Craig v. Gage
| Decision Date | 02 April 1928 |
| Docket Number | No. 1017.,1017. |
| Citation | 25 F.2d 326 |
| Parties | CRAIG v. GAGE. |
| Court | U.S. District Court — Western District of Texas |
M. R. Lively, of Webb City, Mo., for plaintiff.
J. B. Lewright and Guy S. McFarland, both of San Antonio, Tex., for defendant.
Plaintiff asserts that the court has jurisdiction as a court of bankruptcy, because the action here is in aid of the United States District Court of Bankruptcy in the state of Missouri. Jurisdiction has not been acquired as a court of bankruptcy, nor as being ancillary to the original bankruptcy proceeding in Missouri. Hull v. Burr, 153 F. 945, a decision by the Circuit Court of Appeals for the Fifth Circuit, is controlling. It is followed and approved in the following cases: Bardes v. Hawarden Bank, 178 U. S. 524, 20 S. Ct. 1000, 44 L. Ed. 1175; Harris, Trustee, v. First National Bank of Mt. Pleasant, 216 U. S. 385, 30 S. Ct. 296, 54 L. Ed. 528; Wood, Trustee, v. A. Wilbert's Sons Shingle & Lumber Co., 226 U. S. 385-389, 33 S. Ct. 125, 57 L. Ed. 264; Lovell, Trustee, v. Newman & Son, 227 U. S. 412, 33 S. Ct. 375, 57 L. Ed. 577.
This suit is brought by a trustee in bankruptcy as an independent suit against a third person, one who is not connected with or made a party to the bankruptcy proceedings, for the purpose of recovering money claimed as an asset of the bankrupt estate. In these circumstances, an unbroken line of cases hold that a District Court, sitting as a court of bankruptcy, has no jurisdiction. Title 11, § 46, note 9, USCA, and cases there cited, also note 31 under the same section, citing cases supporting the ruling that property held adversely to bankrupt can only be recovered by plenary suit; Bardes v. Hawarden Bank, 178 U. S. 524, 20 S. Ct. 1000, 44 L. Ed. 1175, supra; Louisville Trust Co. v. Comingor, 184 U. S. 18, 22 S. Ct. 293, 46 L. Ed. 413; Pickens v. Roy, 187 U. S. 177, 23 S. Ct. 78, 47 L. Ed. 128; First Nat. Bank v. Chicago Title Co., 198 U. S. 280, 25 S. Ct. 693, 49 L. Ed. 1051; Bush v. Elliott, 202 U. S. 477, 26 S. Ct. 668, 50 L. Ed. 1114.
The only exceptions are where the defendant consents, provided in section 46-b of the same title (page 302), and where recovery of property is sought under the several provisions noted in the same section. The plaintiff states that the case is within one of these; namely, section 96. That section has to do with preferences. The claim sued on is clearly not a preference. Jurisdiction is lacking unless it appears from facts alleged in plaintiff's petition. Plaintiff trustee alleges that the bankrupt was a resident and citizen of the state of Delaware, and that the defendant, Gage, was "a resident of Bexar county, Tex., * * * and there is therefore a diversified citizenship of plaintiff and defendant." Plaintiff admits that an affirmative allegation of defendant's citizenship must appear in his pleading, but relies on his right to amend.
The Act of March 3, 1915 (USCA tit. 28, § 399), gives the right of amendment where the jurisdiction is based upon diverse citizenship, when defectively alleged, provided it existed at the time the suit was brought or removed. Amendment should be permitted seasonably after notice of the defect. The court should not proceed further until jurisdiction becomes apparent from pleadings of record.
The petition sets up three separate causes of action. Plaintiff authorizes dismissal of his third count in the opening paragraph of his brief.
Count 1 is based on the terms of a written agreement between the bankrupt and the defendant, under the terms of which $5,000 is deposited with the defendant June 15, 1920; the purpose being to clear the title to the leased land of incumbrances created through subleases granted by bankrupt to third parties. The bankrupt is allowed 60 days after expiration of the original five-year lease contract, or after the date of its termination by forfeiture. Failure on bankrupt's part to clear the title by institution of suits within time mentioned gives defendant the right to employ attorneys, institute suits, and incur expenses in the clearance of titles, to be paid out of the $5,000 deposit. An alternative provision requires deposit to be returned by defendant if oil or gas be produced continuously during any one year of the five-year contract. Plaintiff alleges that defendant never paid rightfully from said deposit any sum for necessary expenses in court costs or attorneys' fees, as per the agreement, since June 15, 1920.
The second count seeks recovery of $30,000, paid by the bankrupt to defendant in the nature of an advance on the annual lease account or bonus, under terms that $15,000 was to be repaid on completion of well No. 1, and $15,000 on completion of well No. 2, in accordance with the terms of the lease contract. The petition charges: That, for the purpose of avoiding any obligation to refund the amounts paid, the defendant slandered the company's right and title to the lands leased, publicly declared the lease was forfeited for failure to comply with its terms, threatened to bring suit for forfeiture, and wrongfully filed suit to cancel part of the acreage leased. This forced bankrupt to submit, by agreement, to the canceling of some of the lands leased, but bankrupt afterwards complied with the terms of the lease contract, and was in possession and the owner of the leased premises on the date of adjudication in bankruptcy, June 24, 1922. That thereupon defendant refused to recognize the bankrupt's rights, or permit entrance for completion of either of said wells, executed oil and gas leases of the same premises to others, thereby denying the right and title of the bankrupt. That defendant unlawfully took possession of the leased premises and denied the bankrupt's right of possession, thus rendering it impossible for the bankrupt, or its assigns, to complete the drilling of said wells, or either of them.
The defendant presents the defense against counts 1 and 2, by special exception and demurrer, that these causes of action appear to be barred by the statute of limitation of four years, being article 5688 of Vernon's Sayles' Statutes of the state of Texas, 1914, and being article 5688, p. 3818 of volume 4, which provides that actions for debt, where the indebtedness is evidenced by, or founded upon, any contract in writing, suit must be commenced and pursued within four years after the cause of action shall have accrued, and not afterwards. The plaintiff counters with the proposition that the plea of limitation thus urged cannot be presented by way of a special exception or demurrer, but must be done by plea. It is true that the defense of limitation is required to be submitted by plea, but the courts uniformly hold that, where it appears from plaintiff's pleading that the action is barred by the statute, then the defendant may interpose such a defense by special exception or demurrer. Some of these authorities are noted. Gathright v. Wheat, 70 Tex. 740, 9 S. W. 76; Coles v. Kelsey, 2 Tex. 541, 47 Am. Dec. 661; Hopkins v. Wright, 17 Tex. 30; Smith v. Fly, 24 Tex. 345, 76 Am. Dec. 109; Dickinson v. Lott, 29 Tex. 172; Alston v. Richardson, 51 Tex. 1.
Are the causes of action in counts 1 and 2 barred by the four-year statute of limitation?
Count 2 is based on the terms of the original...
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