The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1903-05-30
THE WATTs-sACHS CASE.


The opinion of the Supreme Court of the
United States in the Watts and Sachs cases
has been received by officials Of the District
Court for Indiana 1t has been very much
misrepresented In the Washington dis
patches. An examination of 1t shows that
Judge Anderson was sustained by the
Supreme Court in all his legal propositions.
and that it disagreed with him only as TO
the good faith of Watts and Sachs. The
following are extracts from the opinion Of
the Supreme Court:
whether the transfers OF 1910 and
$500 could have been overhauled I'm
that suit dn the Floyd Circuit Court
we need not inquire. as they were an
doubtedly acts of bankruptcy, and as such
justified the application to the bankruptcy
court. And the operation of the bankruptcy
laws of the United States cannot be
defeated by insolvent commercial corpora
lions applying to be wound up under State
statutes. The bankruptcy law is para
mount and the Jurisdiction of the Federal
voked, in the administrator OF the affairs
OF insolvent persons and corporations. Is
essentially exclusive. Necessarily when like
proceedings in the State courts are
ceedings in bankruptcy. care has to be
taken to avoid collision In respect OF
property in possession of the State courts
such cases are not cases OF adverse pos
session or of possession In enforcement or
pre-existing liens, or in aid of the bank
ruptcy proceedings. The general rule as
between courts of concurrent jurisdiction Is
that property already in possession OF the
receiver of one court cannot rightfully be
taken from him without the courts con-
sent, by the receiver OF another court APP
pointed In a subsequent suit, but that rule
can have only a qualified application where
winding up proceedings are superseded by
those in bankruptcy as TO which the turis-
diction is not concurrent. Still IL obtains
as a rule of comfy, and accordingly the
receiver of the District Court brought bis
appointment to the knowledge of the Floyd
Circuit Court and requested the delivery or
the assets.
we think there can be no reasonable
doubt that the judge OF Floyd Circuit
Court and Messrs. Watts and Sachs enter
tanned the conviction in good faith that the
custody of the State court could not be
lawfully interfered with by the bankruptcy
court by summary proceedings. Their view
was that the Jurisdiction of the State court
having attached. that court was. In all
voluntarily surrendered. But IL the State
court had taken into consideration that
Zier * Co. had committed acts OF
t 3anmaePsey that a. the the a msfsfl 81 RBsnsrupscy
act of Feb. 5. 1903. provided that acts
of bankruptcy would exist IL a person
trustee for his property or because OF IN
solvency a receiver or trustee has been put
in charge of his property under the laws
OF a State or a Territory. or OF me United
y aAA1 AAAoA III
ruptcy law is TO place the administration
OF affairs OF insolyents exclusively under
the Jurisdiction OF the bankruptcy courts,
1t appears to US that instead OF continuing
the application Of the Federal receiver for
three weeks. the court should have directed
once, or at least after the report OF its
own receiver on its return from INDIAN
apolfs .
we do not understand IL TO be con-
tended that the passage OF the bankruptcy
act in itself suspended the statute OF
Indiana in relation to the appointment OF
receivers. but only that when the proceed
ings for such appointment took the form.
as they did here, OF winding up the Affairs
of the insolvent corporation, the proceed
ings In bankruptcy displaced those In the
State court and terminated the jurisdiction
Of the latter. But the acceptance OF that
view does not necessarily involve the con-
cession that these attorneys were guilty or
contempt of the District Court because OF
the action of the State court
They could not be found guilty because
they believed and declared their belief that
the District Court had rot. Granting that
they were mistaken. IL does not follow that
their mistaken conviction constituted con-
tempt. In point Of fact the State court
agreed with them. and would certainly not
have entered orders of whose validity IL
entertained any reasonable doubt.
1.-The distinction between the exclusive
Jurisdiction of the court m bankruptcy.
proceeding. as AZ were in rem. 20 determine
the status Of a debtor and his assets. and
the Jurisdiction over properly subjected 10
particular liens. and the like. exercised by
courts of concurrent jurisdiction. was
probably thought by them not TO apply IN
the circumstances existing here. and advice
based on that opinion could not In itself
constitute conteuot-"