128 F.2d 110 | 5th Cir. | 1942
Appealing from orders
The appeals come up in this way. On August 25, 1939, the City of Wauchula, filed a petition for composition of its debts in accordance with the plan
On February 9, 1940, the court entered an interlocutory decree, approving the plan as fair and equitable and to the best interest of the creditors, making it temporarily operative pending the. final decree, directing the petitioner to begin and carry it through to a conclusion within 60 days, and pending the delivery of the new securities, retaining jurisdiction to -consummate the plan and enjoining
Thereafter, the- city being unable to carry out the plan, -a series of orders was entered extending the time for doing so, and on April 11, 1941, it appearing that it would not be carried -out, the court issued an order requiring the city to file a statement showing the amount of monies in each separate debt service account, as of the filing of the petition and those received subsequent thereto. The statement having been filed, the court on June 23, 1941, entered an order reciting the failure of the plan, “and that the pendency of the proceedings should be continued insofar as is
The order concluded with a paragraph
On October 10th, Crummer & Company and the other appellees, filed their motion to enjoin appellants from further proceedings with the mandamus suit, and adjudge them in contempt for steps they had taken therein. On October 10th, a temporary, and on October 24th, a permanent, order restrained and enjoined appellants from further’ continuing or prosecuting their mandamus action and from seeking or obtaining any benefit on account thereof. This was followed by the order of November 6, 1941, adjudging appellants in contempt for having instituted the proceedings, and ordering them to pay as costs and damages, $740.69.
The motion to dismiss because the orders are interlocutory and therefore not appealable is, neither in its premise nor in its conclusion, well founded. Neither of the orders is interlocutory, each purports to be, each is a final order. By one of them appellants are “permanently enjoined. By the other they are finally adjudged guilty of contempt and finally ordered to pay money. But if they were interlocutory they are orders in controversies, arising in proceedings in .bankruptcy and appealable whether interlocutory or final, under Sec. 47, Title 11, U.S.C.A.
On the merits the matters are not so easily disposed of. As to the injunction decree depriving plaintiff of the benefit of the writ and requiring it to submit its claim in the composition proceeding, there is much to be said for appellants’ position. This is, that a municipal composition proceeding,
So strong is this support that if the city had objected below and were objecting here to the assertion over it and its funds, of the jurisdiction in question, we should be bound to sustain its objection and deny the asserted jurisdiction. But the city is not objecting. On the contrary it has fully acquiesced in the orders as appropriate to, and in, the proceedings so long delayed by its action, and has taken steps to carry them out. We think that it does not lie in the mouth of appellants to complain of orders entered in the assertion of a jurisdiction to which the city has assented, by, in effect, tendering the funds into, and submitting, in the winding up of the proceeding, to their distribution, by the court. Especially will appellants not be permitted to complain of the order taking jurisdiction over the funds when instead of appealing from it as they could have done they elected to test it collaterally. In such a testing the burden rested upon them to show excess of jurisdiction and that burden they have failed to sustain.
It is not meant by this to say that the city could, by consent, confer upon the court a jurisdiction which had not been conferred by law. It is meant though to say; that while the jurisdiction conferred by the statute depending, as it does, upon the city’s volition, may not be extended by the court beyond that volition, and that normally the plan of composition failing, the court may not administer upon the funds gathered by the city for use in carrying out the plan, the city may, by further acts of volition, consent to the custody and distribution by the court of the gathered funds, and the jurisdiction, asserted with such consent, may not be questioned by creditors interested in the funds nor may they be reached by process from or judgments in other courts.
The appeal from the contempt order stands differently. Until the order of June 23rd, appellants were under the sweeping injunction embodied in Clause (j), Note 3 supra. This injunction specifically governed the commencement of suits by mandamus or otherwise, and had plaintiffs,
Unfortunate and unsatisfactory as such scrambles for jurisdiction are, and to be avoided whenever possible by seemly and orderly procedure, Bryan v. Speakman, 5 Cir., 53 F.2d 463, a contempt proceeding is not the way to resolve them, nor to advance the establishment between state and federal courts of that greatly to be desired comity.
The contempt judgment may not stand. Bender v. Young, Mo.Sup., 252 S.W. 691; In re Watts, 190 U.S. 1, 23 S.Ct. 718, 47 L.Ed. 933; 27 A.L.R. 19; In re Howell, 273 Mo. 96, 200 S.W. 65. The injunction order is affirmed. The contempt order is reversed and the proceeding for it is dismissed. The costs of the appeal are to be equally divided.
Affirmed in part and reversed and dismissed in part.
One of the orders entered October 24, 1941, enjoined appellant Leco Properties, Inc., from further continuing or prosecuting the mandamus action which it had brought in the state court against the City to obtain preferential payment
The other entered November 6, 1941, adjudged Leco Properties and Garner, its attorney, in contempt for having brought the action and ordered them to pay “to the attorney R. E. Crammer & Company, John R. Hill, D. A. Hester, Virginia S. Pleus and James Davis, creditors of the City of Wauchula, the sum of $740.69, as damages and reasonable attorney’s fees incurred by such persons in defending the fund under the control of this bankruptcy proceeding.”
(1) The plan listed the bonds outstanding and proposed to refund them by exchanging for them refunding bonds bearing a less rate of interest; (2) reserved for the benefit of the respective security holders, all rights and remedies which were available for the support and enforcement of the original bonds; (3) tax support for the refunding bonds was provided by an agreement between the city and the holders of the refunding bonds for an ad valorem tax levy in each of the years beginning in 1938 until the bonds were retired, amounts for each of the years to be as stated in the plan, beginning with $50,000 and running up to $70,000. The ordinance making this agreement concludes: “The taxes so levied shall be in addition to all other taxes levied by or on behalf of the city and the proceeds thereof of all tax certificates and of all tax certificates and tax deeds issued therefor are hereby appropriated and shall be used exclusively for the purpose for which the same are levied.” (4) The plan contained provision for protection of the bondholders if the sums agreed to were not raised for the purchase of the refunding bonds at prices named and generally for carrying out the plan.
“(j) That pending the delivery of the new securities under the plan of composition, and under this order, and pending the entry of a final decree herein, all persons, firms and corporations be and they are hereby enjoined from collecting or enforcing, or attempting to collect or enforce, any claim' or claims, against said Petitioner on account of any of the securities affected by the plan of composition, including judgments thereon, and that they be and are hereby further enjoined from prosecuting any suit or suits, at law or in equity, based upon such bonds or coupons, including judgments thereon, or interest thereon, and from commencing any suits by way of mandamus, or otherwise, against Petitioner on account of any such securities or judgments thereon.
“(k) That this Court hereby expressly retains jurisdiction herein to supervise the consummation of said plan of composition, including, among -other things, the delivery of the new refunding bonds and the certificates of deposit, and the distribution thereof by the depositary, and for the purpose of entering a final decree herein, together with such injunctional orders as may be necessary to make such plan of composition fully effective when consummated.”
“5. That the pendency of this cause is hereby continued and jurisdiction is hereby specifically reserved for the purpose of making and enforcing the proper distribution of the monies involved in the prior portions of this order; provided, however, that such pendency shall in no manner constitute a bar to the enforcement by creditors of such rights as they may have on aec'ount Of securities affected by the Plan of Composition herein; and any and all prior injunctive orders heretofore entered herein against the commencement of continuation of any suits or proceedings having for their pur-pose the enforcement of such securities, or judgments obtained thereon, be, and the same are, h,ereby vacated and dissolved; provided further, however, that all monies herein by this order provided to be disbursed are to remain within the sole jurisdiction of this Court and subject to its disposition and shall in no manner be amenable to any suit, writ, or other process other than as specifically ordered and . adjudicated in these proceedings.”
Chap. 9, Title 11, §§ 401-403.
In speaking of ordinary compositions, the Supreme Court said: “Composition is a settlement by the bankrupt with his creditors. In a measure, the composition supersedes, and is outside of, the bankrupt proceedings. Cumberland Glass [Mfg.] Co. v. De Witt, 237 U.S. 447, 454, 35 S.Ct. 636, 59 L.Ed. 1042. It originates in a voluntary offer by the bankrupt; and results, in the main, from voluntary acceptance by his creditors.” Nassau Smelting & Refining Works v. Brightwood Bronze Foundry Co., 265 U.S. 269, 271, 44 S.Ct. 506, 507, 68 L.Ed. 1013.
Sec. 30, Title 11 governing composition of persons subject to be adjudged bankrupt provides in Sub. (e), “Upon the confirmation of a composition, the consideration shall be distributed as the judge shall direct, and the case dismissed. Whenever a composition is not confirmed,
Sub. f See. 403 provides that where the composition has been confirmed by an interlocutory decree and “the money, securities, or other consideration to be delivered to the creditors under the terms of the plan shall have been deposited with the court or such disbursing agent as the court may appoint or shall otherwise be made available for the eredi-tors” the court shall enter a final decree discharging the municipality of all debts and liabilities dealt with in the plan except as provided therein.
“(i) In proceedings under this chapter and consistent with the provisions thereof, the jurisdiction and powers of the court, the duties of the taxing district and the rights and liabilities of creditors, and of all persons 'with respect to the taxing district and its property, shall be the same as if a voluntary petition for adjudication had been filed and a decree of adjudication had been entered on the day when the petition of the taxing district was approved.”