ORAY V. BEOK.
done by the district court in the case, under the existence of, the power. . The question adjourned must, in its entirety, be answered in the .affirmativee
GRAY, Surviving Assignee, etc.,
BEoK and another.
(DMtrict Court, D. New Jersey. April 11, 1881.)
1. EQUITABLE RELIEF-JURISDICTION-ASSIGNEES IN BANKRUPTCY.
A bill in equity by in bankruptcy to recover the value of personal property transferred to the defendant by the bankrupt, in fmud of his' creditors, will I,e dismissed for want of jurisdiction: the complainant ,has a plain, adequate, and complete remedy at law.
A bill will be dismissed for lack ,of' equity, although the point is. made for the first time when the cause comes before the court for final hearing 011 the pleadings and proof.
But inasmuch as the defendant is in fault for not raising the objec. tioD in the pleadings, the bUl wiil be dismissed without costa to the defendant.
'Nelson Smith, for complaint\nl M. T.Newbold, for defendant Beck·. NIXON,D. J. This suit was originally. commenced by William M. Gtay and Alexander H. Wallil:l, aSSignees in bankruptcy of John Werder, against Joseph B. Beck and Werder, to recover the sum of $2,000, and also'for the value of' a barrel of wine, alleged to have been transferred to the said Beck by the bankrupt, after the proceedings in bank. ruptcy had begun, in fraud of his creditors.. Pending the proceedings, Wallis, one of the assignees, died, and the suit has been revived and continued in the name of the, suryiving assignee. A decree pro confesso was I against the de. fendant Werder for not appearing and answering, and the other defendant, Beck, filed an answer to the bill of com-
plaint, denying that he received the sum of $2,000, or any other sum of money, from the bankrupt in fraud of his creditors, or for any other purpose; and, after acknowledging the receipt of a barrel of wine, alleging the same was sent to him by Werder as payor offset for certain short weights in flour that he had purchased of Werder, and not for any other intent or purpose. A large amount of testimony was taken by the respective parties, and when the cause came before the court for hearing on the pleadings and proofs, the counsel for the defendant suggested that the bill, answer, and testimony disclosed a clear case for proceedings at law, and that this court, in equity, had no jurisdiction over it. Conrts listen with great reluctance to such suggestions on the final hearing, where the defendant has not thought proper to raise the objection by demurrer, or in the answer. They regard the forms of proceeding as handmaids, to be used for obtaining ratherthan for obstructing the rights of the litigants, and frequently ,decline to consider questions touching the mere form of the remedy which a.re not brought to their attention until after expense has been incurred in taking the testimony in the cause., Un. derhill v. Van Cortland, 2 John. Ch. 839. But, notwithstanding this, the question raised is ,alwa:ys treated in the courts of the :crnited States as jurisdictional, and must be entertained,wheI1everurged, becaus6'Doc'onsent of parties, however expressed or inferred, can giva jurisdiction to the court where the 1ft"" ·does not give it. The equitable jurisdiction of these courts is limited. It cannot be invoked or susta.ined in any case "where a plain, adequate, and complete remedy may be had at law." Sucharethe express provisions of the statute, (Rev. St. § 723;) and the refusal of the court to give them effect is a denial to the adverse party of his constitutional right of the trial of the issues.oUact by a jury. Hipp v. Baden, 19 How. 278. Does the bill disclose a casein which the complainant has not a complete remedy at law? It is filed by assignees in bankruptcy to recover the value of personal property which it
GRAY V. BECK.
is alleged the bankrupt gave to the defendant to place it for his own use beyond the reach of creditors. It was doubtless a. fraudulent act, if committed, but courts of law have a concurrent jurisdiction with courts of equity in many matters of fraud; and, in all cases where concurrent jurisdiction exists, the party seeking relief must come into the courts of law if he has a plain, adequate, and complete remedy for the wrong complained of. After the expense and delay to which the parties have been subjected in the suit, I have endeavored to I find some tenable ground upon which I could stand and retain the case for adjudication, but have failed in the effort. The prayer of the bill is that the defendant Beck may be decreed to pay to the complainants the sum of $2,000, which the put into his hands to conceal from his creditors, and the"turther sum of $54 for the barrel of wine deposited with' him for a like purpose,-a naked legal demand for the payment of money wrongfully appropriated and withheld,':""" and for 'the value of personal frab.dulently transferred. There are nofeatures or the' would seem to authorize or justify an equitable actidn. The complainants have not even the excuse of seeking a discovery of anything, for they expressly waive an answer under oath.· I am, therefore, Constrained to the bill for want of jurisdiction in equity; but inasmuch as the defendant is in fault for not raising the objedion in the pleadings, it is dismissed without costs to the defendl,l.nt.
!:lee SiU v. Solberg, ante. 468.
SMITH V. SAME.
(Circuit CO'ltrt, D. Rhode Island.
ILLEGAL PREFERENCE-KNOWLEDGE OF CREDITOR.
The illegality of a preference depends upon the actual knowledgeof the creditor.-[ED.
Appeals from district court. Wm. P. She.ffield, for complainants. Saml. R. Honey and Francis B. Peckham, Jr., for defendant. LOWELL, C. J. E. Truman Peckham was made bankrupt in this district upon a petition filed March 22, 1878, and Willian: J. Cozzens is his assignee. On the twenty-second of January, 1878, the bankrupt had given two mortgages of land and buildings to his relatives, William J. Peckham and John (}. Smith, to secure them for liabilities which they had incurred for him. The land was duly sold by the assignee, free of encumbrances, and the purchase money is in court to answer in its stead. Bills and cross-bills were filed in the district court, the insillting that the mortgages were fraudulent preferences, and the mortgagees maintaining their validity. The district court found the mortgages to be valid. '" The 'question is whether Peckham and Smith-for they stand precisely alike-had reason to believe that E. Truman Peckham was insolvent on the twenty-second of January, and knew that he intended to commit a fraud upon the act. I agree with the district judge that the assignee has failed tit prove the necessary facts. The evidence was unfortunately taken upon written interrogatories, and is very vague. There are suspicious circumstances, but I cannot say that it is proved that the mortgagees knew much about the affairs of the bankrupt, or had any particular reason to believe him insolvent.
*Sce 3 FED. REp. 794.