In re Bronson Woodworth, Inc.
| Decision Date | 06 December 1963 |
| Docket Number | No. LR 63 B 235.,LR 63 B 235. |
| Citation | 229 F. Supp. 262 |
| Parties | In the Matter of BRONSON WOODWORTH, INC., Bankrupt. Bank of Russellville, Respondent. |
| Court | U.S. District Court — Eastern District of Arkansas |
D. D. Panich, Little Rock, Ark., for trustee-in-bankruptcy, petitioner.
Robert H. Williams of Williams & Gardner, Russellville, Ark., for respondent.
This petition was filed by G. L. Nicklaus, Trustee in Bankruptcy for Bronson Woodworth, Inc., an Arkansas corporation, seeking to set aside an order of this Court entered August 15, 1963 in case No. LR 63 CR 132, delivering possession of $99,000 worth of bonds to the respondent, the Bank of Russellville, and an order restraining and enjoining the Bank of Russellville and the Chancery Court of Pope County, Arkansas, from proceeding further in case No. 10159 pending in said Court. The proceeding in the Pope Chancery Court was commenced July 20, 1963 against Bronson Woodworth, Inc., a corporation, Bronson Woodworth, individually, Elaine Woodworth, et al., to declare a constructive trust upon $130,000 which the Bank alleges was obtained from it by the fraud of Bronson Woodworth, Inc., a corporation. The trustee in bankruptcy was appointed as the result of an involuntary petition filed September 5, 1963.
It is admitted that the Bank, upon a check drawn on the account of Bronson Woodworth, Inc., issued its money order payable to Hill, Crawford & Lanford; that Bronson Woodworth delivered the money order to Hill, Crawford & Lanford obtaining the bonds of the value of $99,000, and $31,000 in currency in denominations of $100 bills; and that Bronson Woodworth sent to various people currency in the form of $100 bills (usually in the amount of $3,000 to each person) with direction to hold the same for the use and benefit of Bronson Woodworth. Some of the people to whom the money was sent turned it over to Elaine Woodworth, the wife; some turned the money over to counsel for Woodworth. This money was subsequently paid into the Pope Chancery Court. One person, Thomas Bash, has turned $3,000 over to the Trustee herein.
The $99,000 in bonds came into the hands of the United States Marshal for the Eastern District of Arkansas, and under an order of this Court in a criminal proceeding against Bronson Woodworth (No. LR 63 CR 132), were turned over to the Bank of Russellville before the petition in bankruptcy was filed. Two thousand nine hundred ninety-nine dollars eighty-five cents ($2,999.85 — being $3,000.00 less 15¢ bank charge) of the money in the registry of the Pope County Chancery Court was received by the Clerk of that Court prior to the date the petition in bankruptcy was filed. Nineteen thousand six hundred Dollars ($19,600) of the funds held by the Pope Chancery Court were paid to the Clerk of that Court by Elaine and Bronson Woodworth after the petition in bankruptcy was filed. Elaine Woodworth and Bronson Woodworth had been enjoined by the Pope Chancery Court prior to the filing of the petition in bankruptcy, from transferring or disposing of the funds so obtained in the form of $100 bills.
The Trustee takes the position that the right of ownership of the property involved is not now before the Court — that the only question is, "WHICH COURT HAS THE JURISDICTION TO DETERMINE THE RIGHT OF OWNERSHIP?" He relies upon 11 U.S.C. §§ 11, sub. a(7) and 11, sub. a(21) and asserts that this Court has summary jurisdiction over the property and has the authority to bring all parties into this Court and determine all rights therein.
The respondent for its position cites 9 Am.Jur.2d 101, § 58 under the title "BANKRUPTCY" as follows:
The statement from Am.Jur.2d is in accord with the adjudicated cases on the subject. See In re Hoey, Tilden & Co., D.C., 292 F. 269; Atlanta Flooring & Insulation Co. v. Russell (5 Cir. 1944), 145 F.2d 493, rehearing denied 146 F.2d 884, certiorari denied 325 U.S. 862, 65 S.Ct. 1202, 89 L.Ed. 1983. In the latter case (145 F.2d at page 496), it was said:
"An adjudication of bankruptcy draws to the bankruptcy court jurisdiction to administer all nonexempt property of the bankrupt, even though it may be subject to a valid lien; but where, prior to the filing of the petition in bankruptcy, a state court has obtained custody of such property in proceedings to enforce a lien not affected by bankruptcy, such custody will not be disturbed, nor the orderly procedure of the state court enjoined, by a court of bankruptcy."
Another exception to the summary jurisdiction of the bankruptcy court under 11 U.S.C. §§ 11, sub. a(7) and 11 sub. a(21) is where one is in possession of the property claiming adversely. Atlanta...
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