112 Wis. 406 | Wis. | 1901
1. The first question raised by the defendants is whether the courts of this state will take jurisdiction of actions arising under the federal bankruptcy act. The plaintiff is suing, in his capacity as trustee in bankruptcy of the defendant Julius Bruss, to set aside conveyances of his real estate alleged to have been made some six months prior to the filing of his voluntary petition. His authority to sue is given by Bankruptcy Act of 1898, § 10. Subdivision “ e ” of this section provides:
“ The trustee may avoid any transfer by the bankrupt of his property which any creditor of sucli bankrupt might have avoided and may recover the property so transferred, or its value, from the person to whom it was transferred, unless he was a bona fide holder for value prior to the date of the adjudication,” etc.
It is said by defendant’s counsel that Congress has no power to impose on the state courts the duty of administering any part of the bankrupt act, that it is purely discretionary with them whether they will act or not, and that the policy of this state, declared under the act of 1861, was that such jurisdiction would not be entertained. He cites two cases (Brigham v. Claflin, 31 Wis. 607, and Bromley v. Goodrich, 40 Wis. 131) to sustain his position. In the first of these cases, Mr. Justice Cole, who wrote the opinion, was inclined to hold that the federal courts had exclusive jurisdiction of all proceedings under the bankrupt law; but the case was decided on the ground that, the transaction attacked by the assignee being valid under the state law, the courts of this state would not lend their aid to avoid it at
But this case is unlike either of the cases mentioned. Those were cases where the conveyances mentioned were made within the four months limited by sec. 35 of the act of 1867. In this case the conveyances attacked were made more than six months prior to the filing of the petition in bankruptcy, and do not come within the prohibitory terms of the act of 1898. The action is by the trustee, representing the creditors, to set aside conveyances alleged to have been made in fraud of creditors, and prohibited by sec. 2320, Stats. 1898. It involves no application of the penal statutes of the United States. Under the act of 1867 the supreme court of the United States held, contrary to the cases above cited, that the assignee in bankruptcy might sue in the state courts, no exclusive jurisdiction being given to the courts of the United States, and that in such cases the state courts did not exercise a new jurisdiction conferred upon-them, but their ordinary jurisdiction derived from their constitution under state law. Claflin v. Houseman, 93 U. S. 130; McKenna v. Simpson, 129 U. S. 506. The latter case is one very similar in its facts to the one at bar, and held that the decision of the state court as to what should be deemed a fraudulent conveyance did not present a federal question so that it could be taken to the supreme court for review.
2. A second point urged with confidence is that the trustee possesses no greater rights than the creditor he represents. He is proceeding under the state law, and must show that he is a judgment creditor, or represents a judgment creditor, who has exhausted all his legal remedies, before he can maintain this action. There can be no doubt about the general proposition that, before a mere creditor or his representative can attack a conveyance alleged to have been made by his debtor in fraud of his creditors, he must show that he has exhausted his legal remedies. Gilbert v. Stockman, 81 Wis. 602; French L. Co. v. Theriault, 107 Wis. 627; Ellis v. S. W. L. Co. 108 Wis. 313. Sec. 3029, Stats. 1898, provides that when an execution has been issued upon a
This leads us to the consideration of the situation presented by the allegations of the complaint. It is not alleged that any of the creditors have ever obtained judgment on their claims. The trustee has not secured a judgment, and it is not perceived how either he or the creditors could do so, under the provisions of the bankrupt act. By sec. 11 all suits founded on a claim from which a discharge would be a release, pending at the time of the petition, are to be stayed until after an adjudication or the dismissal of the petition, and, if such person be adjudged a bankrupt, such suits are to be stayed until twelve months after the date of such adjudication, or, if within that time such person applies for a discharge, then until the question of such dis
3. A third proposition is that the trustee cannot maintain this action unless it is shown by the complaint that he has not sufficient assets in his hands to satisfy the claims óf the creditors of the debtor. No such showing is made in the complaint. For all that appears therein, there may be money and property enough in his hands to pay every claim filed against the debtor. The conveyances attacked were good between the parties thereto. Ellis v. S. W. L. Co. 108 Wis. 313. Third parties are not allowed to impeach them unless it is necessary to do so in order that justice may be done. The trustee has no right superior to that of the creditors he represents. If we admit that the facts stated show such transfers to have been fraudulent, still no right to avoid them exists unless it appears that some one was harmed. It seems quite evident, without argument, that, unless it is made to appear that the property so conveyed
By the Court.— The order is reversed, and the cause is remanded with directions to the court below to sustain the-demurrer, and for further proceedings according to law.