Burleigh v. Foreman

• Citation: 125 F. 217
• Decision Date: 22 September 1903
• Docket Number: 472.
• Parties: BURLEIGH et al. v. FOREMAN.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

125 F. 217

BURLEIGH et al. v. FOREMAN.

No. 472.

United States Court of Appeals, First Circuit.

September 22, 1903

Addison C. Burnham (Albert S. Hutchinson, of counsel), for appellants.

Bancroft Gherardi Davis, for appellee.

Before COLT, PUTNAM, and ALDRICH, Circuit Judges.

PUTNAM Circuit Judge.

This is an appeal from a decree of the District Court for the district of Massachusetts. The proceedings arose out of the bankruptcy of the copartnership of E. C. Hodges & Co., and the question involved is an issue between the creditors of the copartnership and the creditors of one of the copartners Hodges, relative to the title to the proceeds of seats at the Boston and the New York Stock Exchanges, and at the Chicago Board of Trade, and certain notes and shares of stock of the Wheelman Company. All these assets stood in the name of Hodges; but the creditors of the copartnership claim that they, in fact, belonged to it. A decree was entered that the property constituted joint assets. Thereupon this appeal was seasonably taken. The appellants are Charles b. Burleigh and the Washington National Bank, creditors of Hodges, and Freeman Hutchinson as trustee of the joint and several estates. There is only one appellee, Henry G. Foreman, a creditor of the copartnership.

Of course, in strictness, Burleigh, the Washington National Bank, and Foreman should have been required to intervene in the litigation each in behalf of himself and of all other creditors of the same class. Unless interventions are made in that way, it cannot be clear that adjudications are conclusive against any creditors except those nominally parties to the proceedings. However, no point is made on that account, and, on the record as it stands, we are not required to assume that there are any joint or several creditors except those before us.

The proceeding seems to have commenced with the filing of accounts by the trustee as required by law, crediting the assets in dispute to the individual estate of Hodges, and praying, in several petitions and amended petitions, that dividends should be ordered on that basis. Thereupon, Foreman filed several answers to the petitions, solely in his own behalf as stated, without any apparent authority from the court to intervene, if any was needed. Burleigh and the Washington National Bank, in like manner, filed petitions praying that the assets should be marshaled as now claimed by them. The record contains a number of petitions and amendments, in various stages, before the ultimate issues were framed. The result was that there was an order directing reformed pleadings, which clearly recognized the standing as litigants of the creditors who took this appeal. The District Court, having, as we have said, decided that the assets in question belonged to the copartnership, entered accordingly a decree which fully disposed of that issue, and which, therefore, so far as this subject-matter is concerned, was final. Thereupon, Burleigh the Washington National Bank, and Hutchinson as trustee appealed, as we have said, against Foreman only.

The appellee now moves to dismiss the appeal for several reasons only one of which has been relied on at bar. That is as follows:

'The matter sought to be brought before this court on appeal is not within the terms of section 25a, and is not a controversy in bankruptcy proceedings within the meaning of section 24a of the bankruptcy act.'

Section 2 of the bankruptcy act of July 1, 1898, c. 541, 30 Stat. 545 (U.S. Comp. St. 1901, p. 3420), enumerates certain matters over which the courts of bankruptcy are invested with jurisdiction at law and in equity. This gives them undoubted cognizance of the marshaling of assets in the possession of the trustee in proceedings like that underlying this appeal, as was fully explained by us in Union Trust Company, Petitioner (C.C.A.) 122 F. 937. In this respect the District Courts are not within the prohibition of Bardes v. Hawarden Bank, 178 U.S. 524, 20 Sup.Ct. 1000, 44 L.Ed. 1175, and of decisions which have followed that case, but their powers are analogous to those exercised by equity courts in marshaling and distributing assets which have come within their control and into their custody. When, however, the equity courts assume a jurisdiction of that character, it is a fundamental rule, so far as the federal tribunals are concerned, that, whenever any party intervening raises a distinct and separable issue or controversy involving substantial pecuniary rights, an appeal lies. Pursuing that analogy, an appeal should be allowed in the present case. A construction of the bankruptcy act of 1898 which would lead to a different conclusion would be monstrous. It would give a single judge absolute power over questions of fact concerning estates in bankruptcy, no matter how immense, while no such power exists in any other branch of the federal judicial jurisdiction. Such a result should not be accepted unless the statute furnishes some express provision in that direction, clear and positive. None such exists.

The relief given by the bankruptcy act of 1898 to litigants dissatisfied with the conclusions of the District Court are distinctly threefold: First, there is an appeal provided in section 25, with reference to the specific matters named therein. This was needed if an appeal was to be allowed, as the matters to which it relates could arise in bankruptcy only. Second, section 24b gives the several Circuit Courts of Appeals jurisdiction 'to superintend and revise in matter of law the proceedings of the several inferior courts of bankruptcy within their jurisdiction. ' Third, section 24a invests them 'with appellate jurisdiction of controversies arising in bankruptcy proceedings from the courts of bankruptcy from which they have appellate jurisdiction in other cases.'

Notwithstanding the limited form of expression in section 24b, the appellee maintains that its provision for revision relates to all matters covered by section 2 of the act of 1898, exclusive of all other methods of relief. It is true that, when a statute vests a new jurisdiction and simultaneously enacts a specific remedy, it ordinarily excludes by implication all others. Nevertheless, this is not a universal rule, as is very peculiarly illustrated with reference to the construction of that clause of section 5 of the act of March 3, 1891 (26 Stat. 826), establishing the Circuit Courts of Appeals, which provides an appeal to the Supreme Court in cases in which the jurisdiction of the court...