Case ID: f_118/html/0672-01.html
Source: Caselaw Access Project
Author: {"author": "WHEELER, District Judge.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In re BALL.
    (District Court, D. Vermont.
    November 28, 1902.)
    1. Bankruptcy—Jurisdiction of Bankruptcy Courts—Injunction—Restraining Sale under Bankrupt’s Mortgages.
    Bankr. Act 1898, § 2, cl. 7 [ü. S. Comp.' St. 1901, p. 3421], conferring on the courts of bankruptcy the power to cause estates of bankrupts to be collected, reduced to money, and distributed, and determine controversies in relation thereto, except as otherwise provided, which exception is by section 23 of suits at law [U. S. Comp. St. 1901, p. 3431], as distinguished from proceedings in bankruptcy, authorizes a bankruptcy court to enjoin, pending the bankruptcy proceedings, the sale of a stock of merchandise by a mortgagee under mortgages executed by the bankrupt more than four months before his bankruptcy, where the value of the stock greatly exceeds the amount of the mortgages, and where, though conceding their validity, their effect in covering old and new goods may be questioned.
    In Bankruptcy.
    Porter & Thompson, for creditors and trustee.
    Cook & Norton, for petitionee.
   WHEELER, District Judge.

This cause has been heard upon a petition of creditors for an injunction against the sale by Josephine Lee of a stock of hardware goods in a store occupied by the bankrupt, on mortgages more than four months old, pending the appointment of a trustee, on which a temporary stay was granted pending the motion. The value of the stock greatly exceeds the amount of the mortgages. The validity of these mortgages is not denied, but their effect and extent in covering old and new goods may come in question. This brings them well within the jurisdiction of the court of bankruptcy, as provided in section 2, cl. 7 [U. S. Comp. St. 1901, p. 3421], to “cause the estates of bankrupts to be collected, reduced to money and distributed, and determine controversies in relation thereto,- except as herein otherwise provided.” The exception is by section 23 of suits at law [U. S. Comp. St. 1901, p. 3431], “as distinguished from proceedings in bankruptcy.” Bryan v. Bernheimer, 181 U. S. 188, 21 Sup. Ct. 557, 45 L. Ed. 814. This stock of goods is a part of the estate to be administered by the trustee, upon which the petitionee has only a lien, which, to its lawful extent, is to be respected and adjusted in the proceedings. A sale by her upon the mortgages, as threatened, would defeat this right, and confessedly waste the estate and wrong the general creditors, while in administration by the trustee her claims will be saved to her, by being left to rest upon the proceeds. The injunction should therefore be continued pending the administration, which will leave the goods for-the trustee, as a part of the estate, to be proceeded with under direction of the referee.

A motion is made for a direction for delivery to the trustee, but that is not deemed necessary, for it is not to be presumed or expected that the petitionee or any one will attempt to stand in the way of the trustee in taking possession of any of the estate.

Stay continued pending the proceedings.