IN BE LITCHFIELD.
his possession of the legal title of the 1,400 acres of land; and ter's, Dearborn's, and Colebrook's apparent ownership of the stock of the Chicago & Illinois River Railroad Company, which the cross-com· plainant seeks to reach,-it would seem proper that they should be made defendants. What has been said abont Slater as defendant in the original bill is applicable in the cross-bill. The demurrer to the cross-bill of the before-mentioned defendant$ is overruled. In a manuscript brief, filed by one of the counsel for defendants, the point is madl:l that it is not competent for the compiainant inthis collateral proceeding to assail the validity of the decree and proceed. ings in the state court; This is one of the questions which must be determined upon the final hearing between the principal parties. It does not fairly arise upon the present hearing. At any rate, it need not now be disposed of, and is reserved for the final hearing. Counsel will prepare the orders required by the foregoing memorandum_
(DiltrEd Court, E. D. Michigan.
October 16, 1882.)
1.BANKRUPTCy-POSBESSION OD' ESTATE BY ASSIGNEE-RIGHTS OD' ADVERI!B (..'LAllIANT8.
An assignee in bankruptcy may take peaceable possession of the bankrupt'. estate wherever he can find it, but adverse claimants of such property, situated in districts other than the one wherein the bankruptcy proceedings are pending, may assert their rights to the same by bringing suits against the agents of the assignee in the state courts, or by notifying the custodians of such property not to deliver the same to the assignee, without being guilty of a con. tempt of the court by which the assignee was appointed.
2. SAlIE-DEFENSIll OF TITLE BY ASSIGNEE-REMEDIES-INJUNCTION. In such case, however, the assignee may eitller defend his title in the state court, or may file a bill in the circuit or district court of the United States praying that the rights of the adverse claimants be adjusted, and, as incidental thereto, that the actions in the state courts may be enjoined. The assignee cannot proceed iii such case by summary petition. J. (JONTEMPT OF CO.URT-JURIBDICTION OF OFFENSE. QUl1!re. Can a contempt of court, being a criminal offense, and therefore local in its nature, be committed except within the jurisdiction of the contemned court f
On petition of the assignee for an injunction, and an atta.chment for contempt against Thomas Nestor for unlaw-
fully interfering with the property of the bankrupt. case are substantially as follows:
The facts of this
In 1873 Litchfield was adjudicated a bankrupt in the district court for the sonthern district of New York, and petitioner, who is a resident of the city of New York, was appointed assignee. Among the assets of the bankrupt were about 4,600 acres of pine land and mill property situated in his state, the to which was vested in Utchfield under a deed made in 1863 from Henry C. Knight, receiver of the property of one Stewart, under a creditor's bill filed in this court. In 1874, one .Johnson, who had been appointed administratOJ of Stewart's estate, be in the mean time having died, filed a bill against the petitioner in the southern district of New York for the recovery of these lands, claiming that the receiver's deed was invalid for want of jurisdiction in the court, and for irregularities in the proceedings j that the conveyance had been made to Litchfield in trust; and that the debt for which it had been deeded to him had been paid. The bill was, in short, a bill to redeem for the benefit of creditors of Stewart's estate, which was insolvent. This suit was afterwards compromised by the payment to Johnson of $15,000. In 1881 these lands were damaged to such an extent, by a fire which swept over that portion of the state, that the preservation of the timber rendered it necessary that it should be immediately cut, and petitioner procured an order from the district court for the southern district of New York to lumber the same, and in pursuance of such order made contracts with Brown & Davidson for stripping these lands. In pursuance of these contracts Brown & Davidson went upon the lands, and cut about 15,000,000 feet of timber, some of which has been manufactured into lumber and shipped eastward, and a portion of which is now in the hands of a boom company in process of floating down to the mill. It further appears that in February or March, 1882, the heirs of Stewart, with one exception, conveyed all their interest in this property to Qne Nestor, who claims to be the owner in fee of two-thirds thereof. The petition alleges that this conveyance is made public by Nestor, who claims to have acquired a good title to the property, and to the logs, already cut and of the lumber manufactured from them; that by reason of his claims, and threats to take possession of the logs and lumber, petitioner was compelled, in order to induce purchasers to buy, to indemnify them, and covenant to protect them in the peaceable possession and enjoyment thereof. It appears that Nestor replevied a portion of this lumber from one Fisher, who had bought the same from the assignee; that he has also brought actions of ejectment in the state courts against Brown & Davidson, and has given notice to the boom company, which now has possesion of a large amount of logs cut from these lands, not to deliver them to the petitioner, and has otherwise endeavored to embarrass him in his lumbering operations. These operations are carried on, not by the assignee personally, but by agents employed by him to manage his property in this state. 'fhe assignee asks for an injunction to restrain Nestor from interfering with the logs cut, and to be cut, either by causing the same to be seized by any legal process; or by giving notice of his claim to them, to any custo:Han, or persons in possession thereof, and from making any claim to said logs or
I:N RE LITCHFIELD. ,tltn ber, or from slandering the title of the assignee;or from bringing or continuing any action of ejectment against the actual occllpants of these lands under the . Rflsignee; and also asks for an order requiring Nestor to show c!:\Use why he should not be punished as for a contempt of the district court of the southern district of :New York, for his interference with the lumber sold to Fisher, by causing the same to be seized by a writ of repleVin, by serving notice of his claim to the logs in possession of the boom company, and by slandering petitioner's title to the logs in question, Nestor claims, as did the administrator of Stewart, that the deed from henry C. Knight, receiver, was void for several reasons; and further claims that the settlement made with Johnson as administratOt' of Stewart's estate was in DO way binding upon the heirs of Stewart, or upon him as their grantee. He also clltirns to own the property in question; denies the authority of the district court for the southern district New York to auc;hol'ize the assignee to lumber the lands, or continue the business (If said I.itchfield beyond nine months after he was, adjudged a bankrupt, or that said court had any authority to authorize the assignee to enter upon or do any acts upon lands in thicl state; and insists that the attempt of petitioner to catry on an extensive ber business for several years, as shown by his petition, is in Violation of the letter and spirit of tho bankrupt act. '
TV. Howard TVait and Ashley Pond, for assignee. JOh'l AtHnson and Henry M. Duffield, for respondent.
D. J. The assignee insists that the respondent should be punished for contempt (1) in notifying the boom company not to deliver to the assignee the logs cut from the lands in question under authority of the' order of the district court for the southern district of New York; (2) in bringing ejectment suits in the state courts against the parties in possession of these lands under the assignee; (3) in replevying a portion of the lumber cut from the logs .from Fisher, who had purchased the same from the assignee. The respondent insists with great earnestness that the district court for the Bouthern district of New York, in which these bankruptcy proceedings are pending, had no jurisdiction to authorize the assignee to carryon lumbering operations upon lands situated in this district. both because the lands are not within the juriSdiction of that court; and because, under section 5062a, the court had no authority tc\ direct the aS3ignee to carryon the business of the debtor for a period exceeding nine months from the time he was declared a bankrupt, which time had elapsed long before the order was made. I find it quite unnecessary, however, to consider this point. In the view I of the case it appears to me quite immateriaL v.13,no.14-55
It goes without saying that an assignee in ,bankruptcy may, as soon as has given bond and qus;lified, take immediate possession of all the property 6f the bankrupt found within his district. But if any' portion of the property be in the possession' of a third person claiming an adverse title assignee may not proceed summarily to enforce his right, but is bound to institute a plenary suit at iaw or in equity to establish his title or recover possession. SmithY. Mason, 14 WaJl. 419; Marshall Knox, 16 Wall. 551; In re Marter, 12 N. B. R. :).87; Knighfv Cheney, 5 N. B. R. 305. So, if a.n assignee has taken peaceable p'ossession ,of property, the ltdverse claimant may not take it aw.ay from him by force, or by reple:v;h.l from a state conJ:t, but must petition the conrtofbankruptcy for its delivery to him. This is held to be the, "proper action" provided for the relief of such pltrties.' Rev. ;St. § 5069; In're VogeZ; 7 Blatcht18.An attempt to of J;lrope,rty from the, assignee by a writ of replevin (r<,>ID,t4e c,ollrt is, asniuch a cop.tempt of the bankrupt court as if the plaintiff had endeavored to take it by force, and in such cases the sheriff will be ordered to return the property. In re Vogel, 7 Blatch£. 18; In re Ulrich, 6 Ben. 488; Inre People's Mail Steam-ship Co. 2 N. B. R.552; In re Kerosene Oil Co. 2, N.B. R. 538; In re Atkinson, 7N. B.R.143. The assigneeis an officer,of the court, and his possession is the possession of, the court, and the familiar cases turning upon the relations of marshal and sheriff are applicable with force to the protection of an assignee. Taylor v. Carryl, 20 How. 583; Freeman v. Howe, 24 How. 450; Bttck v. Colbath, 3 Wall. 324. The rule is the same in cases of receivers. High, Receiv. § 163; Noe v. Gibson, 7 Paige, 514; Albany City Bank v. Schermerhorn, 9 Paige, 377. Indeed, the power of the district court to wind up bankrupt estates, unfettered by the interference of state courts, has been strongly asserted by this court, and I have seen no reason to change my views in that regard. To make a bankrupt law effectual there must be a court specially authorized to administer it. If assignees are bound to go from county to county, defending their rights to different parcels of an estate, the whole administration of the law might as well be vested in the state courts. ,It is no disrespect to those courts to say that the want of harmony in their decisions which would almost inevitably result, would go far towards destroying the efficiency of the system. It is almost as important that the administration of the law should be uniform, and subject to the guidance of
· IN BE LITCHFIELD.
one supreme court, as that the law itself shouid conform to the constitutional requirement of uniformity. Hence, an exceptional power is givep to the district· courts in bankruptcy cases to enjoin proceedings in the state courts/-a power which has never been questioned since the decision of the supreme court in Ex parte Schwab, 98 U. S. 240. Not that this power should always be exercised when an assignee is defendant, since cases are numerous in which injunctions have been refused because it appeared that the case could be more conveniently and cheaply tried in the state courts. In re Oooper, 16 N. B. R. 178. The power to enjoin as in other cases is largely discretionary. The proper practice in all cases where the assignee has taken possession of the property lWt belonging to the bankrupt requires the adverse claimant to go into the bankrupt court and make his claim to the property, or bring a plenary suit against the assignee. As I have already observed, an action of replevin will not lie against an assignee in such cases. Other suits, however, such as trespass or trover, where the property is not taken from the possession of the assignee by mesne process, may be properly begun in the state courts, and carried to a final determination, subject to a discretionary power in the bankruptcy conrt to transfer the litigation there. Eyster v. Gaff, 91 U. S. 525; Sharpe v. Doyle, 102 U. S. 686; In re Moller, 14 Blatchf. 207. Thus far we have discussed the powers and immunities of an assignee within his own district. Other considerations present themselves when the authority of an assignee is sought to be enforced in other districts. I see no reason to question his authority to take peaceable possession of the property of the bankrupt, in whatever state or district he may find it, without application to the bankruptcy court of that district. But third persons, whose rights he may chance to assail, are entitled to protection. The power to puniSh those interfering with property in the possession of an assignee, or to enjoin the prosecution of suits in the state courts, presupposes that the adverse claimant may go into the bankruptcy court and have his right adjusted. But snppose the assignee, as in this case, sends his agent into another state to take possession of lands and lumber them, the adverse claimant cannot resort to the district court of this district for the assertion of his rights, since there is no case pending here, and no assignee within the district upon whom process can be served. Must he go to the southern district of New York, or, possibly, to the district of Oregon, to substantiate his claim? Clearly
not. A requirement of this kind would be an intolerable hardship. As the of a bankruptcy court cannot reach into other districts, (Jobbings v. Montague, 6 N. B. R. 117; Pa,ine v. Caldwell, 6 N. B. R. 558,) neither can inhabitants of other districts be compelled to resort to courts outside their own jurisdiction. Their only recourse, then, is to the state courts, in which suit may be begun against the persons in actual possession of the property, whether they be agents of the assignee or not. I am,.therefore, clearly of the opinion that Nestor was not guilty of contempt in bringing the actions of ejectment, nor in giving notice to the boom cotnpltny, although such notice would undoubtedly have been a contempt if the transaction had occurred within the distL'ict where the bankruptcy proceedings were launched. The case of Langford v. Lan,gford, High, lnj. § 170, note, is no authority foc the order demanded by the petitioner. In this case the defendant, being in England and within the jurisdiction of the court of chancery there, a receiver was appointed over his estate in Ireland. The defendant instructed his solicitor in Ireland to oppose, as far as the law would permit, the receiver of the rents and profits of such estate from r,eceiving the same. The solicitor accordingly notified defendant's tenants in Ireland that tlIe order of the court of chancery inEngland appointing a receiver was of no effect in Ireland, and that defendant would still enforce payment of his rents l1S before. This was held to be a contempt of the cou.rt of chancery in England, and such it undoubtedly was. It is no authority, however, for holding that the solicitor in Ireland, who notified the tenants, could be proceeded against for a contempt either in the English or Irish court of chancery, though if he had been found in England he might have been arrested for any act done within that jurisdiction. But still I am of the opinion that Nestor had done nothing here of which the assignee is entitled to complain. Indeed, it is difficult to see how Nestor could be guilty of a contempt of the district court of southern New York for any act whatever done within this district. A contempt of court is a specific criminal offense. New Orleans v. Steam-ship Co. 20 Wall. 387,392; Hayes v. Fischer, 102 U. S. 121; Crosby's Case, 3 "Vilson, 188; Williamson's Case, 26Pa. St. 24; Ex parte KeGlnuy, 7 Wheat. 41; U. S. v. Ja('obi, 1 Flippin, 108. Whether, like all criminal offenses, it is local in its character, and must be tried in the jurisdiction where committed, which locality must also be within the jurisdiction of the contemned court, it is unnecessary to decide. Cearly one court cannot punish a contempt against
IN RE LITCHFIELD.
the authority of another. Ex parte Tillinghast, 4 Pet. 108; People v. County Judge, 27 Cal. 151; Ex parte Chamberlain, 4 Cow. 49; Penn v. Messinger, 1 Yeates, 2. But I do not wish to be nnderstood as saying that the assignee is without remedy. It is now settled tha,t he may sue and collect the assets of the bankrupt within other districts than his oW-n. Lathrop V. Drake, 91 U. S. 516. Within the same ruling I see no objection to his filing a bill or bills in the oircuit or district court of this district, calling upon the respondent to come into such court and have his rights adjusted, and praying that he meanwhile be reskained from further prosecuting his actions in the state courts, or from interfering with the logs in the possession of the boom company. Davis v. Fried· lander, 104 U. S. 570, 575. If the assignee is unwilling to contest his claims in the state court, he must provide a forum and a cause in which the respondent may assert them, as the latter is powerless in this regard. But I thihksuch suit should be plenary in its nature; not only because it involves the title to the property in question, but because a summary petition is obnoxious to the ruling of the snpreme court that "strangers to the proceedings in bankruptcy, not served with pro' cess, and who have not voluntarily appeared and become parties to such a litigation, cannot be compelled to come into court under a petition for a rule to show cause, as in this case; nor is the exercise of such a jurisdiction necessary, as the third clause of the second section of the bankrupt act affords tbe assignee a convenient, constitutional, and sufficient remedy to contest every claim made by any person to any propedy or rights of property transferable to or vested in such assignee." Smith v. Mason, 14 Wall. 419 j Marshall v. Knox, 16 Wall. 551,557. The case of Samson V. 6 N. B. R. 403, if in point at all, IDllst be deemed to have boon overruled by Marshall v. Kno,1:, 16 Wall. 551, which appears to have been decided somewhat later. It results that this petition must be 'dismissed without prejudice.
(District Oourt, N. D. New York.
BANKRUPTOy-PRIVATE SALE BY ASSIGNEE-INADEQUAOY OF' PRICE.
Where an assignee sells property at private sale, in pursuance of an order of the court allowing him to sell as the register may direct, such sale will be set aside and a resale ordered when it is made to appear to the court that the property is worth a much greater sum than that at which it was sold, and parties are willing to bid it in at its real value, even in cases where there is no actual fraud on the part of those interested in the first sale.
George Gorham, for motion. W. L. Sessions, opposed. Cou, D. J. This is a motion by a oreditor to set aside a private sale by the assignee of his interest in lot No. 651, Cherry Grove township, Warren county, Pennsylvania, to William W. Welch, and a subsequent sale by Welch to one John L. McKinney. The assignee's sale was made pursuant to an order of the court dated July 18, 1882, allowing him to sell the said interest under the direction and control of the register, and in such manner as he should order and direct. The register took the proof and heard the allegations of the parties. On the twenty-se,cond of July he made an order authorizing the sale, without public notice, for $825. On the nineteenth day of August following, Welch sold the property for $4,500. Petitioner, who is a creditor in the sum of $6,500, had no notice of the sale, and now asks that it be set aside as fraudulent and irregular, alleging that the assignee's interest was worth much more than the amount received. Two affidavits are produced, in which the affiants swear that the said interest was worth at least $3,000, ana they offer, upon a resale, to bid that sum for it. The remedy adopted by the petitioner, though summary, seems to be the proper one. The act of June 22, 1874, (18 St. at Large, p. 178, § 4,) having reference to public sales-and a fortiori to private sales-by the assignee, provides: "And the court, on application of any part,y in interest, shall have complete supervisory power over such sales, including the power to set aside the same and to order a resale, so that the property sold shall realize the largest Bum." See, also, Hale v. Clauson, 60 N. Y. 339; In re Major, 14 N. B. R. 71; Brown v. Frost, 10 Paige, 243; Barb. Oh. Pro (2d Ed.) 541.