Court Opinion

ID: 8794264
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:03:25.197518+00
Date Added: 2024-06-11T17:03:32.021311
License: Public Domain

MAXEY, District Judge
(after stating the facts as above). The bill filed by the trustee in bankruptcy was merely to set aside an alleged preferential transfer of cotton made by the bankrupts, Knight, Yancey & Co., to Latham & Co. The suit was instituted in the Southern District of Alabama, and the original bankruptcy proceeding to have Knight, Yancey & Co. adjudged bankrupts was brought, and is now pending, in the Northern District of that state.
[1] The adjudication of bankruptcy in the latter court brought the property of the bankrupts, wherever situated, into custodia legis, and that court thus acquired the full right to administer the estate. Thus it was said by the Supreme Court in Lazarus v. Prentice, 234 U. S. at page 266, 34 Sup. Ct. 851, at page 852 (58 L. Ed. 1305):
“Tbe filing of tbe petition and adjudication in tbe bankruptcy court in New York brought tbe property of tbe bankrupts, wherever situated, into custodia legis, and it was thus beld from tbe date of tbe filing of tbe petition, so that subsequent liens could not be given or obtained thereon, nor proceedings had in other courts to reach tbe property; the court of original jurisdiction having acquired tbe full right to administer the estate under the bankruptcy law. Mueller v. Nugent, 184 U. S. 1 [22 Sup. Ct. 269, 46 L. Ed. 405]; Acme Harvester Co. v. Beekman Lumber Co., 222 U. S. 300 [32 Sup. Ct. 96, 56 L. Ed. 208.]”
[2] Hence the appellants had no place in the suit instituted by the trustee merely to set aside a preferential transfer. If, as claimed, they *723may impress a trust in their favor upon any of the assets of the bankrupts in the hands of the trustee, no reason is perceived why they may not proceed in the court of original jurisdiction. In any event, they will not be permitted to intervene in an ancillary suit, brought by the trustee, the sole purpose of which is to collect assets of the bankrupt and transfer them to the proper court for administration.
Upon the hearing of the motion the trial court dismissed, without qualification, the cross-bill or petition of intervention filed by the appellants.
The order of dismissal should be so amended as to show that the bill or petition is dismissed without prejudice, and, as thus amended, it is affirmed.