In re McCallum, 113 F. 393

In re McCallum

113 F. 393 | E.D. Pa. | 1902

J. B. McPHERSON, District Judge.

The facts upon which this application rests are these: Before the petition in bankruptcy was-*394filed, the bankrupts had made an assignment for the benefit of creditors, under which a large part of their assets had been sold and converted into cash. The fund thus arising has been handed over to the trustee, and is now in his hands. The present petitioner’s claim, which he asks to pursue in the state court, is based upon the averment that he delivered to the bankrupts certain oriental rugs, to be sold by them upon consignment; the title to the rugs to remain in the petitioner, and the bankrupts to be compensated by being paid a commission on the sales. These rugs, it is further averred, were all sold by the bankrupts or by the assignee; and the petitioner seeks to follow the proceeds, asserting a right to be paid in full out of the fund in the hands of the trustee. He has also proved his claim as an ordinary debt against the bankrupt estate, but has not accepted the dividend that was recently declared, asking for leave first to pursue his claim to be paid in full, and, failing success in this attempt, intending to resume his position as an unsecured creditor of the estate. He asks leave to sue the trustee in a state court, because he believes that the bankrupt act, as interpreted by the supreme court in Bardes v. Bank, 178 U. S. 524, 20 Sup. Ct. 1000, 44 L. Ed. 1175, requires such a suit to be brought in the circuit court, if the other jurisdictional requisites exist, or in the state courts, if, as in the present case, the amount in controversy is less than $2,000.

I am unable to take this view of the bankrupt act. The case of Bardes v. Bank interpreted section 23, cl. “b,” which is concerned simply with suits brought by the trustee, and has no reference to suits brought against him. I find nothing either in the statute or in the opinion of the supreme court further to qualify section 2, cl. •7, of the act, which confers power on the district court, as a court of bankruptcy, to collect, reduce to money, and distribute the estates of bankrupts, and to determine controversies in relation thereto. The only restriction upon this grant of power, which congress had the undoubted right to make, is the restriction contained in the final words, “except as herein otherwise provided”; and, as I have already intimated, there is no provision elsewhere in the act regulating suits brought or claims made against the estate, or against the trustee as its representative. It seems to me that the present application is the ordinary case of a claim against a fund in the hands of a court, and such claims the court in possession of the fund has the right to hear and determine. It is an incident to the power to distribute, and, except where this power is expressly so limited by competent authority that a claim to a share of the fund must be sent to some other court for determination, the court that has possession of the fund is the proper tribunal to decide all controversies concerning its ownership.

I do not deny the jurisdiction of the state courts to determine controversies, in proper cases, between the trustee and adverse claimants ; but this, I think, is not such a controversy. The claim here is essentially that the applicant be declared to have a superior right to a certain part of a fund about to be distributed. He is not asserting that he can recover any personal chattels from the trustee. *395Whatever title he may have had to the rugs themselves is gone, and his claim, in one character or the other, has been transferred to the proceeds. If he is an ordinary creditor, he must, of course, prove his claim in the bankrupt court. If he is claiming a superior right against the same fund, — a right to take away a part of it to the prejudice of other creditors, — I think he ought to pursue the claim where they can all be heard in defense of their rights.

For these reasons, 1 am of opinion that the applicant should present before the referee such claim as he may be advised to make. The application for leave to sue the trustee in the state courts is refused.