The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918. Page: 986
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250 FEDERAL REPORTER
"All assignments, in whole or in part, of any indebtedness secured by
mortgage, deed of trust, or other lien of record, shall be entered on the mar-
gin of the record of the lien within thirty days from the day of said assign-
ment, or said assignment shall he acknowledged and filed for record within
said time, and if the assignee of said indebtedness shall fail to comply with
the provisions of this section, he shall forfeit to the debtor ten per cent. of the
amount of said indebtedness."
The deed to Bankston retained a lien upon the real estate sold to
secure the notes. This deed the grantee caused to be recorded. The
transfer of the notes to Wilson was not entered upon the margin of the
record, nor was the transfer of the notes to the plaintiff so entered.
On December 6, 1915, the plaintiff filed for record an assignment of the
lien, dated December 4, 1915. When sued upon the notes, the defend-
ant Bankston filed a cross-bill, asking for judgment against plaintiff
for $1,534 68, an amount claimed to have been forfeited to him as 10
per cent. of the indebtedness, for failure to enter the transfer within
If there are any circumstances under which this forfeiture could
be enforced against the plaintiff, it would be by suit at law. It is sug-
gested that equity rules 23 and 30 (198 Fed. xxiv, xxvi, 115 C. C. A.
xxiv, xxvi) authorize the counterclaim and cross-bill. Rule 23 is to
"If, in a suit in equity, a matter ordinarily determinable at law arises, such
matter shall be determined in that suit according to the principles applicable,
without sending the case or question to the law side of the court."
Equity rule 30 provides:
"The answer must state, in short and simple form, any counterclaim arising
out of the transaction which is the subject-matter of the suit, and may,
without cross-bill, set out any set-off or counterclaim against the plaintiff
which may be the subject-matter of an independent suit in equity against him."
To authorize the counterclaim it must either (1) arise out of the
transaction which is the subject-matter of the suit; or (2) be a claim
which might be the subject-matter of an independent suit in equity.
The claim does not arise out of the transaction which is the subject-
matter of the suit, and it could not be the subject-matter of an mde-
pendent suit in equity. The suit against the defendant was based upon
promissory notes executed by him, given for the purchase price of and
secured by a lien on real estate in Mississippi. If a valid clairh of any
kind has arisen against the plaintiff, it does not arise out of that trans-
action, but is the result of a failure on its part, more than a year after
the execution of the notes, and several weeks after its acquisition of
them in Tennessee, to do something in the state of Mississippi, which
failure the law of that state undertakes to make the basis of a forfei-
ture, but which does not affect the rights of the holders of the notes to
recover. The only relationship of the forfeiture to the debt is that the
debt furnishes the measure of the forfeiture. According to the terms
of the statute, a forfeiture may accrue against every assignee of the
note, and may be collected, notwithstanding the person incurring the
forfeiture may no longer own the indebtedness.
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The Federal Reporter with Key-Number Annotations, Volume 250: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States, August-October, 1918., legislative document, 1918; Saint Paul, Minnesota. (digital.library.unt.edu/ark:/67531/metadc38821/m1/1001/: accessed June 25, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.