FIRST NATIONAL BANK OF JACKSBORO
v.
LASATER
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A former debtor sought to recover usurious interest paid on a promissory note after the debt had been discharged in bankruptcy proceedings, claiming the right of action survived and belonged to him despite never disclosing this claim to his bankruptcy trustee. The Supreme Court reversed the lower court's judgment, holding that a bankrupt cannot conceal a valuable claim from his trustee during bankruptcy proceedings and then assert ownership of that property after the bankruptcy estate is closed, as such property rightfully belongs to the creditors through the trustee.
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.Mr. Justice BREwer,
after making the foregoing statement of facts, delivered the opinion of the court.
The mere discharge by A. M. Lasater-of the note executed by himself and J. L. Lasater, by giving his own note in renewal thereof, would not uphold a recovery from the bank on account of usurious interest in the former note. Brown v. Marion National Bank, 169 U. S. 416. The payment contemplated by the statute is an actual payment, and not a further promise to pay, and was not made until the bapk, in June, 1901, received its money. Prior to the renewal by A. M. Lasater, in October, 1900, there were only two or three small cash payments on the indebtedness.
We shall not stop to inquire whether J.
L. Lasater can avail himself of - the final payment made by A.
M. Lasater. The Court of Appeals held that he could, reaching this conclusion on the authority of cases like Hough v. Horsey, 36 Maryland, 184; Richardson v. Baker, 52 Vermont, 617, to the effect that the grantee of mortgaged property, who in consideration of the purchase agrees to pay off the mortgage, cannot raise the question of usury, that being a personal right of the original debtor. The Court of Appeals also held that the claim for usurious interest was one which survived the death of the person in ¿whom the right of action was vested, and under the laws of Texas a part of his estate, and consequently one that could be sold and bought like any other chose in action. If. so, that claim passed to the trustee in bankruptcy under section 70 of the bankrupt law, which, in describing the property passing to the trustee, names “property which prior to filing of the petition he could by any means have transferred.''
The question then presented is whether this right of action having once passed to the trustee in bankruptcy was retrans-ferred to J.
L. Lasater upon the termination of the bankruptcy proceedings, he having returned no assets to his trustee, and having failed to notify him or the creditors of this claim for usury, and beginning this action within less than two months after the final discharge of the trustee. We have held that trustees in bankruptcy are not bound to «accept property of an onerous or unprofitable character, and that they have a reasonable time in which to elect whether they will accept or not. If they decline to take the property the bankrupt can assert title thereto. American File Company v. Garrett, 110 U. S. 288, 295; Sparhawk v. Yerkes, 142 U. S. 1; Sessions v. Romadka, 145 U. S. 29; Dushane v. Beall, 161 U. S.
513. But that doctrine can have no application when the' trustee is ignorant of the existence of the property and has had no opportunity to make an election. Jt cannot be that a bankrupt, by omitting to schedule and withholding from his trustee all knowledge of certain property, can, after his estate in bankruptcy has been finally closed up, immediately thereafter assert title to the property on the ground that the trustee had never taken any action in respect to it. If the claim was of value (as certainly this claim was according to the judgment below) it was something to which the creditors were entitled, and this bankrupt could not, by withholding knowledge of its existence, obtain a release from his debts and still assert title to the property.
The judgment of the Court of Civil Appeals is reversed, and the case remanded to that court for further proceedings not inconsistent with this opinion. .
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Citator
Cited By (24 total)
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Brown v. O'Keefe, 300 U.S. 598 (U.S. 1937)…nd was directed by the court to abandon and disclaim them. American File Co. v. Garrett, 110 U. S. 288, 295; Sparhawk v. Yerkes, 142 U. S. 1, 13; Sessions v. Romadka, 145 U. S. 29, 39; Dushane v. Beall, 161 U. S. 513; First National Bank v. Lasater, 196 U. S. 115. In such case “the title stands as if no assignment had been made.” Sessions v. Romadka, supra, p. 52. Cf. Mills Novelty Co. v. Monarch Tool & Mfg. Co., 49 F. (2d) 28, 31; In re Frazin, 183 Fed. 28, 32; Kirstein Holding Co. v. Bangor Veritas, Inc.,…
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McCollum in Bankruptcy v. Hamilton Nat'l Bank, 303 U.S. 245 (U.S. 1938)…ke Benton First National Bank v. Watt, 184 U. S. 151. Upon petitioner’s appointment as trustee in bankruptcy, the bankrupt’s right to recover the penalty vested in him. Bankruptcy Act, § 70 (a), 11 U. S. C. § 110 (a). First National Bank v. Lasater, 196 U. S. 115, 118. Reed v. American-German Nat. Bank, 155 Fed. 233. The penalty is to be enforced according to the terms of the statute. Guilt being established, the law itself fixes the punishment at precisely twice the usurious exaction paid; it may not be enh…
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Mgmt. Invs. & Norman C. Reid v. United Mine Workers OF Am., 610 F.2d 384 (6th Cir. 1979)…2d 95, 98 (6th Cir. 1975); Dallas Cabana Inc. v. Hyatt Corporation, 441 F. 2d 865, 867 (5th Cir. 1971); Slonim, supra. Thus Brummett cannot now, after having been discharged in bankruptcy, assert this cause of action. First National Bank v. Lasater, 196 U.S. 115, 25 S.Ct. 206, 49 L.Ed. 408 (1905); Scharmer, supra, at 98-99; Dallas Cabana, Inc., supra at 867-868; Wallace v. Lawrence Warehouse Company, 338 F. 2d 392, 395 (9th Cir. 1964). Gochenour v. George & Francis Ball Foundation, 35 F.Supp. 508 (D.C.Ind.1…
Previewing 3 of 24 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited
- Sessions v. Romadka, 145 U.S. 29 (U.S. 1892)
- Sparhawk v. Yerkes, 142 U.S. 1 (U.S. 1891)
- Dushane v. Beall, 161 U.S. 513 (U.S. 1896)
- Am. File Co. & Another v. Garrett & Another, 110 U.S. 288 (U.S. 1884)
- Brown v. Marion Nat'l Bank, 169 U.S. 416 (U.S. 1898)
- Ferdinand Clark v. Clark, 17 How. 315 (U.S. 1854)