Clark v. Binninger

38 How. Pr. 341
CourtThe Superior Court of New York City
DecidedFebruary 15, 1870
StatusPublished
Cited by1 cases

This text of 38 How. Pr. 341 (Clark v. Binninger) is published on Counsel Stack Legal Research, covering The Superior Court of New York City primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clark v. Binninger, 38 How. Pr. 341 (N.Y. Super. Ct. 1870).

Opinion

McCunn, J.

The respondent admits the facts constituting the contempt, but urges, in justification, an alleged authority as assignee in bankruptcy, to demand and receive possession of the property in the hands of the receiver of this court.

Thus, the single question before me is the sufficiency of the justification presented by the respondent, and the decision of that question turns on the authority of the federal court in bankruptcy to interfere with or to arrest the pro[342]*342ceedings of a state court in the ordinary and legitimate administration of justice.

The action in this court was in the nature of a bill in equity, brought by one partner against another on the dissolution of the copartnership, for the purpose of winding up the copartnership, paying the creditors, and adjusting the reciprocal rights and equities of the copartners. That action is progressing in an orderly course of development towards a final judgment, wherein the rights and interests of the several creditors, as well as of the partners intersese, will be ascertained, adjusted, and protected upon the principles of equity applicable in analogous cases.

In aid of the ultimate relief an injunction was granted and a receiver appointed, with a view to the pi otection of the copartnership property pendente lite.

The action was commenced on the 19th day of November, 1869; on the 19th day of November, 1869, a receiver of the copartnership property was appointed; on the said 19th of November the receiver executed and filed the requisite bond; on the said 19th of November the receiver took possession of the copartnership property, and has remained in possession to the present moment.

The regularity and validity of these proceedings, in this court, are not to be impeached by any federal tribunal (U. S. Constitution, art. IV. § 1; ex parte Burns, 7 Law Reg., 105 ; Atkinson agt. Purdy, Crabbe, 551; United States agt. Howland, 4 Wheaton, 115; 10 Wheaton, 25).

The instant the receiver took possession, the copartnership property passed into the custody and control of this court, of which he was the officer. His possession is the possession of the court.

So by virtue of the order of this court appointing the-receiver, and the filing his bond in pursuance of that order, the receiver was vested with the legal title to all the copartnership property; that property, in contemplation of law, is no longer the property of the copartnership, and their [343]*343only interest in it is an equitable right to whatever surplus may remain after satisfaction of the copartnership’s creditors.

On the 11th of December, 1869, proceedings in bankruptcy were commenced against the copartnership of Binninger & Clark; on the 22d of December, 1869, they were adjudicated bankrupts; and afterwards, on the — day of-, John S. Beecher was appointed assignee.

Afterwards, on the — day of January, 1870, the said assignee demanded of the said receiver the possession of the property of the said copartnership, which possession the receiver refused to surrender or deliver to the assignee.

Recognizing and respecting the legitimate powers of the district court, I nevertheless contest the authority of that honorable court to oust the already attached jurisdiction of the superior court, and to compel the surrender, by its officer, of property duly and lawfully in its custody, and which is now in course of judicial administration.

That court, as a court of bankruptcy, is the creature of statute, and has no power beyond that expressly conferred upon it (ex parte Hugh Campbell, 7 Am. Law Reg., 100).

Antecedently to and independently of the bankrupt act of March 2d, 1867, that court had no authority to enjoin parties or proceedings in a state court, nor otherwise in any way to interfere with its process or proceedings (Act of March 2, 1793; Kent’s Com., 412; 3 Story’s Com., 521-626).

No such authority is conferred by the bankrupt act of March 2d, 1867, neither in terms nor by implication (ex parte Campbell, supra; Clark agt. Rist, 3 McLean, 494;. Matter of Burns, 7 Am., Law Reg., 105; Atkinson agt. Purdy, Crabbe, 557).

The bankrupt act expressly reserves and preserves intact all liens existing at the commencement of the proceedings in bankruptcy, (Sec. 14 Bankrupt Act, 1867; Clarke agt. Rist, supra; ex parte, Donaldson, 16 Am., Law Reg., 213; Matter of Allen, 1 N. Y. Legal Obs., 115 ; Re Houseberger agt. Zibetien, 2 Bank. Reg., 33.)

[344]*344Upon familiar principles, each partner has a specific lien on the copartnership property, for the satisfaction of the copartnership debts, and for the payment of any surplus that may remain to him after the adjustment of the rights and equities between themselves; and the object of a suit in equity between patners—particularly of the action in the superior court, is to enforce and effectuate that lien, (Lindley on Partn., 577, et seq).

The intent and policy of the bankrupt law of 1867, is to insure an equitable appropriation of the debtor’s property to the satisfaction of the claims of creditors; hence, the only transfers and assignments • which it denounces and invalidates, are transfers and assignments in preference or in fraud of creditors (sec. 39). Nothing in the bankrupt act distinguishes and' declares the district court the only forum where a just and equitable distribution of the debtor’s property can be consummated; and the jurisdiction of other tribunals of competent authority, except in administration of bankruptcy, is neither expressly nor impliedly excluded.

When this court acquired jurisdiction of the copartnership, no proceeding in bankruptcy had been instituted, and there was then no pretense of claim for the jurisdiction of the district court.

The amity subsisting between the tribunals of kindred and associated governments, forbids the suggestion in the district court that the action in this, the superior court, can terminate otherwise than in an equitable administration of the copartnership effects; nor can it be contended for a moment. that the commencement of an action in a state court, is an act of bankruptcy, nor is it obnoxious to the provisions or policy of bankruptcy law.

The superior court of the city of New York, and the district court, in administering the affairs of dissolved or insolvent copartnerships, proceeds upon the same principle? and with an equal solicitude to protect the rights of credi[345]*345tors ; hence, there is no occasion, with a view to justice or equity, why the district court should attempt to oust the jurisdiction of this court

My position is grounded as well upon authority as reason. In the cases cited below—all federal adjudications—the power and jurisdiction claimed for the district court were, in some instances, impliedly, and in others, most expressly and distinctly disclaimed and repudiated by the very tribunals in whose favor these anomalous pretentions were assserted. (Sedgwick, Assignee, agt. Minck, et al., 1 Bankrupt Reg., 204; Sedgwick, Assignee, agt. Place et al., 1 Bankrupt Reg., 204;

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Bluebook (online)
38 How. Pr. 341, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clark-v-binninger-nysuperctnyc-1870.