Dempster v. Waters Pierce Oil Co.

172 F. 353, 97 C.C.A. 51, 1909 U.S. App. LEXIS 4914
CourtCourt of Appeals for the Eighth Circuit
DecidedJuly 26, 1909
DocketNos. 92, 2,947
StatusPublished
Cited by22 cases

This text of 172 F. 353 (Dempster v. Waters Pierce Oil Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dempster v. Waters Pierce Oil Co., 172 F. 353, 97 C.C.A. 51, 1909 U.S. App. LEXIS 4914 (8th Cir. 1909).

Opinion

AMIDON, District Judge

(after stating the facts as above). The appellant mainly contends that the written admission of the corporation that it was insolvent and unable to pay its debts was collusive, and that the adjudication in bankruptcy in New York was without authority of law. This is a collateral attack upon the judgment of the New York court, which cannot be permitted. When the petition in bankruptcy in that court was filed, it was a caveat to all the world, and the appellant here was thereby made a part}'' to that proceeding. If in his judgment is was without authority of law, or the petition was collusive, it was his duty to appear in that court and contest the proceeding, and, if dissatisfied with the judgment, seek his redress by [355]*355appeal. He cannot be beard to raise the question collaterally in another court.

We are of the opinion, however, that the entire proceeding in the trial court was coram non judice. It was definitely decided in this circuit in the case of In re Granite City Bank, 137 Fed. 818, 70 C. C. A. 316, that under the present bankruptcy law “there are no such things in bankruptcy proceedings as courts of primary and ancillary jurisdiction." The court in which the petition is filed has plenary jurisdiction in bankruptcy throughout the United States. Within that limit all the estate in the possession of the bankrupt or held by another as his property is brought immediately within the custody of the court and made subject to its protection. The filing of the petition is an attachment of the estate, and an injunction restraining any act which will interfere with its administration in bankruptcy. This jurisdiction is national, and takes no account of districts or states. In re Wood and Henderson, 210 U. S. 246, 28 Sup. Ct. 621, 52 L. Ed. 1016; In re Williams (D. C.) 123 Fed. 321, approved by the Circuit Court of Appeals of the Second Circuit, in the case of In re Von Hartz, 142 Fed. 726, 74 C. C. A. 58. See, also, In re Williams (D. C.) 120 Fed. 38; In re Schrom (D. C.) 97 Fed. 760. Any proceeding necessary for the protection of the estate had in any other district must take the form of a plenary action at law or suit in equity. A petition or motion, such as was presented to the trial court, can only be made in an action, suit, or proceeding pending in court. The appointment of a receiver or the issuance of an injunction can only he made in some cause properly before the court. Inasmuch as there was no cause or bankruptcy proceeding pending in the Eastern District of Missouri to which the petition or motion here under review could be attached as a provisional remedy, the trial court was wholly without jurisdiction to entertain the motion.

A contrary conclusion is reached in the cases of In re Benedict (D. C.) 140 Fed. 55. and In re Dunseath & Son Co. (D. C.) 168 Fed. 973, where the authorities are reviewed. The decisions there relied on, however, are misapprehended. Sherman v. Bingham, Fed. Cas. No. 12,762, and Lathrop v. Drake, 91 U. S. 516, 23 L. Ed. 414, were both plenary suits. The former was an action of assumpsit, instituted by declaration and summons, to recover money wrongfully received from the bankrupt. The latter was a suit in equity, instituted by hill and subpmna, to set aside a fraudulent preference. The question raised in these cases was whether under Bankr. Act March 2, 1867 (14 Stat. 517, c. 176), United States courts had jurisdiction of a plenary action brought by the trustee in any district other than that in which the petition was filed, and it was decided that such jurisdiction existed. Such suits are spoken of by the court as ancillary; but the word “ancillary,” as there used, simply means that the suits are in aid of the court of bankruptcy in collecting the assets of the estate. They lend no countenance to the filing of a petition or motion in a court where no cause is pending'.

Under the present bankruptcy law the trustee is vested with all the property belonging to the bankrupt, and may pursue any remedy [356]*356available to the owner of property. If the property has been reduced to possession, the court of bankruptcy can grant him full relief in the exercise of its summary jurisdiction. If it is held adversely, he can only recover it by plenary action or suit. The only court in which he can proceed by petition or motion is the court in which the proceeding is originally instituted. In re Williams (D. C.) 123 Fed. 321; Ross-Mecham Foundry Co. et al. v. Southern Car & Foundry Co. (D. C.) 124 Fed. 403; In re Von Hartz, 142 Fed. 726, 74 C. C. A. 58. The only cases to the contrary, besides those mentioned in the preceding paragraph, are In re Peiser (D. C.) 115 Fed. 199, in which the subject is not in any way discussed; and In re Sutter Bros. (D. C.) 131 Fed. 654, which must be regarded as overruled by the case of In re Von Hartz, 142 Fed. 726, 74 C. C. A. 58.

It does not follow, from what we have said, that the parties in interest here were without remedy. The authorhy of the bankruptcy court to appoint a receiver for the preservation of the estate pending the adjudication, to authorize the receiver temporarily to conduct the business of the alleged bankrupt, and to make all orders necessary for the accomplishment of those objects, applies to the entire estate of the bankrupt, wheresoever it may be situated in the United States, and is not confined to such property as may be within the district wherein the petition in bankruptcy is filed. In short, the authority to take precautions for the preservation of the estate pending the adjudication in bankruptcy is quite as broad, territorially speaking, as is the authority to collect, administer, and settle the estate after a trustee is appointed. Section 2; cl. 3, of the bankruptcy act (Act July 1, 1898, c. 541, 30 Stat. 545 [U. S. Comp. St. 1901, p. 3421]), authorizes the court to appoint receivers “for the preservation of estates, to take charge of the property of bankrupts.” Wherever the estate is in the United States, there this jurisdiction extends. In its exercise the court may authorize the receiver to take possession of property belonging to the estate wherever situated, and restrain third parties from interfering with that possession, and may also restrain them from pursuing remedies in other courts which will conflict with the duties of the receiver. In the recent case of In re Muncie Pulp Co., 151 Fed. 732, 81 C. C. A. 116, the Circuit Court of Appeals of the Second Circuit held that a court of bankruptcy in the Southern District of New York had power to authorize its receiver to take possession of real property belonging to the estate in Arkansas, and to restrain creditors residing in that state from prosecuting actions in its courts by attachment against the property. Upon the authority of that case, the court of New York in the instant case had jurisdiction to restrain the execution sale now under consideration by specific order. If the pendency of that sale was not discovered by the receiver until he reached the state of .Missouri, and at a time when it would have been too late to. apply to the court of his appointment, there were still several courses open to him: (1) He might have applied to the state court out of which the execution issued to restrain further proceedings thereon, and it would have been the imperative duty of that court, under section 11 of the bankruptcy act, to grant the relief. (2) The sheriff held the property as the property ©f the bankrupt. [357]*357Otherwise there would have been no foundation for his levy. Clarke v.

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Bluebook (online)
172 F. 353, 97 C.C.A. 51, 1909 U.S. App. LEXIS 4914, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dempster-v-waters-pierce-oil-co-ca8-1909.