Shea v. Lewis

206 F. 877
CourtCourt of Appeals for the Eighth Circuit
DecidedMay 26, 1913
DocketNos. 3,761 and 125
StatusPublished
Cited by28 cases

This text of 206 F. 877 (Shea v. Lewis) 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
Shea v. Lewis, 206 F. 877 (8th Cir. 1913).

Opinion

VAN VAEKENBURGTÍ, District Judge

(afier stating the facts as above). The errors mainly relied upon as stated in the brief are: First, that the referee was without jurisdiction in summary proceedings to try the right and title of claimant Abbie A. Shea to the real and personal property she is ordered to turn over to the trustee, and in tiiat connection: (a) That under the federal homestead laws there can be no fraudulent conveyance of a federal homestead as to creditors whose claims accrued prior to the issuance of patent, and, as all claims filed are of such character, claimant, by the conveyance of bankrupt’s federal homestead, took good title thereto and to the proceeds of any sale thereof, including all the property she is ordered to turn over to the trustee; (b) that-under the homestead laws of Minnesota there can be no fraudulent conveyance of a state homestead exemption of 80 acres, and that, by the conveyance of bankrupt’s state homestead, claimant Abbie A. Shea acquired a good title, as well as to the proceeds of any sale thereof by her, including all the property she is ordered to turn over to the trustee, except 5,000 shares of stock in Cedar- Island Take Iron Company. Second, that in law there is no evidence to warrant the order directing, the bankrupt to pay to the trustee $3,000, or any other sum.

[ 1 ] Out of abundance of caution appellants and petitioners present this case on appeal and by petition to revise. In the view we take, it is unnecessary to determine whether appeal will lie. It is conclusively [880]*880established that where, in a case like this, the District Court erroneously retains jurisdiction to adjudicate the merits, its action can be corrected on review. In re Gill and In re Farmers’ & Manufacturers’ Bank of Rich Hill, 190 Fed. 726, 111 C. C. A. 454; In re McMahon; 147 Fed. 684, 77 C. C. A. 668; Mueller v. Nugent, 184 U. S. 1-15, 22 Sup. Ct. 269, 46 L. Ed. 405; Schweer v. Brown, 195 U. S. 171, 25 Sup. Ct. 15, 49 L. Ed. 144; First National Bank v. Title & Trust Co., 198 U. S. 280, 25 Sup. Ct. 693, 49 L. Ed. 1051.

We shall consider first the specification of error involving the summary jurisdiction of the District Court.

[2] 1. The rule applicable to situations such as that presented by the case at bar has been authoritatively established by numerous decisions of the Supreme Court and has been exhaustively discussed and specifically stated by this court. In re Rathman, 183 Fed. 913, 106 C. C. A. 253, Speaking for this court, Judge Sanborn said:

“Tlie jurisdiction of tlie bankruptcy court to determine in a summary proceeding adverse claims created before the filing o,f tlie petition in bankruptcy to liens upon and titles to property claimed by' tlie trustee as that of the bankrupt is conditioned and limited by its actual possession thereof.”
“The test of the summary jurisdiction is that the court of bankruptcy, through the act of its officers, such as referees, receivers, or trustees, has taken possession of the res as the property of the bankrupt.”

“The declaration in Mueller v. Nugent, 184 U. S. 1-14, 22 Sup. Ct. 269, 275 (46 L. Ed. 405), that the filing of the petition * * * ‘is a caveat to all the world and in effect an attachment and injunction,’ has been so limited by subsequent decisions of the Supreme Court that -it has no application to those holding substantial claims antedating the filing, to liens upon or titles to property claimed as that of the bankrupt. In the absence of proper proceedings to make such claimants parties to the bankruptcy proceeding, they are strangers thereto, and their claims are unaffected thereby.”

In such cases a plenary suit must be'brought either at law or in equity by the trustee, in which the adverse claim of title can be tried and adjudicated. • Bardes v. Hawarden Bank, 178 U. S. 524-532, 20 Sup. Ct. 1000, 44 L. Ed. 1175; Louisville Trust Co. v. Comingor, 184 U. S. 18, 22 Sup. Ct. 293, 46 L. Ed. 413; First National Bank v. Title & Trust Co., 198 U. S. 280, 25 Sup. Ct. 693, 49 L. Ed. 1051; Murphy v. John Hofman Co., 211 U. S. 562-570, 29 Sup. Ct. 154, 53 L. Ed. 327; Babbitt v. Dutcher, 216 U. S. 102-113, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969; Johnston v. Spencer, 195 Fed. 215, 115 C. C. A. 167; Cooney v. Collins, 176 Fed. 189, 99 C. C. A. 543; In re McMahon, 147 Fed. 684, 685, 77 C. C. A. 668; In re Michie (D. C.) 116 Fed. 749.

The bankruptcy court-has jurisdiction to draw to itself, and to determine by summary proceedings after reasonable notice to claimants, the merits of controversies between the trustee and such claimants over liens upon and title- to property claimed by the trustee as that of the bankrupt which has been lawfully reduced to the actual possession of the trustee or of some other officer of the bankruptcy court as the property of the bankrupt. When those in possession are not adverse claimants, but are only representatives of the bankrupt, without claim of lien upon, or right to, the property in themselves, the bankruptcy court may by summary proceeding take the actual possession of the [881]*881property, and then, when it has thus acquired the actual possession, may by summary proceedings determine the validity of claims or liens upon and titles to it. In re Rathman, supra, 183 Fed. pages 922-923, 106 C. C. A. 253.

In Babbitt v. Dutcher, 216 U. S. 102, 113, 30 Sup. Ct. 372, 377 (54 L. Ed. 402, 17 Ann. Cas. 969), the Supreme Court said:

"There are two classes oí cases arising under the act of 1898 and controlled by different principles. The first class is where there is a claim of: adverse title to property of the bankrupt, based upon a transfer antedating the bankruptcy. The other class is where there is no claim of adverse title based on any transfer prior to the bankruptcy, but where the property is in the physical possession of a third party or of an agent of the bankrupt, or of an officer of a bankrupt: corporation, who refuses to deliver it to the trustee in bankruptcy. In the former class of casos a plenary suit must be brought, either at law or in equity, by the trustee, in which the adverse claim of title can be tried and adjudicated.”

The bankruptcy court, however, has jurisdiction under an order to show cause to investigate and determine wlietner or noi u nan ai the time the petition for the order to show cause ivas hied, or at any other time, actual possession of the property involved in the order, and whether those asserting lien or title have a substantial or only a frivolous and baseless adverse claim. In re Rathman, 183 Fed. 913-918, 106 C. C. A. 253; Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 L.

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Bluebook (online)
206 F. 877, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shea-v-lewis-ca8-1913.