ATLANTA F. & INSULATION CO. v. Oberdorfer Ins. Agency

• Decision Date: 25 June 1943
• Docket Number: No. 10626.,10626.
• Citation: 136 F.2d 457
• Parties: ATLANTA FLOORING & INSULATION CO., Inc., et al. v. OBERDORFER INS. AGENCY et al.
• Court: U.S. Court of Appeals — Fifth Circuit

136 F.2d 457 (1943)

ATLANTA FLOORING & INSULATION CO., Inc., et al. v. OBERDORFER INS. AGENCY et al.

No. 10626.

Circuit Court of Appeals, Fifth Circuit.

June 25, 1943.

O. C. Hancock, C. R. Wheeless, and Wm. A. Fuller, all of Atlanta, Ga., for appellants.

Benton E. Gaines, J. Kurt Holland, and Jos. J. Fine, all of Atlanta, Ga., for appellees.

Before HUTCHESON, HOLMES, and WALLER, Circuit Judges.

HUTCHESON, Circuit Judge.

The receiver in Bankruptcy of the estate of S. Yoshinuma, bankrupt, appeals from a denial of his petition for a turn-over order to be directed to a Georgia State Court receiver. It presents the single question whether the referee as Special Master and the district judge were right in holding that the "bankruptcy proceeding having been instituted more than four months after the filing of the bill in the state court, its appointment of the receiver and his taking possession of the res in controversy, the state court is entitled to retain jurisdiction and to administer the estate". This is the record:

Oberdorfer Insurance Agency, a judgment lien creditor of S. Yoshinuma, on May 13, 1942, filed an equitable petition in Fulton Superior Court for the enforcement of its judgment, alleging, among other things, insolvency and that it was necessary for it to proceed in equity, and asking for the appointment of a receiver. On the same day, appellee Russell was appointed by the state court, receiver of the assets of the defendant. On June 25th, Yoshinuma acknowledged service in the state court suit and consented to making the receivership permanent and to the sale by the receiver of his assets. On September 15, 1942, two days more than four months after the receiver had been appointed, an involuntary petition in bankruptcy was filed against Yoshinuma, and consenting to be adjudged bankrupt, he was, on October 5, 1942, so adjudged. On October 6, 1942, Fuller was appointed receiver and instructed to apply to the state court for a turn-over order. He applied and was refused. He then applied to the bankruptcy court for such an order and his petition was referred to the referee as Special Master. On October 23, 1942, the special master filed his report in which, summarizing the material evidence and carefully and correctly setting down his conclusions of law,¹ he determined and recommended accordingly that because the bankruptcy proceeding had been instituted more than four months after the filing of the bill in the state court, the petition for a turn-over order should be denied. On November 20, 1942, the district judge, overruling the objections and exceptions to the master's report, and making the findings of the master the order and judgment of the court, denied the petition.

Appellant, urging upon us that the referee and the district judge misconceived the effect of Sec. 2, sub. a(21)² of the Chandler Act, and, therefore, the state of the law, insists that Emil v. Hanley, March 15, 1943, 63 S.Ct. 687, 87 L.Ed. ___; Duparquet Huot & Moneuse Co. v. Evans, 297 U.S. 216, 56 S.Ct. 412, 80 L.Ed. 591, and Straton v. New, 283 U.S. 327, 51 S.Ct. 465, 75 L.Ed. 1060 require a different holding. We do not think so. Nothing in any of those decisions at all makes against the position taken below. They are, indeed, authority for it. They but affirm and reaffirm the principle first laid down in Sturges v. Crowninshield, 4 Wheat. 122, 4 L. Ed. 529, and persistently thereafter adhered to and reaffirmed in, among others, Metcalf v. Barker, 187 U.S. 165, 23 S.Ct. 67, 47 L.Ed. 122; Stellwagen v. Clum, 245 U.S. 605, 38 S.Ct. 215, 62 L.Ed. 507; and International Shoe Co. v. Pinkus et al., 278 U.S. 261, 49 S.Ct. 108, 73 L.Ed. 318. This principle is that while federal bankruptcy statutes supersede state bankruptcy statutes, bankruptcy does not supersede a state court proceeding for the enforcement of a lien and the appointment of a receiver therein where the institution of the suit created a valid lien, or was for the enforcement of a valid existing lien obtained, more than four months prior to bankruptcy. The decisions of this court have been uniformly to the same effect. Blair v. Brailey, 5 Cir., 221 F. 1; Russell v. Edmondson, 5 Cir., 50 F.2d 175; Bryan v. Speakman, 5 Cir., 53 F.2d 463; In re White Star Refining Co., 5 Cir., 74 F.2d 269. The judgment is right. It is affirmed.

1 "The bankruptcy proceeding having been instituted more than four months after the filing of the bill in the State Court, its appointment of the Receiver, and his taking of possession of the res in controversy, the State Court is entitled to retain jurisdiction and to administer the estate.

"§ 2, sub. a (21) of the Bankruptcy Act, as amended in 1938 11 U.S.C.A. § 11, sub. a (21); Metcalf Bros. & Co. v. Barker, 187 U.S. 165, 23 S.Ct. 67 47 L.Ed. 122; Straton v. New, 283 U.S. 318, 51 S.Ct. 465 75 L.Ed. 1060; Blair v. Brailey, 5 Cir., 221 F. 1; Neely v. McGehee, 5 Cir., 2 F.2d 853; Murray v. Miller, 157 Ga. 11 121 S.E. 113; Ramey v. McCoy, 56 Ga.App. 741 193 S.E. 790; Clements v. Conyers, 7 Cir., 32 F.2d 5; Marcell v. Engebretson, 8 Cir., 74 F.2d 93, 94 (6); In re Hamilton, 7 Cir., 29 F.2d 281 (computation of time); Emil v. Hanley, 2 Cir., 130 F.2d 369, 371, as follows:

"`* * * Since the section 2, sub. a (21) merely granted a new remedy and was not intended to enlarge the jurisdiction of the bankruptcy Court.'

"§ 2057, Vol. 5, 4th Edition, Remington on Bankruptcy, as follows:

"`Assignments and Receiverships Created before Four Months — Assignments and receiverships instituted more than four months preceding the filing of bankruptcy petition are not affected.

"`But,...