Case Name: Lindsay, Trustee, etc., v. Runkle et al.
Court: Supreme Court of Ohio
Jurisdiction: Ohio
Decision Date: 1910-06-28
Citations: 82 Ohio St. 325
Docket Number: No. 11993
Parties: Lindsay, Trustee, etc., v. Runkle et al.
Judges: Summers, C. J., Crew, Spear, Davis and Si-iauck, JJ., concur.
Reporter: Ohio State Reports, New Service
Volume: 82
Pages: 325–338

Head Matter:
Lindsay, Trustee, etc., v. Runkle et al.
Trustee of bankrupt estate — Cannot bring suit for partition of real estate — In which bankrupt is tenant in common, when.
A tmstee of the estate of a bankrupt selected or appointed under the provisions of the national bankruptcy act, is without legal capacity under the statutes of Ohio to bring and maintain a suit for the partition of real estate in which such bankrupt is a tenant in common with others.
(No. 11993
Decided June 28, 1910.)
Error to the Circuit Court of Pickaway county.
On the 29th day of September, 1908, the plaintiff in error filed in the court of common pleas of Pickaway county, his petition in which he prayed for the partition of certain real estate in which the bankrupt, William H. Runkle, was a tenant in common with the defendants in error.
Omitting description of the several tracts of land, that part of the petition important in the consideration of this case is as follows:
“The plaintiff says that he is the duly appointed, qualified and acting trustee in bankruptcy of the estate of William H. Runkle, a bankrupt; that it is to the best interest of the said estate that this proceeding be brought, and that he has a legal right to and is seized in fee simple and entitled to possession as such trustee of William H. Runkle, a bankrupt of the undivided one-fourth part of the following described real estate situate in the county of Pickaway, in the state of Ohio, and in the townships of Madison and Walnut, and being,” etc. Here follows a description of five different tracts. of real estate, some of them containing but a few acres.
The petition alleges that William H. Runkle, the bankrupt, is the son and heir at law of Henry M. Runkle, deceased, and that the personal property of the deceased “is sufficient to pay all the ■debts and claims against his estate.” It is also alleged that Saloma Runkle is the widow of the deceased and entitled to dower in said premises, and that the other defendants, now defendants in error, are tenants in common in said premises with said bankrupt, each entitled to one-fourth part of the premises subject to said dower.
The prayer of the petition is to have the interest of said bankrupt set off to him in severalty, and “that the dower of said Saloma Runkle be assigned to her, and that subject thereto, that partition be made, and his interest set off to him in severalty if the same can be done without manifest injury to the property, but if his interest cannot be so set off without injury to the value of said property, that same majr be appraised and sold, and • for such other relief as may be provided for in law and equity.”
The defendants demurred to the petition on two grounds: (1) That the plaintiff has not a legal capacity to sue. (2) That the petition does not state facts sufficient to constitute a cause of action. The court sustained the demurrer, and the plaintiff not desiring to amend the petition, the same was dismissed at costs of the plaintiff.
The latter prosecuted error in the circuit court for the reversal of said judgment, but the same, on final hearing, was affirmed.
Mr. Joseph W. Adkins and Mr. George W. Lindsay, for plaintiff in error.
Plaintiff claims that under Section 47a-2, Bankruptcy Act of 1898, authority is conferred upon the trustee to pursue any way which the court shall direct to reduce the property of the estate to money, having in view at all times the best interests of the parties in interest (the creditors) and for the purposes of this demurrer, it must be taken as a fact “that it is to the best interests of said estate” that this property be reduced to money through proceedings in partition. The trustee or assignee, under both the present and former bankruptcy acts, is clothed with the power and duty to sue whenever suit is necessary, and he is given the same right in any litigation he may institute which the bankrupt would have had if no decree in bankruptcy had been rendered. Sanger v. Upton, 91 U. S., 56; Sparhawk v. Yerkes, 142 U. S., 1; Sections 11c, 11d, Bankruptcy Act of 1898; Section 5046, U. S. Revised Statutes; Hiscock v. Bank, 206 U. S., 28; Holden v. Stratton, 198 U. S., 202; Hewit v. Machine Works, 194 U. S., 296; Bardes v. Bank, 178 U. S., 524; Dudley, v. Easton, 104 U. S., 103.
The trustee succeeds to all the interests -of the bankrupt, becomes in effect the owner of his property, and subject to his accountability to the court, holds absolute title to such property. Section 70a, Bankruptcy Act of 1898; 5 Cyc., 339; Davis v. Crompton, 158 Fed. Rep., 735, 20 Am. Ban. R., 53; Randolph v. Canby, 20 Fed. Cas., 258; Bromley v. Smith, 2 Bissell, 511; Leighton v. Harwood, 111 Mass., 67.
An assignee for the benefit of creditors has the power to sue for and recover, in the name of such assignee, everything belonging or appertaining to the assigned estate, and, generally, to do whatever the debtor might have done in the • premises. 2 U. S. Ency., 629; Hubbard v. Tod, 171 U. S., 474; Lenox v. Roberts, 2 Wheat., 373; Mueller v. Nugent, 184 U. S., 14; Brent v. Bank, 10 Pet., 596; Section 21e, Bankruptcy Act of 1898; Page v. Edmunds, 187 U. S., 596; Section 5046, U. S. Revised Statutes; Section 14, act of March 2, 1867, ch. 176, 14 U. S. Comp. Statutes, 522; Pearsall v. Smith, 149 U. S., 231; Claflin v. Houseman, 93 U. S., 130; Phelps v. McDonald, 99 U. S., 298; Hammond v. Whittredge, 204 U. S., 538.
It is the policy of the law of the state of Ohio to permit anyone having the legal title to property held in common with others, to have partition of the same, and the plaintiff does not need to go farther and show that partition is required by the demands or the interests of a beneficial owner, or that the same is necessary to protect the rights of those beneficially interested. Lindsay v. Zanoni, 6 C. C, 477; Horstman v. Ritter, 6 N. P. 470; Section 5757, Revised Statutes; Byers v. Wackman, 16 Ohio St., 441; Williams v. Van Tuyl, 2 Ohio St., 337; Tabler v. Wiseman, 2 Ohio St., 208; Section 5772, Revised Statutes.
The only way defendants can defeat the right of this trustee to bring and maintain this suit is by showing that the bankrupt himself did not have title to the property, such as would enable him to maintain partition. They have no interest in the property oí the bankrupt, are not his creditors and cannot be heard to object as to the manner in which this trustee chooses to collect and reduce this property to money.
As to any tenant who might be compelled to suffer partition, may maintain partition himself, see Horstman v. Ritter, 6 N. P., 470, and Section 5754, Revised Statutes.
As to making the right to elect to take at appraisement a test of the right to maintain partition, the law provides that the premises shall be appraised at their fair market value by three competent freeholders of the vicinity, and it is to be presumed that these appraisers will act fairly, and if the appraisement is not fairly made, the trustee would undoubtedly, on proper showing, have the power to have it set aside and a new appraisement made. The trustee of a bankrupt takes more than a bare power of sale in the property of the bankrupt. By the Bankruptcy Act, 1898, Section 47a-2, he shall collect and reduce the property of the estate for which he is trustee, and he has • the power to sue for and recover, as such trustee, everything belonging or appertaining to the assigned estate, and generally to do whatever the bankrupt might have done, had not bankruptcy intervened.
The purchaser from the trustee or assignee in bankruptcy does not acquire by his purchase any greater rights than those possessed by such trustee or ' assignee. 2 U. S. Ency., 915; Greene v. Taylor, 132 U. S., 415; Adams v. Collier, 122 U. S., 382; Crawford v. Halsey, 124 U. S., 648; Easton v. Bank, 127 U. S., 532; Roby v. Colehour, 146 U. S., 153; Cramer v. Wilson, 195 U. S., 408.
If the' trustee can convey absolute title to this real estate, he surely possesses such a title, and if the bankrupt, at the time of his adjudication of bankruptcy, had an absolute title, this title vests in the trustee. Van Arsdale v. Drake, 2 Barb., 599; Sandmeyer v. Insurance Co., 2 S. Dak., 346; Walker v. Ross, 150 Ill., 50; Johnsons Appeal, 103 Pa. St., 373; Burnham v. Logan, 88 Tex., 1.
Furthermore, it has been held that a trustee having the power of sale- may maintain partition and is entitled to exercise his own judgment and discretion upon the question as to whether, or not it is to the best interests of his trust estate to partition the same. Gallic v. Eagle, 65 Barb., 583.
A power to dispose of real estate conferred by will upon a trustee, authorizes a partition. Phelps v. Harris, 101 U. S., 370.
It has been very generally held that an assignee for the benefit of creditors, upon proper showing, may maintain partition of premises held in common by his assignor with others. Horstman v. Ritter, 6 N. P., 470; Jewett v. Perrette, 127 Ind., 97, 26 N. E. Rep., 685; Smith v. Scholtz, 68 N. Y., 41.
This suit in partition is not a part of the proceedings in bankruptcy, but an independent suit brought by the trustee in bankruptcy to assert his rights to property of the bankrupt and to collect and reduce that property to money and is against strangers to the bankruptcy proceedings. Bardes v. Bank, 178 U. S., 524; Whitney v. Wenman, 198 U. S., 539; Pirie v. Trust Co., 182 U. S., 438.
The character in which plaintiff holds title or the manner in which he acquired 'it, is immaterial to the defendants, unless they can show better title to the premises in themselves. If plaintiff is the legal owner, this is sufficient. 30 Cyc., 194; Phelps v. Townsley, 10 Allen, 554; Smith v. Gaines, 38 N. J. Eq, 65; Paine v. Sackett, 27 R. I., 300, 61 Atl., 735.
In this case at bar, the partition will not only “noE be in contravention of the trust,” but for the best interests of the trust.
Mr. Clarence Curtain, for all defendants in error, except William H. Runkle.
The two grounds of the demurrer filed to said petition are: \
1. That the plaintiff has not a legal capacity to sue.
2. That the petition does not state facts sufficient to constitute a cause of action.
It will be observed that' the petition does' not contain any averment to the effect that the trustee in bankruptcy had been ordered or directed by the bankruptcy coun to commence any such action.
In order to determine • this question it will be necessary to examine some of the provisions of the Bankruptcy Act of 1898 as well as .our statute in reference to partition. Sections 2, 47a and 70a, Bankruptcy Act; Sections 5754, 5-756, 5757, 5763, 5764, ’’5765, 5766 and 5770, Revised Statutes of Ohio.
The primary purpose of the bankruptcy act is expressed by Section 2 thereof, which defines the power of courts thereunder.
It will be observed that Section 47a expressly limits the authority of trustees in bankruptcy and that they can do no act under Section 47a, unless it be “under the direction of the court.” It may be observed here that the petition in this case fails to show that the trustee in filing the petition in this case was acting “under the direction of the court.” If-nothing further appeared in this case, that would be sufficient to sustain the judgments of the circuit and common pleas court in sustaining the demurrer to said petition.
Section 70b of the bankruptcy act provides the manner in which the property of the bankrupt may be sold.'
These provisions are all inconsistent with the theory that a trustee in bankruptcy without a special order for that purpose made by the bankruptcy court has the power or authority to commence a suit in partition in a state court. If a trustee in bankruptcy has the right tó commence and prosecute a suit in partition in a state court he must do so under the laws of the state and he must have authority to submit himself to and comply with the laws of the state.
We fail to find any provision in the bankruptcy law by which the trustee could elect to take the estate at the appraised value or by which the court appointing him would have power to direct him to do so. Under the state law if neither party elects to take the estate at the appraised value it must be sold and it may be sold at two-thirds of the appraised value thereof. Under the bankruptcy act the trustee cannot sell without the approval of the court for less than seventy-five per cent, of the appraised value. Where lands are sold in partition a deed for the same is to be made by the sheriff of the county. Under the bankruptcy act it is made the duty of the trustee upon a sale of the property to make a deed therefor to the purchaser!
In the case of Rector, Trustee, v. Reinhard, (unreported and unpublished), the circuit court of Franklin county in substance held that while a trustee in bankruptcy might be compelled to “suffer partition” under Section 5754, Revised Statutes of Ohio, that he did not have such an estate or interest that he could compel a partition of real estate under that section of the statutes.
We now have the holding of two common pleas courts (in the case at bar and the Rector case) and of two circuit courts (same cases) that a trustee in bankruptcy has not the right to maintain an action for the partition of real estate, the title to which the bankrupt held prior to his having been adjudicated a bankrupt, as a tenant in common with others, and unless these courts are clearly wrong the judgment in this case should be affirmed in view of the fact that titles to real estate will be made to depend, in cases of this character, upon the decision rendered in this case.

Opinion:
Price, J.
The plaintiff in error, as trustee of William H. Runkle, a bankrupt, holds that position under certain provisions of the bankruptcy act, whereby the creditors of the bankrupt may elect a trustee, or on failure to so act, the court of bankruptcy may appoint the trustee. If the trustee elected by a majority of the creditors is an incompetent or unsuitable person, the bankruptcy court may disapprove of the selection and another may be .appointed by the court after such creditors have failed to select a suitable person, and when the trustee so created has accepted and become duly qualified as required by the statute, he is invested with the title of the bankrupt to his estate real and personal of whatever character, not exempt under the law. This is so by virtue of the statutes relating to the subject and not by virtue of any direction or will of -the bankrupt.
Without considering all the particular steps to be taken or observed by the trustee in discharge of his duties, it is- sufficient here to notice some of the consequences of the procedure.
By clause 2 of Section 47 of the Bankruptcy Act, it is made the duty of the trustee to reduce to money the property of the estate, under the direction of the court, and by clause 6 he is required to keep regular accounts showing' all amounts received and from what source. The provisions of Section 70 which relate to sales of property are as follows: "All real and personal property shall be appraised by three disinterested appraisers; they shall be appointed by and report to the court. Real and personal property shall, when practicable, be sold subject to the approval of the court; it shall not be sold otherwise than subject to the approval of the court for less than seventy-five per 'centum of its appraised value. The title to property of a bankrupt estate/ which has been sold as herein provided shall be conveyed to the purchaser by the trustee."
In Section 58 (Bankruptcy Act) - it is provided that creditors shall have at least ten days' notice by mail of all proposed sales of property ct cet.
Another provision of the act requires that - all sales shall be by public auction unless otherwise ordered by the court. There are provisions as to sale of property encumbered by lien; giving the court, on proper petition by the trustee, the power to order sale, subject to or free of liens as may be considered best, by the court. The trustee is carefully instructed by the Bankruptcy Act as to his powers and duties, and in discharge of many of his duties he is under the control of and answerable to the court of bankruptcy.
We need not further occupy this field of investigation, but we have gone far enough to see that the jurisdiction and powers of the court of bankruptcy are peculiar to that court, made so by the law creating and regulating its jurisdiction, and we are now to determine the standing and rights of such trustee when he enters the state courts claiming to be a tenant in common asking partition of real estate.
He comes to the state court as a stranger to its jurisdiction, although he may resort to it to enforce his rights in certain cases. He says in his petition that he belongs to another jurisdiction, and gives the sign by which he may be known, viz., he is trustee of a tenant in common who is a bankrupt. He does not disclose in his petition that the court of bankruptcy had ordered or authorized him to come into the state court, for any purpose, nor does he ask the state court to order a sale in either of the ways pointed out by the statute under which he was appointed and qualified.
Is he a tenant in common, or is he but the trustee of a tenant in common?- He is invested with the title of the bankrupt, not as a purchaser, or under other form of contract, but solely by operation of law and for a special purpose, that he may convert the estate into money with which to pay the debts of the bankrupt.
He may, in the bankruptcy proceedings, and according to the law on that subject, sell the undivided interest of the bankrupt in the lands, and convey such interest to the purchaser who may thus become a tenant in common with the owners of the other interests, and that path appears to be free from doubt or obstruction.
But what confronts the trustee as he asks partition in the state court?. The suit must be entertained and conducted under the laws of the state. What would the trustee do or say, in case one or more of the tenants in common should answer and charge that the bankrupt tenant in common had received and enjoyed the rents and profits of the estate for years, and ask an accounting for the same? Would he have to consult the bankruptcy court as to his duty in such case? If the dower of a widow is to be assigned, as is required in this case, it must be done under the state law. If the commissioners appointed to make partition "are of opinion that the estate cannot be divided without manifest injury to the value thereof, they shall return that fact to the court with a just valuation of the estate, whereupon if the court approve the return, and one or more of the parties elect to take the estate at such appraised value, the same shall be adjudged to him or them, upon his or their paying to the other parties their proportion of the appraised value thereof according to their respective rights," etc. >
This right of election is vested by law m each of the tenants in common, but it could not be exercised by the trustee, without using the estate otherwise in his hands to make the necessary payments to other co-tenants.
If no such election is made, "the court may, at the instance of a party, make an order for the sale thereof at public auction by the sheriff who executed the writ of partition, or his successor in office." (Section 5764, Revised Statutes.) Section 5765 provides: "but the estate shall, not be sold for less than two-thirds of the appraised value thereof as returned by the commissioners." Here would be a conflict between the state and bankruptcy courts, for we have observed that it is provided in Section 70b of the Bankruptcy Act, that "all real and personal property belonging to bankrupt estates shall be appraisedJby three disinterested appraisers; they shall be appointed 'by, and report to the court. Real and personal property shall, when practicable, be sold subject to the approval of the court; it shall not be sold otherwise than subject to the approval of the court for less than seventy-five per centum of its appraised value."
The court mentioned is the bankruptcy court.
The sale in the partition case is governed by prescribed rules which, as we see by comparison, are in plain conflict'^with the provisions for sale in the bankruptcy proceeding, and the trustee seems insistent in promoting and maintaining that conflict. We know of no method of blending these jurisdictions in order to have partition made that will be just and equitable to the widow and all the tenants in common as their rights may appear.
It is not our duty to entertain the suit of the trustee when it is inevitable that a conflict of jurisdiction will arise between the state and federal courts. The trustee may sell the estate of the bankrupt without partition, as before observed, with results less harmful than a complication of questions and interests likely to follow such an action for partition.
We still think the trustee in bankruptcy is not a tenant in common, as recognized in partition proceedings, but is but a trustee of a tenant in common.
The foregoing reasons áre sufficient to sustain the judgment of the lower court and its judgment is affirmed.
Judgment affirmed.
Summers, C. J., Crew, Spear, Davis and Si-iauck, JJ., concur.