Courier-Journal Job-Printing Co. v. Schaefer-Meyer Brewing Co.

• Decision Date: 08 May 1900
• Docket Number: 791.
• Citation: 101 F. 699
• Court: U.S. Court of Appeals — Sixth Circuit
• Parties: COURIER-JOURNAL JOB-PRINTING CO. v. SCHAEFER-MEYER BREWING CO. In re FIRST NAT. BANK OF LOUISVILLE.

101 F. 699

COURIER-JOURNAL JOB-PRINTING CO. v. SCHAEFER-MEYER BREWING CO.

In re FIRST NAT. BANK OF LOUISVILLE.

No. 791.

United States Court of Appeals, Sixth Circuit.

May 8, 1900

The petitioner is a creditor of the Schaefer Brewing Company, a corporation of the state of Kentucky, which was declared a bankrupt upon the petition of creditors in the district court of the United States for the district of Kentucky. Its debt has been allowed as a general and unsecured claim, but it has been denied the benefit of a mortgage made by the bankrupt, and the object of the petition is to revise the order excluding it from participating in the benefit thereof. The petitioner's claim against the bankrupt's estate is evidenced by a note made April 10 1895, with one Charles A. Schaefer as surety thereon. This note was originally for $3,000, but by payments had been reduced to $1,700. Petitioner sought to be subrogated to the rights and lien of the said surety, Charles A. Schaefer under a mortgage made by the principal debtor for the purpose of indemnifying and protecting said Schaefer and others as sureties. This mortgage, so far as material, is as follows 'That whereas, the said parties of the second part, with one Adolph Meyer, have already become liable as sureties in various attitudes on commercial paper for the said party of the first part in the sum of twenty-four thousand seven hundred dollars upon an agreement, made at the time of the undertaking of such suretyship between the said party of the first part and the said parties of the second part, that said parties of the second part, with the said Meyer, should be secured from all loss or damage in their said suretyship by a proper mortgage upon the property of said party of the first part, hereinafter set forth and described, and are secured, and the signature of the said Meyer cannot be had to the renewals of said commercial paper, and the said parties of the second part have undertaken and agreed to continue to be so bound as sureties as aforesaid in various attitudes upon commercial paper for the said party of the first part up to the amount of twenty-five thousand dollars, inclusive of the amount for which said parties of the second part are already bound as aforesaid during the period of four years from the date hereof; provided, they, the said parties of the second part, should be lawfully indemnified and secured from loss in their said suretyship by mortgage of indemnity upon the said property: Now, this instrument witnesseth that in consideration of the undertaking and agreement of the said parties of the second part, and in pursuance of the said agreement and undertaking between the said parties of the first and second parts, and in consideration of the premises and one dollar, said party of the first part, in order to protect, indemnify, and save and keep harmless from all loss and damage the said parties of the second part in the amount for which they have already become liable as sureties as aforesaid, and in the amount for which they are to become liable, or any one or more of them may become liable, as sureties as aforesaid, has, and by these presents does, grant, bargain, sell, and convey to the said parties of the second part the following described and enumerated realty and personalty, all in the city of Louisville, state of Kentucky: (Here follows description of land, etc.) The condition of this conveyance and transfer is such that should said party of the first part well and truly pay off and discharge all claims, debts, and liabilities on which said parties of the second part, or any or more of them, may be bound as sureties as aforesaid, or may become hereafter bound as sureties as aforesaid, to the amount of twenty-five thousand dollars, within four years from the date hereof, and save and keep harmless and from any and all loss by reason of their suretyship, then this conveyance is to be null and void; otherwise, remain of full force and effect. ' The Third National Bank likewise made proof of a claim against the bankrupt's estate, and set up a like claim to be subrogated to the lien of this and of two subsequent mortgages. This claim was evidenced by two notes, upon which all of the mortgagees of the mortgage of April 15, 1892, were sureties. These notes aggregated $32,000. The district court held that the said Third National Bank was entitled to be subrogated to the lien of the said mortgage of April 15, 1892, to the extent of $25,000, but was an unsecured creditor for the remainder of its debt. The First National Bank was excluded from any participation in the benefit of the said mortgage, because its debt was not made until after the limit of the mortgage had been reached, by the creation of more than $25,000 of debt to the Third National Bank, upon which the said mortgagees were bound as sureties.

John J. McHenry, for petitioner.

Lewis N. Dembitz, for appellee.

Before TAFT, LURTON, and DAY, Circuit Judges.

LURTON Circuit Judge, having made the foregoing statement of the case, .

Two modes of reviewing the decisions and orders of the district court in bankrupt proceedings are provided by the bankrupt act. The first is that found in section 24b of the act, which provides that:

'The several circuit courts of appeal shall have jurisdiction in equity, either interlocutory or final, to superintend and revise, in matter of law, the proceedings of the several inferior courts of bankruptcy within their jurisdiction. Such power shall be exercised on due notice and petition by any party aggrieved.'

Section 25a of the same act provides:

'That appeals, as in equity cases, may be taken in bankruptcy proceedings from the courts of bankruptcy to the circuit court of appeals of the United States, and to the supreme court of the territories, in the following cases, to wit: (1) From a judgment adjudging or refusing to adjudge the defendant a bankrupt; (2) from a judgment granting or denying a discharge; and (3) from a judgment allowing or rejecting a debt or claim of five hundred dollars or over.'

The superintending and revising authority granted by the twenty-fourth section was evidently intended to provide a summary way for reviewing the orders and decisions of the bankrupt courts upon questions at law, and does not contemplate any review of the facts. Under section 25, a review of both questions of fact and law is contemplated. Under section 24, the jurisdiction is not exercised under an appeal, but upon an original petition filed in this court by any person aggrieved by the decision or order complained of. This differentiation of the modes of redress provided by the two sections seems altogether conformable to the language employed, and is the interpretation announced by the circuit court of appeals for the Seventh circuit in Re Rouse Hazard & Co., 63 U.S.App. 570, 33 C.C.A. 356, 91 F. 96, and in Re Richards, 37 C.C.A. 634, 96 F. 935. The same interpretation is announced in the Fifth circuit court of appeals. In re Abraham, 35 C.C.A. 592, 93 F. 767, and In re Purvine, 37 C.C.A. 446, 96 F. 192. It was also the view taken by this court in Cunningham v. Bank (decided at this term) 101 F. 977. If the petitioner had desired a review of the question of the allowance of his claim upon both law and fact, he should have appealed. In Cunningham v. Bank, cited above, we held that the question of the rank or lien of a claim was an incident to the allowance or rejection of the debt for which a lien was allowed or denied, and might therefore be reviewed under an appeal from an order allowing or rejecting the debt, and that under such an appeal questions of both law and fact might be reviewed. Nevertheless an order allowing or denying a lien claimed may be reviewed upon petition, as to any matter of law. In re Rouse, Hazard & Co., 33 C.C.A. 356, 91 F. 96; In re Richards, 37 C.C.A. 634, 96 F. 935. No rule or order has been made by the supreme court regulating the practice under the twenty-fourth section, and none has been prescribed by this court. In Re Richards, cited above, the court of appeals for the Seventh circuit, speaking of the mode in which the jurisdiction of the court might be invoked under that section, said: 'In the case of an appeal, the facts as well as the law are before this court for review. In the case of original petition, this court has authority to review merely a matter of law arising in the course of the proceeding below. The latter is intended as a summary mode of reviewing any supposed erroneous holding upon a question of law, and does not contemplate a review of the facts. A similar conclusion was reached by the court of appeals of the Fifth circuit in Re Purvine, 37 C.C.A. 446, 96 F. 192. The petition in such case should state specifically the question of law which was involved and was ruled upon by the court below, and should be accompanied by a certified copy of so much of the record as will exhibit the manner in which the question arose, and its determination. Such question of law so presented is the question, and...