Court Opinion

ID: 9651573
Source: CourtListenerOpinion
Date Created: 2023-08-23 16:27:36.722137+00
Date Added: 2024-06-11T18:12:36.272321
License: Public Domain

LEARNED HAND, District Judge
(concurring) . The' right of the District Court to entertain such a bill as that at bar depends upon the jurisdiction of a court of equity over a.judgment creditor’s bill; it is that and nothing more. Pusey & Jones v. Hanssen, 261 U. S. 491, 43 S. Ct. 454, 67 L. Ed. 763. True, it is not necessary that the debt shall be in judgment and that execution shall be returned nulla bona, if the defendant consent (Re Metropolitan Street Railway Receivership, 208 U. S. 90, 28 S. Ct. 219, 52 L. Ed. 403), but that in no sense changes the equity of the bill, any more than the fact that it is brought on behalf of all creditors instead of on behalf of one. In such a suit the court takes possession of the property, and sells and distributes it; but in so doing it acts strictly in rem and does not go beyond the reach.of its process. This remains true although the court acting in personam may compel the debtor to convey assets which it cannot seize (Ager v. Murray, 105 U. S. 126, 26 L. Ed. 942), or which may be without the jurisdiction (Bailey v. Ryder, 10 N. Y. 363, 370), just as it may in a foreclosure (Muller v. Dows, 94 U. S. 444, 24 L. Ed. 207). Yet the scope of the bill still remains a distribution of the assets which can be brought within its jurisdiction, in payment of the defendant’s debts.
In the suit at bar the order under appeal requires the defendant to commit an act of bankruptcy and to consent to file a voluntary petition, either of which will defeat the very purpose of the bill by compelling a surrender by the receivers to the bankruptcy court which supersedes .all other insolvency proceedings. I cannot conceive how that can be thought to be within the purposes of the *43suit to 'which the' defendant consented, and I submit that it is entitled to insist upon limiting th^t consent to what the bill proposed.
As I undersand it, the receivers support their position chiefly by an appeal to Graselli Chemical Co. v. Ætna Explosives Co., 252 F. 456 (C. C. A. 2) 164 C. C. A. 380. There it is true that by a divided court we held in a suit like this the preferred shareholders of a company in receivership might be enjoined from exercising rights given them under the charter. If the principles there enunciated were again to arise, for myself, .1 should feel it necessary to give the closest scrutiny to their validity and to consider in the gravest possible way whether the authority of the case must not be confined to the very facts then before the court. Por that reason I am quite unwilling now by silence to give any apparent assent to its broader implications. However, I entirely agree with my brother MANTON in thinking' that even if Graselli Chemical Co. v. ¿Etna Explosives Co., supra, should in the end become broadly accepted, the case at bar is certainly beyond its ruling. At least the court did not there in effect terminate the suit itself; its action, proper or not, was confessedly ancillary, and was supported only on the theory that it made possible the distribution of the assets in the suit itself.
The receivers’ argument goes even further. We are asked to hold that such a suit submits the corporation generally to a visitator-ial control, by virtue of which we can compel the' debtor to do whatever may in our judgment be to the advantage of its creditors. Any such notion ignores altogether the origin and history of such suits. They are as much limited by law as any others, and there is in my judgment no warrant either in principle or policy for asserting that, once a receiver is appointed, the court takes on the part of a benevolent despot. If we needed authority for so plain a proposition, it seems to me that there is the clearest intimation of it in Pusey' & Jones v. Hanssen, supra.