Court Opinion

ID: 8794192
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:03:21.524427+00
Date Added: 2024-06-11T17:03:31.842694
License: Public Domain

PARDEE, Circuit Judge
(dissenting). The case shows:
(1) On January 9, 1914, in the matter entitled “The Receivership of Joseph Webre Company, Limited,” being No. 2444 of the docket of the Twenty-Seventh judicial district court for the parish of St. James, that the court took jurisdiction and through proper orders in the appointment of a receiver took into custody and possession all the property of the Joseph Webre Company, Limited, including the res involved in this case.
(2) On the 13th day of February, 1914, a petition in involuntary bankruptcy against the Joseph Webre Company, Limited, was filed in the United States District Court, Eastern District of Louisiana, but no receiver or other possession of property was asked for or ordered.
(3) That on the 20th of February, 1914, Edward N.- Pugh, a citizen of the United States, obtained from the Twenty-Seventh judicial district court in and for the parish of St. James, La., an order of seizure and sale against the property mortgaged by Joseph Webre Company, Limited, on the 28th of February, 1913, under an authentic act of mortgage importing confession of judgment, with the pact de non alienando, duly recorded in the parish where the property is situated, and by this order the custody of the property in the state court was continued and confirmed.
(4) That under said writ the sheriff of the parish of St. James gave due notice to pay, and on the 26th of February, 1914, seized and took into his actual possession for the state court the mortgaged property duly described in said act of mortgage.
(5) That said sheriff under said writ of said state court, and to pay and satisfy the same, duly advertised said mortgaged property to be sold at public auction on April 18, 1914.
(6) That on the 6th of March, 1914, said Joseph Webre Company, Limited, was adjudicated a bankrupt.
*425(7) That on the 2d of April, 1914, Victor Loisel, trustee of said bankrupt, took a rule sua sponte against said sheriff J. B. Dornier, and against said Edward N. Pugh, seizing creditor, in said Twenty-Seventh judicial district court in and for the parish of St. James, asking said court to recall its writ issued in the matter of said Edward N. Pugh v. Joseph Webre Company, Limited, No. 2873 of the docket of said court, and to relegate the entire matter to the United States District Court in Bankruptcy.
(8) That issue was joined in said rule thus taken by said trustee in said state Court, tried contradictorily, argument had, and judgment rendered on April 7, 1914, by said state court refusing to recall its writ.
(9) That from said judgment thus rendered by said state court said trustee obtained an order of appeal to the Supreme Court of Louisiana, suspensive and devolutive.
(10) That on the 15th day of April, 1914, said trustee obtained an order from the District Court, Eastern District of Louisiana, ordering said sheriff and said Edward N. Pugh to show cause on the 18th of April, 1914, why an injunction should not issue restraining and enjoining them and each of them from selling, claiming possession, or control over said property, and from interfering or disturbing said trustee in the possession of the assets of the said bankrupt, and further ordering that until the termination of this order to show cause said sheriff and said Edward N. Pugh are stayed and enjoined from selling or disposing of the said property or otherwise interfering or disturbing the said trustee in possession of the same.
(11) That issue was duly joined on said rule to show cause, and it was shown that the sheriff of the parish of St. James, acting under orders of the Twenty-Seventh judicial district court in and for the parish of St. J ames, La., did on the 26th day of February, 1914, take actual and corporeal possession of said mortgaged property, and was in actual possession of the same on the day of the trial of said order to show cause why an injunction should not issue, and had retained possession thereof from the 26th of February, 1914.
(12) That as appears by the sworn statement of Edward N. Pugh, and the same is not controverted, the mortgaged property in controversy will not sell for more than $30,000, and the valid mortgages thereon exceed the sum of $50,000. The certificate of mortgages in the record shows registered mortgages exceeding $55,000.
(13) That hearing was had on the pleadings and the exhibits thereto, no evidence being taken, and the District Court entered a decree ordering the issuance of the injunction applied for; and this order has been brought to this court for review.
On this showing, I conclude:
1. That as the property involved was taken into the possession'and custody of the state court before any proceedings were instituted in the court of bankruptcy, and the custody was retained under the ex-ecutory proceeding filed by E. N. Pugh, the trustee in bankruptcy, if he desired or claimed possession, was well advised to seek relief as he did by applying to the state court setting up his alleged title, and after *426such application and the decision of that tribunal he ought not to be heard in questioning the same otherwise than by appellate proceedings. Grant v. Buckner, 172 U. S. 232, 238, 19 Sup. Ct. 163, 43 L. Ed. 430; Winchester v. Heiskell, 119 U. S. 450, 7 Sup. Ct. 281, 30 L. Ed. 462, and cases there cited.
2. That as the mortgage on which the executory proceedings in the state court were based was granted nearly one year before the bankruptcy proceedings were instituted and imported a confession of judgment and contained a nonalienation pact, it is a valid lien with an ex-ecutory remedy attached under the laws of the state of Louisiana not subject to be attacked as an unlawful preference under, nor be com sidered as impaired or affected by, the proceedings in bankruptcy. See section 67d of the Bankruptcy Law. And clearly the lienor’s right would be impaired if his remedy under the state law should be taken away.
Hiscock v. Varick Bank of New York, 206 U. S. 28, 27 Sup. Ct. 681, 51 L. Ed. 945, is decidedly in point. In one of the syllabi it is announced that:
“The bankruptcy act does not deprive a lienor of any remedy with which, he is vested by the state law.”
And at page 37 of 206 U. S., at page 684 of 27 Sup. Ct. (51 L. Ed. 945), the court says:
“The contracts of pledge were made, executed, and to be performed in the state of New York, and the rights of the parties were governed by the law of that state. No preference under the bankruptcy act was alleged or proved, nor was there any allegation or proof that the pledge of the securities was in i fraud of the rights of the creditors or trustee. The questions of the extent and validity of the pledge were local questions, and the decisions of the courts of New York are to be followed by this court.”
Acme Harvester Co. v. Beekman, 222 U. S. 300, 32 Sup. Ct. 96, 56 L. Ed. 208, does not appear to me as applicable to the facts in this case, nor in any wise conflict with my views herein.
3. As the property involved was before the proceedings in bankruptcy were instituted and is now in the custody of the state court, and, particularly, as the case shows no fraud nor any race among creditors for preference nor any equity to be administered by the trustee in bankruptcy, the injunction of the District Court was improvident, and to insist upon and enforce the same can only result in delay in settling the bankruptcy case, or in a conflict of jurisdiction between the bankruptcy court and the state court, which is not only to be deprecated, but should by all means be prevented on general grounds of comity.
In my opinion the order of the District Court should.be reversed, with instructions to the trustee to seek his remedy in the state courts, whose jurisdiction he invoked, and, if there denied, he can go direct to the Supreme Court of the United States.