No. 1860 | E.D. La. | Apr 24, 1914
Notwithstanding the high regard I have for the opinion of Judge Wortham, I am constrained to differ with him. In the Hiscock Case, supra, certain insurance policies were pledged to the- bank, and the court found the bank had both title to and possession of the policies for more than two years before the filing of the petition. Naturally it declined to interfere with their sale under the provisions of a valid pledge. The same rule prevails where a state court has obtained jurisdiction by virtue of a seizure predicated upon a valid lien or hypothecation prior to the vesting of jurisdiction in the federal court. But in this case both the title to and possession of the property were in the bankrupt at the moment the petition for bankruptcy was filed, and the bankrupt could hold it for the purpose of maintaining jurisdiction of the bankruptcy court as well as a receiver or the trustee. Whitney v. Wenman, 198 U.S. 539" court="SCOTUS" date_filed="1905-05-29" href="https://app.midpage.ai/document/whitney-v-wenman-96319?utm_source=webapp" opinion_id="96319">198 U. S. 539, 25 Sup. Ct. 778, 49 L. Ed. 1157" court="SCOTUS" date_filed="1905-05-29" href="https://app.midpage.ai/document/whitney-v-wenman-96319?utm_source=webapp" opinion_id="96319">49 L. Ed. 1157.
The question here presented is one of jurisdiction and not of title, and undoubtedly the jurisdiction of this court vested with the filing of the petition for bankruptcy. In Mueller v. Nugent, 184 U. S. 14, 22 Sup. Ct. 275, 46 L. Ed. 405" court="SCOTUS" date_filed="1902-01-20" href="https://app.midpage.ai/document/mueller-v-nugent-95574?utm_source=webapp" opinion_id="95574">46 L. Ed. 405, the court said:
“It is as true of the present law as it was of. that of 1867 that the filing of the petition is a caveat to all the world, and in effect an attachment and injunction.”
This doctrine has been repeatedly affirmed by the Supreme Court, with some differentiation at times it is true, according to the facts of the particular case; but the rule has always been applied to a state of facts such as are here presented. In Acme Harvester Co. v. Beekman Lumber Co., 222 U. S. 306, 32 Sup. Ct. 99, 56 L. Ed. 208" court="SCOTUS" date_filed="1912-01-09" href="https://app.midpage.ai/document/acme-harvester-co-v-beekman-lumber-co-97500?utm_source=webapp" opinion_id="97500">56 L. Ed. 208, the court said:
“Whatever may be the limitations of the doctrine declared by this court, speaking by the late Chief Justice Fuller, in Mueller v. Nugent, * * * it is none the less certain that an attachment of the bankrupt’s property after the filing of the petition and before adjudication cannot operate to remove the bankrupt’s estate from the jurisdiction of the bankruptcy court for the purpose of administration under the act of Congress. * * * The filing of the petition is an assertion of jurisdiction with a view to the determination of the status of the bankrupt and a settlement and distribution of his estate. The exclusive jurisdiction of the bankruptcy court is so far in rem that the estate is regarded as in custodia legis from the filing of the petition. It is true that under paragraph 70a of the act of 1898 the trustee of the estate, on his appointment and qualification, .is vested by operation of the law with the title of the bankrupt as of the' date he was adjudicated a bankrupt; but there are many provisions of the law which show its purpose to hold the property of the bankrupt intact from the time of the filing of the petition, in order that it may be administered under the law if an adjudication in bankruptcy shall follow the beginning of the proceedings.”
As a matter of strict interpretation, under the bankruptcy law it would be immaterial whether the petition to foreclose was filed in the state court before or after the filing of the petition for bankruptcy, as the jurisdiction of the federal court is essentially exclusive. See In re Watts & Sachs, 190 U. S. 27, 23 Sup. Ct. 718, 47 L. Ed. 933" court="SCOTUS" date_filed="1903-05-18" href="https://app.midpage.ai/document/in-re-watts-and-sachs-95879?utm_source=webapp" opinion_id="95879">47 L. Ed. 933. But in the exercise of that comity that is always observed by courts it is not likely that the jurisdiction of the state court would be disturbed in the matter of a foreclosure of a mortgage if it had in fact attached first, for the trustee is not bound to take possession of mortgaged property, unless it is for the benefit of all the creditors, and it makes little difference which court shall sell it and administer the-proceeds. I have had occasion several times to grant permission to mortgage creditors to foreclose in the state court where the trustee offered no objection, and in the matter of McLoughlin, Trustee, v. Knop, Civil Sheriff, 214 F. 260" court="E.D. La." date_filed="1913-04-25" href="https://app.midpage.ai/document/mcloughlin-v-knop-8792276?utm_source=webapp" opinion_id="8792276">214 Fed. 260, No. 14,662 of the docket of this court, a matter growing out of the bankruptcy of James J. Woulfe, where it appeared the petition to foreclose was filed in the state court before the adjudication in bankruptcy, and the order of seizure and sale was not executed until after the adjudication, I held that, as ex-ecutory process was in the nature of an equitable levy, the jurisdiction of the state court attached with the filing of the petition, and the application of the trustee for an injunction was dismissed. In this case the Twenty-Seventh Judicial District Court was entirely without jurisdiction of the res, and the order of sale is necessarily void.
The injunction will issue as prayed for.