Court Opinion

ID: 6720021
Source: CourtListenerOpinion
Date Created: 2022-07-20 22:52:48.444725+00
Date Added: 2024-06-11T16:01:33.525578
License: Public Domain

DENISON, J.
Epitomized Opinion
Appeal from interlocutory order appointing receiver for the Post Co. Lyons, as trustee in bankruptcy of Smith, instituted the action alleging that Smith was the chief and controlling stockholder and general manager of the Post Co., which had become indebted to him to the amount of $19,000, and that four months before bankruptcy and with intent to defraud his creditors, Smith had cancelled and discharged this $9,000 debt upon an inadfl consideration, and that the corporation was in ger of insolvency. The prayer was for an account ing and the recovery of the full balance due, am for the appointment of a receiver. There was n allegation that the corporation owed debts othe than this one, or that its business and assets wer being mismanaged. On appeal, the Post Co. urge that the equity court had no jurisdiction becaus there was an adequate remedy at law and also tha the Federal Court had no jurisdiction. In remandin. the case for an addition to the record, showing th proof offered in open court in support of the allega tions of the bill praying for a receiver, the Circui Court of Appeals held:
1. “Manifestly, the mere facts that the bankrup is the controlling manager and stockholder of th corporation, and that he has increased its apparer assets at his personal expense, do not tend to justif a receivership taking the corporate manage^ away from the directors.”
2. Where a suit is merely one by the trustee f receiver by adverse proceedings a debt from defem ant to the bankrupt, and where there is no divers citizenship, still a Federal Court has jurisdietic because it is the trustees’ duty under the Bankrupt! Act to prosecute such action and such an action one arising under the laws of the U. S. of whii the Federal Courts are given jurisdiction by tl judicial code. However, the Post Co. appeared b fore the court at the time fixed for the motion ar obtained a postponement of the hearing to comple an expected adjustment which, having failed, tl Company, on the adjourned day, argued the meri of the case and made no objection to the jurisdietic of the court, thereby corisenting to the jurisdietic of the court. Also, objection to the jurisdietic of the court on the ground of . an adequate remec at law must be made at the first opportunity in tl trial court or it is waived.