Case ID: ala_69/html/0515-01.html
Source: Caselaw Access Project
Author: {"author": "SOMERVILLE, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Pollock & Co. v. Hill, Assignee.
    
      Bill in Equity by Assignee in Bankruptcy to hme Gonveya/nce of Land Bet aside a/ncl Ocmcelled.
    
    1. Bankruptcy ; right of assignee, prior to adoption of Revised Statutes, to bring suit in State courts. — Priorto the adoption of the Revised Statutes of the United States, the chancery courts of this State had jurisdiction to entertain a bill filed by an assignee in bankruptcy, to assail and set. aside transfers of property made by the bankrupt in fraud of the rights of his creditors, or in fraud of the assignee as their trustee, or fiduciary representative.
    2. Same; when jurisdiction of Federal courts exclusive. — Since the adoption of the Revised Statutes, June 22d, 1874, and the act amendatory of the bankrupt act of 1867, approved on same day, the jurisdiction of the Federal courts has been exclusive as to all actions instituted by an assignee in bankruptcy for the recovery or collection of the assets of the bankrupt, except in cases coming within the influence of the exception created by the amendment.
    3. Same ; when State courts may take jurisdiction.- — In such cases the State courts may take jurisdiction, under the exception created by the amendment, when the amount in controversy does not exceed five hundred dollars, and the Federal court in which the proceedings in bankruptcy are pending, has authorized or directed the assignee to sue in • the State courts.
    Appeal from Jefferson Chancery Court.
    Heard before Hon. Charles Turner.
    The bill in this cause was filed on the 24th of April, 1879, by H. L. Hill, as the assignee in bankruptcy of D. F. Constantine, the appellee, against J. Pollock & Co., the appellants, to have delivered up and cancelled a deed executed by the bankrupt on the 2d of March, 1878, and during the pendency of proceedings in bankruptcy, against him, conveying to the appellants certain real estate situate in Birmingham. It is shown by the averments of the bill and exhibits thereto, and also by the proof, that on the 23d of February, 1878, the requisite number of •creditors under the bankrupt law filed their petition in the District Court of the United States for the Northern District of Mississippi, to have D. F. Constantine and one S. S. Fields, his partner, declared and decreed bankrupts; that on the 24th of April, 1878, said District Court entered a decree, declaring and adjudging the said Constantine and Fields bankrupts, and appointing the appellee as the assignee of their estates in bankruptcy ; and that on the 3d of June, 1878, the register of said court executed to the assignee an assignment of all the property and effects of said bankrupts under the provisions of the bankrupt law. The appellants were creditors of Constantine & Fields,, and the deed was executed to them in payment of a part of what that firm owed them. The bill, after charging that - the deed was inoperative as against the assignee because it was executed after proceedings in bankruptcy .had been instituted, and while such proceedings were pending, also sets up a contemporaneous parol agreement to the effect, that the deed was delivered on condition that the title to the real estate described therein should not vest thereunder, until said District Court should determine that Constantine “was not a bankrupt, and until he had been discharged from the court as free of the charge, and proceedings of bankruptcy so instituted and pending in said court against, him.” The other facts are sufficiently stated in the opinion.
    The Chancery Court overruled a demurrer filed to the bill,, and on final hearing, had on pleadings and proof, decreed to the complainant the relief prayed. The decree overruling the demurrer and the decree on final hearing are here assigned as error.
    Rios & Wiléy, and J. T. Glaze, for appellants.
    J. T. Terry, contra.
    
    (No briefs came to the hands of the reporter.)
   SOMERVILLE, J.

Prior to the adoption of the Revised Statutes of the United States, which was on June 22d, 1874, the chancery courts of this State had jurisdiction to entertain a bill filed by an assignee in bankruptcy, to assail and set aside transfers of property made by the bankrupt, in fraud of the rights of his creditors, or in fraud of the assignee as their trustee or fiduciary representative. — Barnard v. Davis, 54 Ala. 565; Bradley v. Hunter, 50 Ala. 265; Claflin v. Houseman, 93 U. S. 130; Cook v. Whipple, 14 Amer. Rep. 202 [S. C. 55 N. Y. 150].

Since the adoption of these statutes, however, and the enactment, on the same day, by Congress, of the law of June 22d, 1874, amendatory of the bankrupt act of 1867, the jurisdiction, of the Federal courts has been exclusive as to all actions instituted by an assignee in bankruptcy for the recovery or collection of the assets of the bankrupt, unless such actions can be brought within the influence of the exception created by the amendment. — U. S. Stat. at Large, vol. 18, part 3, p. 178; Laws of U. S. p. 210, § 2.

In order to confer such jurisdiction upon the State courts, two prerequisites are essential. The first is, that the court having charge of the estate of the bankrupt, which is of course the court in which the bankrupt proceedings are pending, shall authorize or direct the assignee to sue in the State courts; and the second is, that the amount in controversy in such action shall not exceed the sum of five hundred dollars. This question was considered by this court in Glover, Assignee, &c., v. Love, 68 Ala. 219, where the conclusion above indicated was reached. See Dodd v. Hammock, 59 Ga. 403; Sherwood v. Burns, 58 Ind. 502; Olcott v. Maclean, 73 N. Y. 223.

In this cause the bill was filed in April, 3879, and the Chancery Court was, therefore, without jurisdiction over the subject-matter in controversy, under the principle above declared. The record shows that the fair value of the laud conveyed by the bankrupt to the appellants was about two thousand dollars. It fails further to show that the assignee had any authority conferred on him by the bankrupt court to bring this suit in a State court. He was authorized and directed merely “to take charge ■of all the assets, real and personal, of said bankrupt in the State of Alabama, and to bring suit for the recovery of all real and personal property, in the State of Alabama, rightfully belonging to the estate of said bankrupt.” There is nothing said here 0-about suing in the State courts. No authority to this end is given to the assignee. ’Without the requisite order, the Federal courts in this State constituted the proper forum for the litigation here presented.

The chancellor erred, therefore, in taking jurisdiction of the case as made by the record. His decree must be reversed, and a decree is rendered in this court dismissing the complainant’s bill at his cost.