Claflin v. Lisso

• Decision Date: 01 June 1883
• Citation: 16 F. 897
• Parties: CLAFLIN and others v. LISSO and others. [1]
• Court: U.S. District Court — Eastern District of Louisiana

16 F. 897

CLAFLIN and others v. LISSO and others. ^[1]

United States Circuit Court, E.D. Louisiana.

June, 1883

John H Kennard, W. W. Howe, and S. S. Prentiss, for complainants.

J. C Egan and T. L. Bayne, for defendants.

PARDEE J.

There is no dispute as to the facts in this case, and it is not necessary to recapitulate them in order that my views may be understood. Under the creditors' bill in this case the complainants would be entitled to a decree subjecting the judgment described in the bill to the payment of their judgment almost as a 'matter of course.' The question now presented is whether the insolvency proceedings under the state law can have such operation as to defeat the rights and advantages of complainants as acquired by their bill, its service, and the injunction accompanying. They acquired 'a lien in equity' upon the judgment: they made an 'equitable levy' upon it. Miller v. Sherry, 2 Wall. 249. See, also, 9 Cow. 722; 26 Mo. 190; 46 Ill 177; 11 Ala. (N.S.) 988: 2 Sandf.Ch. 494; 57 Ala. 414; Rev. Civil Code La. art. 1977; 7 La.Ann. 633; 8 La.Ann. 453.

Now it seems to be well settled that the jurisdiction of the United States courts, previously acquired, cannot be ousted by proceedings in insolvency under state laws, when the parties invoking the jurisdiction have not participated in the insolvency proceedings. Suydam v. Broadnax, 14 Pet. 67; Union Bank v. Jolly's Adm'rs, 18 How. 507; Green's Adm'x v. Creighton, 23 How. 90. But it is claimed that, as no receiver was appointed, the court did not take possession of the res, and that, therefore, although complainants may have a lien on the equitable asset, yet by virtue of the insolvency it passed into the hands of the state court, whose possession cannot be divested. It is well understood that where a state court has lawfully obtained possession of property no federal court will interfere to divest that possession. And this is what is said so well in the case of Levi v. Columbia Life Ins. Co. 1 McCrary, 34, (S.C. 1 F. 206,) relied upon by counsel for syndic in this present case. Judge McCRARY says, after reviewing the authorities:

'Hence the broad principle remains, * * * that whatever tribunal, state or federal, lawfully has possession of the res of an estate, it shall proceed to the full administration thereof, without interference by another tribunal.'

The point in this case is, not whether the state court under the insolvency proceedings became vested with the possession and control of all the surrendering debtors' assets, but whether, by virtue of the previous proceedings in this court this court had or not jurisdiction and control of the particular asset, the Beaird judgment. If it had, the subsequent insolvency proceedings could not divest that jurisdiction and possession. We have seen supra the effect of the proceedings here. An equitable levy had been made on the judgment. Notice to Beaird and to the pretended claimants, and to Lisso & Scheen, the debtors of complainants, had been given directly, and to all the rest of the world constructively, of such levy, and, so far as possible under the circumstances attendant, the asset had been taken into the possession of the court. Only constructive possession could be taken in such a case. Only a constructive possession can now be claimed for the state court and its officer, the syndic. How the appointment of a receiver would have aided the possession of the court in such a case I am unable to see. Had the...