Brown Shoe Co. v. McKey

3 F.2d 247, 1924 U.S. App. LEXIS 2436
CourtCourt of Appeals for the Seventh Circuit
DecidedDecember 10, 1924
DocketNo. 3422
StatusPublished
Cited by5 cases

This text of 3 F.2d 247 (Brown Shoe Co. v. McKey) 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
Brown Shoe Co. v. McKey, 3 F.2d 247, 1924 U.S. App. LEXIS 2436 (7th Cir. 1924).

Opinion

PAGE, Circuit Judge.

Petitioners, before bankruptcy, replevined merchandise from bankrupt, in the state court, on the ground that the purchase and possession had been obtained by means of fraudulent representations. Respondent, receiver in bankruptcy, filed petition in the bankruptcy court, asking that petitioners be restrained from any sale or disposition of the merchandise, that they bo directed to turn the same over.to the receiver, and that petitioners be compelled to litigate their rights in the bankruptcy court. On the same day that petition was filed the court, apparently without notice to petitioners, granted the whole prayer of the petition. Six days later petitioners made answer, in which they asserted that the court had no jurisdiction in the premises or of the subject-matter, set out the basis of their action of replevin, and moved to set aside the earlier order of the court. On the following day the motion was denied. There was never any hearing upon the merits of petitioners’ contention in the replevin suit.

It is admitted that the proceeding in the District Court is purely summary, and that petitioners did not submit themselves to the jurisdiction of the court, but contested it. It is also admitted that the property, before filing the bankruptcy petition, was in the possession of petitioners. The court was wholly without power to dispose of such a question in a summary proceeding. Weidhorn v. Levy, 253 U. S. 268, 40 S. Ct. 534, 64 L. Ed. 898.

It is urged that that which was gained in the action of replevin falls within the provision of section 67f of the Bankruptcy Act (Comp. St. § 9651), viz.: “That all levies, judgments, attachments, or other liens, obtained through legal proceedings against a person who is insolvent, at any time within four months prior to the filing of a petition in bankruptcy against him, shall be deemed null and void in case he is adjudged a bankrupt,” etc. Three eases are relied upon by respondent, viz.:

In re Weinger (D. C.) 126 F. 875. In that ease, while the court discussed the question as to whether the rights obtained in replevin were within the meaning of the language of the section, the court concluded: “It is unnecessary to pass upon this question on this motion.”

[248]*248In re Hymes Buggy & Implement Co. (D. C.) 130 F. 977. Several irregularities were noted, and the ease was finally decided by the court upon the finding -“that whatever possession.of the goods the sheriff acquired under the writ of replevin was on the '4th day of May, 1904, voluntarily surrendered by him to the receiver in bankruptcy.”

In re Rudnick (D. C.) 158 F. 223. This case was reversed by the Court of Appeals (160 F. 903, 905, 88 C. C. A. 85, 87), wherein the court said: “It is contended that section 67f of the act (Act July 1, 1898, c. 541, 30 Stat. 565 [U. S. Comp. St. 1901, p. 3450]), invalidating levies, judgments, attachments and liens obtained within four months against a person who is insolvent and providing that the property so affected shall pass to the trustee as part of the estate of the bankrupt, vests the necessary power in the District Court. We cannot accede to this view. It is manifest that the section in question deals with the property 'of the bankrupt. Assuming that Congress might lawfully pass a law requiring the property of third parties, found in the possession of ■ the bankrupt, to be turned over to his trustee as part of his estate, it' is sufficient for the purposes of this review that Congress has not done so in the present act. If A. leaves his coat with B. to be repaired and B. refuses to return it, A. can reclaim it in an action of replevin, and the status of that suit is not affected by the fact that B. subsequently becomes a bankrupt. The mere assertion by B. of ownership in the coat does not oust the court of jurisdiction and transfer the controversy to the bankruptcy court. It presents a question of fact merely, to be. tried in the court first obtaining possession of the property.”

In Linstroth Wagon Co. v. Ballew, 149 F. 960, 79 C. C. A. 470, 8 L. R. A. (N. S.) 1204, before bankruptcy, appellant, on the charge that the purchases of the bankrupt were fraudulent, had proceeded in the state court -and obtained sequestration and possession of certain of the property sold, and the sale of which appellant rescinded because of the fraud. Upon the appointment of a receiver in bankruptcy, a few days afterward, he took possession of the assets, . including the property under levy and sequestration in the hands of the sheriff. It is unnecessary to recite all of the facts, but such proceedings were had that the possession of the property was awarded to the trustee in bankruptcy. ' The court said (966, 967, 79 C. C. A. 476, 477): “It [appellant] does not claim the property here in controversy under any transfer from the bankrupt; it expressly disclaims being a creditor of the bankrupt at the time of the institution of this suit. The suit is not founded upon a claim from which a discharge in bankruptcy would be a release, and therefore, is not subject to the provisions, of section lía (30 Stat. 549 [U. S. Comp. St. 1901, p. 3426]). Before the filing of the involuntary petition, which imparted life to the jurisdiction of the court of bankruptcy as to Morgan and his estate, the appellant asserted it! title to the specific personal property,, 'clearly marked, branded, and distinctly pointed out, which it sought to recover against the bankrupt, then in possession' of it, and obtained appropriate preliminary process for placing the property in safe custody pending the trial of appellant’s title thereto. It did not seek to acquire or fi;s a lien by the levy of its. writs of sequestration, or by the recovery of a judgment, but to establish its rights to the specific property and recover, lawfully, the possession of it.” The court found further that the District Court was in error in returning possession of the property, and directed that it be surrendered to appellant.

The record here shows that the action in replevin included what at common law would be a count in trover. Of course if there was a recovery of the property, there would be no claim whatever. A recovery under the trover count would be for the value of the property obtained on credit upon a materially false statement in writing made by the bankrupt for the purpose of obtaining such credit, and under section 14 of the Bankruptcy Act (Comp. St. § 9598) the only claim, being in trover,, was not dischargeable. Linstroth Wagon Co. v. Ballew, 149 F. 960, 966, 79 C. C. A. 470, 8 L. R. A. (N. S.) 1204; Bankruptcy Act, § 14b (3). Section 11a of the Bankruptcy Act (section 9595) provides for the stay of only such suits as are “founded .upon a claim from which a discharge would be a release,” pending at the time of the filing of the petition.. Because neither the replevin feature nor the count in trover were “founded upon a claim from which a discharge would be a release,” petitioner’s rights are not affected by section 11a.

We are of opinion, also, that, in addition to the authorities above cited, it must be concluded that the rights obtained under the writ of replevin Were not lost or dissolved by virtue of anything found in the [249]*249language of section 67f, though obtained within four months prior to the filing of the bankruptcy proceeding.

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Bluebook (online)
3 F.2d 247, 1924 U.S. App. LEXIS 2436, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brown-shoe-co-v-mckey-ca7-1924.