the policies was concealed and withheld from the assignee, and remained in Ellis' possession and control until his death, when they were taken possession of by the defendant in his capacity as administrator, except that policy No. 68,430 had been surrendered by Ellis on or about March 2, 1879; that the assignee in bankruptcy had no knowledge or information concerning the policies until shortly before the commencement of this suit,

"the same being concealed by said Ellis in his lifetime, and since his death by his administrator, and that immediately upon being informed of the existence of said property he demanded the same, or the proceeds thereof, from the defendant. "

Page 132 U. S. 606

The answer puts in issue the material allegations of the declaration, and pleads specially that the cause of action did not accrue to the assignee, nor against the defendant as administrator, within two years before the suing out of the plaintiff's writ.

The court refused to grant any of the defendant's requests for instructions, including one based upon the statute of limitations, and instructed the jury that the plaintiff was entitled to recover the two sums claimed by him, with interest on each from the date of the writ. A verdict was thereupon returned in favor of the plaintiff for the sum of $11,539.56, upon which judgment was rendered. clubjuris

Page 132 U. S. 607