Court Opinion

ID: 8743114
Source: CourtListenerOpinion
Date Created: 2022-11-26 10:56:53.342333+00
Date Added: 2024-06-11T17:00:30.882111
License: Public Domain

SHELBY, Circuit Judge
(dissenting). The plaintiff in error brought suit in the circuit court against “Claude H. Solanas, trustee of the estate of E. C. Fenner, bankrupt,” to recover 37 phaetons and surreys. . The case was heard before the judge, a jury being waived, and a judgment rendered for the plaintiff. No writ of error is sued out to review that judgment. No objection is made to it. The matter here for review is the judgment of the court on a motion. The motion is not in the record, except as embodied in the following order or rule on the trustee to show cause:
“On motion of Rice & Montgomery, of counsel for John B. McFarlan, Senior, John B..McFarlan, Junior, Charles E. J. McFarlan, William W. Mc-Farlan, and James E. McFarlan, doing business as commercial partners under the name and style of the J. B. McFarlan Carriage Company, plaintiffs herein, and on suggesting to the court that judgment has been rendered herein decreeing your movers to be the owners of the property herein sued for, which judgment is now final, and on further suggesting to the court that *151pending the trial of said cause the defendant herein sold a part of the goods and property forming the subject-matter of said suit, and "received therefor the price and sum of eight hundred and nineteen B°/ioo dollars, which sum stands in place and lieu of the property adjudged to belong to these movers, and on further suggesting that the defendant, while he has turned over and delivered to your movers the property adjudged to be theirs, and unsold by him, has refused and still refuses to pay over and deliver to movers the sum aforesaid received hy him from the sale of certain of said goods and property pending this litigation, and that he is without right in law or otherwise to retain the same, it is ordered hy the court that said Olaude II. Solanas, trustee of Edward C. Fenner, bankrupt, do show cause, if any he have, on Saturday, the 10th day of March, 1000, why he should not pay over forthwith to movers the said sum of eight hundred and nineteen so/ioo dollars aforesaid.”
This order being served on the trustee, he filed this sworn answer:
“Now into court comes Olaude H. Solanas, trustee of E. C. Fenner, bankrupt, and, for answer to the rule taken upon him hy the J. B. McFarlan Carriage Company, shows to the court that this respondent, in his capacity of trustee, holds the sum of eight hundred and nineteen and «Vioo dollars ($819.-39) subject to the orders of the court; said amount representing the proceeds of the goods of the plaintiffs in rule held hy respondent pending the adjudication by the court of the rights of all parties. Respondent further shows that plaintiffs in rule are liable to contribute their proportion of the insurance premiums upon the property insured after the surrender of E. C. Fenner in bankruptcy, and said proportion of insurance is $37.71. Respondent further shows that plaintiffs in rule are liable to contribute their proportion of the taxes upon the merchandise and stock in trade of the bankrupt; that the whole amount of said taxes is $285, and the assessment for 1898 and 1899 upon the merchandise and stock in trade of said bankrupt was $7,000, the amount of plaintiffs’ goods on hand at the time of the surrender in bankruptcy being $2,607.50. Respondent shows that, of said amount of taxes, $07.50 is for the taxes of 18,98. Respondent submits to the court the question whether the plaintiffs in rule are liable to contribute to the expense of the administration of the bankrupt’s estate, including commissions of the referee and trustee. Respondent further shows that plaintiffs in rule, as third persons whose goods were on the leased premises with their consent at the-time of the surrender in bankruptcy, are liable to contribute towards the payment of the rent, and that the amount of said liability can be determined only by ascertaining the rank of the privileged creditors appearing upon the account filed by respondent, and said ascertainment can he liad only after due notice to all parties, and a hearing of their respective claims in concursa. Wherefore respondent prays that this rule lie dismissed, that a hearing be had to determine the respective rights of the privileged creditors appearing on the account heretofore filed by respondent, and for costs and general relief.
“Denegre, Blair & Denegre, Attorneys.”
Here is the order or judgment made on the trial of the motion, which is here assigned as” error:
“March 21, 3900.
“The rule herein taken on February 27, 1900, by plaintiff on the trustee of E. O. Fenner, bankrupt, for the payment of $819.50, having been argued by counsel and submitted, and the court having duly considered the same, it is ordered that the said rule he dismissed, reserving to the plaintiff the right, if it be so advised, to institute proceedings for its protection in the bankruptcy court of tills district.”
The estate of the bankrupt was in the hands of the trustee, in custody of the bankruptcy court. The suit and motion were against the trustee in Ms official capacity. The final judgment having been rendered by the circuit court against the trustee in bankruptcy, I think the plaintiffs in the judgment should have been required to apply to the bankruptcy court for (all orders relating to , its satis*152faction or payment. This is what the circuit court decided. The trustee holds the property subject to the orders of the court that appointed him, just as a receiver in equity holds the trust estate. The judgment creditor of the receiver’s trust estate must go with his judgment claim to thq court having jurisdiction of the receivership. Wiswall v. Sampson, 14 How. 52, 14 L. Ed. 322; Beach, Rec. § 713. “Unless,” as Mr. Justice Kelson asked in the case cited, “the court be permitted to retain the possession of the fund, thus to administer it, how can it ascertain the interest in the same to which the prosecuting judgment creditor is entitled, and apply it upon his demand?” In Byers v. McAuley, 149 U. S. 608, 13 Sup. Ct. 906, 37 L. Ed. 867, the court states the rule which I think is applicable to this case:
“It is a rule of general application that, where property is in the actual possession of a court of competent jurisdiction, such possession cannot he disturbed by process issued out of another court.”
This principle is applicable to cases of suits against administrators, assignees, receivers, and ah trustees, where the trust estate is in process of administration in a court of competent jurisdiction. Hewett v. Norton, 1 Woods, 68, Fed. Cas. No. 6,441, involved an adverse claim by a third person of property in the hands of the as-signee in bankruptcy. Woods, Circuit Judge, held that:
“No other court, and no person acting under any process from any other court, can, without the permission of the bankrupt court, interfere with it; and to so interfere is a contempt of the bankrupt court.”
I think the circuit court correctly refused to grant the motion, and that the plaintiff in error was properly required to make the application to the bankruptcy court having jurisdiction of the estate. The bankruptcy court is vested with power to marshal the assets and settle the estate. No part of the assets should be taken from the trustee except by order of the bankruptcy court. It is not sufficient reason for making an exception to the rule that some other court has decided that certain funds held by him as trustee are not really part of the trust estate. When another court interferes, it is always under some claim of right to interfere. If the trustee has received and holds the funds as a part of the trust estate, they are in custodia legis, and only, the court having jurisdiction of the trust should make orders as to paying out the fund. The answer to the rule shows that the funds are the proceeds of the sale of property on leased premises, and that under the Louisiana statute they are liable to contribute to the payment of the rent. Personal property belonging to third persons, when it is contained in the leased house by consent of the owner of the property, is affected by the pledge. Rev. Civ. Code La. art. 2707; Goodrich v. Bodley, 35 La. Ann. 525. This lien, being valid under the state law, is valid under the bankruptcy law. McLean v. Klein, Fed. Cas. No. 8,884; In re Bowne, Fed. Cas. No. 1,741; In re Wynne, Fed. Cas. No. 18,117. This defense could only properly be adjudicated by the court having jurisdiction to administer the bankrupt’s estate. Other defenses involving similar questions are stated in the *153answer. The circuit court has not passed on them. That court properly, I think, held that the matter should be decided and adjusted in the bankruptcy court. Under the decision just made in this court they are not to be decided at all, for the direction to the circuit court is peremptory to enter judgment on the motion, disregarding the. defenses.
There are other reasons why I think the judgment cannot be properly reversed. The only errors assigned relate to the judgment of March 21, 1900. The previous judgment was in favor of the plaintiff in error, and no objection is made to that by eitlier party. The judgment complained of is the refusal of the court to grant an order to the trustee to pay the plaintiff in error $819.50. The court declined to make such order, "reserving to the plaintiff the right, if it. be so advised, to institute proceedings for its protection in the bankruptcy court of this district.” Ko exception was reserved to this order. Kb timely objection was made to it. Without such objection and exception, it should not now avail to reverse the case. Wilson v. McNaimee, 102 U. S. 572, 26 L. Ed. 234; Mahoney v. O’Leary, 34 Ala. 97. Tt is not until May 8, 1900, (hat the record shows that the plaintiff was not content to malo; the application in the court administering the trust, and then the first objection is shown by filing the petition for a writ of error. Not only is there an absence of a note on the record of any objection to the order, bat no bill of exceptions is filed in the case. Motions made in cases at law during the progress of a case, and the rulings of the court granting or denying them, must, in order to be reviewed by an appellate court, be taken up on a bill of exceptions. Wiggins v. Witherington, 96 Ala. 535, 11 South. 539; Fleming v. City of Bainbridge, 84 Ga. 622, 10 S. E. 1098; Berger v. Spalding, 13 La. Ann. 580; Murphy v. Simonds, 14 La. Ann. 322; Kerr v. Clampitt, 95 U. S. 188 24 L. Ed. 493; Railway Co. v. Warren, 137 U. S. 348, 11 Sup. Ct. 96, 34 L. Ed. 681. The presumption prevails that the circuit court has decided correctly unless the contrary appears from the record. Livingston v. Cooper, 22 Fla. 292. The order or rule recites that it is issued on the motion of counsel for the plaintiff in error, and states what suggestions were made in the motion, but 1ho motion is not otherwise shown in the record. The record contains (he trustee’s answer to the rule setting up certain defenses, and shows that a hearing was had, and the motion refused. Whether That hearing was on affidavits or oral evidence does not appear. No evidence is shown by bill of exceptions or otherwise. Under such circumstances, this court, I think, should presume that the evidence was such as justified the circuit court in refusing to grant the motion. The opinion of the majority, however, finds error, when the record fails to disclose the evidence on which the court acted; and the case is remanded, not for a new trial, but with peremptory instructions to make an order on evidence not disclosed in the record. This conclusion is wrong, 1 think, because it requires the circuit court to interfere with the administration or disposition of a fund in the hands of the district court, it ignores the fact that no objection was made or exception taken to the order here epmplained *154ofj it disregards the usual presumption in favor of the correctness of the ruling's of the trial court, and -it dispenses with the necessity for a hill of exceptions in a trial of issues of fact in a case at law. Although the circuit court has both equity and common-law jurisdiction, as is stated in the opinion of the court, this case cannot he considered a case at law for the purpose of review hy writ of error, and a case in equity to dispense with the necessity-for a bill of exceptions. I think the judgment of the circuit court should he affirmed.