In re Mitchell

278 F. 707 | 2d Cir. | 1922

HOUGH, Circuit Judge

(after stating the facts as above). The question before us is irregularly presented and almost academic.

[1] The petition to revise is in the name of, and signed andr verified by, the attorney for Gross and Birenberg. While the forms and orders prescribed by the Supreme Court do not descend into the particulars of practice on petitions to revise, it is plain that such petition must be by the party aggrieved. In re Jemison, etc., Co., 112 Fed. 966, 50 C. C. A. 641. It would be a proper application of familiar local practice to allow the verification of a petition to revise by the attorney, he showing cause therefor in his affidavit; but there is no justification for the attorney himself and in his own name seeking review, and the reason for this is that he is not the party aggrieved.

The question is academic, or nearly so, because in the absence of any evidence we are ignorant of the facts leading to the order complained of: consequently we can only answer the inquiry whether, under any circumstances, however aggravated by fraud, perjury, and covin, a person not the bankrupt, having possession of property derived from the bankrupt and asserting the right to keep it, can be required to give security therefor. We say “security,” because the bringing of the money into court is under the order optional, and the deposit of property in court, there to await the result of a plenary suit, is but one, and a very ancienl, method of giving bail to the action.

[2] In involuntary bankruptcies there necessarily intervenes a period, sometimes a long period, between petition filed and adjudication. During this interim it is the plain duty of the bankruptcy court to prevent the disappearance and appropriation of everything to which the trustee when appointed will or may be entitled. The fundamental basis or reason for this exercise of jurisdiction is that the estate of the bankrupt is in process of administration from the date of petition filed (Cameron v. United States, 231 U. S. 710, 34 Sup. Ct. 244, 58 L. Ed. 448), and such filing is a caveat and in effect an attachment (Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L. Ed. 405); and more specifically it is the purpose of the act 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 adjudication follows (Acme, etc., Co. v. Beekman Co.. 222 U. S. 300, 32 Sup. Ct. 96, 56 L. Ed. 208).

The application of this principle is not easy where, before there can be any administration in bankruptcy of a particular piece of property, the question must somewhere be decided whether that property belongs to the bankrupt estate or not. No one doubts but that to maintain what may be the estate intact the court may, and daily does, employ the machinery of receiverships, injunctions, stay orders, summary proceedings, and even seizure under the sixty-ninth section of the act (Comp. St. § 9653). Beach v. Macon, etc., Co., 116 Fed. 143, 53 C. C. A. 463,

[8] Summary proceedings against third persons depend on the answer to the questions whether there be an “adverse claim,” and whether the claim advanced is more than merely colorable. In re Friedman, 161 Fed. 260, 88 C. C. A. 306; In re Ironclad Co., 191 Fed. 831, 112 C. C. A. 345; In re Yorkville, etc., Co., 211 Fed. 619, 128 C. C. A. 570; In re Midtown, etc., Co., 243 Fed. 56, 155 C. C. A. 586. We may assume that these petitioners for revision asserted an adverse claim, but we must also assume that on the facts presented their claims seemed unwarranted, and they themselves unreliable, if not irresponsible.

[4] Under such circumstances, even adverse claimants are by familiar practice restrained by injunction until appropriate action — i. e., plenary suit — can be begun. Under the doctrine evidently accepted by the court below, such plenary suit must await the election of a trustee. Therefore the period of injunction is until the trustee qualifies, and has time to begin suit if he is so advised. Such injunctive relief may be and has been accompanied by demands for security, and this is no more than the exercise of the ordinary equity powers of the court in aid of the bankruptcy proceeding. Remington, § 1905, citing cases, especially In re Blake (D. C.) 171 Fed. 298. See also Remington, § 359, and cases cited.

All this is no more than a recognition of equity’s power to mold its remedies to suit the occasion. If it were settled law that a receiver or any body of creditors could maintain plenary actions for the same purposes that a trustee can sue, equity could without doubt enjoin the dissipation of a fund, and even appoint therefor a receiver pendente lite.

[5] Having no facts before us, we hold as a legal abstraction that to require security, pending suit by the trustee, from one alleged to have in possession a part,of the bankrupt estate, and in respect of what was obtained from the'bankrupt, is within the power of the bankruptcy court, and agree with the court below that- such power is necessarily within the language of decision in Bryan v. Bernheimer, 181 U. S. 188, and especially pages 196, 197, 21 Sup. Ct. 557, 45 L. Ed. 814, which recognizes under some circumstances the right of actual seizure.

Orders affirmed, with costs.