91 F. 508 -

508

91

FEDERAL REPORTER.

Inre BROOKS. (DIstrict Court, D. Verlliont. December 24, 1898.)
1.

BA;NKRpJ>TOY-.JuRISDICTION....,.R;BlCOVERY OF PROPERTY OF BANKRUPT.

A court of bankruptcy has jurisdiction of 8 petit!(}n by a trustee In bankruptcy for an order directing the restoration to him of property' of the' bankrupt unlawfully Boldon foreclosure of a chattel mortgage after the adjudication in bankruptcy, and bef(}re the appointment of the trustee, and of the qf. ba!?'kruptcy. The holder of a chattel mortgage, having notice of proceedings in bankruptcy against the mortgagbJ.', has no right, after the adjudication and before the appointment of a trustee, and without leave of the bankruptcy court, to sell the property, of! the bankrupt on forecll;l!!Ure of his mortgage, where the proceedings on foreclosure were not suchRe to bring the res within the jurisdiction of a state court, arid was no exc!usivepos, session of the property, before the adjudication,· by the officer making the sale. A sale so made Is unlawful and void, and passes no title.
OF TO FORECLOSE.

S.

8.

the holder of., a, Chattel mortgage on property of the bankrupt had unlawfully caused a of the same to be made for the satisfaction of his mortgage, after the adjUdication 'in bankruptcy and before the ap" p(}intnient of a trustee, and had bid in the greater part of it himself, held, on petition of the trustee ·subsequently appointed, that he should be ordered forthwith to restore to such trustee so much of the property as yet remained in his control, and to account the value Of, the remainder, such value to be ascertained and reported by the referee, with leave to the trustee to moveior a warrant directing the marshal to bring in the property, if not returned as. ordered.

FORECLOS"l1Rlll.,...RECOVERY QIi'PROPERTY BY TRUSTEE.

In Bailk'ruptcy. , '. , On petition by a trustee in 'bankruptcy ,for the.restoration to him of chattel of property of the bankrupt previously' sold on mortgages and held by the petitionee. . Bates, May & Simonds, for Dunnett & Slack, for petitionee.

, WHEELER, District Judge. The bankrupt had a tailoring establilShment, with a stock of goods, tools, and fixtures, in St. Johnsbury, on which, at the time of adjudication, the petitionee held chattel mortgages, with conditions broken over 30 days, .that Were in the hands of the constable, who had locked the property up in a room on tlle bankrupt's premises, and taken the key. They were notified of the proceedings, but before there was any trustee, and against objections of those interested, the constable sold the property at auction on the mortgages' at about half its value, most of which was bid off by the petitionee and bidders acting for him, and is now held by him against demand for its return by the trustee. This petition was brought t<.> compel return. It was referred to one of the referees for a finding of the facts, which from his report made after hearing on notice Ind Objection IS made that this court has no jurisdiction of this matter by this proceeding, because suits by the trustee are required to be brought where the bankrupt could bring them "if proceedings in bankruptcy had Dot been instituted." Bankruptcy Act 1898, § 23a. This,

IN RE BROOKS.

509

however, is not any such proceeding as the bankrupt could have brought if there had been no bankruptcy proceedings. It is founded upon them, and is a part of them. Rights of action accrued to the bankrupt from property pass to the trustee, as to which he becomes a new party, but in the same forum; and mere rights of action might 'accrue to the trustee from his course of administration, to which that provision might apply. But the assets of the bankrupt are brought by the proceedings within the reach and control, and subject to the orders, of the court, and no one has any ri'ght to remove or meddle with them, but for their preservation, without leave of the court, except the trustee. Bank v. Sherman, 101 U. S. 403; Sharpe v. Doyle, 102 U. S. 686; Feibelman v. Packard, 109 U. S. 421,3 Sup. Ct. 289. In Bank v. Sherman, Mr. Justice Swayne, for the court, said: "The filing of the petition was a caveat to all the world. It was, in effect, an attachment and injunction." This proceeding is for the vindication of the control of the property by the court, and the reference was for a report upon the specified issue involved, as provided for in section 22. The petitionee sets up proceedings under the laws of the state for foreclosure of his mortgages in justification. These are not judicial proceedings in any court drawing to it jurisdiction of the subjectmatter, but are merely proceedings for a public sale by an officer, in a specified way, lUI agent for the mortgagee. V. S. § 2265. The mortgagor has a right to redeem, which continues all the way to the time of sale (section 2264), of which he, and those claiming under him, are entitled to notice (section 2266). After the filing of the petition, there 'was no one to act upon a notice, or to whom notice could properly be given, until there should be a trustee; and the petitionee could not lawfully proceed according, to the provisions of the statutes of the state, nor without leave of the court having jurisdiction and control of the property. Such taking away of the property is not only an unlawful interference with the juriSdiction of the court, but the reo ceiving of "any material amount of property from a bankrupt after the filing of the petition, with intent to defeat this act," is made highly penal. Section 29b. That an officer having exclusive possession of property of a bankrupt could not lawfully proceed after bankruptcy proceedings, with notice, was treated as unquestionable in Connor v. Long, 104 U. S. 228; although that he might proceed notwithstanding such proceedings in another state', without notice, was, after much consideration, held. Here the possession of the officer was not exclusive. It was on the premises of the bankrupt, where the officer had no right superior to that of the bankrupt (Slate v. Barker, 26 Vt. 647); and here the petitionee, under whom the officer acted, as is found, had notice. In any view, the sales after the bankruptcy proceedings were unlawful and void, and conveyed no title. The value of the property was to be determined by converting the same into money, in some of various ways, "as the court may direct." Section 57h. This should be done now, and the property be forthwith returned for that purpose, or substantial rights of the creditors may be lost. If any has passed beyond reach of the petitionee, the value of that should be accounted for, to be determined by further proceedings be-

510

91 FEDERAL REPORTER.

fore the referee., If· not returned, a provisional warrant may issue to the marshal for bringing it, on motion of the trustee. And the peti· tionee should pay the costs of this proceeding. Let the property in 'control of the petitionee be returned within five days, and the value of the rest be reported by the referee, with leave to move for warrant on failure to so return, with costs.

In re DE LUE. (DIstrict Court, D. Massachusetts. February 2, 1899.)
No. 465.

BANKRUPTCy-DISSOr,UTION OF 'LIEN OF ATTACHMENT-LIMITATION OF TIME.

Under Bankruptcy Act 1898, § 67c, providing that "a lien created by or obtained In or pursuant to any suit or proceeding at law or in equity, including an attachment upon mesne process ... · ., which was begun against a person within four months before the filing of a petition in bankruptcy, by or against such person, shall be dissolved· by the adjudi. cation of such person to be a bankrupt," the lien of an attachment of the land of a voluntary bankrupt, made by virtue of a special precept issued within four months before the filing of his petition, is not dissolved by the adjUdication thereon, when the suit in which such precept issued was begun a year before.

In Bankruptcy. William W. Jenness, for bankrupt. George W. Wardrop, pro se. LOWELL, District Judge. De Lue was adjudicated bankrupt on his own petition, filed December 21, 1898. His trustee seeks to enjoin the sale of his real estate on execution, and to dissolve the lien created by the attachment thereof. The ,suit in which the execution was ob· tained was begun in December, 1897. No attachment was made therein until November 2,1898, when an attachment of the real estate in controversy was made by virtue of a special precept issued in accord· ance with Pub. St. Mass. c. 161, § 85. The application for the precept was made upon the day on which it was issued. The levy was made December 19th, the notice being posted on that day. Section 67c of the bankrupt act reads, in part, as follows:
"A lien created by or obtained in or pursuant to any suit or proceeding at law or in equity, Including an attachment upon mesne process or a judgment by confession, which was begun against a person within four months before the filing of a petition in bankruptcy, by or against such person, shall be dissolved by the adjudication of such person," etc.

The date put in question by this provision is not the date at which the lien was created, but the date at whis;h the suit or other proceed· ing was begun in which the lien was obtained. The counsel for the petitioner contends that this suit or proceeding is to be taken to be the application for the special precept, and not. the principal suit. The construction contended for, as it seems to me, is straineCl and unnatural. The act does not look to the date of the petition or other proceeding which is specially related to the attachment (the petition