Local Loan Co v. Hunt, No. 783

CourtUnited States Supreme Court
Writing for the CourtSUTHERLAND
Citation54 S.Ct. 695,78 L.Ed. 1230,292 U.S. 234,93 A.L.R. 195
Decision Date30 April 1934
Docket NumberNo. 783
PartiesLOCAL LOAN CO. v. HUNT

292 U.S. 234
54 S.Ct. 695
78 L.Ed. 1230
LOCAL LOAN CO.

v.

HUNT.

No. 783.
Argued April 4, 5, 1934.
Decided April 30, 1934.

Page 235

Messrs. Federic Burnham and David F. Rosenthal, both of Chicago, Ill., for petitioner.

[Argument of Counsel from pages 235-237 intentionally omitted]

Page 238

Messrs. Lloyd A. Faxon and Harry F. Wiggins, both of Chicago, Ill., for respondent.

Mr. Justice SUTHERLAND delivered the opinion of the Court.

On September 17, 1930, respondent borrowed from petitioner the sum of $300, and assecurity for its payment executed an assignment of a portion of his wages thereafter to be earned. On March 3, 1931, respondent filed a voluntary petition in bankruptcy in a federal District Court in Illinois, including in his schedule of liabilities the foregoing loan, which constituted a provable claim against the estate. Respondent was adjudicated a bankrupt; and, on October 10, 1932, an order was entered discharging him from all provable debts and claims. On October 18, 1932, petitioner brought an action in the municipal court of Chicago against respondent's employer to enforce the assignment in respect of wages earned after the adjudication. Thereupon, respondent commenced this proceeding in the court which had adjudicated his bankruptcy and ordered his discharge, praying that petitioner be enjoined from further prosecuting said action or attempting to enforce its claim therein made against respondent under the wage assignment. The bankruptcy court, upon consideration, entered a decree in accordance with the prayer; and this decree on appeal was affirmed by the court below (In re Hunt (C.C.A.) 67 F.(2d) 998), following its decision in Re Skorcz (C.C.A.) 67 F.(2d) 187.

Challenging this decree, petitioner contends that the bankruptcy court was without jurisdiction to entertain

Page 239

a proceeding to enjoin the prosecution of the action in the municipal court; that, assuming such jurisdiction, the rule is that an assignment of future wages constitutes an enforceable lien; but that, in any event, the highest court of the state of Illinois has so decided, and by that decision this court is bound.

First. The pleading by which respondent invoked the jurisdiction of the bankruptcy court in the present case is in substance and effect a supplemental and ancillary bill in equity, in aid of and to effectuate the adjudication and order made by the same court. That a federal court of equity has jurisdiction of a bill ancillary to an original case or proceeding in the same court, whether at law or in equity, to secure or preserve the fruits and advantages of a judgment or decree rendered therein, is well settled. Root v. Woolworth, 150 U.S. 401, 410—412, 14 S.Ct. 136, 37 L.Ed. 1123; Julian v. Central Trust Co., 193 U.S. 93, 112 114, 24 S.Ct. 399, 48 L.Ed. 629; Riverdale Cotton Mills v. Manufacturing Co., 198 U.S. 188, 194 et seq., 25 S.Ct. 629, 49 L.Ed. 1008; Freeman v. Howe, 24 How. 450, 460, 16 L.Ed. 749. And this, irrespective of whether the court would have jurisdiction if the proceeding were an original one. The proceeding being ancillary and dependent, the jurisdiction of the court follows that of the original cause, and may be maintained without regard to the citizenship of the parties or the amount involved, and notwithstanding the provisions of section 265 of the Judicial Code (Rev. St. § 720), U.S.C., title 28, § 379 (28 USCA § 379).1 Julian v. Central Trust Co., supra, 112 of 193 U.S., 24 S.Ct. 399; Dietzsch v. Huidekoper, 103 U.S. 494, 497, 26 L.Ed. 497; Root v. Woolworth, supra, 413 of 150 U.S., 14 S.Ct. 136; McDonald v. Seligman (C.C.) 81 F. 753; St. Louis, I.M. & S.R. Co. v. Bellamy (D.C.) 211 F. 172, 175—177; Brun v. Mann (C.C.A.) 151 F. 145, 150, 12 L.R.A.(N.S.) 154.

Page 240

These principles apply to proceedings in bankruptcy. In re Swofford Bros. Dry Goods Co. (D.C.) 180 F. 549, 554; Sims v. Jamison (C.C.A.) 67 F.(2d) 409, 410; Pell v. McCabe (C.C.A.) 256 F. 512, 515, 516; Seaboard Small Loan Corporation v. Ottinger (C.C.A.) 50 F.(2d) 856, 859, 77 A.L.R. 956. Petitioner relies upon a number of decisions where other federal courts sitting in bankruptcy have declined to entertain suits similar in character to the present one, on the ground that the effect of a discharge in bankruptcy is a matter to be determined by any court in which the discharge may be pleaded. See, for example, Hellman v. Goldstone (C.C.A.) 161 F. 913; In re Marshall Paper Co. (C.C.A.) 102 F. 872, 874; In re Weisberg (D.C.) 253 F. 833, 835; In re Havens (C.C.A.) 272 F. 975. To the extent that these cases conflict with the view just expressed they are clearly not in harmony with the general rule in equity announced by this court. And we find nothing, either in the nature of the bankruptcy court or in the terms of the Bankruptcy Act, which necessitates the application of what would amount to a special rule on this subject in respect of bankruptcy proceedings. Courts of bankruptcy are constituted by sections 1 and 2 of the Bankruptcy Act, amended by Act May 27, 1926 (U.S.C., title 11, §§ 1 and 11 (11 USCA §§ 1, 11)), and are invested 'with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings,' etc. The words 'at law' were probably inserted to meet clause (4) of section 2, 11 USCA § 11(4), which empowers such courts to arraign, try, and punish certain designated persons for violations of the act. Bardes v. Hawarden Bank, 178 U.S. 524, 534—536, 20 S.Ct. 1000, 44 L.Ed. 1175. But otherwise courts of bankruptcy are essentially courts of equity, and their proceedings inherently proceedings in equity. Bardes v. Hawarden Bank, supra, 535 of 178 U.S., 20 S.Ct. 1000; In re Rochford (C.C.A.) 124 F. 182, 187; In re Siegel-Hillman Dry Goods Co. (D.C.) 111 F. 980, 983; Swarts v. Siegel (C.C.A.) 117 F. 13, 16; Dodge v. Norlin (C.C.A.) 133 F. 363, 368, 369; In re Swofford Bros. Dry Goods Co., supra, at page 553 of 180 F.; In re Lahongrais (C.C.A.) 5 F.(2d) 899, 901; French v.

Page 241

Long (C.C.A.) 42 F.(2d) 45, 47. And, generally, proceedings in...

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1772 practice notes
  • In re GEO Specialty Chems. Ltd., Case No.: 04–19148(RG) (Jointly Administered)
    • United States
    • U.S. Bankruptcy Court — District of New Jersey
    • 4 Diciembre 2017
    ...but unfortunate debtor.’ " Grogan v. Garner, 498 U.S. 279, 286–87, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 78 L.Ed. 1230 (1934) ).....New GM argues in response that because plaintiffs' claims were "contingent," those individual......
  • Kesler v. Department of Public Safety, Financial Responsibility Division, State of Utah, No. 14
    • United States
    • United States Supreme Court
    • 26 Marzo 1962
    ...not relieve the judgment debtor from this requirement. Appellant initiated this ancillary bankruptcy proceeding, Local Loan Co. v. Hunt, 292 U.S. 234, 239, 54 S.Ct. 695, 696, 78 L.Ed. 1230, in the United States District Court for Utah, seeking an order requiring restoration of his privilege......
  • SEC v. Lorin, No. 90 Civ. 7461 (HB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 21 Noviembre 1994
    ...at 565 (quoting Grogan v. Garner, 498 U.S. 279, 286, 111 S.Ct. 654, 659, 112 L.Ed.2d 755 (1991) (in turn quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 699, 78 L.Ed. 1230 The Telsey court further acknowledged that its holding was not based on strict statutory construction,......
  • Grogan v. Garner, No. 89-1149
    • United States
    • United States Supreme Court
    • 15 Enero 1991
    ...in life with a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt." Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 699, 78 L.Ed. 1230 (1934). But in the same breath that we have invoked this "fresh start" policy, we have been careful t......
  • Request a trial to view additional results
1775 cases
  • In re GEO Specialty Chems. Ltd., Case No.: 04–19148(RG) (Jointly Administered)
    • United States
    • U.S. Bankruptcy Court — District of New Jersey
    • 4 Diciembre 2017
    ...but unfortunate debtor.’ " Grogan v. Garner, 498 U.S. 279, 286–87, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 78 L.Ed. 1230 (1934) ).....New GM argues in response that because plaintiffs' claims were "contingent," those individual......
  • Kesler v. Department of Public Safety, Financial Responsibility Division, State of Utah, No. 14
    • United States
    • United States Supreme Court
    • 26 Marzo 1962
    ...not relieve the judgment debtor from this requirement. Appellant initiated this ancillary bankruptcy proceeding, Local Loan Co. v. Hunt, 292 U.S. 234, 239, 54 S.Ct. 695, 696, 78 L.Ed. 1230, in the United States District Court for Utah, seeking an order requiring restoration of his privilege......
  • SEC v. Lorin, No. 90 Civ. 7461 (HB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • 21 Noviembre 1994
    ...at 565 (quoting Grogan v. Garner, 498 U.S. 279, 286, 111 S.Ct. 654, 659, 112 L.Ed.2d 755 (1991) (in turn quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 699, 78 L.Ed. 1230 The Telsey court further acknowledged that its holding was not based on strict statutory construction,......
  • Grogan v. Garner, No. 89-1149
    • United States
    • United States Supreme Court
    • 15 Enero 1991
    ...in life with a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt." Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S.Ct. 695, 699, 78 L.Ed. 1230 (1934). But in the same breath that we have invoked this "fresh start" policy, we have been careful t......
  • Request a trial to view additional results
5 books & journal articles
  • Postpetition Proceeds of Exempt Interests in Property: Who Owns the Appreciation?
    • United States
    • American Bankruptcy Law Journal Vol. 95 Nbr. 4, December 2021
    • 22 Diciembre 2021
    ...Into Focus, 95 AM. BANKR. L.J. (forthcoming Dec. 2021). (99) Grogan v. Garner, 498 U.S. 279, 286 (1991) (quoting Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934)). (100) See, e.g., Schwab v. Reilly, 560 U.S. 770, 791 (2010); Smith v. State of Maine Bureau of Rev. Servs., 910 F.3d 576, 587 (......
  • Brewing Disharmony: Addressing Tribal Sovereign Immunity Claims in Bankruptcy.
    • United States
    • American Bankruptcy Law Journal Vol. 96 Nbr. 1, January 2022
    • 1 Enero 2022
    ...gives the debtor a "fresh start" by releasing him, her, or it from further liability for old debts. See, e.g., Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934). "Under our longstanding precedent, States, whether or not they choose to participate in the proceeding, are bound by a bankruptcy ......
  • The Inequities of Equitable Subordination.
    • United States
    • American Bankruptcy Law Journal Vol. 96 Nbr. 1, January 2022
    • 1 Enero 2022
    ...(37) Id. at 297-99. (38) Id. at 308. (39) Id. at 313. (40) Id. at 312. (41) Id. at 305. (42) Id. at 304 (citing Local Loan Co. v. Hunt, 292 U.S. 234, 240 (43) See, e.g., In re Fin. Oversight and Mgmt. Bd. for P.R., 987 F.3d 173, 181 (1st Cir. 2021) (referencing Pepper in discussion on equit......
  • Shielding Third Parties in Bankruptcy: Extensions of the [section]362 Automatic Stay and Imposing [section]105 Injunctions Under the Bankruptcy Code.
    • United States
    • Florida Bar Journal Vol. 96 Nbr. 5, September 2022
    • 1 Septiembre 2022
    ...Ins. Co., 65 F.3d 973, 984-85 (1st Cir. 1995); and In re AOV Indus., 792 F.2d 1140, 1152 (D.C. Cir. 1986). (6) Local Loan Co. v. Hunt, 292 U.S. 234, 240, 54 S. Ct. 695, 78 L. Ed. 1230 (1934). See also In re Empire for Him, Inc., 1 F.3d 1156, 1160 (11th Cir. (7) Bank of Am. Nat'l Trust &......
  • Request a trial to view additional results

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