In re BLAKE, 150 F. 279

SANBORN, Circuit Judge, after stating the case as above, delivered the opinion of the court. The chief complaint of the trustee Blake in this case is that his right to recover this $16,000 of' the Clinton Bank has been determined by the court of bankruptcy in thé absence of pleadings that would be impregnable to attack in an independent suit of interpleader.

His counsel argue that the bill of interpleader should have been dismissed because it presents the theory that the county claims the $16,000 as a trust fund, while the facts show that the bank is a debtor and not a trustee on account of this transaction, because it shows that the same thing is not claimed by both Henry county and the trustee, that the bank is not without interest in the subject-matter of the controversy, and that it has incurred independent liability to each of the claimants and because no relief in a suit of interpleader can be based upon claims not presented by the bill, which are subsequently set forth in the pleadings of the claimants.

Conceding, without deciding, that each of these positions would be well taken if this were an independent suit and the questions here suggested had been presented in due time, there is a short and conclusive answer to all these objections.

It is that they are not here for our consideration, that the petitioner waived them in the proceeding below by pleading to the merits of the case, by praying for a judgment in his favor therein, and by stipulating that the controversy between him and the other parties thereto should be determined upon the agreed statement of facts which he signed without making any objections to the pleadings or to the form of the proceeding, without taking any ruling upon any of these questions, and without saving any exception to any such ruling.

Here was a chose in action, a claim of liability of the Clinton Bank to pay $16,000. The trustee and the county each claimed to own this chose in action. There was therefore a controversy between the trustee and an adverse claimant concerning property claimed by the trustee, and this was a subject-matter of which the court of bankruptcy might lawfully take jurisdiction. Bankr. Act July 1, 1898, c. 541, §§ 2 (7), 23a, 23b, 30 Stat. 545, 552 [U. S. Comp. St. 1901, pp. 3420, 3431].

The trustee, with the consent of the bank, could have maintained a suit against it in the bankruptcy court to enforce his claim, and the county could have intervened therein and have secured a determination of its right to this chose in action and to its proceeds. The jurisdiction, the power, and the duty of the court to determine the controversy in this case was not conditioned by the presentation of any bill of interpleader.

It rested upon the adjudication in bankruptcy, upon the existence of the controversy between the trustee and the adverse claimant concerning this chose in action claimed by the trustee and the consent of the parties in interest that the bankruptcy court -should determine it. These requisite conditions to the jurisdiction existed. There were the requisite adjudication in bankruptcy, the necessary controversy, and the requisite consent of the parties. And there was in addition the express waiver of the objections to the form of the proceeding and the defects of the pleadings by the agreed statement of facts.

The petitioner made an unqualified agreement that the court might determine his claim and this controversy upon the agreed statement of facts which he signed. The court and the other parties in interest here relied upon his contract and determined the controversy upon those facts, and it is now too late for him to be heard upon the technical objections he urges which challenge neither the substantial sufficiency of the pleadings of the claims adjudged nor the real jurisdiction of the court. His agreement has estopped him from thus experimenting with the courts.

The submission to a court upon an agreed statement of facts without objection to the pleadings or to the form of the proceeding of a controversy of which and of the parties to which the court has jurisdiction waives every objection to the form of the proceeding and to technical defects in the pleadings. Saltonstall v. Russell, 152 U. S. 628, 630, 14 Sup. Ct. 733, 38 L. Ed. 576; Fisher v. Knight, 9 C. C. A. 582, 584, 61 Fed. 491, 493; Folger v. Columbian Ins. Co., 99 Mass. 267, 277, 96 Am. Dec. 747; Brettun v. Fox, 100 Mass. 234, 236.

Salmon & Salmon and the Clinton Bank combined together, suppressed competition for the use of the surplus moneys of the county which the law contemplated and required, and thereby procured the county deposits to be made with Salmon & Salmon, in consideration whereof the latter transferred to the Clinton Bank the credit of $16,000, for which it is now indebted. A combination of bidders to suppress competition at a public sale required by law is a fraudulent conspiracy in restraint of trade and contrary to public policy.

It renders any contract- or transaction of the vendor induced thereby voidable at his election and vests in him the legal right to recover of any of the conspirators the value of all the benefits he has received thereunder. Greenhood on Public Policy, pp. 183-189; 1 Story’s Eq. Jur. § 293; Jones v. Caswell, 3 Johns. Cas. (N. Y.) 29, 2 Am. Dec. 134; Doolin v. Ward, 6 Johns. (N. Y.) 194.

Counsel indulge in the discussion of the questions whether or not the deposit in the Clinton Bank was a trust fund which the county could identify and follow, whether or not the Clinton Bank was a partner of Salmon & Salmon in the securing of the deposits of the county, whether or not it was liable with them as a joint tort-feasor for the entire $63,976.77, which they still owe to the county, and whether or not Salmon & Salmon were the agents of the bank in procuring for it the credit on account of which it owes the $16,000.

But in the case before us in which no claim was made against the bank for more than $16,000, these are academic questions whose consideration and decision are unnecessary to the determination of the crucial issue'it presents, and for that reason they are here dismissed without debate or determination. The liability of the bank to pay this $16,000 to the county stands on broader ground. It rests upon the indubitable principle that whoever knowingly receives money, property, or benefit, from another through the fraud of a third is always liable to restore it or its value. Bridgeman v.

Green, Wilmot’s Rep. 64; Huguenin v. Baseley, 14 Ves. 288, 289; Gordon v. McCarty, 3 Whart. (Pa.) 407, 411; Commonwealth v. Call, 21 Pick. (Mass.) 515; Tuckwell v. Lambert, 5 Cush. (Mass.) 23. By so much .the more is he liable when he participates himself in the'perpetration of the fraud. All the credits on account of which the Clinton Bank owes this $16,000 were obtained by. it in consideration of its fraudulent combination with Salmon & Salmon by means of which »they obtained corresponding deposits from the county.

From this fraud upon the county it has derived a, benefit of $16,000, and the court below rightfully adjudged that it should pay the value of this benefit to the county. The trustee can maintain no cause of action against the Clinton Bank to recover this money, because the consideration of the bank’s agreement to pay this $16,000 to Salmon & Salmon entirely fails, and it is thereby released from that obligation when the county urges and maintains its right to avoid its contract and transaction with Salmon & Salmon and to recover this indebtedness from the bank.

The contention that, although Salmon & Salmon could not have maintained a claim to this chose in action against the county, yet the trastee may do so because he is invested with the rights of attachment and execution creditors of the bankrupt at the time of the filing of the petition in bankruptcy who might have levied upon this property, and the authorities cited in support of this position- (In re Tweed [D. C.] 131 Fed. 355, 358; In re Butterwick [D. C.] 131 Fed. 371, 372; In re Fraizer [D. C.] 117 Fed. 746; In re Rabenau [D.

C.] 118 Fed. 471, 479), are answered by the decisions of the Supreme Court in York Mfg. Co. v. Cassell, 201 U. S. 344, 352, 26 Sup. Ct. 481, 50 L. Ed. 782; Hewit v. Berlin Machine Works, 194 U. S. 296, 24 Sup. Ct. 690, 48 L. Ed. 986, and Thompson v. Fairbanks, 196 U. S. 516, 25 Sup. Ct. 306, 49 L.

Ed. 577, that: “Under the present bankrupt act the trustee takes the property of the bankrupt, in cases unaffected by fraud, in the same plight and condition that the bankrupt holds it, and subject to all the equities impressed upon it in the hands of the bankrupt.” The claim of Salmon & Salmon against the Clinton Bank was founded in fraud and liable to be defeated at any time by the discovery of this fraud and the assertion of the right to recover of the bank by the county. 'This claim passed to the trustee subject to that fatal defect which has now destroyed it.

The county had a cause of action to recover this $16,000 of the bank. The enforcement of this cause of action deprived the agreement of the bank to pay this $16,000 back to Salmon & Salmon of its entire consideration and thus destroyed the right to enforce it. The objection that the judgment in favor of the county and against the bank is erroneous because the court below would have had no jurisdiction of an original action between them cannot be sustained. While no such action was maintainable in that court, the proceeding in bankruptcy was a proceeding in equity.

The court below sitting in equity had plenary jurisdiction of the trustee and of his claim to recover the $16,000 of the bank, of the controversy between the trustee and the county concerning this chose in action which the trustee claimed, and of the trustee, the bank, and the county, each of whom had consented and requested that the court would determine all their claims which had relation to this subject-matter.

The power is conferred and the duty is imposed upon a court of equity which has acquired jurisdiction of the subject-matter and of the parties to a controversy to consider and determine all the rights and claims of the parties relating to the subject-matter and to enter a decree that will finally determine and enforce their rights against each other to the end that a multiplicity of suits may be avoided and litigation may cease. Hopkins v. Grimshaw, 165 U. S. 342, 358, 17 Sup. Ct. 401, 41 L. Ed. 739; Sunflower Oil Co. v. Wilson, 142 U. S. 313, 325, 12 Sup. Ct. 235, 35 L. Ed. 1025; Ward v. Todd, 103 U.

S. 327, 329, 26 L. Ed. 339. The order that the bank pay the $16,000 to the county was within the jurisdiction of the court, the petition for revision disclosed no error of law in the proceedings which culminated in this judgment, and the petition is accordingly dismissed.