No. 937 | 5th Cir. | Jan 8, 1901
Lead Opinion
after stating the case, delivered the opinion of the court.
In addition to the facts above recited from the transcript of the record, we learn from the brief of counsel submitted on behalf of the defendant trustee, that:
“Pending a decision of the suit [intermediate the filing of the petition and the decree], and with the consent of the plaintiffs, sales wore made of some of the goods claimed, and the trustee retained the proceeds of said sales to respond to the final judgment of the court. The amount thus retained is $819.39.”
It thus appears that the defendant trustee did not receive this sum as trustee of the bankrupt, but as trustee for the parties to the pending suit, and to respond to the final judgment of the court therein. If the property in controversy should be adjudged to be assets of the bankrupt estate, the proceeds of these sales would be held, just as the unsold part of the property would be held by the trustee of the bankrupt, for administration as a part of the bank-' rupt’s estate. If, on the other hand, the judgment of the court should be, as it clearly was, that all of the property in controversy was the property of the plaintiffs, and for which the court gave unqualified judgment in the plaintiffs’ favor, with costs against the defendant trustee, it seems clear to us that the obligation of the trustee to turn over the proceeds of the sales thus made by consent was at least as binding on him as his duty to turn over the unsold portion of the goods remaining in his possession. The judge of the circuit court did not place on record any statement of the reasons or conclusions of law whieh induced him to render the judgment he did on the motion or rule of the plaintiffs. We learn from the brief submitted by counsel for the defendants in error that:
“The judge of the circuit court assimilated this case to a proceeding against a succession representative to determine the amount of a claim against the estate of the deceased, and considered that in such a ease the court called upon to determine thé claim quoad the administrator or other succession, representative would remit the claimant, for the payment of his claim, to the court vested with jurisdiction of the ^succession. The court considered that it was out of the question to interfere with the court originally acquiring possession of the res, and cited in support of this view the case of Byers v. McAuley, 149 U.S. 608" court="SCOTUS" date_filed="1893-05-10" href="https://app.midpage.ai/document/byers-v-mcauley-93657?utm_source=webapp" opinion_id="93657">149 U. S. 608, 13 Sup. Ct. 906, 37 L. Ed. 867" court="SCOTUS" date_filed="1893-05-10" href="https://app.midpage.ai/document/byers-v-mcauley-93657?utm_source=webapp" opinion_id="93657">37 L. Ed. 867.”
The fully settled general propositions so clearly stated in Byers v. McAuley are:
*149 “First. It is a rule of general application that, where property Is In the actual possession of one court of competent jurisdielion, such possession cannot be disturbed by process out of another court. Second. An administrator appointed by a state court is an officer of that court. His possession of the decedent’s property is a possession taken in obedience to the orders of that court. It is the possession of the court, and it is a possession which cannot be disturbed by any other court.” Third. Reviewing Payne v. Hook, 7 Wall. 425" court="SCOTUS" date_filed="1869-04-12" href="https://app.midpage.ai/document/payne-v-hook-88024?utm_source=webapp" opinion_id="88024">7 Wall. 425, 19 L. Ed. 260, the concluding proposition is, in substance, that “a plaintiff, the citizen of another state, may apply to the federal courts to enforce a claim against an administrator arising out of his wrongful administration of the estate; and, if it he objected that other distributees were not made parties, the reply is that it was unnecessary, — that it was a proceeding alone against the administrator and his sureties.”
Mr. Justice Brewer quotes from the opinion in Payne v. Hook, where it is said on page 431, 7 Wall., and page 262, 19 L. Ed.:
“The hill under review has this object, and nothing more: It seeks to compel the defendant, Hook, to account and pay over to Mrs. Payne her rightful share in the estate of her brother; and, in case he should not do it. to fix the liability of the sureties on his bond.”
Judge Brewer then proceeds:
“There was no suggestion in the bill that the federal court take possession of the estate and remove it from the custody of the administrator appointed by the state court; no attempt to settle the claims of citizens of the state, as «between themselves; no attempt to take the administration of the estate, but simply to establish and enforce, in behalf of a citizen of another state, her claim to a share of the estate.”
The suit of the plaintiffs in error was an action at law. It presented a case of which the circuit court had jurisdiction by reason oí the amount involved and the diverse citizenship of the parties. It is not entirely clear that the district court, under the general jurisdiction in law and equity conferred upon it by the bankrupt law for the purpose of aiding it, as a court of bankruptcy, in the administration of bankrupt estates, could have entertained the plaintiffs’ action. And it is fully settled that had the defendant Fenner, prior to the filing of the petition on which he was adjudicated a bankrupt, surrendered the property in question to the plaintiffs, and the trustee had sought to recover it as assets of the bankrupt estate, he could, “by the proposed defendant’s consent, but not otherwise,” have prosecuted his claim in the district court. The letter of the statute being: “Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt whose estate is being administered by such trustee might have brought or prosecuted them if proceedings had not been instituted, unless by the consent of the proposed defendant” (section 23b), — it is not, as we have already said, entirely clear that, even with the consent of the adverse claimant, the district court could entertain a suit by such claimant seeking to establish his ownership of the property alleged to be wrongfully held by the trustee as assets of the bankrupt estate. But it seems clear that if, with such consent, the district court could entertain jurisdiction over such a suit, that consent must be entirely voluntary, and may not be constrained' by orders or action, or the refusal to act, of the circuit court. To apply the language of the opinion in Byers v. McAuley to this case, we note that there is no suggestion in the
We venture to repeat that, by rendering and executing the fullest judgment between the parties to this suit, there could have been no invasion by the circuit court of the jurisdiction of the court of •bankruptcy in the administration of the bankrupt estate. The action is not against the bankrupt’s estate, but against the trustee only for property claimed to be^ and fully shown and adjudged to be, no part of the bankrupt’s estate. There is no reason to apprehend that any embarrassment would arise in the execution of the judgment against the trustee. Rio action that could be taken by the circuit court against him in this suit could disturb or affect his relations to the court of bankruptcy. It is perhaps due the trustee to remark that there is no indication on the face of this record that he will not promptly comply with any order which the court may .make on the plaintiffs’ rule. The view we have taken of this case requires us to order that the judgment of the circuit court be reversed, and the cause remanded to that court, with directions to make the rule prayed for in the plaintiffs’ motion absolute as to the $819.39 admitted by the defendant trustee to be in his hands.
Dissenting Opinion
(dissenting). The plaintiff in error brought suit in the circuit court against “Claude H. Solanas, trustee of the estate of E. C. Fenner, bankrupt,” to recover 37 phaetons and surreys. . The case was heard before the judge, a jury being waived, and a judgment rendered for the plaintiff. No writ of error is sued out to review that judgment. No objection is made to it. The matter here for review is the judgment of the court on a motion. The motion is not in the record, except as embodied in the following order or rule on the trustee to show cause:
“On motion of Rice & Montgomery, of counsel for John B. McFarlan, Senior, John B..McFarlan, Junior, Charles E. J. McFarlan, William W. Mc-Farlan, and James E. McFarlan, doing business as commercial partners under the name and style of the J. B. McFarlan Carriage Company, plaintiffs herein, and on suggesting to the court that judgment has been rendered herein decreeing your movers to be the owners of the property herein sued for, which judgment is now final, and on further suggesting to the court that*151 pending the trial of said cause the defendant herein sold a part of the goods and property forming the subject-matter of said suit, and "received therefor the price and sum of eight hundred and nineteen B°/ioo dollars, which sum stands in place and lieu of the property adjudged to belong to these movers, and on further suggesting that the defendant, while he has turned over and delivered to your movers the property adjudged to be theirs, and unsold by him, has refused and still refuses to pay over and deliver to movers the sum aforesaid received hy him from the sale of certain of said goods and property pending this litigation, and that he is without right in law or otherwise to retain the same, it is ordered hy the court that said Olaude II. Solanas, trustee of Edward C. Fenner, bankrupt, do show cause, if any he have, on Saturday, the 10th day of March, 1000, why he should not pay over forthwith to movers the said sum of eight hundred and nineteen so/ioo dollars aforesaid.”
This order being served on the trustee, he filed this sworn answer:
“Now into court comes Olaude H. Solanas, trustee of E. C. Fenner, bankrupt, and, for answer to the rule taken upon him hy the J. B. McFarlan Carriage Company, shows to the court that this respondent, in his capacity of trustee, holds the sum of eight hundred and nineteen and «Vioo dollars ($819.-39) subject to the orders of the court; said amount representing the proceeds of the goods of the plaintiffs in rule held hy respondent pending the adjudication by the court of the rights of all parties. Respondent further shows that plaintiffs in rule are liable to contribute their proportion of the insurance premiums upon the property insured after the surrender of E. C. Fenner in bankruptcy, and said proportion of insurance is $37.71. Respondent further shows that plaintiffs in rule are liable to contribute their proportion of the taxes upon the merchandise and stock in trade of the bankrupt; that the whole amount of said taxes is $285, and the assessment for 1898 and 1899 upon the merchandise and stock in trade of said bankrupt was $7,000, the amount of plaintiffs’ goods on hand at the time of the surrender in bankruptcy being $2,607.50. Respondent shows that, of said amount of taxes, $07.50 is for the taxes of 18,98. Respondent submits to the court the question whether the plaintiffs in rule are liable to contribute to the expense of the administration of the bankrupt’s estate, including commissions of the referee and trustee. Respondent further shows that plaintiffs in rule, as third persons whose goods were on the leased premises with their consent at the-time of the surrender in bankruptcy, are liable to contribute towards the payment of the rent, and that the amount of said liability can be determined only by ascertaining the rank of the privileged creditors appearing upon the account filed by respondent, and said ascertainment can he liad only after due notice to all parties, and a hearing of their respective claims in concursa. Wherefore respondent prays that this rule lie dismissed, that a hearing be had to determine the respective rights of the privileged creditors appearing on the account heretofore filed by respondent, and for costs and general relief.
“Denegre, Blair & Denegre, Attorneys.”
Here is the order or judgment made on the trial of the motion, which is here assigned as” error:
“March 21, 3900.
“The rule herein taken on February 27, 1900, by plaintiff on the trustee of E. O. Fenner, bankrupt, for the payment of $819.50, having been argued by counsel and submitted, and the court having duly considered the same, it is ordered that the said rule he dismissed, reserving to the plaintiff the right, if it be so advised, to institute proceedings for its protection in the bankruptcy court of tills district.”
The estate of the bankrupt was in the hands of the trustee, in custody of the bankruptcy court. The suit and motion were against the trustee in Ms official capacity. The final judgment having been rendered by the circuit court against the trustee in bankruptcy, I think the plaintiffs in the judgment should have been required to apply to the bankruptcy court for (all orders relating to , its satis
“It is a rule of general application that, where property is in the actual possession of a court of competent jurisdiction, such possession cannot he disturbed by process issued out of another court.”
This principle is applicable to cases of suits against administrators, assignees, receivers, and ah trustees, where the trust estate is in process of administration in a court of competent jurisdiction. Hewett v. Norton, 1 Woods, 68" court="None" date_filed="1870-11-15" href="https://app.midpage.ai/document/hewett-v-norton-9298956?utm_source=webapp" opinion_id="9298956">1 Woods, 68, Fed. Cas. No. 6,441, involved an adverse claim by a third person of property in the hands of the as-signee in bankruptcy. Woods, Circuit Judge, held that:
“No other court, and no person acting under any process from any other court, can, without the permission of the bankrupt court, interfere with it; and to so interfere is a contempt of the bankrupt court.”
I think the circuit court correctly refused to grant the motion, and that the plaintiff in error was properly required to make the application to the bankruptcy court having jurisdiction of the estate. The bankruptcy court is vested with power to marshal the assets and settle the estate. No part of the assets should be taken from the trustee except by order of the bankruptcy court. It is not sufficient reason for making an exception to the rule that some other court has decided that certain funds held by him as trustee are not really part of the trust estate. When another court interferes, it is always under some claim of right to interfere. If the trustee has received and holds the funds as a part of the trust estate, they are in custodia legis, and only, the court having jurisdiction of the trust should make orders as to paying out the fund. The answer to the rule shows that the funds are the proceeds of the sale of property on leased premises, and that under the Louisiana statute they are liable to contribute to the payment of the rent. Personal property belonging to third persons, when it is contained in the leased house by consent of the owner of the property, is affected by the pledge. Rev. Civ. Code La. art. 2707; Goodrich v. Bodley, 35 La. Ann. 525" court="La." date_filed="1883-04-15" href="https://app.midpage.ai/document/goodrich-v-bodley-7192709?utm_source=webapp" opinion_id="7192709">35 La. Ann. 525. This lien, being valid under the state law, is valid under the bankruptcy law. McLean v. Klein, Fed. Cas. No. 8,884; In re Bowne, Fed. Cas. No. 1,741; In re Wynne, Fed. Cas. No. 18,117. This defense could only properly be adjudicated by the court having jurisdiction to administer the bankrupt’s estate. Other defenses involving similar questions are stated in the
There are other reasons why I think the judgment cannot be properly reversed. The only errors assigned relate to the judgment of March 21, 1900. The previous judgment was in favor of the plaintiff in error, and no objection is made to that by eitlier party. The judgment complained of is the refusal of the court to grant an order to the trustee to pay the plaintiff in error $819.50. The court declined to make such order, "reserving to the plaintiff the right, if it. be so advised, to institute proceedings for its protection in the bankruptcy court of this district.” Ko exception was reserved to this order. Kb timely objection was made to it. Without such objection and exception, it should not now avail to reverse the case. Wilson v. McNaimee, 102 U.S. 572" court="SCOTUS" date_filed="1881-01-10" href="https://app.midpage.ai/document/wilson-v-mcnamee-90269?utm_source=webapp" opinion_id="90269">102 U. S. 572, 26 L. Ed. 234; Mahoney v. O’Leary, 34 Ala. 97" court="Ala." date_filed="1859-01-15" href="https://app.midpage.ai/document/mahoney-v-oleary-6506462?utm_source=webapp" opinion_id="6506462">34 Ala. 97. Tt is not until May 8, 1900, (hat the record shows that the plaintiff was not content to malo; the application in the court administering the trust, and then the first objection is shown by filing the petition for a writ of error. Not only is there an absence of a note on the record of any objection to the order, bat no bill of exceptions is filed in the case. Motions made in cases at law during the progress of a case, and the rulings of the court granting or denying them, must, in order to be reviewed by an appellate court, be taken up on a bill of exceptions. Wiggins v. Witherington, 96 Ala. 535" court="Ala." date_filed="1893-11-15" href="https://app.midpage.ai/document/wiggins-v-witherington--co-6514854?utm_source=webapp" opinion_id="6514854">96 Ala. 535, 11 South. 539; Fleming v. City of Bainbridge, 84 Ga. 622" court="Ga." date_filed="1890-03-10" href="https://app.midpage.ai/document/fleming-v-city-of-bainbridge-5563741?utm_source=webapp" opinion_id="5563741">84 Ga. 622, 10 S.E. 1098" court="Ga." date_filed="1890-03-10" href="https://app.midpage.ai/document/hudson-v-hudson-5563738?utm_source=webapp" opinion_id="5563738">10 S. E. 1098; Berger v. Spalding, 13 La. Ann. 580" court="La." date_filed="1858-08-15" href="https://app.midpage.ai/document/berger-v-spalding-7185750?utm_source=webapp" opinion_id="7185750">13 La. Ann. 580; Murphy v. Simonds, 14 La. Ann. 322" court="La." date_filed="1859-04-15" href="https://app.midpage.ai/document/murphy-v-j-s-simonds--co-7185992?utm_source=webapp" opinion_id="7185992">14 La. Ann. 322; Kerr v. Clampitt, 95 U. S. 188 24 L. Ed. 493" court="SCOTUS" date_filed="1877-12-10" href="https://app.midpage.ai/document/kerr-v-clampitt-89581?utm_source=webapp" opinion_id="89581">24 L. Ed. 493; Railway Co. v. Warren, 137 U.S. 348" court="SCOTUS" date_filed="1890-12-08" href="https://app.midpage.ai/document/montana-railway-co-v-warren-92885?utm_source=webapp" opinion_id="92885">137 U. S. 348, 11 Sup. Ct. 96, 34 L. Ed. 681" court="SCOTUS" date_filed="1890-12-08" href="https://app.midpage.ai/document/montana-railway-co-v-warren-92885?utm_source=webapp" opinion_id="92885">34 L. Ed. 681. The presumption prevails that the circuit court has decided correctly unless the contrary appears from the record. Livingston v. Cooper, 22 Fla. 292" court="Fla." date_filed="1886-01-15" href="https://app.midpage.ai/document/livingston-v-cooper-4913950?utm_source=webapp" opinion_id="4913950">22 Fla. 292. The order or rule recites that it is issued on the motion of counsel for the plaintiff in error, and states what suggestions were made in the motion, but 1ho motion is not otherwise shown in the record. The record contains (he trustee’s answer to the rule setting up certain defenses, and shows that a hearing was had, and the motion refused. Whether That hearing was on affidavits or oral evidence does not appear. No evidence is shown by bill of exceptions or otherwise. Under such circumstances, this court, I think, should presume that the evidence was such as justified the circuit court in refusing to grant the motion. The opinion of the majority, however, finds error, when the record fails to disclose the evidence on which the court acted; and the case is remanded, not for a new trial, but with peremptory instructions to make an order on evidence not disclosed in the record. This conclusion is wrong, 1 think, because it requires the circuit court to interfere with the administration or disposition of a fund in the hands of the district court, it ignores the fact that no objection was made or exception taken to the order here epmplained