Board of Com'rs of Shawnee County, Kansas v. Hurley

• Citation: 169 F. 92
• Decision Date: 02 April 1909
• Docket Number: 2,864.
• Parties: BOARD OF COM'RS OF SHAWNEE COUNTY, KAN., v. HURLEY et al.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

169 F. 92

BOARD OF COM'RS OF SHAWNEE COUNTY, KAN., v. HURLEY et al.

No. 2,864.

United States Court of Appeals, Eighth Circuit.

April 2, 1909

(Syllabus by the Court.)

The obligee in a bond, or the holder of a claim upon which several parties are personally liable, may prove his claim against each of the estates of those who become bankrupt, and may at the same time pursue the others at law, and he may recover notwithstanding payments after the bankruptcy by other obligors or by their estates dividends from each estate in bankruptcy upon the full amount of his claim at the time the petition in bankruptcy was filed therein, until from all sources he has received full payment of his claim, but no longer.

The filing of a petition in bankruptcy vests in each creditor of the bankrupt an equitable estate in such a proportion of his property as the creditor's claim bears to the entire amount of the provable claims.

An appellee who does not take an appeal, and a defendant in error who does not sue out a writ of error, cannot confer jurisdiction upon an appellate court to consider or review decisions adverse to him upon questions suggested by an assignment, or by an argument of cross-errors, nor can he be heard upon such questions. He may be heard only in support of the order, decree, or judgment below.

Edwin A. Austin (John J. Schenck, on the brief), for appellant.

John S Dean, for appellees.

Before SANBORN and ADAMS, Circuit Judges, and RINER, District Judge.

SANBORN Circuit Judge.

On November 21, 1902, the First National Bank of Topeka, Kan as principal, and Charles J. Devlin and others, as sureties, gave a bond to the county of Shawnee in the state of Kansas conditioned, among other things, that the bank should repay the money deposited with it by the county on demand. On July 3, 1905, the bank was insolvent, and a receiver was appointed by the Comptroller of the Currency who took possession of its property. On July 6, 1905, a petition in bankruptcy against Charles J. Devlin was filed upon which he was subsequently adjudged a bankrupt. At the time this petition was filed the bank was indebted to the county on account of deposits made with it in the sum of $32,731.05. On July 7, 1905, the county demanded payment of this amount from the bank, and it failed to pay any part of it. The county then proved its claim for this amount against the estate of Devlin, and on October 19, 1905, it was tentatively allowed, subject to a reconsideration upon the filing of other objections. Between the date of the filing of the petition and March 24, 1908, the county received in dividends upon its claim out of the property of the insolvent bank $26,839.46, and the referee thereupon allowed its claim for the remainder $5,891.59, only, and his action was confirmed by the District Court. The county has appealed and has assigned as error that the court refused to allow its claim for the $32,731.05 owing at the time the petition in bankruptcy was filed and to order the payment of dividends upon that amount.

In their brief counsel for the appellees argue that no part of the claim of the county was provable because it was contingent and unliquidated, contingent because Devlin was liable to pay in case of the default of the bank only, and there had been no default on July 6, 1905, since no demand of payment was made of the bank until the next day, and unliquidated because the condition of the bond was that the bank, in addition to paying back the money deposited when demanded, should file with the county clerk each month a statement of the amount on hand during the previous month and of the amount of interest accrued thereon and should discharge all duties imposed upon it by law, and the amount of the damages for its failure to comply with these terms was undetermined.

But the referee and the District Court decided these questions against the trustees, this court has no jurisdiction of them and they are here dismissed because the trustees took no appeal. An appellee who does not take an appeal, and a defendant in error who does not sue out a writ of error, cannot confer jurisdiction upon an appellate court to consider or review rulings adverse to him upon questions suggested by an assignment or an argument of cross-errors. He cannot be heard upon such questions in the appellate court. He may be heard only in support of the order, decree, or judgment below. The Maria Martin, 12 Wall. 31, 40, 20 L.Ed. 251; Guarantee Bank of North America v. Phenix Ins. Co., 124 F. 170, 172, 173, 59 C.C.A. 376, 378, 379; Building & Loan Ass'n v. Logan, 66 F. 827, 828, 14 C.C.A. 133, 134; Clark v. Killian, 103 U.S. 766, 769; United States v. Blackfeather, 155 U.S. 180, 186, 15 Sup.Ct. 64, 39 L.Ed. 114; The Stephen Morgan, 94 U.S. 599, 24 L.Ed. 266; Cleary v. Ellis Foundry Company, 132 U.S. 612, 614, 10 Sup.Ct. 223, 33 L.Ed. 473; Bolles v. Outing Company, 175 U.S. 262, 268, 20 Sup.Ct. 94, 44 L.Ed. 156; Pauly Jail Building & Mfg. Co. v. Hemphill County, 62 F. 698, 703, 10 C.C.A. 595, 600.

A single question remains: Is the claim of a creditor against the estate of a surety in bankruptcy upon which the principal has made partial payments after the date of the filing of the petition in bankruptcy entitled to allowance at and to dividends upon the amount owing upon it when the petition was filed, or upon the amount remaining unpaid upon it when the final allowance of it is made, or when the respective dividends are paid? In the discussion of this question preferences, securities consisting of pledged or mortgaged property, such as are required to be surrendered or applied upon claims by the bankruptcy law, are laid out of consideration, and what is said has no reference to rights under them, because no such rights are in issue here. Laying out of view then such preferences and securities, the status of claims at the time of the filing of the petition in bankruptcy, and not at any subsequent time, fixes the rights of their owners to share in the distribution of the estate of the bankrupt. Bankr. Act, July, 1898, c. 541, Sec. 63a(1), 30 Stat. 562 (U.S. Comp. St. 1901, p. 3447); Swarts v. Siegel, 117 F. 13, 15, 54 C.C.A. 399, 401; In re Bingham (D.C.) 94 F. 796. On that date the property of the bankrupt passes from his control to the court or to its receiver, and thence to the trustee in trust for the creditors of the bankrupt in proportion to the amounts of their claims at that time. On that date there vests in each creditor as a cestui que trust an equitable estate in such a part of the property of the bankrupt as the amount of his provable claim at that time bears to the entire amount of the provable claims against the estate. On that date the bankruptcy law deprives the creditor of all his common-law remedies to collect his debt out of the property of his debtor and to collect subsequent interest on his claim against that property, and gives him in lieu thereof this equitable estate in the property of the bankrupt. Thus the filing of a petition upon which a subsequent adjudication of bankruptcy is rendered places all the property of the bankrupt 'which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him' in custodia legis.

Section 70a(5), 30 Stat. 566 (U.S. Comp. St. 1901, p. 3451). From that hour the bankrupt is divested of the power to appropriate it to the payment of his debts or to use and dispose of it at will, and that authority is vested in the District Court. Every suit against him upon a provable claim is stayed from the date of the filing of the petition. Section 11a, 30 Stat. 549 (U.S. Comp. St. 1901, p. 3426). Every person is forbidden to receive from the bankrupt any material amount of property after that date with intent to defeat the act. Section 29b, 30 Stat. 554 (U.S. Comp. St. 1901, p. 3433). Every intentional preference after that date is voidable. Section 60b, 30 Stat. 562 (U.S. Comp. St. 1901 p. 3445). Upon the filing of the petition the court may take immediate possession of the property if the bankrupt is neglecting it so that it is deteriorating in value. Section 69a, 30 Stat. 565 (U.S. Comp. St. 1901, p. 3450). And upon the appointment of the trustee all the property of the bankrupt which, prior to the filing of the petition, he could have transferred, or which could have been seized or sold under judicial process against him, passes to this...