Hayes v. Pike

Hayes, the nominal plaintiff, assigned to Steele the order upon which the action was brought against Davis, and the judgment, consequently, was obtained for Steele’s benefit; and the bond, being part *566of fhe remedy, was also taken for the benefit of the same party, but necessarily in the name of Hayes. The right of Steele, therefore, to bring the present action in the name of Hayes, to recover upon the bond, is a necessary and undoubted result of those transactions, unless his right to do so has been affected by the bankruptcy of Hayes, and the assignment of his effects to the assignees appointed by the district court in the course of the proceedings in bankruptcy.

By the decree of the district court, “ all property and rights of property, of every name and nature,” became divested out of the bankrupt, and vested in the assignee, who is authorized to sue for and defend the same. There seems to be nothing in the act to impair the authority justly acquired by another party to bring or prosecute an action for his own benefit in the name of the person who subsequently becomes a bankrupt. The power to do so having been acquired for the benefit of the party claiming it, is not revocable by the party granting it by a direct act for the purpose; or, as it seems, by the indirect effect of an application to tbe district court under the statute of bankruptcy.

But the authorities place the rights of the assignee of a chose in action upon the broad ground that property, held by the bankrupt in trust, does not pass to his assignees, and that therefore the cestui que trust cannot bring any action respecting such property in their names, but must bring it in the name of the bankrupt. Carpenter v. Morrell, 3 B. & P. 40; Winch v. Keeley, 1 T. R. 619. In each of those cases it was decided, upon full argument, that where a chose in action is assigned by one who afterwards becomes bankrupt, the action should be in his name, and not in the name of his assignees in bankruptcy.

But it is said that Hayes, having assigned the chose in action, retained a beneficial interest in it, and that such *567interest passed to the assignee in bankruptcy, who was thereupon entitled to sue in his own name, and therefore the right to sue in the name of the bankrupt was displaced.

The proceedings in bankruptcy conferred upon the assignee the property of the bankrupt, and, as incident, the appropriate rights of action, but nothing more. The right of the bankrupt to the chose in action was to recover it upon first paying to Steele the sum it was pledged for, and the further right to recover of Steele what should remain after he had satisfied himself from its avails. Such was the extent of the bankrupt’s interest, and such is, of course, the interest of his official assignee.

When the event is shown to happen which divests the interest of Steele and his fight, as cestui que trust, to sue to the exclusion of all others from intermeddling with the suit, then the rights of the assignee, with its appropriate remedy, attaches, but not before.

The conclusion therefore is, that the action is well brought, and that there must bo

Judgment for the plaintiff.