the bankruptcy, until the final distribution and settlement of the estate of the bankrupt, and the close of the proceedings in bankruptcy." The bill in the present case could come within either of these subdivisions. It is a suit to collect "the assets of the bankrupt," and it has direct reference to "acts, matters, and things to be done under and in virtue of the bankruptcy, until the final distribution and settlement of the estate of the bankrupt," etc. The bill seeks to stamp certain personal property as trust funds. This trust fund, it is claimed, is part of the assets of the firm of Schoenfeld, Cohen & Co., or the proceeds or profits thereof, of which Harris Lewis has been adjudged, by the solemn decree of this court, to be trustee for the benefit of the assignee of the bankrupt firm and of its creditors. Nor did the repeal of the bankrupt act impair or take away the right to institute these proceedings. Suits of this character were expressly saved and authorized by the act to repeal the bankrupt law (Act June 7, 1878; 20 Stat. p. 99).

The third objection, viz. that the complainant has an adequate remedy at law, is answered by the fact that the bill seeks a discovery, a subject peculiarly of equitable cognizance. Moreover, it is sought to impress a trust character on certain personal property, and this alone would give the court jurisdiction as a court of equity. Oelrichs v. Spain, 15 Wall. 211, 228. Furthermore, the complainant holds the equitable title to the assets of the firm for the ben fit of the creditors thereof, and this suit seeks to reach property claimed to constitute such assets.

The fourth objection, viz. that the court has not jurisdiction over the respondents, is important in so far as the absence of the Puget Sound National Bank of Seattle, the pretended assignee, may be deemed fatal to any further proceedings against the remaining respondents. This is really the only question of any serious moment in the case, and, for the sake of convenience, it will be considered further on in connection with the objections urged by the insurance companies to the jurisdiction of the court because of a defect of parties.

The last objection presented by counsel for Lewis and Davids is that the complainant has been guilty of laches. Section 5057 of the Revised Statutes is cited. It provides:

"That no suit, either at law or in equity, shall be maintainable in any court between an assignee in bankruptcy, and a person claiming an adverse interest, touching any property or rights of property transferable to or vested in such assignee, unless brought within two years from the time when the cause of action accrues for or against such assignee."

There is, however, a well-settled qualification to this rule, viz. that, where there has been fraud in concealing the cause of action, the right to sue runs only from the date of the discovery of the fraud, or, what is held to be the equivalent of knowledge, being in possession of facts which ought to put a reasonable man on inquiry. As was said in Yancy v. Cothran, 32 Fed. 687, 689, in interpreting the above section:

"The courts have, however, ingrafted on this act the recognized rule, as to statutes of limitation, that if the facts on which any right of action is based

have been fraudulently concealed by the parties in interest, or if the fraud is of such character as conceals itself, the statute will only commence to run from the date of the discovery of the fraud, or of such information as, if diligently followed up, would discover it."

The following cases are cited to sustain this proposition: Carr v. Hilton, 1 Curt. 390, Fed. Cas. No. 2,437; Bailey v. Glover, 21 Wall. 342; Upton v. McLaughlin, 105 U. S. 640; Rosenthal v. Walker, 111 U. S. 185, 4 Sup. Ct. 382. See, also, Martin v. Smith, 1 Dill. 85, 102, Fed. Cas. No. 9,164; Cook v. Sherman, 20 Fed. 168.

The complainant asserts in his bill that the fraudulent concealment by Harris Lewis of the assets of the bankrupt firm, or of their proceeds, was not discovered until three months previous to the oringing of this action. He therefore brings himself within the limitation of the rule referred to, and the court, for the purposes of this motion, must so consider it.

We now recur to the fourth objection, presented by Lewis and Davids, which is substantially the same as that raised by the insurance companies, viz. the defect of a necessary party,-the Puget Sound National Bank of Seattle. It is claimed that Davids & Co. has assigned said policies of insurance to the Puget Sound National Bank for a consideration; that such assignments were made in the months of November and December, 1894; that, as this court has not jurisdiction of the assignee, no order made in this proceeding will be binding on said assignee, or in any wise protect these respondents, or any of them, from the demand of said assignee under said assignment. It is further claimed, as to two of the respondent insurance companies,-the Royal Exchange Assurance Company and the Home Insurance Company,-that the moneys in their hands due to said Davids & Co., or their assigns, and the debt due and owing from it to said Davids & Co. under their polices of insurance, in said order to show cause mentioned, were, in the state of Washington, attached by writ of attachment duly issued out of the superior court of the state of Washington, county of King, in a suit pending in said court, wherein the United States Clothing Company was plaintiff, and Davids & Co. were defendants; the said writ being intended for the purpose of securing to the United States Clothing Company payment to it of a demand by it made and asserted against said Davids & Co. It is claimed that the United States Clothing Company is an indispensable party, and that because it is a resident of another state, and not amenable to the process of this court, it cannot be made a party unless it should appear voluntarily. With respect to this claim, it is sufficient to say that it does not appear how funds in the possession of the companies in San Francisco could be attached by the service of a notice of garnishment on the agent of the companies at Seattle. If, as is alleged in the bill, the funds out of which such insurance moneys are to be paid is within the jurisdiction of the court, it has plenary power to enjoin the payment thereof, and preserve the fund intact until the rights of the respective parties have been adjudicated upon. The further contention is also made that, since the policies of insurance are made out

in favor of Davids & Co., and the assignment, if such was in fact made, was in the name of that firm, this court cannot proceed against the firm, for the reason that it is a resident of and does business in, another district. On the other hand, it is claimed that if said policies were really not for the benefit of Davids & Co., but for the benefit of Harris Lewis, the policies are void, the contract of insurance being a personal one. With reference to this alternative contention, it would seem to be met squarely by the averments in the bill that the use of the firm name and style of Davids & Co. was part of the fraudulent scheme to conceal from the assignee the true character of the assets and trust funds then being utilized by Lewis for his own benefit and gain, and was done for the express purpose of defrauding said assignee and the creditors. The mere fact that the policies were made out in the name of Davids & Co. must be treated, therefore, as immaterial. If the facts set out in the bill be true, the style of Davids & Co. was intended simply as the firm name. The insurance companies intended to and did insure Davids & Co., of which Harris Lewis, as alleged, was the real and sole owner. The whole question resolves itself into this proposition: Are the averments of fraud as to the colorable and pretended assignment to the Puget Sound National Bank sufficient to justify this court in proceeding further with the case, and, during its pendency, to grant the injunction prayed for, in the absence of that corporation? It may be conceded that, if there were no allegations of fraud as to this assignment, the court would decline to proceed without the presence of the assignee of these policies, and would treat such assignee as an indispensable party. But the court cannot, at this stage of the proceedings, ignore the allegations contained in the bill. For the purposes of this motion, the facts therein set forth must be taken as true. Minnesota Co. v. St. Paul Co., 2 Wall. 609, 632. The best criterion as to the merit of the allegations in the bill is to consider what the course of the court probably would be, assuming that such a state of facts as is alleged were proved. Would the court permit itself to be imposed on by colorable and fictitious assignments? Would it allow parties, by fraud or collusion, to deprive it of its jurisdiction, to the detriment of its own citizens seeking to enforce their rights in their own forum? Would it suffer itself to be ousted of its jurisdiction by reason of the nonresidence of the transferees, to whom the transfer had been fraudulently made for the purpose of depriving the court of its cognizance over the case, the real title remaining all the time in the original owner, who is subject to the jurisdiction of the court? Unquestionably not. Bank v. Stafford, 12 How. 327; Banking Co. v. Stafford, Id. 343; Ward v. Arredondo, 1 Paine, 410;1 Bank v. Cooper, 120 U. S. 778, 7 Sup. Ct. 777; Fost. Fed. Pr. pp. 102, 103, §§ 54, 59. A court, and particularly a court of equity, will look through the mere surface and form of the transaction, and scrutinize closely the merits and substance. If the allegations of the bill be true, the Puget

1 Fed. Cas. No. 17,148.

Sound National Bank is not a party to this suit. The truth of the allegations in this regard involves the jurisdictional question. The court must proceed far enough into the merits of the case to enable it to decide that question. Ward v. Arredondo, supra. And, until it can do so, it is a matter of the very first importance to the complainant that the property or fund in dispute should be kept inviolate and in statu quo. Otherwise, if he should finally be held entitled to recover, any diversion or diminution of the fund might be to his irreparable injury, as alleged in the bill. In Great Western Ry. Co. v. Birmingham & O. J. R. Co., 2 Phil. Ch. 602, Lord Cottenham said:

"It is certain that the court will, in many cases, interfere and preserve property in statu quo during the pendency of the suit in which the rights are to be decided, and that without expressing, and often without having the means of forming, any opinion as to such rights. It is true, the court

will not so interfere if it thinks that there is no real question between the parties; but, seeing that there is a substantial question to be decided, it will preserve the property until such question can be regularly disposed of.”

See, also, Glascott v. Lang, 3 Mylne & C. 455,

The court must accept the averments of the bill as true until the contrary is established. As they appear, they are sufficient to justify the continuance of the restraining order. The objections to the bill and order are, therefore, overruled. and the further hearing of the order continued.

SHAINWALD v. DAVIDS et al.

(District Court, N. D. California.
No. 262.

1. PRACTICE-SUBSTITUTED SERVICE.

August 29, 1895.)

A party to a suit which, as to him, is an original proceeding, cannot be brought before the court, in a jurisdiction foreign to his residence, by substituted service of process upon a law firm retained by him to represent him in case it should be necessary for him to appear voluntarily, but who are not his general agents or representatives. & PRACTICE.

Substituted service cannot be made upon a law firm retained to represent a nonresident party, but who are not his general agents or representatives.

Bill in equity. Motion to set aside substituted service on the Puget Sound National Bank of Seattle, state of Washington. Motion granted.

Rothchild & Ach, for the Puget Sound National Bank.

James L. Crittenden (M. T. Moses and S. M. Van Wyck, Jr., of counsel), for complainant.

MORROW, District Judge. By the amended bill in equity, filed April 22, 1895, the Puget Sound National Bank of Seattle, Wash., was formally made a party, being substituted for John Doe. It being a nonresident of this district, it was sought to bring it be

fore the court by substituting the service of the alias subpoena on Messrs. Rothchild & Ach, a law firm of the city of San Francisco. The order for this substituted service was made upon the affidavit of one Robert Levy, who deposed that Messrs. Rothchild & Ach had been retained by the Puget Sound National Bank to represent them in this controversy. Rothchild & Ach have appeared specially, and move to set aside the service made on them for and in behalf of the bank, on the ground that the court was without jurisdiction to enter such an order, and that such service was illegal, invalid, and improper. The question presented for decision by this motion is whether the court can bring the Puget Sound National Bank, of the state of Washington, before it by substituting service of the alias subpoena on a law firm of this city, alleged to have been retained by the bank to represent it in this suit. While resort may be had to substituted service, in order to compel parties to appear before the court, through some legal and acknowledged representative, yet this is done only in exceptional cases. The practice itself is now well settled, but its use has been confined, as a general rule, to cases where the defendant has absconded to escape service, or has concealed himself, or cannot be found, or has a legal and acknowledged general agent or representative within the jurisdiction of the court; also, upon bills to restrain actions at law, or to reform instruments which are the basis of actions at law, or, under certain circumstances, upon cross bills. In the three last instances, service upon the attorneys who appeared for the parties in the actions at law, or, in the case of a cross bill, who appeared for the complainant in the original bill, is held to be sufficient for all purposes to bring the party before the court. The following authorities, English and American, establish the general proposition: Sergison v. Beavan, 9 Hare, Append. 29; marg., 16 Jur. 1111, Stewart, V. C.; Hope v. Hope, 4 De Gex, M. & G. 328; Hobhouse v. Courtney, 12 Sim. 140, 6 Jur. 28; Webb v. Salmon, 3 Hare, 251, 255; Cooper v. Wood, 5 Beav. 391; Weymouth v. Lambert, 3 Beav. 333; Pulteney v. Shelton, 5 Ves. 147; Hunt v. Lever, 5 Ves. 14; Baker v. Holmes, 1 Dickens, 18; Thomson v. Jones, 8 Ves. 141; Carter v. De Brune, 1 Dickens, 39; Hyde v. Forster, 1 Dickens, 102; Lady Carrington v. Cantillon, Bunb. 107; Dunn v. Clarke, 8 Pet. 1; Logan v. Patrick, 5 Cranch, 288; Herndon v. Ridgway, 17 How. 424; Rubber Co. v. Goodyear, 9 Wall. 807; Hitner v. Suckley, 2 Wash. C. C. 465, Fed. Cas. No. 6,543; Eckert v. Bauert, 4 Wash. C. C. 370, Fed. Cas. No. 4,266; Ward v. Seabry, 4 Wash. C. C. 426, Fed. Cas. No. 17,161; Shainwald v. Lewis, 5 Fed. 517; Id., 6 Sawy. 585; Bowen v. Christian, 16 Fed. 729; Bartlett v. Sultan of Turkey, 19 Fed. 346; Fidelity Trust & Safety Vault Co. v. Mobile St. Ry. Co., 53 Fed. 850; Abraham v. Insurance Co., 37 Fed. 731. I have been referred to no authority which lays down the proposition that a party who is a nonresident, and who does not come within any of the classes above referred to, and who has no regularly constituted and acknowledged agent within the district where suit is brought, can be effectually and legally served with process of subpoena by substitution. The Puget Sound Na