Court Opinion

ID: 8743113
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:56:53.340565+00
Date Added: 2024-06-11T17:00:30.880239
License: Public Domain

McCORMIOK, Circuit Judge,
after stating the case, delivered the opinion of the court.
In addition to the facts above recited from the transcript of the record, we learn from the brief of counsel submitted on behalf of the defendant trustee, that:
“Pending a decision of the suit [intermediate the filing of the petition and the decree], and with the consent of the plaintiffs, sales wore made of some of the goods claimed, and the trustee retained the proceeds of said sales to respond to the final judgment of the court. The amount thus retained is $819.39.”
It thus appears that the defendant trustee did not receive this sum as trustee of the bankrupt, but as trustee for the parties to the pending suit, and to respond to the final judgment of the court therein. If the property in controversy should be adjudged to be assets of the bankrupt estate, the proceeds of these sales would be held, just as the unsold part of the property would be held by the trustee of the bankrupt, for administration as a part of the bank-' rupt’s estate. If, on the other hand, the judgment of the court should be, as it clearly was, that all of the property in controversy was the property of the plaintiffs, and for which the court gave unqualified judgment in the plaintiffs’ favor, with costs against the defendant trustee, it seems clear to us that the obligation of the trustee to turn over the proceeds of the sales thus made by consent was at least as binding on him as his duty to turn over the unsold portion of the goods remaining in his possession. The judge of the circuit court did not place on record any statement of the reasons or conclusions of law whieh induced him to render the judgment he did on the motion or rule of the plaintiffs. We learn from the brief submitted by counsel for the defendants in error that:
“The judge of the circuit court assimilated this case to a proceeding against a succession representative to determine the amount of a claim against the estate of the deceased, and considered that in such a ease the court called upon to determine thé claim quoad the administrator or other succession, representative would remit the claimant, for the payment of his claim, to the court vested with jurisdiction of the ^succession. The court considered that it was out of the question to interfere with the court originally acquiring possession of the res, and cited in support of this view the case of Byers v. McAuley, 149 U. S. 608, 13 Sup. Ct. 906, 37 L. Ed. 867.”
The fully settled general propositions so clearly stated in Byers v. McAuley are:
*149“First. It is a rule of general application that, where property Is In the actual possession of one court of competent jurisdielion, such possession cannot be disturbed by process out of another court. Second. An administrator appointed by a state court is an officer of that court. His possession of the decedent’s property is a possession taken in obedience to the orders of that court. It is the possession of the court, and it is a possession which cannot be disturbed by any other court.” Third. Reviewing Payne v. Hook, 7 Wall. 425, 19 L. Ed. 260, the concluding proposition is, in substance, that “a plaintiff, the citizen of another state, may apply to the federal courts to enforce a claim against an administrator arising out of his wrongful administration of the estate; and, if it he objected that other distributees were not made parties, the reply is that it was unnecessary, — that it was a proceeding alone against the administrator and his sureties.”
Mr. Justice Brewer quotes from the opinion in Payne v. Hook, where it is said on page 431, 7 Wall., and page 262, 19 L. Ed.:
“The hill under review has this object, and nothing more: It seeks to compel the defendant, Hook, to account and pay over to Mrs. Payne her rightful share in the estate of her brother; and, in case he should not do it. to fix the liability of the sureties on his bond.”
Judge Brewer then proceeds:
“There was no suggestion in the bill that the federal court take possession of the estate and remove it from the custody of the administrator appointed by the state court; no attempt to settle the claims of citizens of the state, as «between themselves; no attempt to take the administration of the estate, but simply to establish and enforce, in behalf of a citizen of another state, her claim to a share of the estate.”
The suit of the plaintiffs in error was an action at law. It presented a case of which the circuit court had jurisdiction by reason oí the amount involved and the diverse citizenship of the parties. It is not entirely clear that the district court, under the general jurisdiction in law and equity conferred upon it by the bankrupt law for the purpose of aiding it, as a court of bankruptcy, in the administration of bankrupt estates, could have entertained the plaintiffs’ action. And it is fully settled that had the defendant Fenner, prior to the filing of the petition on which he was adjudicated a bankrupt, surrendered the property in question to the plaintiffs, and the trustee had sought to recover it as assets of the bankrupt estate, he could, “by the proposed defendant’s consent, but not otherwise,” have prosecuted his claim in the district court. The letter of the statute being: “Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt whose estate is being administered by such trustee might have brought or prosecuted them if proceedings had not been instituted, unless by the consent of the proposed defendant” (section 23b), — it is not, as we have already said, entirely clear that, even with the consent of the adverse claimant, the district court could entertain a suit by such claimant seeking to establish his ownership of the property alleged to be wrongfully held by the trustee as assets of the bankrupt estate. But it seems clear that if, with such consent, the district court could entertain jurisdiction over such a suit, that consent must be entirely voluntary, and may not be constrained' by orders or action, or the refusal to act, of the circuit court. To apply the language of the opinion in Byers v. McAuley to this case, we note that there is no suggestion in the *150petition of the plaintiffs in error that the circuit court take possession of the estate of the bankrupt, or any part of it, and to move it from the custody of the trustee appointed by the court of bankruptcy, and no attempt to take charge of the administration of the estate in bankruptcy, but simply to establish and enforce in behalf of the plaintiffs their ownership and right to the possession of property claimed by them to constitute no part of the bankrupt estate, and therefore in no way subject to be administered by the court of bankruptcy or by the trustee appointed by that court. We do not perceive why the matters presented in the defendants’ answer to the plaintiffs’ rule might not and ought not to have been set up in answer to the plaintiffs’ suit, or why the defendant trustee, having failed to set them up in his answer to the suit, should be now heard to urge them. If there should be any question as to the defenses being, legal or equitable, the patent reply is that the circuit court exercises amply both jurisdictions, when properly invoked. The defendant trustee is therefore without excuse on that ground.
We venture to repeat that, by rendering and executing the fullest judgment between the parties to this suit, there could have been no invasion by the circuit court of the jurisdiction of the court of •bankruptcy in the administration of the bankrupt estate. The action is not against the bankrupt’s estate, but against the trustee only for property claimed to be^ and fully shown and adjudged to be, no part of the bankrupt’s estate. There is no reason to apprehend that any embarrassment would arise in the execution of the judgment against the trustee. Rio action that could be taken by the circuit court against him in this suit could disturb or affect his relations to the court of bankruptcy. It is perhaps due the trustee to remark that there is no indication on the face of this record that he will not promptly comply with any order which the court may .make on the plaintiffs’ rule. The view we have taken of this case requires us to order that the judgment of the circuit court be reversed, and the cause remanded to that court, with directions to make the rule prayed for in the plaintiffs’ motion absolute as to the $819.39 admitted by the defendant trustee to be in his hands.