Clapp v. Dittman

• Citation: 21 F. 15
• Parties: CLAPP and others v. DITTMAN and others. [1] PERRY and others v. CORBY and another. (FN1)
• Decision Date: 25 July 1884
• Court: U.S. District Court — Eastern District of Missouri

21 F. 15

CLAPP and others v. DITTMAN and others. ^[1]

PERRY and others v. CORBY and another. (FN1)

United States Circuit Court, E.D. Missouri.

July 25, 1884

G Porter, W. D. Anderson, and McKeighan & Jones, for complainants in the first case; and Mills & Fletcraft, for complainants in the second.

Hugo Muench, for defendants in the first case. John D. Johnson and Smith P. Galt, for defendants in the second.

BREWER J.

These cases were argued together. Both stand on demurrer to the bill. Both involve the same questions, and will therefore be disposed of by the same opinion. In them are presented three questions:

First. Where a debtor who is insolvent transfers all his property to a single party, and under such circumstances that it is obvious that there was no intention of merely giving security, and with the idea of paying the debt and reclaiming the property, must such transfer, no matter by what form of instrument, whether that of a chattel mortgage or otherwise and whether made to the creditor directly or to a trustee, be treated as a general assignment, and for the benefit of all creditors? This question was fully considered by this court in the case of Martin v. Hausman, 14 F. 160, and after a full examination of the statutes of Missouri and the decisions of its supreme court, it was answered in the affirmative. The opinion in that case was written by Judge KREKEL, and was concurred in by my predecessor, Judge McCRARY. That opinion was followed in Dahlman v Jacobs, 15 F. 863, in Kellogg v. Richardson, an unreported case in the Western district, and also, I am informed, in other cases in this court, as well as in some of the district courts of the state. While, if this was a new question, I confess my own conclusions would be different, and in harmony with the decisions of Nat. Bank v. Sprague, 20 N.J.Eq. 28; Farwell v. Howard, 26 Iowa, 381; Doremus v. O'Harra, 1 Ohio St. 45; Atkinson v. Tomlinson, Id. 241; and other cases cited by counsel for defendants; yet I think there has been such a course of decision in this circuit as to establish the rule in the United States courts for this state in accordance with the opinion in Martin v. Hausman, supra, and until there be some authoritative construction of the statute by the supreme court of the United States, or of the state, I shall follow the rule laid down as above. I feel the more constrained to do this, as such a construction, securing an equal distribution of the property of an insolvent among all his creditors, is manifestly most just and equitable.

Second. It is insisted that if this instrument is to be treated as a general assignment under the statute for the benefit of all creditors, the state courts have exclusive jurisdiction; and that the remedy of the plaintiff was by citing the supposed assignee to appear in the state courts and distribute the property among all the creditors in accordance with that statute. This claim cannot be sustained. The mere fact that rights are created by virtue of a state statute, and proceedings made for the enforcement of those rights in the courts of the state, does not prevent a foreign creditor from asserting the same rights in the courts of the United States. The question here is not whether the federal courts can take possession of property already in the custody of the state courts, or whether they can supersede or interfere with any action of the latter, but, whether, no action having been taken in the latter, the federal courts are without jurisdiction to enforce rights under the statutes of the state, and for which a special mode of procedure is prescribed. It must be borne in mind that the rights asserted in these cases are not wholly statutory. The transfer of property by assignment, bill of sale, or mortgage is a common-law right, and the statute only prescribes the effect of such a transfer by an insolvent; it does not create, but only regulates, the right. It is like that legislation which determines, as between the mortgagor and mortgagee, the right of possession, or which requires notice to give validity as against subsequent purchasers. So as to the procedure. Jurisdiction over the assigned property is by the statute given to the state courts. It could not well be otherwise. Methods of procedure are prescribed; but such is the case as to general rules of practice. The state law enacts them, and the federal courts follow them. There is nothing of a substantial...