Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1874-05-11
An Important Decision in Bank
ruptcy Proceedings by Chief Justice
I..Sf
From the Richmond Wing. |

From the hlcnmOuu w ulg
In the u. S. Circuit Court, sitting in Rich
mond, Chief Justice Waite presiding, the i'm
portant case of John F. Talisferro, bankrupt.
upon petition invoking the supervisory iuris-
diction of the Circuit Court to reverse decree
of Judge Hughes was decided on Saturday.
To this case the petitioners had brought q
suit in Orange Circuit Court and obtained a
decree to sell the real estate OF John +. Ialla.
ferro to satisfy the liens thereon, which bad
been duly reported Before the decree could
be executed, Taliaferro became a bankrupt and
his assignee filed petition to sell his real es
tate discharged OF liens, transferring the liens,
if there were any, to the fund in court. The
court directed the creditors to BIO oouveued ~
at day named at the registers office, to show
cause against the sale in bankruptcy. Notice
was given by publication in newspaper and
summons sent through the mail. The register
reported to the court February 10th, 1874, that
no sufficient cause had been shown why the
sale should not be made by the assignee and
thereupon the judge of the District Court
made 40 order directing the assignee to sell the
land of the bankrupt. In order to reverse this
order the petitioners filed their petition lnvok-
ing the supervisory jurisdiction OF the Circuit
Court.
The petition stated that the petitioners and
other lien creditors had appeared IN response
to the rule to show cause aud hled written OBJ
iections to the sale. The answer of the as
signee admits that some objections were made,
but says he is Informed they were not IN writ
ing: that he had sold the land for over 5, 10000,
and considered it a fair sale; insisted that the
interest of the creditors demanded that the
case should be etained in the District Court,
and the land fund distributed there.
The Chief Justice was of opinion that the
rights of the lien creditors could not be bound
by the informal and summary proceedings 10 the
case; that the District Court ought not to order
sale of real estate, without having the facts
before it to enable it to determine upon the
propriety and necessity of a sale, without know
ing whether the interest of the general credi-
tors demanded it, and whether it could be
made without prejudcing the interests of the
secured creditors; that it was the duty OF the
assignee to have fully Informed the court of the
condition of the property and the amount OF
liens on it; that without this knowledge the
court could not properly order sale; that it
was the duty OF the assignee If the bankrupt
proceedings wsud not give him the requisite
information, to pursue his Investigations in the
State court, but that in point OF fact the as
signee did not do this, but even after he knew
of the liens and the tendency of the suit in the
State court be seems rather to have avoided
giving the court the requisite Information about
the matter, but was swift to obtain decree for
the sale of the land.
The Chief Justice decides that the lien credi
tors who had not proved their debts, as well as
those who had proved, had right to invoke
the supervisory jurisdiction of the Circuit
Court.
The Chief Justice did not decide that the
District Court should not in any case interfere
With proceedings commenced 10 State court
before adjudication of bankruptcy to enforce
valid liens on the baukrupt's land, but he seems
to coincide with Judge Story that the District
Court ought not to interfere with such pro-
ceedings except under very peculiar circum-
stances, as for instance, where there is some
suggestion Of fraud or improper conduct Oh
the part of the parties litigant. In this case
he thought there would be no surplus to come
into the hands Of the assignee for the benefit
but that if there should be any, there was no
difficulty in the assignee going into the State
court and asserting Els rights there.
The decree of the District Court was revers-
ed. This is very important decision to the
profession, and it is probable that hereafter We
shall have very few cases of interference on the
part of the DISTRICT Court with proceedings
pending in State court. at the time of adjudi-
cation iu bankruptcy, to enforce liens. especial
ly where those proceedings have gone so far
that an order of sale has been made of the debt
or's land. Of course it is the effect of the re.
versal cf the decree of the District Court to
render nugatory and void all proceedings under
it, including the sale by the assignee.
The Conservatives of Petersburg have nomi.