Summary
In Kennedy, the court examined how future lease payments should be treated in the context of a national bank receivership.
Summary of this case from McMilllan v. F.D.I.COpinion
Nos. 3131, 3132.
June 25, 1936.
Appeals from the District Court of the United States for the District of Massachusetts; Elisha H. Brewster, Judge.
Action by Walter A. Kennedy against the Boston-Continental National Bank and another. From a judgment of the District Court ( 11 F. Supp. 611), the plaintiff appeals and the defendants cross-appeal.
Judgment vacated and case remanded, with instructions.
These are cross-appeals from a judgment of the District Court for Massachusetts of October 21, 1935, in an action of contract based on the provisions of a written lease, brought by Kennedy against the Boston-Continental National Bank and Frederick S. Deitrick, asserting a right in the assets of the bank in the hands of Deitrick, its receiver.
The declaration, as finally amended, contains nine counts:
The first count is for rent due December 1, 1931, and thereafter to and including August, 1932, at $1,000 per month. In this count the plaintiff alleged that one Harris Ulin by indenture leased to the Boston National Bank (now called Boston-Continental National Bank) certain property in Boston for the term of fifteen years, beginning February 1, 1930; that under the terms of the lease the lessee (the defendant bank) covenanted and agreed to pay during said term rent at the rate of $12,000 a year in equal monthly payments of $1,000 on the first day of each and every month, beginning with that day; that the lessee entered into possession under the lease; that the lessee thereafter failed to pay the rent due on the first day of each of the following months — December, 1931, January, February, March, April, May, June, July, and August, 1932; that on or about March 3, 1932, Harris Ulin assigned to the plaintiff by an instrument in writing, under seal, all of said Ulin's right, title, and interest in and to said lease and all rights theretofore accrued or thereafter to accrue pursuant to its provisions, including the aforesaid claim; and that said assignment is now in full force and effect.
Count 2 is for taxes assessed by the city of Boston for the year 1931, due October 3, 1931, amounting to $7,402.50. This count includes the same allegations as above set forth under count 1, except that the covenant of the lease alleged to have been broken by the lessee was one wherein it covenanted and agreed to pay the stipulated rental in money and, as additional rent, when due, all taxes and assessments of whatsoever nature which might be assessed upon or become payable for or in respect of the demised premises or any part thereof, after delivery of possession of said demised premises and during the term of said lease.
Count 3 is for taxes assessed by the city of Boston for the year 1932, of $8,342.50. This count contains similar allegations to those in count 2.
Count 4 is for damages for breach of covenant of the lessee to maintain and leave the premises in good repair, of $6,936. This count contains similar allegations to the preceding count, only the covenant alleged to have been broken was one wherein the lessee covenanted and agreed that "the lessee shall and will at the expiration or termination of the said term peaceably yield up unto the lessor all and singular the said premises and all the erections and additions made to or upon the same, whether the said erections or additions shall have been made by the lessor or by the lessee, in good tenantable repair, order and condition in all respects, reasonable wear and tear, damage by fire, unavoidable casualty or public taking excepted."
Count 5 is for damages for breach of covenant of lessee to pay the lessor upon termination of the lease the difference between the fair rental value and the rent reserved under the lease for the residue of the term, of $82,142.47. In this count, after alleging that Harris Ulin leased the premises to the bank for fifteen years beginning February 1, 1930, and that the lessee, under the terms of the lease, covenanted to pay during said term rent at the rate of $12,000 per year in monthly payments of $1,000 on the first day of each and every month beginning with that day, together with additional rent as stipulated, including all taxes and assessments of whatever nature, it was further alleged that the lessee "covenanted and agreed in said lease that in the event of default by the lessee in the payment of the rent or the performance of any of the other covenants of said lease then the lessor, after the giving of notice as provided for in said lease, might immediately or at any time thereafter enter upon said premises and that thereupon said lease should be determined; that said lessee further covenanted and agreed that after such possession was regained the lessee would [will] be and remain liable to the lessor for the excess, if any, of the rents reserved in said lease over the rental value of the demised premises for the remainder of the term; that thereafter said lessee neglected and refused to pay the rent under said lease; and thereafter said lessee neglected and refused to pay rent under said lease and taxes assessed upon said premises in accordance with its covenants contained in said lease; that thereafter, to wit, on or about January 8, 1932, pursuant to the terms of said lease, due notice, in writing, was given by the lessor to said lessee of its violation of its covenants in said lease contained and demand made upon it for payment of said rent and taxes; that on or about March 3, 1932, said Harris Ulin assigned to the plaintiff by instrument in writing, under seal, all of said Ulin's right, title and interest in and to said lease and all rights theretofore accrued or thereafter to accrue pursuant to its provisions, including all rights to receive and collect damages by reason of the aforesaid covenants; that said assignment is now in full force and effect; that thereafter, to wit, on or about August 19, 1932, said default still continuing, entry was made by the plaintiff upon the demised premises for the purpose of terminating the same; that, therefore, the defendants are liable to the plaintiff for the excess of the rent reserved in said lease over the rental value of the demised premises for the remainder of the term, to wit, the period from August 19, 1932 to January 31, 1945; all to the great damage of the plaintiff as alleged in his writ." (Italics supplied.)
Count 6 is for damages for breach of covenant of the lessee to pay for any loss sustained by the lessor through delay in reletting the premises, of $25,137.55. This count contained the same allegations as those in count 5 except that the particular covenant relied on was one wherein "said lessee further covenanted and agreed that after such possession was regained the lessee would be and remain liable to the lessor 'for any loss sustained by the lessor, through delay, not reasonably avoidable, in reletting the premises.'"
Count 7 is for damages for breach of covenant of lessee to pay expenses incurred by lessor in enforcing obligations of the lessee under the lease, $7,300. This count contained the same allegations as were in count 5, including the allegations as to notice, entry, and termination of the lease, but the particular covenant relied on was one wherein it alleged that the lessee further covenanted and agreed that after such possession was regained "it will pay to the lessor on demand all expenses incurred by the lessor in enforcing any obligations of the lessee under this lease."
Count 8 covered all the items contained in the foregoing counts amounting to $146,261.02.
Count 9 was for damages for breach of covenant of the lessee to carry rent insurance. The covenant relied on under this count was one wherein the lessee further covenanted and agreed in said lease "to carry during the term hereof rent insurance in a sum sufficient to indemnify the lessor against loss of rent (including taxes and like charges) hereunder."
The defendants demurred to all the counts. The demurrers were overruled and the defendants excepted. These exceptions, however, are waived.
The defendants also filed an answer, largely in the nature of a general denial, and a declaration in set-off, claiming to set off against any amount recovered by the plaintiff three notes of Harris Ulin, the assignor of the plaintiff Kennedy, payable to the Boston-Continental National Bank, amounting to $22,638.82, and which became due and payable prior to March 3, 1932, the date of the assignment of Ulin to the plaintiff.
The case was tried by the District Court, a jury being duly waived. The court found for the plaintiff on counts 1, 2, 4, and 5, as follows:
On count 1, for rent due December 1, 1931, $1,000 plus interest to December 17, 1931 (the date of insolvency) ..................... $ 1,002.75 On count 2, for the taxes of 1931, plus interest to December 17, 1931 ......................... 7,552.17 On count 4, for failure to maintain and leave the premises in good repair ............ 2,436.00 On count 5, for damages for breach of the covenant of the lessee to pay to the lessor upon termination of the lease the difference between the fair rental value and the rent reserved under the lease for the duration of the term ..................... 56,580.70 __________ Total ....................................... $67,571.62
It held the defendants entitled to set off the notes in the amount of $22,638.82, and entered judgment for the plaintiff for $44,932.80.
It is from this judgment that both parties appeal.
The facts are not in dispute except as to the issue raised by the ninth count. Apart from the issue raised by that count the facts are as follows: Harris Ulin, assignor of the plaintiff, leased to the Boston National Bank certain premises in Boston for the term of fifteen years, beginning February 1, 1930, for a rental of $12,000 per year, payable the first day of every month, the lessee to pay the Boston taxes and other assessments. In December, 1930, the Boston National Bank (the lessee) consolidated with the Continental National Bank and continued to do business under its original charter under the name of Boston-Continental National Bank. The bank failed to pay the rent due December 1, 1931, and the taxes assessed on the leased property for the year 1931, due October 2, 1931. On December 16, 1931, the bank closed and on December 17, 1931, the property and affairs of the bank were taken over by the Comptroller of the Currency, who appointed a receiver on December 22, 1931. The defendant Deitrick is a successor of previous appointees. January 8, 1932, Ulin (the lessor) sent two letters to the bank. In one he notified the bank that it was in default in the performance of the terms, covenants, and conditions of the lease in that it had failed to pay the rent due on the first days of December, 1931, and January, 1932, and had failed to pay the Boston taxes assessed as of April 1, 1931, the same being overdue, and demanded that it pay the rental and taxes, and, in case it failed to do so within thirty days, the lessor would take such action, legal or otherwise, as he deemed for his best interest. In the other letter he notified the bank that it had failed to carry rent insurance in accordance with the provisions of the lease, demanded that it comply with the covenant relating thereto and, in case of default for thirty days after notice, the lessor would take such legal or other action as he deemed for his best interest. January 13, 1932, the receiver notified the lessor of his election not to assume the lease and of his intention to vacate the premises as promptly as possible.
The lease contained the following provisions as to how and when it could be determined: "Provided, however, and these presents are upon condition, that in case at any time default shall be made by the Lessee * * * in the payment of any of the rent herein provided for upon the day the same becomes due and payable, and such default shall continue for a period of thirty (30) days after notice thereof in writing has been sent by the Lessor, or by his agent or attorney, by registered mail to the Lessee in the manner hereinafter provided for, or if the Lessee shall fail for a period of thirty (30) days (except as otherwise hereinafter provided) after written notice of the alleged default has been sent by the Lessor to the Lessee by registered mail, as hereinafter provided for, to perform any of the other covenants of this lease by it to be kept or performed, then and in any of the said cases the Lessor lawfully may, immediately or at any time thereafter and without further notice or demand (except as hereinafter otherwise provided) enter into and upon the said premises or any part thereof and repossess the same as of his former estate and expel the Lessee and those claiming by, through or under the Lessee, and remove the Lessee's effects (forcibly, if necessary) without being taken or deemed guilty of any manner of trespass and without prejudice to any remedies which might otherwise be used for arrears of rent or preceding breach of covenant, and upon entry as aforesaid this lease shall be determined. The Lessor covenants that he will not bring or take any action or proceeding for possession of said demised premises or to terminate this lease unless and until the periods of grace in this lease provided have expired and the default or defaults shall be then continuing." (Italics supplied.)
The lessor (Ulin) assigned to the plaintiff (Kennedy) on March 3, 1932, all his right, title, and interest in and to the indenture of lease, in which assignment he stated: "Meaning and intending to include in this assignment all rights heretofore accrued or hereafter to accrue pursuant to the provisions of said lease, including, but without limiting the generality of the foregoing, the right to receive and collect all rentals and other payments provided to be paid by the Lessee, which payments are in default, all rights under written notices sent by said Ulin to said Lessee under date of January 8, 1932, * * * all rights, if any, which said Ulin may have to terminate said lease by reason of the default of the Lessee in the performance of the terms, covenants and conditions of said lease on the part of said Lessee to be kept, performed and observed, all rights, if any, to receive and collect rental and other payments hereafter accruing and hereafter to be paid pursuant to the provisions of said lease, and all rights, if any, to receive and collect damages by reason of the defaults, if any, in the performance by the Lessee of the terms, covenants and conditions of said lease on the part of the Lessee to be kept, performed and observed."
At the argument the parties waived their claims of error with reference to counts 1, 2, 3, 6, and 7. So nothing remains to be considered as to them.
As to count 4 the plaintiff contends that the court erred in not allowing him the expense and damage that would be incurred in removing the vaults, which the defendant bank had installed on the premises under the provisions of the lease and which were left there.
Under count 5 it is the plaintiff's contention that the court erred in deducting from the excess found to exist between the fair rental value and the rent reserved, a discount of 5 per cent.; and the defendants' contention is that it erred in allowing the plaintiff any damages under this count.
The plaintiff contends that the court erred in disallowing claim 9, both as to the construction of the covenant therein relied upon and as to the admission of certain evidence relating to it.
The plaintiff also contends that the court erred in allowing as a set-off against his claims the three notes of Harris Ulin in the amount of $22,638.82.
The questions to be considered are those relating to counts 4, 5, 9, and the set-off.
George B. Rowlings, of Boston, Mass. (Tyler, Eames, Wright Reynolds, Charles A. Rome, Lewis H. Weinstein, and Joseph Sugarman, all of Boston, Mass., on the brief), for Kennedy and Ulin.
Murray F. Hall and Donald J. Hurley, both of Boston, Mass. (Goodwin, Procter Hoar, of Boston, Mass., on the brief), for Boston-Continental Nat. Bank and Deitrick, receiver.
Before BINGHAM, WILSON, and MORTON, Circuit Judges.
The matters to which the parties have chiefly addressed themselves relate to count 5, in which the plaintiff seeks to recover liquidated damages under a covenant of the lease wherein the lessee covenants to pay the lessor, upon the termination of the lease, the excess of the rent reserved over the fair rental value of the premises for the residue of the term. Under this count the District Court allowed the plaintiff to recover $56,580.70, which is said to be the excess of the rent reserved over the fair rental value from the termination of the lease, about August 31, 1932, to February 1, 1945, less five per cent.
It would seem that the court, in allowing this sum as liquidated damages, must have considered that the liability of the lessee bank became fixed and the sum of $56,580.70 due and owing to the plaintiff on December 17, 1931, the date the bank was declared insolvent by the Comptroller, if there was to be a ratable distribution of the bank's assets among its creditors. After pointing out that the liquidation of a national bank is a statutory proceeding, not one in equity, and, on its being declared insolvent, required a ratable distribution of its assets among its creditors, it stated its view of the law to be that "in adjudicating a claim against the receiver of a national bank the true rule to be applied to the claim of a lessor under a written lease * * * is as follows: If the claim is grounded on a liability absolutely and unconditionally fixed at the time of insolvency, and capable of being determined as to amount when the claim is presented, it may be allowed if seasonably presented." But in applying the rule to the facts of this case the court proceeded on the theory that, under the covenant for liquidated damages, upon the termination of the lease by notice and entry, as therein provided, the liability of the lessee under that covenant became absolutely and unconditionally fixed and the liquidated damages due and owing on the date of insolvency, or as early as December 1, 1931, when the breach of the covenant to pay rent was broken, even though the termination of the lease by notice and entry, upon which the liability was to arise and become fixed, did not take place until long after December 17, 1931. In other words, although the lease, in unequivocal terms, gave the lessor the option, on the breach of the covenant to pay the rent, to determine the lease by a written demand for the payment of the defaulted rent, and, in case it was not paid within thirty days thereafter, to exercise his option by entering upon the leased premises and terminating the lease (all of which acts took place subsequent to December 17, 1931), that the exercise of the option by entry and termination of the lease was not a condition to the creation and fixing of the lessee's liability on the covenant for liquidated damages, and the covenant became operative and the liability of the lessee absolutely fixed on or before December 17, when the lessee-bank was declared insolvent.
If this is what the rule, as stated and applied by the court, means, we cannot accede to it.
By the terms of the lease, its termination by written demand, notice, and entry (the lessee's default still continuing) was a condition precedent to the lessee's liability under the covenant to pay liquidated damages, and until the acts terminating the lease were had and the lease terminated, the lessee's liability under that covenant did not arise and become fixed, and, as these acts and the consequent termination of the lease took place after the declaration of insolvency (December 17, 1931), no liability of the lessee to pay liquidated damages can be said to have arisen and become fixed on or before that date.
The authorities are numerous in the Supreme Court and in the Circuit Courts of Appeal that, to establish a claim against an insolvent national bank in receivership, the liability of the bank (here the lessee) must have accrued and become unconditionally fixed on or before the time it is declared insolvent. Cook County National Bank v. United States, 107 U.S. 445, 2 S.Ct. 561, 27 L.Ed. 537; Scott v. Deweese, 181 U.S. 202, 21 S.Ct. 585, 45 L.Ed. 822; Murray v. Sill (C.C.A.) 7 F.2d 589; Dakin v. Bayly, 290 U.S. 143, 54 S.Ct. 113, 78 L.Ed. 229, 90 A.L.R. 999; Scott v. Armstrong, 146 U.S. 499, 13 S.Ct. 148, 36 L.Ed. 1059; Merrill v. National Bank of Jacksonville, 173 U.S. 131, 19 S.Ct. 360, 43 L.Ed. 640; Chemical National Bank v. Armstrong (C.C.A.) 59 F. 372, 28 L.R.A. 231; Kershaw v. Jenkins (C.C.A.) 71 F.2d 647; American National Bank v. Williams (C.C.A.) 101 F. 943; Citizens' Bank Trust Company v. Thornton et al. (C.C.A.) 174 F. 752; American Surety Company v. De Carle (C.C.A.) 25 F.2d 18; Steele v. Randall (C.C.A.) 19 F.2d 40; Miller v. Irving Trust Company, 296 U.S. 256, 56 S.Ct. 189, 80 L.Ed. 211.
The amount of the claim may be later established, but, when established, it must be the amount due and owing at the time of the declaration of insolvency, as of which time it is entitled, with the claims of the other creditors, to a ratable distribution of the assets of the bank. If nothing is due at the time of insolvency, the claim should not be allowed, for that would be in violation of the National Bank Act ( 12 U.S.C.A. § 194) calling for a ratable distribution.
In Manhattan Properties v. Irving Trust Company, 291 U.S. 320, 337, 338, 54 S.Ct. 385, 389, 78 L.Ed. 824, the court, in construing the covenants in two leases conditioned on re-entry and termination of the leases, said: "In both cases the lessor has the choice whether he will terminate the lease. * * * And upon the exercise of the option by the landlord, a new contract, distinct from that involved in the original letting, becomes operative. While there is some color for the claim that bankruptcy is an anticipatory breach of the lease contract, entailing a damage claim against the estate, this cannot be true as respects these independent covenants of indemnity. For here, the landlord does not rely upon the destruction of his contract by the bankruptcy; he initiates a new contract of indemnity by the affirmative step of re-entry. And this new contract comes into being not by virtue of the bankruptcy proceeding, but by force of the act of re-entry, which must occur at a date subsequent to the filing of the petition." (Italics supplied.)
No more was there here an anticipatory breach of the covenant to pay liquidated damages as that covenant did not become operative until after termination of the lease by entry, which was subsequent to the declaration of insolvency. Had the lease contained a covenant that insolvency shall be a breach of the lease and thereupon, without any further action by the lessor, the lease shall terminate and the lessor be entitled forthwith to damages measured, as provided in the covenant of the lease for liquidated damages, then, on the declaration of insolvency, no doubt a claim would arise and be matured by the agreement for liquidated damages, as indicated in Manhattan Properties v. Irving Trust Co., supra, at the bottom of page 338 of 291 U.S., at page 389 of 54 S.Ct., 78 L.Ed. 824, and as was held in Irving Trust Co. v. A.W. Perry, Inc., 293 U.S. 307, 308, 55 S.Ct. 150, 79 L.Ed. 379, so that the claim would be provable in bankruptcy. But that is not this case. There is no such covenant or agreement in this lease. In the Manhattan Case, a case in bankruptcy, the time of filing the petition was the crucial time on or before which the liability of the lessee had to arise and become unconditionally fixed, while under the National Banking Act that time, as construed by the courts, is the declaration of insolvency. The question whether the liability of a lessee in any given case has become unconditionally fixed depends upon the construction and meaning of the particular covenant called in question and the attendant circumstances; and this is so whether it is a case arising under the Bankruptcy Act (11 U.S.C.A. § 1 et seq.) or the National Bank Act ( 12 U.S.C.A. § 21 et seq.).
This claim (count 5) should not have been allowed.
As to the 4th count in which the District Court allowed the plaintiff to recover $2,436 for the alleged breach of the covenant of the lessee to maintain and leave the premises in good repair, the liability with which it is sought to charge the lessee bank did not arise and become fixed on or before the time it was declared insolvent, but long afterwards, when the receiver removed the counters, grills and other fixtures attached to the premises.
Furthermore this claim should not be allowed as a breach of covenant by the lessee bank. It had nothing to do with the removal of the fixtures. The damage was chargeable to the receiver as an expense of administration, and should be so accounted for. He apparently removed them after the termination of the lease.
But the failure to remove the iron vaults, the cost of doing which is estimated at $4,500, cannot be regarded even as an expense of administration. Indeed it would seem that the vaults, under the terms of the lease, as the District Court found, had become and were the property of the lessor which neither the lessee nor the receiver had the right to remove and appropriate as assets of the insolvent bank.
This claim was improperly allowed as based on this covenant.
The 9th count is based on the covenant of the lease wherein the lessee "covenants and agrees to carry, during the term thereof rent insurance in a sum sufficient to indemnify said lessor against loss of rent (including taxes and like charges) hereunder." By the terms of the lease taxes not paid when due become chargeable as rent.
In this count the plaintiff further alleged that the lessee had "never carried rent insurance required by its covenant and agreement." The plaintiff failed, however, to set forth wherein he was damaged by the alleged failure or in what amount. It is certain that he should not be allowed to include as damages under this count the rent and taxes that had accrued and become due on or before December 17, 1931, for the rent and taxes then due have been claimed and allowed under counts 1 and 2. No other rents or taxes were due and owing on or before December 17, 1931, and the only rents, or taxes as rents, that he could claim as damages would be those accruing and becoming due between January 1, 1932, and August 31, 1932, for the lease was terminated on or about that time.
The receiver occupied the premises from January 1 to the termination of the lease and is liable for the value of the use and occupation of them, a sum that may or may not equal or exceed the rents. On December 17, 1931, it was contingent and uncertain whether the plaintiff would suffer any loss from the lessee's failure to pay rent from January 1, 1932, to August 1, 1932. The taxes for 1932 had not then (December 17, 1931) accrued and become due and did not accrue or become due until October 3, 1932, after the lease had terminated, and it was not ascertainable on December 17 what the taxes would be or that there would be any taxes for the lessee to pay, as the lessor might and did terminate the lease before the 1932 taxes became due.
The covenant at best was an indemnity covenant, for the amount recoverable under it was not capable of determination on or before December 17, 1931, the date of insolvency, and could not be completely ascertained until some time after the lease ended. See Manhattan Properties v. Irving Trust Co., supra.
The District Court did not err in refusing to sustain this count, whether the reasons it gave were correct or not.
The allowance of the notes as a set-off was proper.
The judgment of the District Court is vacated and the case is remanded to that court for further proceedings not inconsistent with this opinion, with costs to the defendants, appellants.
The allowance of the claim for damages on the lease depends on whether the equity rule, or the bankruptcy rule as to provability should be followed. If the former, the claim is provable under Filene's Sons Co. v. Weed, 245 U.S. 597, 38 S.Ct. 211, 62 L.Ed. 497, a Massachusetts case on indistinguishable facts; if the latter, Manhattan Properties v. Irving Trust Co., 291 U.S. 320, 54 S.Ct. 385, 78 L.Ed. 824, and Irving Trust Co. v. Perry, 293 U.S. 307, 55 S.Ct. 150, 79 L.Ed. 379, show that it is not.
I think the decisions of the Supreme Court compel us to follow the equity rule. The upshot of those decisions is that the Banking Act provides a complete statutory system for the liquidation of insolvent national banks; and that the act will be construed and administered on equitable principles. Cook County National Bank v. United States, 107 U.S. 445, at page 448, 2 S.Ct. 561, 27 L.Ed. 537; Scott v. Armstrong, 146 U.S. 499, 13 S.Ct. 148, 36 L.Ed. 1059; Davis v. Elmira Savings Bank, 161 U.S. 275, 16 S.Ct. 502, 40 L.Ed. 700; Merrill v. National Bank of Jacksonville, 173 U.S. 131, 19 S.Ct. 360, 43 L.Ed. 640. In the case last cited it is said in the opinion, "Does the legislation in respect to the administration of national banks require the application of the bankruptcy rule? If not, we are of opinion that the equity rule was properly applied in this case." Fuller, C.J., 173 U.S. 131, at page 142, 19 S.Ct. 360, 365, 43 L.Ed. 640. On full discussion of the authorities and the statutes which appear to be substantially the same in this particular as those now in force, the question was answered in the negative, and it was held that the bankruptcy rule as to secured claims would not be followed in liquidations of national banks. In Chemical National Bank v. Hartford Deposit Co., 161 U.S. 1, 16 S.Ct. 439, 40 L.Ed. 595, on facts which appear to be no stronger for the lessor, to say the least, than those in the present case, a claim on lease against a failed national bank was held allowable. That the case came up from the state courts cannot in view of the Filene Case, I think, have affected the result. I do not find in the generalized statements in some of the later decisions with reference to the time when rights of parties became fixed with reference to set-off (see Dakin v. Bayly, 290 U.S. 143, 148, 54 S.Ct. 113, 78 L.Ed. 229, 90 A.L.R. 999), an intention to modify or overrule the line of cases just referred to or the principle on which they rest. If the bankruptcy rule is not to be applied in Banking Act cases with respect to security held on claims proved, I am unable to see on what principle it can be applied to questions of provability in such cases; as I have said, if provability is to be determined by the equity rule, the Filene Case controls the one before us. Of course the rule as to provability ought to be the same whether the liquidation is in equity, in bankruptcy, or under the Banking Act; but it is not, and it is beyond our province to make it so. The claim seems to me to be allowable.
In other respects I concur in the majority opinion.