Borland v. Central Trust Co.

216 F. 878, 133 C.C.A. 82, 1914 U.S. App. LEXIS 1390
CourtCourt of Appeals for the Seventh Circuit
DecidedAugust 12, 1914
DocketNo. 2084
StatusPublished
Cited by16 cases

This text of 216 F. 878 (Borland v. Central Trust Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Borland v. Central Trust Co., 216 F. 878, 133 C.C.A. 82, 1914 U.S. App. LEXIS 1390 (7th Cir. 1914).

Opinion

BAKER, Circuit Judge.

Respondent has interposed a motion to dismiss this petition to review and revise on the ground that the subject-matter is not within our jurisdiction under section 24b. Facts disclosed in the petition are these: On December 26, 1912, the Breyer Printing Company was adjudicated a bankrupt upon a petition of creditors filed on December 24, 1912, and the Central Trust Company was appointed receiver and afterwards was duly elected trustee. Petitioner leased certain premises to the Breyer Printing Company [880]*880on May 1, 1910, and claims that on December 1, 1912, there was rent due and unpaid to the extent of $1,666. On December 9, 1912, petitioner caused a distress warrant for that sum to be levied on certain chattels. From December 9 to December 27, 1912, these chattels were in the actual possession of petitioner under and by virtue of the distress warrant. On December 27, 1912, petitioner and the Central Trust Company entered into an agreement whereby the chattels were placed in the possession of the Central Trust Company subject to the lien and right of possession of petitioner, with the further stipulation that petitioner’s right should attach to the proceeds if the chattels should be sold before petitioner’s right was adjudicated. On January 10, 1913, petitioner filed in the District Court in bankruptcy his petition, in which he set out the foregoing facts respecting the lease, the seizure of chattels under the distress warrant, his possession thereunder, and his transfer of possession to the Central Trust Company under the recited agreement. The chattels in question were sold by the Central Trust. Company for a sum in excess of the rent and costs due petitioner under the distress warrant. The prayer of the petition to the District Court was that the Central Trust Company as receiver and trustee should therefore be directed to pay to the petitioner the amount of her claim for rent and costs. The Central Trust Compány answered the petition in the bankruptcy court by neither admitting nor denying the averments of the petition, and by affirmatively claiming tide and right of possession in and to the dis-trained chattels superior to the right of petitioner; and the referee’s order rejecting petitioner’s asserted lien and finding title and right of possession in the trustee was confirmed by the District Judge.

[1] Sections 23, 24, and 25 of the Bankruptcy Act draw a clear line of demarcation between “proceedings in bankruptcy” and “controversies at law and in equity arising in bankruptcy proceedings.” “Proceedings in bankruptcy” cover questions between the alleged bankrupt or the receiver or trustee of the bankrupt estate, on the one hand, and the general creditors, as such, on the other, commencing with the petition for adjudication, ending with the discharge, and including matters of administration generally, such as appointment of receivers and trustees, as well as examinations, exemptions, allowance and disallowance of claims, and the like, all of which naturally occur in the settlement of. the estate. “Controversies at law and in equity arising in the course of bankruptcy proceedings” involve questions between the receiver or trustee representing the bankrupt and his general creditors, as such, on the one hand, and adverse claimants on the other, concerning property in the possession of the receiver or trustee or of the claimants, to be litigated in appropriate plenary suits, and not affecting directly administrative orders and judgments, but only the extent of the estate to be distributed ultimately among general creditors. Matter of Roving, 224 U. S. 183, 32 Sup. Ct. 446, 56 L. Ed. 725; United States Fidelity Co. v. Bray, 225 U. S. 205, 217, 32 Sup. Ct. 620, 56 L. Ed. 1055; In re Mueller, 135 Fed. 711, 68 C. C. A. 349; In re Friend, 134 Fed. 778, 67 C. C. A. 500.

[2] Did the landlord’s petition in the bankruptcy court institute a [881]*881“proceeding in bankruptcy” of an administrative character, or did it present a “controversy arising in the course of bankruptcy proceedings” in the nature of a suit in equity? If of the former class, our jurisdiction to review would attach under section 24b or 25a as might be appropriate to the particular proceeding in bankruptcy. If of the latter class, our jurisdiction could be invoked only under section’ 24a. For a defeated party is not at liberty to disregard the appropriate appellate remedy provided for his case and choose some other that may better suit his inclination or convenience. Matter of Loving, 224 U. S. 187, 32 Sup. Ct. 446, 56 L. Ed. 725; United States v. Beatty, 232 U. S. 463, 34 Sup. Ct. 392, 58 L. Ed. 686; In re Friend, 134 Fed. 778, 780, 67 C. C. A. 500. And this remains true although the appellate court may allow' a writ of error which is addressed to questions of law involved in a “proceeding in bankruptcy” to stand as a petition to review and revise, since both are ranged on the same side of the demarcating line and the methods are substantially alike. Freed v. Central Trust Co., 215 Fed. 873, 132 C. C. A. 7.

If a creditor files and asks the allowance of a claim as an unsecured creditor, he plainly institutes a “proceeding in bankruptcy.” And if in connection with the presentation of such a claim he asserts grounds why in the distribution of the proceeds of the estate he should be given priority over other general creditors (as in Coder v. Arts, 213 U. S. 223, 29 Sup. Ct. 436, 53 L. Ed. 772, 16 Ann. Cas. 1008; Matter of Loving, 224 U. S. 183, 32 Sup. Ct. 446, 56 L. Ed. 725; In re Streator Metal Stamping Co., 205 Fed. 280, 123 C. C. A. 444), the matter so presented nevertheless remains a “proceeding in bankruptcy.” And even if the trustee in his answer admits and allows the general claim and contests only the creditor’s right to priority, the nature of the proceeding is not affected. Loving and Streator Cases, supra. On the other hand, it is clear that if a claimant is in possession of chattels under a bill of sale or mortgage, and if subsequent to his possession a petition in bankruptcy is filed and an adjudication in bankruptcy had against his grantor or mortgagor, and if thereafter the receiver or trustee of the bankrupt estate disputes the holder’s right of possession, a controversy arises which is outside of the matter of the administration of the bankrupt estate. The property in question has not come into' the custody of the bankruptcy court or of the receiver or trustee under and by virtue of the adjudication. If the holder maintains his possession and the trustee is compelled to bring a suit against him either in the bankruptcy court or some other court to cancel the alleged title or lien and to recover the property, the resulting order or decree could not be reviewed under 24b or 25a for the reason that the proceeding resulting in such order or decree was not a “proceeding in bankruptcy” within the administration of the estate. And the essential nature of the controversy respecting the holder’s title or lien cannot, in our opinion, be affected by the question whether the suit to determine the validity of the alleged title or lien is begun by the petition or hill of the trustee or of the adverse claimant.

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Cite This Page — Counsel Stack

Bluebook (online)
216 F. 878, 133 C.C.A. 82, 1914 U.S. App. LEXIS 1390, Counsel Stack Legal Research, https://law.counselstack.com/opinion/borland-v-central-trust-co-ca7-1914.