Bernheim v. Birnbaum

• Decision Date: 23 April 1887
• Citation: 30 F. 885
• Parties: BERNHEIM and others v. BIRNBAUM and another, Assignee.
• Court: U.S. District Court — Southern District of Georgia

30 F. 885

BERNHEIM and others v. BIRNBAUM and another, Assignee.

United States Circuit Court, S.D. Georgia, Eastern Division.

April 23, 1887

Syllabus by the Court

Under the act of March 3, 1887, an action may be maintained in the United States circuit courts where the matter in dispute exceeds, exclusive of interest and costs, the sum and value of $2,000, although it is made up of distinct demands of less value than $2,000, and although the plaintiff may have acquired such demands by assignment.

Where a statute of a state provides that in the case of fraudulent assignments a court of competent jurisdiction is authorized to declare the assignment void, although the assignee is not shown to have notice of the fraud, the equity courts of the United States having jurisdiction can enforce rights under such statute. Jaffrey v. Brown, 29 F. 476, followed.

Garrard & Meldrim, for plaintiffs.

Chisholm & Erwin, for defendants.

SPEER J.

This bill is brought by the complainants against the defendants alleging this state of facts: The defendant Birnbaum carried on business in the city of Savannah. He was insolvent. He bought large quantities of goods on credit. A very short time preceding his declaration of insolvency he kept on purchasing goods, making all these purchases without giving any premonition of,is insolvency. Suddenly an assignment is made. Max Birnbaum is out of business, and the assignee is in possession of his stock of goods, a large amount of which is yet unpaid for and on which Max has given some of his creditors, and one relative, to-wit, Fabian Birnbaum, his father, mortgages covering all of the stock. The bill charges that this whole transaction is fraudulent; that Birnbaum bought the goods knowing that he was insolvent, and not intending to pay for them; that the assignee knew it. The mortgages and assignment are charged to be fraudulent, and the prayer is made that they be declared null and void; that the complainants, so far as they are able, may be allowed to identify the goods which have thus been fraudulently obtained from them, and to retake them, and that they have a general decree for the balance due them. The bill is demurred to on two general grounds:

First. That the act of March 3, 1887, deprives the court of jurisdiction. The language relied on by counsel is:

'Nor shall any circuit or district court have cognizance of any suit, except upon foreign bills of exchange, to recover the contents of any promissory note or other chose in action, in favor of any assignee, or of any subsequent holders, of such instrument payable to bearer, and not made by any corporation, unless such suit might have been prosecuted in such court to recover the said contents if no assignment or transfer had been made.'

It is insisted that the complainants, Bernheim, Bauer & Co., added to their claim against the defendants an open account against him assigned to them by other parties, and then brought the bill for the whole amount, and that this is incompetent, because the assignor of the account could not have brought the suit, it being, alone, less than the jurisdictional limit. This is perhaps the first time since this important amendment to the laws conferring jurisdiction on the United States court was enacted that it has been necessary to construe it. The language of the act above referred to is ambiguous and involved to an unusual and remarkable extent, especially when its fundamental importance is considered.

The language, 'unless such suit might have been prosecuted to recover said contents if no assignment or transfer had been made,' can have no reference to the question of amount. That has been definitely provided for in the first section of the act. That provides...