Byron Babbitt v. Howard Dutcher

• Decision Date: 21 February 1910
• Docket Number: No. 39,39
• Parties: BYRON F. BABBITT, Trustee in Bankruptcy of the Estate of Randolph-Macon Coal Company, Appt., v. HOWARD DUTCHER, Secretary of Randolph-Macon Coal Company, and James T. Gardiner, President of Randolph-Macon Coal Company
• Court: U.S. Supreme Court

216 U.S. 102

30 S.Ct. 372

54 L.Ed. 402

BYRON F. BABBITT, Trustee in Bankruptcy of the Estate of Randolph-Macon Coal Company, Appt.,

v HOWARD DUTCHER, Secretary of Randolph-Macon Coal Company, and James T. Gardiner, President of Randolph-Macon Coal Company.

No. 39.

Argued November 29, 1909.

Decided February 21, 1910.

The Randolph-Macon Coal Company was a Missouri corporation, and was duly adjudicated a bankrupt March 26, 1907, in proceedings instituted in the district court of the United States, in and for the eastern division of the eastern judicial district of Missouri. Byron F. Babbitt was duly appointed trustee in bankruptcy for the corporation May 10, 1907, and duly qualified by giving bond on that day.

He thereafter made demand upon the president of the company for the delivery to him of the corporate records and stock books of the bankrupt company, which were kept in the office maintained by the company in New York city. This request was refused by letter of the president of the company, dated September 24, 1907, in which he says that he is advised 'that such records and stock books are not documents relating to the property of the bankrupt, and therefore you, as trustee in bankruptcy, are not entitled to their possession.'

Thereupon the trustee made application to the district court in and for the southern district of New York, by peti- tion, for an order directing James T. Gardiner, the president, and Howard Dutcher, the secretary, of the company, or either of them, to deliver to him the stock-certificate book, the corporation minute book, and the stock register of said company, together with all other records and documents belonging to said company, in their possession or under their control. Gardiner and Dutcher were within the jurisdiction of the district court for the southern district of New York, and the books and papers referred to were within their custody there, and the trustee alleged that the stock-certificate book, the corporation minute book, and the stock register book were necessary to the trustee in his administration and settlement of the affairs of the company.

Thereafter a hearing was had on the petition, the order to show cause, and return thereto, and the district judge (Holt, J.) indorsed on the petition: 'I am obliged to deny this motion on the authority of Re Von Hartz, 74 C. C. A. 58, 142 Fed. 726,' and ordered that the motion be denied on the ground that the court was without jurisdiction to entertain the proceeding or to grant the relief prayed for, and the district judge also certified that the order denying the motion and refusing to grant the relief was based solely on the ground that the court was without jurisdiction 'to entertain proceedings instituted by a trustee in bankruptcy duly appointed in a bankruptcy proceeding pending in another district, to compel the officers of the bankrupt to deliver to such trustee the documents in their possession relating to the business of the bankrupt.'

This appeal was then allowed and duly proscuted.

Messrs. William B. Hornblower and Morgan M. Mann for appellant.

Mr. Henry W. Taft for appellees.

[Argument of Counsel from page 104 intentionally omitted] Mr. Chief Justice Fuller delivered the opinion of the court:

Subdivision 1 of § 70 of the bankruptcy act of 1898 (30 Stat. at L. 565, chap. 541, U. S. Comp. Stat. 1901, p. 3451) provides that the trustee of the estate of a bankrupt shall be vested by operation of law, as of the date of the adjudication, with the title of the bankrupt (a 1) to all 'documents relating to his property,' and subdivision 13 of § 1 of the act provides that "documents' shall include any book, deed, or instrument in writing.'

Appellees, as officers of the bankrupt company, asserted no adverse claim, but denied that the corporate records and stock books were 'documents relating to the property of the bankrupt,' and asserted that therefore the trustee in bankruptcy was not entitled to their possession.

We have no doubt that the books and records in question passed, on adjudication, to the trustee, and belong in the custody of the bankruptcy court, and, there being no adverse holding, that the bankruptcy court had power, upon a petition and rule to show cause, to compel their delivery to the trustee. Bryan v. Bernheimer, 181 U. S. 188, 45 L. ed. 814, 21 Sup. Ct. Rep. 557; Mueller v. Nugent, 184 U. S. 1, 46 L. ed. 405, 22 Sup. Ct. Rep. 269; Louisville Trust Co. v. Comingor, 184 U. S. 18, 46 L. ed. 413, 22 Sup. Ct. Rep. 293; First Nat. Bank v. Chicago Title & T. Co. 198 U. S. 280, 49 L. ed. 1051, 25 Sup. Ct. Rep. 693; Whitney v. Wenman, 198 U. S. 539, 49 L. ed. 1157, 25 Sup. Ct. Rep. 778.

This brings us to the real question in the case, and upon which the decision was rendered; namely, whether the district court of the United States in and for the southern district of New York had jurisdiction to entertain this particular proceeding and grant the relief prayed for.

In Ex parte Martin, Fed. Cas. No. 9,149, decided in 1842, Mr. Justice Story, sitting on circuit, held that the equity jurisdiction of the district courts, under the bankruptcy act of 1841 (5 Stat. at L. 440, chap. 9), was not confined to cases originally arising and pending in the particular court where the relief was sought, and where a creditor living in Massachusetts commenced suits in several states other than Pennsylvania, where proceedings were pending against the bankrupt for an adjudication, that an injunction would issue against the Massachusetts creditor, enjoining him from proceeding in the suits. Mr. Justice Story said:

'The language of the 6th section of the act is: 'That the district court in every district shall have jurisdiction in all matters and proceedings in bankruptcy arising under the act,' the said jurisdiction to be exercised summarily, in the nature of summary proceedings in equity. The act then goes on to enumerate certain specific cases and controversies, to what the jurisdiction extends (which I deem merely affirmative, and not restrictive, of the preceding clause); and then it extends the jurisdiction 'to all acts, matters, and things to be done under and in virtue of the bankruptcy, until the final distribution and settlement of the estate of the bankrupt, and the close of the proceedings in bankruptcy.' Now, this language is exceedingly broad and general; and it is not in terms, or by fair implication, necessarily confined to cases of bankruptcy originally instituted and pending in the particular district court where the relief is sought. On the contrary, it is not unnatural to presume that, as cases originally instituted and pending in one district may apply to reach persons and property situate in other districts, and require auxiliary proceedings therein to perfect and accomplish the objects of the act, the intention of Congress was that the district courts in every district should be mutually anxiliary to each other for such purposes and proceedings. The language of the act is sufficiently comprehensive to cover such cases; and I can perceive no solid ground of objection to such an interpretation of it.'

Section 1 of the bankruptcy act of 1867 (14 Stat. at L. 517, chap. 176), and § 2 of the bankruptcy act of 1898, are substantially identical as to the jurisdiction of the district courts sitting as courts of bankruptcy, as will appear from the following comparison:

Section 1 of the Bankruptcy Act of 1867.

That the several district courts of the United States be, and they hereby are, constituted courts of bankruptcy, and they shall have original jurisdiction in their respective districts in all matters and proceedings in bankruptcy, and they are hereby authorized to hear and adjudicate upon the same according to the provisions of this act. . . .

And the jurisdiction hereby conferred shall extend. . . .

To the collection of all the assets of the bankrupt . . . and to all acts, matters, and things to be done under and in virtue of the bankruptcy, until the final distribution and settlement of the estate of the bankrupt, and the close of the proceedings in bankruptcy.

Section 2 of the Bankruptcy Act of 1898.

That the courts of bankruptcy as hereinbefore definied, viz., the district courts of the United States in the several states, the supreme court of the District of Columbia, the district courts of the several territories, and the United States courts in the Indian territory and the district of Alaska, are hereby made courts of bankruptcy, and are hereby invested, within their respective territorial limits, as now established, or as they may be hereafter changed, with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings, in vacation, in chambers, and during their respective terms, as they are now or may be hereafter held, to . . . (7) cause the estates of bankrupts to be collected, reduced to money, and distributed, and determine controversies in relation thereto, except as herein otherwise provided; . . . (15) make such orders, issue such process, and enter such judgments in addition to those specifically provided for as may be necessary for the enforcement of the provisions of this act; . . .

Nothing in this section contained shall be construed to deprive a court of bankruptcy of any power it would possess were certain specific powers not herein enumerated.

In Sherman v. Bingham, 3 Cliff. 552, Fed. Cas. No. 12,762, Mr. Justice Clifford, sitting on circuit, and construing the act of 1867, reversed the judgment of the district court, which held that an assignee in bankruptcy of a person declared a bankrupt in one district court could not maintain an action to recover moneys paid the defendants, residents of another district, in the district court of such district. And Mr. Justice Clifford said:

'District courts have original jurisdiction in their respective districts in all matters and proceedings in bankruptcy, and the...