Texas Co. v. Hauptman

91 F.2d 449, 1937 U.S. App. LEXIS 4255, 1937 A.M.C. 1217
CourtCourt of Appeals for the Ninth Circuit
DecidedAugust 2, 1937
Docket8311
StatusPublished
Cited by13 cases

This text of 91 F.2d 449 (Texas Co. v. Hauptman) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Texas Co. v. Hauptman, 91 F.2d 449, 1937 U.S. App. LEXIS 4255, 1937 A.M.C. 1217 (9th Cir. 1937).

Opinions

HANEY, Circuit Judge.

Appeal has been taken from an order directing appellants to release a steamship from libel proceedings in the United States District Court for the Southern District of Texas, and restraining appellants from proceeding further with the libel proceedings.

The Charles Nelson Company, a California corporation, hereinafter called the debtor, entered into a written agreement with one Rogers, as trustee for a Delaware corporation to be thereafter organized, under date of January 17, 1936. By the terms of that agreement, the debtor agreed to sell to Rogers the steamship Marsodak for $55,-000, payable $10,000 in cash upon the signing of the agreement, and the balance in twelve equal quarterly installments commencing three months after the date of delivery. It was agreed that the balance should be secured “by a first preferred mortgage on the vessel,” and that the “delivery shall be free and clear of all liens and encumbrances whatsoever.” The contract further provided that the debtor agreed to sell two additional vessels to Rogers on the same terms and conditions, and in connection therewith it is provided in the contract that “Tt is the intention of the parties that the Seller shall sell and the Buyer shall buy three vessels under the terms of this agreement, and if the Seller is unable to make, delivery of three vessels [450]*450to the Buyer in accordance with the terms of this contract then this contract shall become null and void and of no effect at the end of three hundred days from the date hereof. * * *”

The vessel Marsodak was delivered on the date of the contract. The preferred mortgage was executed January 22, 1936. On February 1-, 1936, the debtor assigned the preferred mortgage to a third party.

On February 5, 1936, the debtor filed a petition for relief under section 77B of the Bankruptcy Act (11 U.S.C.A. § 207). On the same date the lower court entered an order approving as properly filed, the above petition, and continuing the debtor in possession of its property. The order also provided “That the commencement or continuation of suits against the debtor are hereby enjoined and stayed until after final decree herein.”

On May 15, 1936, the lower court appointed appellee trustee of the debtor’s property. The order contained a provision enjoining and restraining all persons, firms, and corporations from attaching, levying upon, or enforcing liens upon, disturbing, interfering with, selling, removing, transferring the assets of the debtor, or the possession of appellee, and restraining the institution or prosecution of actions, proceeding in equity, admiralty, or bankruptcy, against the debtor or the trustee. There was a- proviso to this provision “that the Court may, upon notice and for cause shown, permit any judicial proceeding to enforce any lien upon the Estate of the Debtor.”

On July 7, 1936, the third party to whom the preferred mortgage had been assigned transferred a $20,000 interest in the mortgage to the debtor. On July 18, 1936, appellant, the Texas Company, a California corporation, by a libel filed in the federal court in Texas, caused seizure of the vessel sold Rogers, by a libel asserting a lien against such vessel for oil supplied it between August 1, 1935, and December 31, 1935. On July 23, 1936, the trustee filed a petition praying for an order discharging the vessel from the custody of the Texas marshal. On the same date an order was entered requiring appellants to appear on July 24, 1936, and show cause why the order should not be granted.

After hearing on July 24, 1936, the lower court entered an order that appellants “be and they are hereby directed to release forthwith the steamship. ‘Marsodak’ from the libel proceedings aid process issued therein in the United States District Court for the Southern District of Texas.” The order also restrained appellants from proceeding further with said libel proceedings and from instituting further proceedings without first obtaining an order of the court. The court further provided that the libel proceedings “are hereby stayed and enjoined pending the further order of” the court. From that: order, this appeal was taken.

There are twelve ass-gnments of error, all of which have been abandoned except the first four, which question the jurisdiction of the court to enter the order.

Section 77B provides that after a petition thereunder has been approved, “the court in which such order approving the petition * * * is entered shall, during the pendency of the proceedings under this section, have exclusive jurisdiction of the debtor and its property wherever located for the purposes of this section.” 11 U.S. C.A. § 207(a).

Section 207(c) provides:

“Upon approving the petition * * * or at any time thereafter, the judge, in addition to the jurisdiction and powers elsewhere in this section conferred upon him * * * (10) * * * may enjoin or stay the commencement or continuation of suits against the debtor until after final decree; and may, upon notice and for cause shown, enjoin or stay the commencement or continuance of any judicial proceeding to enforce any lien upon the estate until after final decree.”.

Jurisdiction over the persons of appellants is not questioned.

Appellants contend that the Bankruptcy Act gives the court no “power to enjoin the enforcement of liens against property not a part of the bankrupt estate.” Appellee contends that the mortgage on the vessel gave him a “special property interest” in the vessel.

The Ship Mortgage Act (46 U.S.C.A. § 911 et seq.) does not specifically state that a preferred mortgage lien is the same in nature as a maritime lien. We may assume here that the nature of the lien, as distinguished from the enforcement thereof, and other matters, is substantially the same as that of a maritime lien.

The court below ha.d no jurisdiction to stay the continuance of the proceeding in Texas as a suit against the debtor, un[451]*451der 11 U.S.C.A. § 207(c) (10), because the proceeding was not against the debtor, but in rem.

However, that section empowers the court to stay a proceeding “to enforce any lien upon the estate” of the debtor. Here, the estate of the debtor consisted of a mortgage lien. The Texas proceeding was not one to enforce a lien on the mortgage lien. The court, therefore, had no jurisdiction under that section.

It is provided under 11 U.S.C.A. § 207(a), that the trial court has “exclusive jurisdiction of the debtor and its property wherever located.” If appellee had any property in the vessel, it is quite apparent that the Texas court could not have jurisdiction over such property, for such jurisdiction is given exclusively to the court below. Therefore, we must first determine whether or not appellee had any property in the vessel.

What is property? It is “the sum of all the rights and powers incident to ownership.” Nashville, C. & St. L. R. Co. v. Wallace, 288 U.S. 249, 268, 53 S.Ct. 345, 350, 77 L.Ed. 730, 87 A.L.R. 1191. See, also, Bromley v. McCaughn, 280 U.S. 124, 136, 50 S.Ct. 46, 47, 74 L.Ed. 226. In 22 R.C.L. 37, § 2, it is said:

“The term ‘property’ has a most extensive signification, and in its strict legal sense means that dominion or indefinite right of user and disposition which one may lawfully exercise over particular things or objects.

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Bluebook (online)
91 F.2d 449, 1937 U.S. App. LEXIS 4255, 1937 A.M.C. 1217, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texas-co-v-hauptman-ca9-1937.