Clark v. Snelling

205 F. 240, 123 C.C.A. 430, 1913 U.S. App. LEXIS 1432
CourtCourt of Appeals for the First Circuit
DecidedMay 16, 1913
DocketNo. 1,009
StatusPublished
Cited by13 cases

This text of 205 F. 240 (Clark v. Snelling) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clark v. Snelling, 205 F. 240, 123 C.C.A. 430, 1913 U.S. App. LEXIS 1432 (1st Cir. 1913).

Opinion

DODGE, Circuit Judge.

This appeal is brought by a trustee in bankruptcy. The judgment he seeks to reverse granted a petition brought by the bankrupt’s mother for an order directing the trustee to convey to her certain real estate, which, having long ago paid the bankrupt for it, she has since occupied as hers, but the record title to which has been inadvertently left in him.

The facts material to our decision were alleged in the petition, and admitted by a “demurrer,” which was heard and sustained by the referee, in the first instance. A petition for review brought the matter before the District Court in the same form, and it was there agreed by the parties that judgment upon the demurrer should be final so far as the District Court was concerned; the trustee thus waiving his right to answer the petition in the event of the demurrer being over[242]*242ruled. Upon a hearing under this agreement, the District Court reversed the referee, overruled the demurrer, held the bankrupt’s title to the land to be in him as trustee for the petitioner, and ordered the trustee to convey the bankrupt’s right, title, and interest to her in execution of the trust, according to the prayer of her petition.

The material facts are thus stated in the opinion of the learned judge of the District Court:

“Some ten years before Snelling’s bankruptcy the petitioner orally purchased. of him certain real estate, which she .has since been in exclusive possession of, and upon which she has made valuable improvements. She paid for the property in full, but by inadvertence * :s * no conveyance was ever made to her, so that the legal title still stands in the bankrupt’s name.”

'' J1, 2] This was land which prior to the filing of the petition the bankrupt could “by any means have transferred.” He could have transferred it to a bona fide purchaser for value without notice of the petitioner’s rights, and if he had done so the transfer would have been effectual as against her. This, without more, is enough to bring the bankrupt’s title to it within Act July 1, 1898, c. 541, § 70a (5), 30 Stat. 565, 566 (U. S. Comp. St. 1901, p. 3451), and vest the trustee with that title upon his appointment. But, so far as section 70a alone is concerned, the trustee took no better title than the bankrupt himself had, and the petitioner, .since she could have obtained the conveyance she seeks from him, under the law of Massachusetts, by virtue of her equitable ownership, would have been entitled to it from his trustee in bankruptcy. We agree with the learned judge below that all this is in accordance with the Massachusetts decisions' to which he refers, and the general principle that the trustee takes the bankrupt’s property subject to all the'equities impressed upon it in the bankrupt’s hands. York, etc., Co. v. Cassell, 201 U. S. 344, 352, 26 Sup. Ct. 481, 50 L. Ed. 782. No creditor had “fastened upon” the land before the bankruptcy, nor had anything happened which gave the trustee rights in excess of those obtained by virtue of his mere succession to the bankrupt’s title under section 70a, unless this result can be held to have followed for the reasons below considered.

The trustee relies upon the additions made to section 47a (2) by the amendments of 1910. Act June 25, 1910, c. 412, § 8, 36 Stat. 840 (U. S. Comp. St. Supp. 1911, p. 1500). Without amending section 70a, there w.ere then inserted in section 47a, a section purporting to deal, not with the title, but with the duties of trustees, provisions vesting-trustees with certain “rights, remedies and powers’-’ as to the bankrupt’s property. These are differently defined according as the property in question is “in the custody or coming into the custody of the bankruptcy court” or “not in the custody of the bankruptcy court.” The first inquiry is: In which of these categories does the property here in question belong? The District Court held the land not in its •custody, and the trustee contends that this was error.

The trustee relies here upon Mueller v. Nugent, 184 U. S. 1, 14, 22 Sup. Ct. 269, 275 (46 L. Ed. 405), and insists that:

“On adjudication, title to tne bankrupt’s property became vested in the trustee (sections 21e, 70), with actual or constructive possession, and placed in the custody of the bankruptcy court.”

[243]*243And he contends that the petitioner admitted the custody of the bankruptcy court by the filing of her petition.

[3 j We cannot regard anything said in Mueller v. Nugent as meaning that any better title to this laud became vested in the trustee than he got under section 70a, or that anything more than the bankrupt’s title, with such possession only as he may have had by virtue of it, was placed in the custody of the' bankruptcy court. It is among the facts set forth in the petition, and' therefore stands admitted before us, that the petitioner had entered upon the premises 10 years before the bankruptcy, had since occupied them as hers, had made improvements upon them, had expended much money in the improvements and in upkeep, had paid the taxes, had paid also from 1903 to 1907 the interest on a mortgage which the bankrupt had placed on the premises, and had, in 1907, paid and discharged this mortgage, having agreed at the time of her purchase from the bankrupt to assume and pay it, and having accordingly indorsed and guaranteed his mortgage note. In view of these facts, the bankrupt cannot be said to have had either possession or custody of the premises when the petition was filed. The petitioner had both, by virtue of her occupation and claim of ownership, so that any presumption that the bankrupt’s title gave him either is overcome. There has been no attempt by the trustee to take possession, so far as appears. By her petition she no doubt admitted the jurisdiction of the court to do what she asked it to do, that is, to direct a release by the trustee to her of such title as had become vested in him and thus brought within the court’s control; but having expressly claimed in her petition that his title was only that which he held in trust for her, she cannot he regarded as having admitted any further jurisdiction, or any custody over the premises themselves, in the court. Neither on the facts, therefore, nor because of any admission by the petitioner, can we hold that the District Court erred in its ruling that this lamí was not properly in its custody.

[4¡ As to property not in 1he court’s custody, the provision in the above amendment to section 47a is that the trustee “shall be deemed vested with all the rights, remedies and powers of a judgment creditor holding an execution duly returned unsatisfied.” The rights, remedies, and powers as to the bankrupt’s real estate which would belong to such a creditor when the petition is filed are not everywhere the same, hut they depend upon the law of the particular state. If, in most states, such a creditor would have a lien, in Massachusetts he would not, unless before his judgment he had attached the land. Not having so attached it, his judgment and execution would give him no rights in it before he had taken it on his execution. There is difficulty in saying that by provisions giving trustees certain rights, remedies, and powers all further rights are also given which might, in any event, have been obtained by exercising the rights, remedies, and powers described as given.

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Cite This Page — Counsel Stack

Bluebook (online)
205 F. 240, 123 C.C.A. 430, 1913 U.S. App. LEXIS 1432, Counsel Stack Legal Research, https://law.counselstack.com/opinion/clark-v-snelling-ca1-1913.