Soul v. Keller

24 F.2d 38, 1928 U.S. App. LEXIS 1948
CourtCourt of Appeals for the Sixth Circuit
DecidedFebruary 8, 1928
DocketNo. 5034
StatusPublished
Cited by4 cases

This text of 24 F.2d 38 (Soul v. Keller) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Soul v. Keller, 24 F.2d 38, 1928 U.S. App. LEXIS 1948 (6th Cir. 1928).

Opinion

KNAPPEN, Circuit Judge.

This appeal presents a conflict of jurisdiction between the federal District Court, |in bankruptcy, and the municipal court of Cleveland, over the assets of the bankrupt held, when the bankruptcy intervened, by a receiver previously appointed by the municipal court.1

The facts, so far as immediately important, may thus be sufficiently stated:

On April 28,1926, Dworken and Bradley, as plaintiffs, obtained judgment in the municipal court against the present bankrupt, as defendant, for $1,333.66 and costs. On May 4th following, plaintiffs filed in the municipal court a petition alleging levy by the court’s bailiff, under execution issued upon the judgment, on certain goods, chattels, and choses in action belonging to the judgment defendant, and praying appointment of a receiver to collect the choses in action. Thereupon the court appointed appellant, Soul, “receiver herein of all debts, property, equitable interests, rights, and things in action of said judgment debtor, to collect and receive the goods, chattels and choses in action” belonging to the defendant or under its control, or in the hands of defendant’s managing agent and secretary, and “to apply the same or the proceeds thereof, under direction of this court, toward, the satisfaction of the aforesaid judgment and costs, and to hold the remainder, if any, subject to the further order of the court.” The judgment debtor (or its managing agent) was ordered to deliver to the receiver all money “in his possession and under his control belonging to” the judgment debtor and not exempt from execution, and the judgment debtor was restrained from transferring or disposing of the property, or in any manner interfering therewith “until further order in the premises.” Thereupon the receiver gave bond and took possession of the bankrupt’s property (including all books and records), which he still retains, except funds collected and distributed by him. At dates ranging from May 10 to August 5, 1926, the receiver obtained successively authorizations, among other things, to appoint attorneys for himself, to bring suits to prevent transfer of the assets, to employ an auditor, the appointment of appraisers of the real estate, to sell the office furniture, and to bring Suits on stock subscriptions, the latter for the assigned reason that the corporation was insolvent.

On September 2d involuntary bankruptcy petition was filed. On October 2d the receiver filed his report showing receipts of $6,-840.74 and disbursements of $2,527.84 — thus more than $4,300 net, or more than three times the amount of the execution in aid of which the receivership suit was instituted. The disbursements to that date seem to have included, among other things, $1,200 to the receiver's attorneys and $500 to the receiver, plus $500 on the judgment against the execution defendant. The receiver under order [40]*40therefor, paid a dividend of 33% per cent., amounting to about $1,000, on nine claims of creditors, including $444.55 to the judgment creditor, and an additional $500 to the receiver and $600 additional to his attorneys. Apparently a number of small claims were paid in full. The judgment creditor in aid of whose execution the bill was filed was thus paid in all $944.45. The fees of the receiver and of his counsel then amounted to $3,300, out of gross receipts of nearly $7,000 and net receipts of $4,300. The schedule filed under adjudication of voluntary bankruptcy (apparently at some time in October) listed 17 unsecured creditors, totaling $6,369.95.

In November the trustee in bankruptcy applied to the referee for an order for delivery by the municipal court receiver to the trustee of all property of the then bankrupt then remaining in the receiver’s hands. After full hearing, the referee found that the trustee was entitled to-the possession of all the remaining funds in excess of $1,333 and “costs of that proceeding,” and directed the trustee to apply to the municipal court for an order on its receiver accordingly. The District Court, on review, approved and affirmed the referee’s order.2 The municipal court’s receiver contends here that the present bankrupt had no power to file a voluntary petition in bankruptcy after the lapse of more than four months from the time of the state court’s appointment of the receiver.

The rules applicable to the facts of this case are that the bankruptcy court, by virtue of the adjudication, had paramount and exclusive jurisdiction over the administration of the bankrupt’s property in its actual or constructive possession (Orinoco Co. v. Metzel [C. C. A. 6] 230 F. 40, 44); that the bankruptcy court was entitled to and was in constructive possession of the bankrupt’s property not adversely held by the state court’s receiver (In re Diamond’s Estate [C. C. A. 6] 259 F. 70, 73 et seq.), except so far as a lien had been obtained thereon through the action of the state court; that the execution levy, and bill in aid of execution, filed more than four months before bankruptcy, gave a lien upon the bankrupt’s property to the extent of the judgment, interest and costs thereon, and costs of the bill in aid of execution, such lien not being an unlawful preference, and so not affected by the bankruptcy adjudication (In re Rohrer [C. C. A. 6] 177 F. 381; In re Dayton, etc., Co., 291 F. 390, 401, opinion by Judge, now Mr. Justice, Sanford); that as to the bankrupt’s property not needed for such purpose the bankruptcy court is entitled to administer it, except so far as it may have been, at the time bankruptcy intervened, in the custody of the state court through its receiver for the purpose of lawful administration and disposition m the proceedings m aid of execution — in which case the state court could lawfully complete its administration under the rule that the jurisdiction first lawfully acquired will not be disturbed by the bankruptcy (In re Rohrer, supra; Metcalf v. Barker, 187 U. S. 165, 23 S. Ct. 67, 47 L. Ed. 122; Pickens v. Roy, 187 U. S. 177, 23 S. Ct. 78, 47 L. Ed. 128).3 Except as above stated, the four-months rule cuts no figure here. The bankrupt has otherwise an absolute right to the benefit of the Bankruptcy Act (11 USCA). In re Yaryan Naval Stores Co. (C. C. A. 6) 214 F. 563, 565, 566.

The remaining and controlling question thus is whether by the filing of the bill in aid' of the judgment creditor’s execution, the state court acquired jurisdiction to administer generally the estate of the judgment debtor — the present bankrupt. In the absence of such jurisdiction the action of the District Court was plainly right, unless, as the receiver contends, the judgment debtor is estopped by his alleged acquiescence and participation in the" state court proceedings.

In our opinion the bill was not one for general administration. As we understand the record, the bill on its face and by its terms was a mere bill in aid of execution. It does not appear that it purported to be filed on behalf of creditors generally, or that it asked for relief other than in aid of the judgment creditor’s own execution. Other creditors were not made parties. We find in the record no order requiring the other creditors of the execution defendant to file their claims with the receiver; nor does it appear that the receiver requested such filing. No other creditors than the execution plaintiff became parties to the bill.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Millers v. Kasnett
2015 Ohio 298 (Ohio Court of Appeals, 2015)
Muffler v. Petticrew Real Estate Co.
132 F.2d 479 (Sixth Circuit, 1942)
Wells v. Cermak
82 F.2d 971 (Sixth Circuit, 1936)
Moore v. Scott
55 F.2d 863 (Ninth Circuit, 1932)

Cite This Page — Counsel Stack

Bluebook (online)
24 F.2d 38, 1928 U.S. App. LEXIS 1948, Counsel Stack Legal Research, https://law.counselstack.com/opinion/soul-v-keller-ca6-1928.