Dannel v. Wilson-Weesner-Wilkinson Co.
| Decision Date | 07 February 1940 |
| Docket Number | No. 8071.,8071. |
| Citation | 109 F.2d 364 |
| Parties | DANNEL v. WILSON-WEESNER-WILKINSON CO. et al. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Wilbur W. Piper, of Knoxville, Tenn. (J. Alvin Johnson and Wilbur W. Piper, both of Knoxville, Tenn., on the brief), for appellant.
Chas. C. Moore, of Chattanooga, Tenn., and J. Roy Hickerson, of Winchester, Tenn. (Chas. C. Moore, of Chattanooga, Tenn., W. P. Cooper, of Nashville, Tenn., J. Roy Hickerson, of Winchester, Tenn., and J. Tyree Fain, Thomas H. Malone, and William J. Wade, all of Nashville, Tenn., on the brief), for appellees.
Before SIMONS, ALLEN, and HAMILTON, Circuit Judges.
The appeal is from an order of the court below sitting in bankruptcy, overruling recommendation of the referee upon the trustee's petitions to enjoin the prosecution of a suit in the State Court and vacating a summary order previously entered directing the clerk and master of the State Court to turn over to the trustee funds claimed to belong to the bankrupt's estate. The essential controversy is whether liens of materialmen upon retained percentage in the hands of a state officer upon a public contract are to be adjudicated in the courts of Tennessee or in the Bankruptcy Court upon an adjudication subsequent to the assertion of the liens and the beginning of suits for their foreclosure.
Prior to September, 1932, Fisher, the bankrupt, had completed the building of a road under contract with the Highway Department of Tennessee. Pursuant to the Tennessee Code, Section 3221, the Highway Commissioner retained in his possession $10,518, and advertised that lien claims against the fund be filed on or before September 2nd. Claims were filed, one of the lien claimants subsequently bringing suit for foreclosure in the Chancery Court of Polk County, and others filing bills of foreclosure in the Chancery Court of Davidson County.
Tennessee Code, Section 3222, provides that upon suit being brought, the Highway Commissioner shall file a petition in the nature of an interpleader, and pay into court a sum sufficient to satisfy the claim, that when this is done the suit shall be dismissed as to him, the sum standing in lieu and as a satisfaction of the contractor's bond and a fulfillment of the duties of the Department of Highways to the claimant, and that upon final determination in favor of the claimant, the court may order the clerk to pay the deposited sum to the parties entitled thereto under its decree or judgment. Construing this statute, the Supreme Court of Tennessee, in the case of Walters v. Frank, 171 Tenn. 599, 106 S.W.2d 857, has held that the retainage in the hands of the Commissioner is reserved by statute for the benefit of unsatisfied laborers and furnishers of materials on state highways, and is in the custody of the state, there to remain until the debts of the contractor on behalf of the state in the construction of highways are satisfied.
On February 7, 1933, subsequent to the filing of the foreclosure suits, but before the payment of the retained percentage into court, Fisher was adjudicated a bankrupt, and in March the referee entered a summary turnover order directing the Highway Commissioner to pay the retained fund to the trustee. At the instance of the trustee the Polk County suit was dismissed, but a similar application to the Davidson County Court was denied. A supplemental bill therein sought to enjoin the Commissioner from paying the fund to the trustee, in answer to which the Commissioner filed a bill of interpleader making the trustee and lien claimants defendants, and on May 26, 1933, paid the money to the clerk and master of the Chancery Court.
The trustee petitioned the District Court to restrain the interpleader action, and for an order to the clerk of the County Court to show cause why the funds should not be turned over to him. Three days later, however, the trustee filed an intervening petition in the interpleader suit. A decree followed which sustained the interpleader, and from it the trustee did not appeal, but filed a supplemental petition in the District Court urging its paramount and exclusive jurisdiction over the fund. An ex parte turnover order was entered but the clerk promptly asked to have it vacated because made without notice and in conflict with the decree of the Chancery Court from which no...
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