23 F. 482 | W.D. Va. | 1885
Tlie proceeding in bankruptcy of George W. Anderson was commenced on the twenty-ninth December, 1868, and the adjudication was made on the twenty-sixth January, 1869. The petition was filed at Richmond, in the district court for Virginia, when the state constituted but one judicial district. The proceeding went on at Richmond until the sixteenth June, 1881, when, under the act of congress approved on the third of February, 1871, providing for the division of the state into two judicial districts, it was removed into this, the Western, district of Virginia. The proceeding remained at Richmond 10 years after it could have been removed here. While at Richmond most of the proceedings in it were had under my supervision as district judge there. After it was removed, it came again, in consequence of the resignation of Judge Rives, under my direction during the period of about 13 months, when I was performing the duties of judge here. It is now before the court on petitions for a review of my decrees rendered here and at Richmond, and as such has come to mo along with several other cases which were in my hands when my brother, the Hon. John Paul, became judge in this district.
Whatever interest George W. Anderson had in the larger, or eleven hundred acre, tract,, is also liable to the liens of his lien creditors. Whether his interest was in fee-simple or for life is a question of law subject to the decision of this court in this proceeding. It could be adjudicated nowhere else in a manner to bind this court or the property itself. Sarah J. Anderson claims that the eleven hundred acre home tract came to her as her interest in her father’s estate, and is her own property. She claims this by petition and by amended petition presented to this court in this bankruptcy proceeding. She claims that the liens of the lien creditors of George W. Anderson affect only the life-estate of George W. Anderson in this tract, and that they do not affect her own title in it. This is a question between herself and George W. Anderson’s assignee in bankruptcy. She has come voluntarily into this court by next friend, and asks the court so to decree. She claims only a contingent dower interest in the tract of 335 acres, and submits her.rights in that tract to the adjudication of this court in this proceeding.
In order to a full comprehension of the questions which have arisen •in this case, I will recapitulate, with some fullness of detail, the facts that characterize it. Sarah J. Anderson, wife of the bankrupt, was one of six children left by Jacob Kent, who died intestate in 1858, leaving large real and personal estate. The other co-heirs had received greater or less portions of the estate during their father’s lifetime. In the division and distribution of the estate, it was found that the home farm was nearly equivalent to the interest of one of the heirs and distributees. It was desired by the family that some one of the heirs should purchase this home farm. Mrs. Anderson was persuaded and agreed to do so, and accordingly on August 26,1858, the day on
Hobert Gibbony, administrator of Jacob Kent, was authorized by the heirs to settle among them their shares of the estate, and to make sale of the land for division. His authority was in the form of a power of attorney, dated the nineteenth of July, 1858, signed by tho heirs, and the husbands of those who were femes covert. But this power of attorney had, of course, no validity in law to bind these femes covert. Shanks v. Lancaster, 5 Grat.110. By a paper similarly signed, it was agreed by the several heirs that each might take part of tho estate of the intestate, Jacob Kent, at such appraisement as might be made by persons appointed by the county court of Montgomery county, which was the county in which the intestate died and his estate was. On the seventh of February, 1859, there was an arbitration and appraisement (made by «three citizens chosen for tho purpose) of the home farm, which then consisted of 1,200 acres, (100 acres have since boon adjudicated by this court to belong to one Joseph Kent,) and the valuation of it was thereby fixed at $13,248, which, as was recited in the paper signed by the arbitrators, was “to be paid for by Mrs. Anderson’s entire interest in the estate.” In short, the purchase of the farm was treated by all concerned as made by Mrs. Anderson; the consideration paid for it being her interest in her father’s estate.
At some time during G-ibbony’s agency in selling the lands of the estate he sold to George W. Anderson, individually, a tract of 335 acres lying contiguous to the homo farm, for the price of six dollars an acre. Gibbony went on to sell all the other of the numerous tracts of land belonging to tho estate, none of which, except the home farm, was retained by any of the heirs, in the year 1882, (August 20th,) having made contracts for the sale of all the lands, and probably collected much of the purchase money, Gibbony caused deeds to be prepared, executed, and acknowledged, conveying, on the part of all the heirs, the several parcels of land (except the home farm) to the several purchasers of them. Mrs. Anderson, on the faith of having purchased the homo farm with her own interest, joined in these deeds, granting fee-simple titles for all the other- several parcels of the lands of the estate to the respective purchasers of them.' She has not sought in-this proceeding to set aside those deeds, but desires them to stand.
Notwithstanding the clear understanding which had boon had at the beginning, and had continued for several years, between all persons in interest, and especially between Gibbony and Mrs. Anderson, that she had taken the home farm lor her interest in the estate, yet Gibbony, in procuring the execution of the deeds conveying tho several portions of the realty belonging to the estate as just mentioned, caused the remaining heirs, in conveying their interests in the home
No considerable amount of money, if any, was ever paid by George W. Anderson on account of this $13,248, and Gibbony, as to most, if not all of it, from time to time, as he settled his fiduciary accounts before commissioners, merely handed to Anderson receipts purporting that he had received from Mrs. Anderson amounts approximately making up the price of the home farm. Afterwards, when the transactions of August 21, 1862, came to be put in the form of G. W. Anderson’s bond of that date, Gibbony credited these receipts, nominally from Mrs. Anderson, upon the bond.
Of these proceedings between Gibbony and her husband, Mrs. Anderson was all the while ignorant, and it would seem also that the deed from.her co-heirs, conveying the home tract to Anderson instead of his wife, was never delivered to Anderson; that the execution of it to himself individually was unknown even to himself; that the coheirs were not conscious of the effect of what they were doing, and that it was deposited for registration in the clerk’s office of the county by Gibbony without the knowledge either of Anderson or his wife. The existence of the deed to her husband remained unknown to Mrs. Anderson or to her husband until some recent time, which is not shown in the evidence or the proceedings. For all that the proceedings show, she did not know of the transaction until December, 1872. In his schedule, B 1, George W. Anderson gave in his interest in the 1,200 acres of land which have been referred to, as a life-estate, reciting that this tract of land “was inherited by Sarah J. Anderson, wife of petitioner, from her father, Jacob Kent, and petitioner only has a life-estate in the same depending on his own life.”
All of George W. Anderson’s interest in or control of the home tract of land having passed to his assignees in bankruptcy, his signing this agreement was nugatory. Mrs. Anderson’s execution of the writing was privily acknowledged on the day of its date, namely, tho twentieth December, J872, before one of the counsel of the creditors, Thomas E. Sullivan, who was designated in the body of the writing
After this decree was entered and the survey for a division made, Mrs. Anderson joined her husband in a deed conveying the parts of the home tract, not retained by her, for the benefit of creditors, in pursuance of the agreement and decree just mentioned. This deed was acknowledged by her before the assignee of George W. Anderson, in bankruptcy, a party in interest, but was never duly delivered, was recalled before delivery, and that part of the decree has never been executed by herself and her husband. So far as her own action goes, therefore, there is no further committal of herself to the alienation of her home tract than the agreement she signed with the attorney of the creditors, and the decree of the state court made upon it, both on December'20, 1872. This paper of that date is void as to Mrs. Anderson. A married woman can validly execute no instrument except such as is authorized by section 4 of chapter 117 of the Virginia Code of 1873, page 906, which provides that “when a husband and his wife have signed a writing purporting to convey or transfer any estate, real or personal, she may appear before, etc., * * * and make acknowledgment of the same.” No act of a married woman, unless the instrument signed presently conveys or transfers the estate, can be held to divest her of her rights in it. This power given by statute to a married woman does not apply to executory contracts, or to any other acts except deeds or writings making present transfer or conveyance of estate. 2 Minor, Inst. 582; Shanks v. Lancaster, 5 Grat. 110.
The writing signed by Mrs. Anderson on the twentieth of December, 1872, was wholly executory. It was a mere agreement that something should be done in the future. ' It is void on its face as to Mrs. Anderson, because it was executory and of the character of a mere power of attorney. It was void for two other reasons. The agreement stipulated that Thomas E. Sullivan, who was counsel for the lien creditors, should be the trustee to whom should be conveyed for her separate use that portion of the lands stipulated to be divided, which should be allotted to herself. Yet the record shows that her acknowledgment of this executory agreement was made before this very Thomas E. Sullivan, privily and apart from her husband. This
The agreement was also void because never recorded. The acts of married women, unlike those of persons sui juris, are void even as to themselves, unless authorized by express statute. It is the statute law alone which gives them validity, even as to themselves. The statute of Virginia requires that conveyances by married women sha,11 not only be acknowledged before a designated officer, but recorded also. See section 7, c. 117, Code Va. 1873, p. 907. It is not pro-tended that Mrs. Anderson’s agreement of December, 1872, and her acknowledgment of it, was ever recorded. Her acknowledgment before an interested officer was nugatory, and the failure to record it completely vitiated the paper. On its face it is absolutely null and void, because executory, because illegally acknowledged, and because never recorded.
Although the agreement was incurably null and void, and although the creditors’ suit in the state court was inherently nugatory as to all the estate in the custody and control of the bankruptcy court, counsel for lien creditors contend that by her cross-bill filed in the suit in the state -court, Mrs. Anderson submitted her rights to that court, and is bound by its decree directing the execution of the agreement of December, 1872. But that court had no jurisdiction to deal with titles and rights in property not only not within its custody, but in the custody of the bankruptcy court. The agreement, if it had any effect, passed throe-fourths of the home farm to the assignees in bankruptcy of George W. Anderson, and subjected those three portions to the exclusive jtirisdiction of the bankruptcy court. Mrs. Anderson could not by cross-bill confer jurisdiction upon the state court over that property. Neither express nor implied consent can give jurisdiction. As to the bankrupt’s estate surrendered in bankruptcy, neither the assignees nor lien creditors, by consent, nor Mrs. Anderson, by cross-bill or agreement to assign a disputed three-fourths of the home farm to the use of lieu creditors, could divest the bankruptcy court of its exclusive jurisdiction of the property surrendered and transfer if to another court. If Mrs. Anderson’s agreement could be executed at all, there was no court competent to do so but the bankruptcy court. The creditors’ bill in the state court was cor am nonjiulice; the estate of the bankrupt, including all property in which he claimed any interest, had passed to his assignees, and was in the custody of the bankruptcy court; and the cross-bill of Mrs. Anderson was as empty of jurisdiction for the state court to execute an agreement inherently and incurably void on its face, as so much brown paper.
The bankruptcy court decided,'upon the petition, that the proceeding against George W. Anderson, a bankrupt and civiliter mortuus as to his estate, was ex parte, and as to the estate in bankruptcy and the assignees of the estate was coram non judice and null; the estate being in the custody and within the exclusive jurisdiction of the bankruptcy court, and the assignees having no power to make themselves parties to a proceeding in the nature of a creditor’s bill against the bankrupt, his estate, and his assignees, commenced after the adjudication in bankruptcy. See Case- of George W. Anderson, 9 N. B. B. 360, and 3 Hughes, 379-385. Its decree to this effect was made on the sixteenth March, 1874, and was affirmed, on appeal, November 30,1874. That question is therefore res judicata as between all parties to this proceeding. That decree also enjoined all further proceedings in the circuit court of Montgomery by the assignees, and by the parties plaintiff there, and no further steps have been taken in that court.
The case came again to a hearing in the district court at Bichmond, as a court of bankruptcy, on the petition Of Mrs. Anderson, by her next friend, which has been mentioned, on a plea of the statute of limitations interposed by the assignee to Mrs. Anderson’s petition, and
At the hearing of these matters the bankruptcy court at Richmond, by decree of April 13, 1876, overruled the assignee’s plea of the statute of limitations, on the ground that the exclusive jurisdiction of the bankruptcy court to pass upon all specific claims upon the bankrupt’s estate, and to settle all conflicting interests between the various parties to a bankruptcy proceeding, is not affected by the provisions of the bankruptcy act limiting within two years suits brought by or against assignees in bankruptcy against or by persons in adverse interest ; and that even if it were, Mrs. Anderson’s petition was brought before the expiration of two years after she came to a knowledge of the fraud or mistake of which she complained.
The two-years limitation provided in section 4979 applies to the “suits at law and in equity” authorized by that section. It relates to suits brought independently of and separate from the bankruptcy proceeding, as such, to suits brought in the circuit or district courts, or in state courts on their common-law or equity side. It does not interfere with or limit the jurisdiction of tho district courts on their bankruptcy side in bankruptcy proceedings to “ascertain and liquidate liens and specific claims, and to adjust the various priorities and conflicting interests of all parties” to the bankruptcy proceeding proper.
This petition of Mrs. Anderson is not a suit on the equity side of the district court, but is a collateral petition filed in, as part of, the bankruptcy proceeding. As such, it came here by removal from the Eastern district. If it were a distinct and several suit, it would not be here at all, hut would still be pending at Richmond; for the order of removal made at Richmond embraced nothing but the bankruptcy proceeding. It was verbatim as follows:
“In the District Court of United States, Eastern District of 'Virginia, in Bankruptcy.
“In the matter of George W. Anderson, bankrupt.
“Upon the motion of Floyd Smith and Elizabeth Gibbony, administratrix of Ilobert Gibbony, deceased, judgment creditors of said bankrupt, it is ordered by the court that this cause be removed to the district court of the United States for the Western district of Virginia, held at Lynchburg, in said district. And it is further ordered that the clerk of this court transfer the papers herein to the clerk of said district court at .Lynchburg.
“Richmond, sixteenth June, Istíl.”
It was because Mrs. Anderson’s petition was part of the bankruptcy suit, and not a suit distinct from it, that it came here under that order.
The order concerning evidence referred to had been entered eight months before the hearing; It was drawn up and applied for by Mr. Wade, “attorney at law for Kent’s estate and other creditors of George W. Anderson,” and gave Mrs. Anderson two months within which to take depositions in support of her claim, then gave the petitioning creditors one month for depositions in rejoinder, and afterwards Mrs. Anderson a month for her testimony in conclusion; the depositions to be taken on notice of 10 days. The depositions were exceedingly voluminous, making probably 500 pages. Notice of the taking of Mrs. Anderson’s testimony was accepted by the assignees in bankruptcy, and in every instance by counsel signing “for the judgment creditors and Robert Gibbony’s administratrix.” The evidence was taken upon as full notice, and in as orderly and formal a manner, as any that was ever taken in the most plenary suit ever conducted in a court of justice. It was not only taken by parties on both sides
There can be no'objection to these depositions, on the part, of any creditors, for want of notice, or of presence, or opportunity to bo present, at their tailing. None has been made. No exceptions ha,ve been taken to them, save on the ground of the incompofcency of Mrs. Anderson to testify for or against her husband, and of any of the witnesses to testify in their own interest as against Robert Gibbouy, who is dead. But this suit is between Mrs. Anderson and her husband’s assignees, not himself. Eer husband has no interest in the property in litigation; all his interest having passed to the assignees. She is competent as to him. As to Robert Gibbony, neither he nor his estate has any direct interest in the property surrendered in bankruptcy. The assignees are tho parties defendant, and represent many creditors, most of whom are living, and only a few dead. Mr. and Mrs. Anderson are competent, witnesses as to the assignees, and all whom they represent, living or dead, on the general principles of evidence. But, whether so or not, they are competent witnesses by the express provisions of the bankruptcy act. Section 5088 expressly makes the wife of the bankrupt so, and the amending bankruptcy act of June 22, 1874, § 8-, provides generally that any party to a “ trial or cause” arising under the bankruptcy act shall be a competent witness.
No valid appeal has ever been taken from the decree of April 13, 1876, which was entered upon consideration of these voluminous depositions. As against Kent’s administrator, the assignees in bankruptcy, and George W. Anderson, that decree stands as res judical,a. The time for renewing it by appeal lias long since expired, and the question of the right of Mrs. Anderson to the home farm, subject only to the life-estate of her husband, is forever concluded as against James IL Kent’s estate and the assignees of Georgo W. Anderson, represent-i tig all creditors. It Is true that from the decree just mentioned Kent’s administrator appealed to the circuit court. Tho matter was argued before Chief Justice Waite, who, on the twentieth of May, 1876, entered a decree dismissing tho appeal for want of jurisdietian, holding that the matter was one not for “revision,” but for regular “appeal.” The regular appeal, however, wan never taken, and cannot now bo take-:, and the decree of April 13, 1876, is, as said before, final as against tho assignees and Kent’s administrator. More than that, it is now too late for a review of its own decree by the district court itself; for wherever appeal can be taken a petition for rehearing must bo brought before tire end of the term in which the decree has been' rendered. Judges in bankruptcy will not hear petitions for review brought in disregard of this rule.
As before stated, the decree of April 13, 1876, after passing upon
It seems to be made necessary by the numerous motions and petitions which have been brought by counsel in this cause at various stages, in behalf of lien creditors, that I should enter to some extent into a dissertation upon the nature of a bankruptcy proceeding, as illustrated by the one at bar. The controversy between Mrs. Anderson and the lien creditors of the bankrupt, her husband, forms a necessary part of the bankruptcy proceeding. By virtue of George W. Anderson’s having an estate in the home farm of her father, the fee of which she claims, this court and its predecessor in the Eastern district have had in this proceeding jurisdiction to settle the title to' the home farm, as to this “specific claim" upon it. Whatever title the bankrupt had, passed to his assignees in bankruptcy at the time' of his adjudication. The question whether the bankrupt had a title in fee or an estate for life only, was a question between Mrs, Anderson and the assignees. The creditors of the bankrupt were and are beneficiaries of whatever title has vested in the assignees, and are all represented in the litigation of the question by the assignees. The litigation as to the home farm is essentially between Mrs. Anderson and the assignees, and this court has jurisdiction of that litigation. It not only has jurisdiction, but that jurisdiction is exclusive. Section 4972 of the Eevised Statutes of the United States declares that the jurisdiction of the district court shall extend, among other things,.
This jurisdiction is not only as comprehensive as just shown, but, I repeat, it is exclusive. Before June 20,1874, it was not exclusive. The state courts, before that date, might have concurrent jurisdiction, in sundry instances, over debts and property of the bankrupt. So, also, might the circuit courts of the United States have concurrent jurisdiction under section 4979, cited at bar by counsel for lien creditors. But the act of that date, known as the Revised Statutes of the United States, in section 711, makes the jurisdiction of the district court in bankruptcy, as set out in section 4972, exclusive. It was made exclusive then, for the first time in the history of our federal jurisprudence. In Claflin v. Houseman, 98 U. S. 130-138, the supreme court of the United States say that the Revised Statutes, [of 1874,] “whether inadvertently or not,” have made the jurisdiction of the United States courts exclusive “in all matters and proceedings in bankruptcy.” In that case the court express a doubt whether the clause of section 4979 authorizing suits at law or in equity to be brought by or against assignees in bankruptcy, oven in United States circuit courts, is not repealed by the provision of section 711 of the Revised Statutes of 1874, giving exclusive jurisdiction in bankruptcy matters to the district courts. Certainly is the concurrent jurisdiction of state courts taken away absolutely. This exclusiveness of jurisdiction was necessary. The proceeding in bankruptcy is, in character, effect, and object, the same as a general creditors’ bill in chancery. It supplies the place and purpose of such a bill. It supersedes and dispenses with it. The two could not go along together, for it is an old principle that two courts cannot entertain several creditors’ bills against the same debtor at the same time.
In Humes v. Scruggs, 94 U. S. 22, an assignee brought suit in the United States district court to set aside a deed of settlement, which had been made by a husband in favor of his wife, alleged to have been executed in fraud of his creditors. As a defense in bar to this suit the wife set up a decree which had been rendered in a suit brought by her next friend in a state court, before her husband’s bankruptcy, against her husband, in which the deed had in all things been ratified and confirmed by the state court. The United States district court refused to go behind the decree of the state court, but the supreme court of the United States held, on appeal, that the adjudication in the state court did not bind the United States district court having jurisdiction of the bankrupt’s estate. The point of the case, so far as it relates to the one at bar, is that the jurisdiction of the district courts of the United States over all the property belonging in law or equity to the bankrupt cannot be defeated by proceedings in other courts, no matter whether brought before or after the adjudication in bankruptcy. Therefore it is that there is nothing in the much-pressed point that Mrs. Anderson had, by her cross-bill in the creditors’ suit in the Montgomery court, submitted her claims in the home tract to that court. The cross-bill was but a branch of a suit coram non judice, the nullity of which was fatal to the collateral proceeding. It was the more so because the decree against her in that suit was rendered upon an agreement null and void, as to herself, on its face. This court had to look into the record of the Montgomery court. It was invited to do so by the lien creditors. Thus invited, it did look into that record, and saw patently and prominently that the decree there was in execution of a writing incurably void and null. ' The case was precisely the same as that of Humes v. Scruggs, just com
The creditors’ bill, which was brought against George W. Anderson and his assignees in the circuit court of Montgomery county, after the commencement of this bankruptcy proceeding, was coram nonjudice; it was not only so pronounced to be by myself, when the petition of Mrs. Anderson and that of J. S. Kent’s administrator were first before me at Richmond, in March, 1874, but, on appeal, was declared by the circuit eourt to be null and void. In his opinion in affirmance the circuit judge said;
“It is clear that both Mrs. Anderson and her husband were entitled bo be heard in the district court, and that the proceedings in the state court, commenced after adjudication in bankruptcy, were null and void, so far as they affected the rights of any person who might come into the bankruptcy court, claiming an interest in the property in litigation in the state court.”
And the circuit court remanded the cause to the district court “with directions to proceed to ascertain the rights of the parties claiming the property in litigation in the state court.” All this is res judicata as to Mrs. Anderson, the bankrupt, his assignees, and the administrator of James R. Kent. I may go further and say that all the creditors of this bankrupt, and especially those represented by Mr. John J. Wade, as counsel, who took the appeal I have mentioned, are es-topped by the decree of affirmance from insisting upon the validity of the creditors’ suit in the Montgomery court, or any part of it, and are estopped from denying the exclusive jurisdiction of this court, in this bankruptcy proceeding, to proceed to ascertain the rights of the parties claiming the property which was sought to be subjected to division and sale in the state court.
It is objected that the petition and amended petition of Mrs. Anderson in this cause, being plenary, and not summary, should have been treated as a bill in equity, and that proceedings in it should have been according to the course of practice in plenary bills in equity. Objection is also made to the bankruptcy proceeding on the allegation that it is summary and not plenary, and therefore not a proceeding in which the trial of the rights of Mrs. Anderson as against the assignees in bankruptcy of this bankrupt, representing his creditors, should be had. On the contrary, a bankruptcy proceeding is more plenary than almost any other known to English or American jurisprudence. It is more so than the ordinary creditors’ suit in chancery. As already said, it is itself a creditors’ suit in its nature and objects. The difference is only in the practice; most of that in the bankruptcy proceeding being prescribed by statute. Many of the
It is contended that Mrs. Anderson had no right to file her petition in the bankruptcy proceeding as a collateral part of it, but ought to have brought a separate plenary suit either in the United States district or circuit court. Section 4979, adduced as authorizing such a suit, and the cases of Smith v. Mason and Marshall v. Knox, are cited as requiring that course to have been adopted. But section 4979 merély gives the option to an assignee to bring such a suit against a stranger to the bankruptcy proceeding, and gives a stranger such a right as against an assignee. It allows an option, but does not impose a duty. It does not require the assignee to go out of the district court or the bankruptcy proceeding to assert a claim, nor does it shut the door of the district court in the bankruptcy against a stranger. Efforts have been made to induce the supreme court of the United States to require, by judicial legislation, a resort to such suits, where persons not necessary parties to the bankruptcy proceeding have adverse rights to the assignee and creditors in the bankrupt’s estate, but that court has refused thus to supplement the statute law by making that necessary which the statute leaves optional. There are cases, indeed, in which approved canons of procedure require that rights of property should be determined by methods pursued in suits other than bankruptcy proceedings,—that is to say, in ordinary common-law and chancery proceedings,—and the supreme court has held that in such cases resort should be had to suits at law or in equity.
In the case of Smith v. Mason, 14 Wall. 419, it held that where property belonging to the bankrupt’s estate has, before the bankruptcy, been transferred to a “third party;” who is not a party to the bankruptcy proceeding, and that person is in possession of the property, and the assignee seeks to recover the possession from him, the suit
In Marshall v. Knox, 16 Wall. 551, the same court ruled in the same manner. There, "a partnership firm wore lessees of a plantation in Louisiana. One of the partners went into bankruptcy. Tho lessor, after this event, distrained for rent upon mules and other property found on the premises belonging to tho firm; the sheriff acting as the distraining officer. The assignee of the bankrupt partner thereupon sued out of tho bankruptcy court a rule upon the lessor and the sheriff, requiring them to show cause before the bankruptcy court why they should not deliver to the assignee the distrained property. The supreme court of the United States held, on appeal, that the rights of the lessor, a third party in possession, who was a stranger to the bankruptcy proceeding, could not be adjudicated against his consent under summary rule to show cause sued out against him in the bankruptcy proceeding.
The case at bar is essentially different from both of those just mentioned. The property with which we are concerned is in the constructive possession of the assignee, and in the actual possession of the bankrupt, who holds for the assignee. It is thereby in the custody of this court, and is part of the assets in bankruptcy over which section 4972 gives it complete and exclusive jurisdiction. It is not in the possession of a “third party,” having color of title, whether as vendee, creditor, or sheriff, and tho petition of Mrs. Anderson is not a summary rule against a “third party” to show cause why he should not he dispossessed of the property. Moreover, the supreme court held in both cases last cited that the “third party” in each case could not be brought, by mere rule to show cause, into tho bankruptcy proceeding to try rights of property against his will. It did not decide, and has never decided, and I am sure will never decide, that a third party may not come voluntarily into a bankruptcy proceeding, by petition or other plenary method, and submit to the bankruptcy court his rights touching property in the custody of that court, claimed as assets by the assignee in bankruptcy. Mrs. Anderson has come voluntarily into this court in this proceeding and asked the adjudication of her “specific claim” for property in the custody of the court upon which liens are claimed by creditors, who are already
A petition, filed collaterally in a bankruptcy proceeding or other creditors’ suit, calling for an answer, which answer is filed, and depositions taken on these pleadings through the course of many months, and ‘then heard on an agreed “making up of issues,” is a plenary proceeding, and binds all parties concerned. The petition of Mrs. Anderson, thus proceeded in, bound the assignees and all the creditors of the bankrupt. -Even in creditors’ bills, every creditor need not be made formally and by name a party to the record. A few creditors may maintain a suit in behalf of themselves and all other creditors standing in like relations to the debtor and his estate. The other creditors may come in and prove their debts, and may be treated as parties to the suit. If any of them decline to do so, they will be excluded from the benefit of the distribution of assets, and will nevertheless be bound by the decrees of the court. Story, Eq. PI. § 99. Where the creditors are represented in the suit by a trustee or an assignee, the circuit courts of the United States refuse to hear motions or to receive petitions from individual creditors, require the trustee or assignee to represent them in all respects, and hold them bound by all orders and decrees to which the trustee or assignee is a party. As to trustees, this is a settled practice.
So it is in bankruptcy proceedings. The .publication in bankruptcy brings all creditors into court. As early in the history of the practice, under the bankrupt act of 1867, as the year 1868, Judge Treat held, in Davis v. Anderson, 6 N. B. R. 145, that “creditors of a bankrupt, having security, whether by j udgment, mortgage, or otherwise, must prove their debts against the bankrupt, and foreclose their liens under the authority of the court in bankruptcy, or they may not only be barred of their debts, but may also lose the benefit of their securities. They are parties for the purpose of administering the eátate, whether they formally come in or not. If they fail to prove their debts, and receive no dividends in consequence, they are barred.” This ruling of a judge of very high authority has been followed ever since, and is only qualified by the exception of those eases in which specific liens are held on specific property, and the amount of the lien exceeds or equals the value of the property which it covers; in which cases nothing passes to the assignee.
Every judgment creditor of George W. Anderson was a party to the bankruptcy proceeding, nolens volens, whether he came in and proved his debt or not. The judgment creditors were so because their liens were general. The only creditor who was not as of course a party, was the representative of Robert Gibbony’s estate, in favor of whom there was a specific lien on specific property. But this lien was for a sum inferior to the value of the property it bound. Such was the condition of that lien as to that property that the representative of that estate could not have enforced it without coming into the bank
In Slichney v. Wilt, instead of bringing a distinct bill in equity in the United States district or circuit court, the assignee filed his petition in the bankruptcy proceeding, assailing the validity of certain mortgage deeds resting upon lands of the bankrupt held by persons who were in no way parties to the bankruptcy proceeding. They wore not judgment creditors, but creditors having specific liens upon specific pieces of realty, one of them a vendor’s lien and all the rest specific mortgages. They had not proved their claims, but stood out upon their specific securities. The assignee filed a petition assailing their liens and setting out Ms case, without praying or taking out process against them. They made voluntary appearance and defense; and, on appeal, sought to set aside all that had been done under the petition on the ground that the assignee should have brought a distinct suit in equity against them by formal bill. The supreme court held that the petition was a suit, and that the bankruptcy court had jurisdiction without process against lienholders, when they come in voluntarily. The mortgagees in that case were in the same relations to the petition filed that Gibbony’s estate is in hero. The only difference is that Mrs. Anderson files the petition instead of the assignee. The case of Slichney v. Will settles affirmatively the question whether contests respecting the property of the bankrupt between an assignee and persons having.specific claims adversely can be litigated in the bankruptcy proceeding in casos where strangers to that proceeding come voluntarily into it, as was done by Mrs. Anderson on one side and Gibbony’s representative on the other. The cases of Smith v. Mason and Marshall v. Knox, supra, so far from negativ
I have thus shown that it is not a valid objection to the proceeding of Mrs. Anderson that it was a petition filed in the bankruptcy proceeding as part of it, instead of a distinct suit brought in the district court on its equity side; or that this petition did not make parties defendant by name, and pray for process against the lien creditors of the bankrupt who were already, by the publications in bankruptcy, parties to the proceeding; or that these• creditors and the assignee were not summoned each personally to appear and make answer to the petition, filed in a proceeding where they had already been summoned by publication and were constructively present; or that they, had not formally appeared and made especial answer to the petition. The assignee was in court and pleaded the statute of limitations. Isaiah Welsh, administrator of J. B. Kent, much the largest creditor, appeared formally, and answered and filed a cross-petition, making all the defense that could be made, either by himself or other' creditors, not only by negation of Mrs. Anderson’s claim, but by affirmation of those of the lien creditors. All the other lien creditors, though not formally answering the petition of Mrs. Anderson, were in point of fact represented by counsel in the taking of depositions for eight months, and in the argument at the hearing. They were represented by the same counsel who had represented them in the state court, who had signed for them the agreement of December, 1872, and who now represented Welsh and the assignee. They were represented by that counsel in the “making up of issues” antecedent to the hearing preparatory to the decree of April 13, 1876. That hearing was on the eleventh of December, 1875. The argument was elaborate and full, oral and in writing, and made in behalf of all the lien creditors. After the hearing, the court held the case, under-advisement for four months. Thorough investigation was made of all the voluminous evidence; all proceedings in Montgomery court; and all the proceedings in bankruptcy. During that interval the court freely accepted additional notes and suggestions from counsel on the points involved. While the case was sub juclice, I received a. letter from Mr. Wade, dated on the-twenty-seventh of January, which is filed in the cause, in which he said: “I have already said all I wish to say in the case, and, besides my oral argument, I left with Major Stiles a hastily written note of argument on the evening the case was submitted to your honor. ” This note I had. Seldom was a cause:
I do not now think that I was under legal obligation to require an amended petition to be filed by Mrs. Anderson. I am of opinion that all the creditors were bound by the decree of April, 1876. They were hound technically, because they were parties to the bankruptcy proceeding under the publications that had been made in bankruptcy. They were bound justly, because they had been efficiently and zealously represented by counsel during the whole period of more than two years, during which Mrs. Anderson’s petition had been pending and progressing to a hearing. In point of fact, Mrs. Anderson’s litigation was not with the lien creditors. Their claims wore not contested in a single instance to the extent of a single dollar. They -were conceded to be due. Her litigation was with the assignee as to what had passed to him by tho adjudication in bankruptcy. It is true that the creditors were interested in tho question, what estate passed to the assignee; hut that officer was competent to contest that point, and they were not necessary parties to its litigation. They would never have been considered by the court as parties hut for the agreement of December, 1872; and it was solely with reference to that agreement that they were afforded an opportunity and the privilege of coming into the litigation.
I gave Mrs. Anderson leave to ñle a petition which should make all lien creditors for whom Mr. Wado had signed the agreement of December, 1872, formal parties by name to her litigation. This leave was confined to those creditors. It was a requirement upon Mrs. Andorson,-—a burden imposed, and not a boon conferred. It was for the benefit of the creditors, and really a leave given them to come in and contest the pretensions of Mrs. Anderson. How have they availed themselves of this privilege, which I conceive that the court was under no legal constraint to afford, and which it accorded out of mere grace ? This will appear from what transpired after the thirteenth April, 1876. Appeal for supervision was taken from the decree of that date, which, on the twentieth May following, the chief justice dismissed, on the ground that has been stated. Very soon thereafter Mrs. Anderson’s counsel, Mr. Stiles, began a correspondence with Mr. Wade for the purpose of making up a correct list of the lien creditors who were to be made by name parties defendant to the amended petition. In reply, Mr. Wade w'rote under date of July 24, 1876, from a watering placo in Montgomery county, a letter containing the following passage: “In the matters pending in the state court I represented tho judgment creditors as they appeared by petition or otherwise down to and including Floyd Smith, (except Hartman & Straus,) being the first twelve in the list forwarded to me.” The list com
Meanwhile notice had been given to Mr. Stiles of a motion on the part of some of the creditors to remove the case to the Western district of Virginia, at Lynchburg, which motion was once abandoned, then renewed, and set for hearing October 30, 1880, argued several times on several different.grounds, always strenuously resisted by Mrs. Anderson’s counsel, but finally granted June 16, 1881, as has been seen. Through the failure of the movers to comply with the provisions of the statute in respect to removals, the papers were not actually brought to Lynchburg until the thirtieth of August, 1881. On the seventh of January following, notice was given by creditors of a motion to dismiss the original petition of Mrs. Anderson, and to set aside and annul the original restraining order granted upon it.
The notice was signed by John J. Wade and T. E. Sullivan, attorneys for James E. Kent’s administrator, and Eobert Gibbony’s executrix, and others. These were the same counsel that had represented the assignee and all the creditors in the elaborate and protracted proceedings in the case, while pending at Eichmond. The notice fixed the hearing for the sixth of February, 1882, in chambers, at Charlottesville, before Judge Erras, then judge of the Western
The petition was filed, and nil creditors for whom Mr. Wade liad signed the agreement of December, 1.872, were served with process to answer it, either by actual service or by acceptance of service by counsel, except 1). Preston Parr and Samuel Straus, surviving partner of Hartman & Straus. These latter were non-residents residing in Baltimore, Maryland, who had small claims of about §175 each. Mr. Wado bad signed for them the agreement of December, 1872, and bad represented Parr subsequently in the court; certainly as late as his letter of the twenty-fourth July, 1876, which was after the decree of April, 1876. They were both cognizant of the proceeding of Mrs. Anderson, and of its full purport. This fact is shown by their affidavits to petitions and answers now filed in the record, which wore prepared by Mr. Wade for them in Baltimore, and to which they swore on the twenty-fourth of March, 1883, during the term of this court at Lynchburg’, which liad commenced on the 20th, and to which process that had been served on resident defendants to the amended petition of Mrs. Anderson was made returnable.
At the beginning of the term of court just mentioned, Mr. Sullivan, one of the counsel for lion creditors, was present, and asked the court to defer action on the petition until Mr. Wade, bis associate, who was expected in a day or two from Baltimore, would be present. No answer was presented or defense made by any of the 12 defendants to tho petitions, and Mr. Bullivan soon disappeared. Tho court deferred action in the matter for a week, and, none of the defendants having' made objection, the final decree of March 26, 1883, was entered. Tin's decree was, In substance, but a repetition of the decree of April 13, 1876. The 12 lien creditors who, through Mr. Wade, were parties to the agreement of December, 1372, had been allowed the privilege of coming personally into court and contesting the claim of Mrs. Anderson. Process had been served on, or service of it accepted for, them by 10 of the 12. The other two, who were creditors for inconsiderable amounts, were aware of the petition, but had not come into court. Instead of coming promptly in while there was yet opportunity, these two had remained away and contented themselves with preparing dilatory papers four days before tho end of the term at Lynchburg, and sending them to counsel here too late for thorn to be filed during the,term. Their counsel, Mr. Wade, who had represented most of the other creditors, and had accepted service of process for
By requiring Mrs. Anderson to file an amended petition, making the 12 creditors parties defendant to it by name, the eourt had accorded these defendants a privilege. Notwithstanding this concession to them, these creditors by counsel resisted the filing of the amended petition, and when it was filed, and they were summoned into court, failed to appear. The court did more than it was called upon stricti juris to do, when it required that they should be made parties. When, on being summoned, or apprised that the privilege was accorded them, they failed to avail themselves of the opportunity of making personal defense, the court could do nothing but grant the decree in favor of Mrs. Anderson, which it entered at Lynchburg near the close of the March term of 1883. The defendants Parr and Straus were in fact bound by the decree of April, 1876, being, as creditors, parties in court under the publications in bankruptcy. They were, besides, during the March term of 1883, personally cognizant of the petition of Mrs. Anderson, to which they signed an answer, and of the privilege which the eourt had accorded them of making defense to it. They failed to make that defense in time;' and the court is not at liberty, with any respect for the rights of Mrs. Anderson, who has been a patient and diligent suitor at its bar for 12 years, to reopen decrees to which no substantial objection has been shown, and which were most maturely considered and deliberately passed, first in April, 1876, and next in March, 1883, and to which no effective appeal has been taken.
The petitions now before the court of several- or all of the 12 creditors that have been mentioned, contain nothing substantially new. The objections which they raise to the decree of March, 1883, are all either strictly technical, or set out grounds that have been repeatedly overruled by the court in this proceeding; especially at the hearing at Richmond in December, 1875. The assignee and creditors were concluded by the decree of April 13,1876, except from appeal. That they lost by invoking the supervisory instead of the appellate jurisdiction of the circuit court in May, 1876. Allowed by the decree thus unsuccessfully appealed from to come in and make defense to the amended petition, the 12 creditors failed to avail of this privilege, and permitted the decree of March, 1883, to be entered against them. Appeal from that decree was open to them. They could have invoked the appellate jurisdiction of the circuit%court, hut they neglected to do so. Several of the 12 creditors could have carried
Proceedings in bankruptcy, in matters plenary in character and assimilated to equity suits, (which counsel for creditors insist that Mrs. Anderson’s petition is,) are required by rule 32 in bankruptcy to be conformed as nearly as practicable to suits in equity; and the oighty-eiglith rule in equity forbids petitions for review, where appeal would lie, from being brought after the expiration of the term during which the decree complained of is rendered. All those petitions for review, therefore, having been brought after the expiration of the term which commenced on the twentieth of March, 1883, at Lynchburg, are brought too late, and cannot be entertained. I will enter a decree dismissing them all, as well on the merits as on- the ground that they are brought too late.
These had no part in the agreement of December, 1872, and had no right to be made parties to the amended petition.—Hughes, J.