Court Opinion

ID: 6639609
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:44:22.542666+00
Date Added: 2024-06-11T15:59:11.666319
License: Public Domain

CLAYTON, District Judge
(after stating the facts as above). The jurisdiction of this court is invoked as ancillary to the proceedings in bankruptcy in the bankruptcy court of original jurisdiction; the defendants residing within this, the Middle, district of Alabama. Progressive Bldg. & Loan Co. v. Hall, 220 F. 45, 135 C. C. A. 613; Musica v. Prentice (5th C. C. A.) 211 F. 326, 127 C. C. A. 575.
The chief insistence of the defendants is that this is a suit against the state, and therefore not maintainable. This cannot be assented to. It must be conceded that the District Courts of the United States have paramount and exclusive jurisdiction in the administration of bankrupt estates, and especially is this true with respect to the allowance or rejection of claims which may become either primarily or ultimately a charge against the assets of the bankrupt estate. Undoubtedly the District Court itself cannot yield this jurisdiction to another tribunal. U. S. F. & G. v. Bray, 225 U. S. 205, 32 S. Ct. 620, 56 L. Ed. 1055. Therefore it cannot be questioned that the District Court has the inherent power to protect itself in the full exercise of its jurisdiction, even though the interference be attempted by state officers, acting or assuming to act in the name or on behalf of the state. If officers of the state should, under the guise of the discharge of their duties, institute suit in the name of the state to recover the possession of property in the custody or under control of the federal District Court, would it be contended that such court would bo impotent to protect its jurisdiction? The mandate here sought of this court would adjudicate no rights against the state, nor would there be any attempt to determine the merit's of the controversy between the state and the trustee; but such mandate would merely restrain the persons assuming to act in the name of the state from a course which directly involves matters and things over which the bankruptcy court has exclusive or paramount jurisdiction. Ex parte Tyler, 149 U. S. 164, 13 S. Ct. 785, 37 L. Ed. 689.
The situation here is analogous to the now well-settled principle that officers assuming to act in their official capacity, though in the name of the state, may be restrained from the prosecution of suits or the enforcement of demands under statutes which are violative of constitutional rights or obnoxious to or in contravention of paramount authority. In such aspect this suit or petition by the trustee is, not in any proper sense a suit against the state. Poindexter v. Greenhow, 114 U. S. 270, 5 S. Ct. 903, 962, 29 L. Ed. 185; Reagan v. Farmers’ L. & T. Co., 354 U. S. 362, 14 S. Ct. 1047, 38 L. Ed. 1014; Tindal v. Wesley, 167 U. S. 204, 17 S. Ct. 770, 42 L. Ed. 137.
It is true the trustee is not a party to the suits in the state circuit court, the prosecution of which is here sought to be restrained; but by operation of law ho, and consequently the estate in his custody, must ultimately respond to the sureties for whatever they are made to pay. The suits are predicated upon the contract made by the *982trustee in the course of the administration of the bankrupt estate, and by and with the approval and under the authority of the bankruptcy court, and rights arising in favor of the state, as well as individuals, in such circumstances, must of necessity be determined by the bankruptcy court, or in such other tribunal or proceedings as the bankruptcy court may expressly authorize. Any other rule would result in chaos in the administration of the trust estate. Porter v. Sabin, 149 U. S. 473, 13 S. Ct. 1008, 37 L. Ed. 815; Hershy Choc. Co. v. Sharpe, 199 Ala. 21, 74 So. 33; Berman v. Smith (D. C.) 171 F. 735. Manifestly, the trustee, in the administration of the trust confided to him, is an officer of the eourt, and is entitled to its protection.
Under the undisputed facts the demand sought to be recovered in the suit in the state court should be presented to and adjudicated by the eourt of bankruptcy in which the estate of the Montevallo Mining Company is being administered, or leave be obtained to proceed elsewhere. I think what has been said is decisive of the motion of the defendants to dismiss the petition of the trustee, as well as determinative of the .defendants’ objection to injunction restraining them from the prosecution of the suit in the state circuit court.
By appropriate order the prayer of the petition is granted, and Harwell G. Davis, the Attorney General of Alabama, L. A. Boyd, President of the State Board of Convict Supervisors, the American Surety Company, and the Union Indemnity' Company, and all other persons who may have knowledge of such order, are enjoined from the further prosecution of said suit in the circuit court of Montgomery county, Ala.