196 F. 678 | N.D.N.Y. | 1912
(after stating the facts as above).
“Now come the respondents Jane Logan and Grace Tompkins, by Franklin 0. Keyes, their attorney, and specifically object to the power of the referee to order the respondents, or either of them, to turn over the property sought to be recovered by the trustee. Arthur H. Abel, or to grant the relief prayed for in the petition filed in this proceeding, and object to the jurisdiction of the court to proceed summarily in this matter. And respondents set up a claim adverse to that of the trustee to the property sought to be recovered and claim absolute title thereto for a valuable consideration, and assert that they are bona fide holders thereof for value prior to the adjudication in bankruptcy in the matter of Jacob Logan, bankrupt.”
These objections were based on the evidence taken and before the referee. No other answer to the petition was filed. These objections w-ere not verified by any one. On the 25th day of March, 1912, the referee made the order under review which directs the said Jacob and Jane Logan and Grace Tompkins to execute and deliver conveyances of such real estate and personal property to said trustee, and to deliver the possession thereof to him, and also directing Jane Logan to deliver a certain promissory note of $2,000 made by Grace Tompkins to the order of said Jane Logan. This order was served on the 26th day of March, 1912, and conveyances tendered for execution.
The referee found that Logan and wife and Miss Tompkins formerly resided in Pennsylvania, where Jacob Logan owned certain real estate ánd personal property which was disposed of or traded, so that the proceeds went into certain real estate in Lestershire or Bingham-ton, N. Y., in the names of Logan and his wife, and this was disposed of and deeded, and such property or its proceeds delivered to Gaylord Gibson, who deeded the farm in question to said Grace Tompkins more than four months before the filing of the petition in bankruptcy in consideration thereof, and that all was done under such circumstances as to' show that the transactions were a mere cover for placing the property of, Jacob Logan in the hands of said Grace Tompkins temporarily and until said Logan should be discharged in bankruptcy from his debts, when it is to be turned back to him, and that she holds title as a trustee or agent for Logan; that no consideration was paid by said Grace Tompkins, and that she has not been, and is not, in possession of this farm, and personal property, but that, immediately on Miss Tompkins taking title from Gibson, the bankrupt, Jacob Logan, and Jane Logan, his wife, went into possession and occupation; and that Jacob Logan now has actual possession thereof, and did at the date of bankruptcy. The referee finds, and the evidence will sustain, the finding that the property of Logan, the bankrupt, owned by him in Pennsylvania was put into the Lestershire and Binghamton property, and then into the farm in question, so that the proceeds of Logan’s property are traced directly into the farm in question. Grace Tompkins put a mortgage of $500 on the farm, and with the money purchased the personal property in question, except the note. The deed from Gibson, who had the title to the farm, vested such title of record in Grace Tompkins. The question of possession was a disputed one before the referee, as was the question whether or not a consideration was paid by Grace Tompkins for the farm, etc. The evidence would have justified a finding of fact that Grace Tompkins is in the legal as well as actual possession of the farm, etc., and that she did pay a valuable consideration by surrendering valid claims she held against Logan, the bankrupt. This was the contention of Miss Tompkins and of Mr. and Mrs. Logan. I assume the findings of the referee that no money or property was paid or valuable thing surrendered as a consideration for the farm in question, and that Logan himself was in the actual occupancy and physical possession of both farm and personal property at the time of.the filing of the petition in bankruptcy, are correct and fully sustained by' the evidence. The conveyance of the farm to Grace Tompkins by deed duly recorded was made more than four months prior to the filing of the petition in bankruptcy, and the mortgage thereon was given and the personal property purchased with the proceeds more than four months prior to' the bankruptcy. Under the findings of the referee, the transaction of Logan and wife and Miss Tompkins were clearly in fraud of creditors. Assuming that in a plenary suit by the trustee to set aside the transfer of the farm to Grace
It has been decided that the referee in case of personal property may and must determine whether the claim of a third person who claims to be. an adverse claimant is real or fictitious, merely colorable. Mueller v. Nugent, 184 U. S. 1-15, 22 Sup. Ct. 269, 46 L. Ed. 405. An assignee for the benefit of creditors is but the agent, at best, of the bankrupt who made the assignment. Bryan v. Bernheimer, 181 U. S. 188, 21 Sup. Ct. 557, 45 L. Ed. 814. In short, a third person having possession of personal property which in fact clearly belongs to the bankrupt is not an adverse claimant for the reason he says he is. But, if such third person has a bill of sale of such personal property, describing it, which he took from a person other than the bankrupt who in fact owned the property, and the claim of the trustee in bankruptcy is that sttch third party took such bill of sale by collusion with the bankrupt more than four months before bankruptcy, the filing of a petition, and to cheat and defraud creditors, and this is denied by such third person, who also claims that he is in
In Mound Mines Co. v. Hawthorne, 173 Fed. 882, 97 C. C. A. 394 (C. C. A. 8th circuit), Mrs. Fletcher owned certain real estate which she contracted to sell to the Griffith Mines Company, and this corporation went into possession and made improvements. It- did not comply with the terms of the contract, and $500 was due and unpaid to Mrs. Fletcher. In October, 1908, bankruptcy proceedings were instituted against said Griffith Mines Company, and one Hawthorne was made receiver and then trustee. After such bankruptcy proceedings were instituted, the Mound Mines Company was organized and incorporated, and later Mrs. Fletcher deeded the property to it for $500, the balance due her. Later the trustee was authorized by the court to sell, and did sell, the property of the bankrupt, including the real estate in question. The purchaser objected to the title, and a summary proceeding was ■ instituted by petition before the referee to compel the Mound Mines Company to execute and deliver a deed of the said real estate to the purchaser thereof from
In First National Bank v. Title & Trust Co., 198 U. S. 280, 25 Sup. Ct. 693, 49 L. Ed. 1051, the bankrupt owned certain merchandise which was in storage with National Storage Company, and for which he took warehouse receipts. These he hypothecated for loans prior to bankruptcy to the First National Bank of Chicago. The warehouse receipts acknowledged possession of the merchandise in the Storage Company. It had possession thereof. The receiver in bankruptcy filed his petition, by which he instituted the summary proceeding to obtain possession of the merchandise in which he recited that he had taken possession of the property. This was denied, and says the court at page 291 of 198 U. S., at page 696, of 25 Sup. Ct. (49 L. Ed. 1051):
“The District Court adjudged that the receiver had not at the time of filing its petition the right of possession, and that the National Storage Company, at that date, and also at the time of the filing of the petition in bankruptcy, was entitled to possession and had possession [of the merchandise!.”
It held this possession, not for the one who placed the goods in storage, but for the one who held the warehouse receipts. The court held that the First National Bank was not only an adverse claimant, but that, possession was held for it, and that it was entitled thereto, and that the receiver had no possession, and was not entitled to possession. The claim was in good faith and well founded. The Supreme Court also expressly held that the referee had jurisdiction to proceed and ascertain the facts stated, and determine whether the receiver had possession or the right of possession. (Pages 290, 291 of 198 U. S., page 696 of 25 Sup. Ct. [49 L. Ed. 1051]). When the bankruptcy court determined that the Storage Company had possession and the right of possession and that the receiver had no possession, the court held that it should have refused to go further, and that the summary proceeding iri the form it had assumed could not be regarded as an independent plenary suit, and that, even if so considered, there was no jurisdiction in the District Court (as the law then stood), as such a suit could be prosecuted in that court only by consent of the proposed defendant. But here the referee has found that the actual possession of the real and personal property was in the bankrupt at and before the filing of the petition in bankruptcy, and that he was the owner, and that the ownership and right of possession passed to the trustee in bankruptcy, and that Grace Tompkins never owned either the real or personal property, or had
The referee has found, and there is abundant evidence to sustain the finding, that at and prior to the filing of the petition in bankruptcy Grace Tompkins was not holding the property in question, either real or personal, adversely to Jacob Logan; that she made no claim of ownership as against him, or his wife, but that,' on the other hand, she was in collusion with him to cheat and defraud his creditors, conceal this property from his creditors and his trustee in bankruptcy when such proceedings should be instituted, and that she was the mere agent or bailee of said Jacob Logan in holding the Binghamton and Lestershire property by deeds, and that “said Grace Tompkins in receiving and recording the deeds of said property (Binghamton and Lestershire properties) was acting at all times as a confederate of the said Jacob Logan and a mere cover or receptacle of his title to said premises for the purpose of secreting his said property, and thereby hindering, delaying, and defrauding the creditors of said Jacob Logan.”
The referee then finds that thereafter the Binghamton and Lester-shire properties were deeded by Grace Tompkins to Gibson in exchange for the farm in question, and “that said Grace Tompkins, as the agent, bailee, and confederate of the said Jacob Logan, took title to said farm in her own name, and that the title to said farm and premises has been at all times and is now merely colorable, and that Jacob Logan was at all times after said title was so taken in the name of said Grace Tompkins and up to the time of his adjudication in bankruptcy the real owner of said farm, and he has been at all times since and now is in possession of and occupying said farm, and that the title to said premises or farm was so taken in the name of Grace Tompkins solely for the purpose of secreting the ownership of same for the purpose of hindering, delaying, and defrauding the creditors of said Jacob Logan, and that said Grace Tompkins is not now and never has been the owner of said farm, or any part thereof, and has not now, and never has had, any interest or claim whatsoever in, to, or against said premises, or any part thereof, and that during ail of said times she has been and is now acting as a mere cover or receptacle of the title of said farm for the sole purpose of secreting same for said Jacob Logan and hindering, delay
Accepting these findings which the referee had jurisdiction to make, and which it was his duty to make, if the evidence warranted them, and Grace Tompkins was not an adverse claimant at and before the filing of the petition in bankruptcy. The claim now asserted by her through her attorney to this real estate and personal property is not an adverse claim existing at the time the petition was filed. It was not made, had no existence, as against Jacob Logan. It is asserted against the trustee in bankruptcy pursuatff to an agreement or understanding between her and Jacob Logan; she, in effect, being his agent and holding title for him.
In Louisville Trust Company v. Comingor, 184 U. S. 18-25, 22 Sup. Ct. 293, 296 (46 L. Ed. 413), the court said:
“We have just held in Mueller v. Nugent, ante, 1, that the District Court has power to ascertain whether In the particular instance the claim asserted is an adverse claim existing at the time the petition was tiled. And, according to the conclusion reached, the court will retain jurisdiction or decline to adjudicate the merits.”
This reduces the proposition here to the question whether the mere existence of the recorded deed of the farm in the name of Grace Tompkins, Logan having the possession, and Grace Tompkins holding the title as agent or bailee for Logan and by collusion with him for the purpose of secreting the property from his creditors and trustee in bankruptcy when appointed, she not claiming to own same as against Logan, constituted an adverse claim existing at the time of the filing of the petition. The deed was not the claim but the foundation for a claim, evidence upon which a claim of actual ownership and title could be based by her against Logan in possession.
In Mueller v. Nugent, 184 U. S. 1, 14, 22 Sup. Ct. 269, 275 (46 L. Ed. 405), the court held that:
“Tile bankruptcy court lias power to compel the surrender oí money or other assets of the bankrupt in his possession, or that of some one for him, on petition and rule to show cause.”
Also:
“The refusal to surrender property of the bankrupt does not in itself 'create an adverse claim at the time the petition is filed.”
And at page 17 of 184 U. S., at page 276 of 22 Sup. Ct. (46 L. Ed. 405), said:
“In tbe case before us Wiliiam T. Nugent held this money as the agent o" his father, the bankrupt, and without any claim of adverse interest in him self.”
Here the referee finds the bankrupt in possession and that Miss Tompkins was and is by arrangement with Logan, who was and is the real owner, his mere agent and bailee in holding such title,. claiming no interest therein as against Jacob Logan. She made no claim under or by virtue of the deed against Logan, but by collusion with Logan and placed herself in position to assert one against creditors
“In the case of Mueller v. Nugent, 184 U. S. 1 [22 Sup. Ct. 269, 46 L. Ed. 405], this court recognized the power of the bankruptcy court to compel the surrender' of money or other assets of the bankrupt in his possession, or that of some one for him. In that case the decisions in Bardes v. Hamarden Bank [178 U. S. 524, 20 Sup. Ct. 1000, 44 L. Ed. 1175], White v. Schloerb [178 U. S. 542, 20 Sup. Ct. 1007, 44 L. Ed. 1183], and Bryan v. Bernheimer [181 U. S. 188, 21 Sup. Ct. 557, 45 L. Ed. 814], were reviewed by the Chief Justice, who delivered the opinion of the court, and it was held that the filing of a petition in bankruptcy is a caveat to. all the world, and, in effect, an attachment and injunction, and that on adjudication title to the bankrupt’s estate became vested in the trustee with actual or constructive possession, and placed in the custody of the bankruptcy court. We think the result of these cases is, in view of the broad powers conferred in section 2 of the bankrupt act, authorizing the bankruptcy court to cause the estate of the bankrupt to be collected, reduced to money and distributed, and to determine controversies in relation thereto, and bring in and substitute additional parties when necessary for the complete determination of a matter in controversy, that when the property has become subject to the jurisdiction of .the bankruptcy court as that of the bankrupt, whether held by him or for him, jurisdiction exists to determine controversies in relation to the disposition of the same and the extent and character of liens thereon or rights therein. This conclusion accords with a number of well-considered cases in the Federal courts. In re Whitener, 105 Fed. 180 [44 C. C. A. 434]; In re Antiago Screen Door Co., 123 Fed. 249 [59 C. C. A. 248]; In re Kellogg, 121 Fed. 333 [57 C. C. A. 547]. In the case of First National Bank v. Chicago Title & Trust Company, decided May 8 of this term, ante, 198 U. S. page 2S0 [25 Sup. Ct. 693, 49 L. Ed. 1051], in holding that the jurisdiction of the District Court did not obtain, it was pointed out that the court had found that it was not in possession of the property. Nor can we perceive that it makes any difference that the jurisdiction is not sought to be asserted in a summary proceeding, but resort is had to an action in the nature of a plenary suit, wherein the parties can be fully heard after the due course of equitable procedure.”
It is not material that the bankrupt, Jacob Logan, did not schedule this property as his own, or claim it as his own. He had determined to conceal it and his ownership from his trustee when appointed, and to this end he and Grace Tompkins placed the record title in her, Logan retaining the real ownership as well as actual possession. As stated before and as held by the Supreme Court, constructive possession has passed to the trustee and the court in bankruptcy, and it had and has power to settle and determine all rights concerning it and all claims thereto, bringing in the necessary parties by order to show cause. In Re Eppstein (C. C. A. 8th Circuit), 156 Fed. 42, 43, 84 C. C. A. 208, 17 L. R. A. (N. S.) 465, the Circuit Court of Appeals held that in a summary proceeding a tax deed could be set aside where .■such deed was taken by a third person after the’property had passed
In Babbitt v. Dutcher, 216 U. S. 102, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969, a corporation was adjudicated a bankrupt and a trustee appointed who demanded the corporate records and stock hooks of the president of the corporate company who had them in his possession. The president refused the demand in writing, saying that he was advised “that such records and stock books are not documents relating to the property of the bankrupt, and therefor you, as trustee in bankruptcy, are not entitled to their possession.” It is noted at once that the trustee had no actual possession, only that constructive possession which every trustee has of property of the bankrupt in the possession of the bankrupt when the petition is filed and adjudication made. Application was made to the district judge on petition for an order directing the delivery of the books and records and this was denied. The Supreme Court reversed, and held that the order should have been granted; there being no adverse title asserted. In Re Von Hartz et al., 142 Fed. 726, 74 C. C. A. 58, referred to in the opinion in Babbitt v. Dutcher, supra, 216 U. S. 114, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969, the policy of insurance was in the actual possession of the assignee thereof who held and claimed under a written assignment thereof. The bankrupt had no possession, and his trustee no actual or constructive possession. If books and papers in the hands of the president of a bankrupt corporation which he refuses on demand to deliver to the trustee can be ordered delivered in a summary proceeding, I see no reason why real estate and other personal property owned by the bankrupt and found in his actual possession cannot be ordered delivered to the trustee in a summary proceeding. In Jaquith v. Rowley, 188 U. S. 620, 23 Sup. Ct. 369, 47 L. Ed. 620, one Silsby before bankruptcy had become surety on the bond of the bankrupt in a suit pending in the state court, and had certain money of the bankrupt which he -held as indemnity for such liability. It was held that, as the suits could be prosecuted and collection made of the surety in the state courts, he was an adverse claimant, and that he could not be compelled to pay over such money to the trustee.
In Clay v. Waters, 178 Fed. 385, 392, 101 C. C. A. 645, 652, 21 Ann. Cas. 897 (C. C. A. 8th Circuit), the court says:
“But the property here in controversy was in the possession of, the bankrupt when the petition was filed and when the adjudication was made, and it then passed within the jurisdiction of the District Court below. The second section of the bankruptcy law invests the District Court sitting in bankruptcy with power to ‘(7) cause the estates of bankrupts to be collected, reduced to money and distributed and determine controversies in relation thereto except as otherwise provided,’ and the exception is of cases involving those controversies between trustees in bankruptcy and adverse claimants specified in section 23, which relate to property which was not in the possession of the bankrupt when the petition for adjudication was filed, and in which the defendants do not consent to suits in the District Courts. The District Court sitting in bankruptcy has jurisdiction to determine by sum-.*688 mary proceedings, after a reasonable notice to claimants to present their claims to it, controversies between the trustee and adverse claimants over liens upon and the title and possession of (1) property in the possession of the bankrupt when the petition in bankruptcy is filed; (2) property held by third parties for him; (3) property lawfully seized by the marshal as the bankrupt’s under clause 3 of section 2 of the bankruptcy law'; and (4) property claimed by the trustee which has been lawfully reduced to actual possession by the officers of the court. Such controversies are controversies in proceedings in bankruptcy under section 2, and they are not controversies at law or in equity as distinguished from proceedings in bankruptcy within the meaning of section 23.”
In this case Logan, his wife, and Miss Tompkins were before the referee. The referee had the advantage of seeing and hearing them, and noting their manner, and it was his duty to ascertain and determine the truth. It has be.en held many times that the court itself should not 'disturb the findings of fact made by a referee, unless clearly unsupported,by the evidence. The notes which Miss Tompkins- claims to have surrendered to Logan as a consideration for the
This brings us to a consideration of the order so far as it relates to the delivery to the trustee of the note for $2,000 made by Grace Tompkins to Jane Logan.
I am not able to discover any theory upon which the trustee is entitled to this note of Grace Tompkins. It is made by Grace Tompkins to Jane Logan, and was delivered to her.- It is true that Logan placed title in his wife jointly with himself to the Binghamton property, and then both deeded to Grace Tompkins. This was a part of the fraudulent scheme to conceal the property of Jacob Logan, but the whole title was passed to Grace Tompkins, who, in turn, placed the title in Gibson in exchange for the. farm, and, when she and Mr. and Mrs. Logan surrender that, they have, so far as appears, surrendered all the property of Jacob Logan. The question of the rights of Mrs. Logan as against Grace Tompkins we need not dwell upon. True, the note is an evidence of indebtedness of Grace Tompkins to Jane Logan, and was given for wdiafever interest Jane Logan held in the property. If surrendered to the trustee, he could not enforce it under the findings of the referee. The note in the possession of Jane Logan in no way impairs or incumbers the title of the farm or of the personal property thereon. The note has no validity as against Jacob Logan, the bankrupt, or his estate, and clearly creates no liability on the part of Grace Tompkins to Jacob Logan or his estate in bankruptcy. Under the evidence and findings of the referee, that note is a worthless thing so far as the farm and personal property thereon is concerned, and so far as the estate in bankruptcy of Jacob Logan is concerned. It was never in the possession of Jacob Logan, the bankrupt, and the trustee and court have no actual or constructive possession thereof.
The order of the referee is affirmed so far as it relates to the farm and personal property thereon, and is reversed as to the note of $2,000 given by Grace Tompkins to Mrs. Logan.
