Court Opinion

ID: 8821383
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:34:32.503553+00
Date Added: 2024-06-11T17:04:38.652344
License: Public Domain

ROSS, Circuit Judge
(dissenting). I respectfully dissent from the judgment of affirmance in these cases, as I did when they were last here (270 Fed. 915, 925), and for the same reasons as were then briefly stated in my dissenting opinion, and which views, in my judgment, find full support in the following decisions of other Circuit Courts of Appeals and of the Supreme Court not then cited: In re Yorkville Coal Co., 211 Fed. 619, 128 C. C. A. 570 (Second Circuit); In re Blum, 202 Fed. 883, 121 C. C. A. 241 (Seventh Circuit); In re Midtown Contracting Co., 243 Fed. 56, 155 C. C. A. 586 (Second Circuit); In re Goldstein, 216 Fed. 887, 133 C. C. A. 91 (Seventh Circuit); Babbit v. Dutcher, 216 U. S. 102, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969.
The records in the present cases show beyond question that the proceedings in the court below were summary proceedings in bankruptcy, and were so treated and declared both by the court and by the special master, who conducted them by appointment of the court. This I think is very clearly shown by this extract from the opinion of the court confirming the order of the master:
“Upon the issues thus joined the case was referred to the special master, who, after exhaustive and elaborate hearings, filed a report, in which he detailed the facts as lie understands them and reaches the conclusion that the assets of the Oregon Eilers were in truth and in fact a part of the assets of the bankrupt's estate, and recommends that an order be entered requiring that they be turned over to the trustee. I have read this testimony time and again, I have examined it in the light of the arguments and briefs, and I am forced to concur in the views of the special master, although I do not agree with some of his findings of fact. He finds that as a matter of fact, at the time the stock of Graves & Co. was purchased, it was understood it should be done for the use and benefit of the individual stockholders of the Piano House; but I am of the opinion that this was a conclusion not warranted by the testimony. The records of the corporation and the entire transaction *336are against any such conclusion. The contract entered into for the sale of the stock was made in the name of the Piano House and for its benefit. It was done in pursuance of resolution of the Piano House and was paid for by the Piano House.
“It is true that charges were made on the hooks against the account of individual stockholders for a part, if not all, the moneys used in paying the notes of the Piano House; but I am not able to determine whéther that was merely a bookkeeping transaction or for some other purpose. The status of the accounts of these respective stockholders does not appear very clear from the testimony. It is in evidence, I believe, that at the time those charges were made there stood upon the books to the account of these gentlemen individually a credit sufficient to cover these charges; but whether there were any other obligations is not so clearly disclosed. In January, 1914, an audit of the books seems to have been made, at which time it was reported that there were stockholders’ bills receivable outstanding amounting to $202,000. Whether any of this was outstanding at the time this transfer was .made is not apparent. At the time of the bankruptcy, an expert examination of the books disclosed that there was about $400,000 due the corporation from these several stockholders; but I do not take this to- be very material.
“The stock was purchased and paid for by the Piano House, it became the property of the Piano House, and the Piano House, as far as the record discloses, never has parted with that stock, and when it transferred its business and assets to the bankrupt, it naturally transferred this stock and the interest therein, together with the other, assets. So that on the whole I am of the opinion that the report of the special master must he confirmed, and an order of that kind will be entered.”
Nevertheless the present prevailing opinion treats the proceedings as a plenary suit, notwithstanding it expressly states that the trustee of the bankrupt had, long before instituting the summary proceedings, to wit, on August 21, 1918, petitioned the cóurt of bankruptcy for instructions, on tire ground that he was in doubt whether he should proceed in a court of the state in a plenary suit against Oregon Eilers Music House for the possession of the property in question, and for the appointment of a receiver thereof meanwhile, or take summary proceedings, and that, receiving from the bankruptcy court authority to commence such plenary suit, he did, on the 15th day of March, 1919,' commence in a state court of Oregon an independent suit against Oregon Eilers Music House, wherein he set forth facts and prayed for the appointment of a receiver to take possession of the assets of that company,"and for a decree that all the property there alleged to be in its .possession be adjudicated to be the property of the bankrupt. A demurrer to that bill having been sustained by the court in which it was brought, the case was taken to the Supreme Court of Oregon, where on February 15, 1921 (195 Pac. 563), the judgment of the trial court óf the state was reversed upon the ground that the complaint of the trustee in bankruptcy stated a case for the discovery and marshalling of the assets of the bankrupt.
In the present prevailing opinion of this court it is said that “nothing further has been done in that case.” But suppose the state court, in protection of the actual possession of one of the corporations of the state, under bona fide claim of ownership, should proceed with the case and give judgment favorable to the Eilers Music House — what then? Since that suit antedated the summary proceedings here in question, *337I am unable to see bow such summary proceedings could operate as a bar thereto. On the contrary, I am of the opinion that the pendency of that plenary suit emphasizes the correctness of my conclusion that the bankruptcy court was without any jurisdiction summarily to take the property in controversy from the actual possession of the party claiming in good faith to own it.