O'Dell v. Boyden

• Decision Date: 27 November 1906
• Docket Number: 1,548.
• Parties: O'DELL v. BOYDEN.
• Court: U.S. Court of Appeals — Sixth Circuit

150 F. 731

O'DELL v. BOYDEN.

No. 1,548.

United States Court of Appeals, Sixth Circuit.

November 27, 1906

Lawrence Maxwell, Jr., and Thomas F. Shay, for appellant.

J. W Peck, Benj. L. Heidingsfeld, Otis H. Fisk, and Louis Kramer for appellee.

Before LURTON, SEVERENS, and RICHARDS, C Judges.

LURTON Circuit Judge.

This is an appeal under section 7 of the Court of Appeals act (Act March 3, 1891, c. 517, 26 Stat. 828 (U.S. Comp. St. 1901, p 550)), from an interlocutory decree of the District Court exercising jurisdiction as a bankrupt court, awarding an injunction. There is a motion to dismiss the appeal on the ground that the decree is not final, and therefore not appealable. But an appeal is allowed under section 7 of the Court of Appeals act from an interlocutory decree awarding an injunction, and the appeal prayed is expressly limited to the decree of January 29, 1906, awarding an interlocutory injunction, and is not taken from a final decree, nor sought to be sustained except as an appeal under section 7 of the Court of Appeals act. Neither is it ground for denying an appeal under section 7 that the right of the court below to issue the injunction complained of involves the jurisdiction of that court. If this court would have jurisdiction of an appeal taken from a final decree in the cause, it may entertain jurisdiction of an appeal from a decree granting an interlocutory injunction, although the jurisdiction of the court may be involved. Lake Nat. Bank v. Wolfeborough Sav. Bank, 78 F. 517, 24 C.C.A. 195; McLish v. Roff, 141 U.S. 661, 12 Sup.Ct. 118, 35 L.Ed. 893; United States v. Jahn, 155 U.S. 109, 15 Sup.Ct. 39, 39 L.Ed. 87. It is, however, essential that we shall inquire into the jurisdiction of the court below; for, if the injunction was allowed in a cause of a character subject only to review in matters of law under the supervisory powers of this court under section 24b of the bankrupt act of July 1, 1898 (30 Stat. 553, c. 541 (U.S. Comp. Ct. 1901, p. 3432)), no appeal will lie to this court under the seventh section of the Court of Appeals act. In such case the interlocutory order allowing the injunction would not be one pronounced 'in a cause in which an appeal from a final decree may be taken under the provisions of this act to the Circuit Court of Appeals,' and appellant's only remedy would be a petition for review seasonably filed in this court under section 24b. The distinction between the two remedies has been made in the act 'the provisions for appeal and for petition of review being mutually exclusive. ' In re Mueller, 135 F. 711, 68 C.C.A. 349; In re McMahon (decided by this court October 2, 1906), 147 F. 684; Hewit v. Berlin Machine Works, 194 U.S. 296, 24 Sup.Ct. 690, 48 L.Ed. 986; First National Bank of Chicago v. Chicago Title & Trust Co., 198 U.S. 280, 25 Sup.Ct. 693, 49 L.Ed. 1051.

The facts upon which the jurisdiction of the District Court depended are substantially these: On July 1st, the copartnership, doing business as 'Holzman & Co.,' and the individuals composing it, Ross Holzman, Alfred Holzman, and Charles Henrotin, were declared bankrupts. Charles Henrotin, one of the bankrupts, was and had been a member of the New York Stock Exchange since January 14, 1886. The membership is not evidenced by any certificate, and is personal in its character. It may, nevertheless, be transferred under the conditions prescribed by the by-laws and rules of the exchange. Article 15, Sec. 1, prescribes that:

'A transfer of membership may be made upon submission of the name of the candidate to the committee on admissions, and the approval of the transfer by two-thirds of the entire committee. Notice of the proposed transfer shall be posted on the bulletin in the exchange for at least ten days prior to the transfer.'

The proceeds of any seat transfer must be disposed of as prescribed by other sections of article 15-- (1) to payments of fines, dues, and assessments; (2) to payment of creditor members of the exchange arising from contracts subject to the rules of the exchange; (3) the surplus of the proceeds of the transfer to the person whose membership is transferred, or his legal representatives, upon the execution by him of a release satisfactory to the committee on admissions.

December 27, 1902, Henrotin transferred this membership to a firm of which he was a member, styled 'Feder, Holzman & Co.' One-quarter interest he sold to his partners outright, and received for the same $20,000. The remainder he put into the firm as his contribution to the capital. March 2, 1905, Feder, Holzman & Co. dissolved, and a firm composed of Henrotin and the two Holzmans was organized. This is the bankrupt firm. This firm took over from the old firm this Stock Exchange seat as an asset of that firm. May 5, 1905, two of the members of this firm united in an assignment of this and other seats to the appellant O'Dell, in words and figures as follows:

'Cincinnati, May 5th, 1904.

'W. J. O'Dell, Esq., City.-- Dear Sir: For value received I and we hereby transfer to you all interest and privileges in the following seats and memberships:

'New York Cotton Exchange, July 10, 1902, Ross Holzman.

'Cincinnati Stock Exchange.

'Chicago Board of Trade, February 27, 1903, Charles Henrotin.

'New York Stock Exchange, January 14, 1886, Charles Henrotin.

'Chicago Stock Exchange.

Resp'y,

Chas. Henrotin. 'Ross Holzman.

'Witness: Ross Holzman.

'Witness: Chas. Henrotin.'

The evidence tends to show and the claim of O'Dell is that this assignment was intended to secure $77,000, of which $52,000 was a debt contracted at the time for money loaned. Within a few days the firm of Holzman & Co., and the individual members of the firm, petitioned to be declared bankrupts, and in due course were so declared. Among the scheduled assets were the several memberships in Exchanges mentioned in the O'Dell assignment or the interest of the bankrupts therein. We are here concerned only with this membership in the New York Stock Exchange. On August following the trustee gave notice to the Exchange of his claim to the membership as an asset of the bankrupt firm. On October 6th the bankrupt court directed the trustee to take all necessary steps to sell this membership in accordance with the rules of the Exchange and subject to the approval of the court. The court also directed Henrotin to sign all assignments, transfers, and consents necessary to dispose of the seat under the rules of the Exchange.

Through the Exchange a sale was made by the trustee of this seat to one Rothschild for $85,000, and Henrotin signed the necessary consents, releases, and transfers and the Exchange consented to the transfer to Rothschild. The proceeds of the sale were paid into the hands of the committee on admissions, and they were engaged in determining the debts chargeable against the proceeds under the Exchange rules preparatory to paying over the surplus to Boyden as trustee in bankruptcy. At this stage of the proceedings the trustee learned of the assignment to O'Dell and that he had given notice of his claim to the Exchange, though such notice was not given until after sale of the seat as before stated.

On December 9th the trustee filed this petition, in which he set out the facts substantially as we have already stated them, and asserted that this membership or seat was an asset which had passed to him as trustee, and was within his custody, control, and possession as the bankrupt's trustee; that he had just learned that the appellant, William J. O'Dell, claimed same under some form of assignment and had lately notified the Exchange of his claim to hold same as collateral security for a pretended loan to Holzman & Co. He averred that O'Dell by his claim and notice to the New York Stock Exchange was hindering and interfering with the steps he was taking under the order of the court to sell the same under the rules of the Exchange and to receive the surplus after satisfaction of prior claims of members of the Exchange had been satisfied. The prayer is that the court would make said O'Dell a party to the bankruptcy proceedings for the purpose of determining his claim and right under said assignment of May 5, 1905; that he be enjoined from instituting any suit against the New York Exchange, or the petitioner, or the bankrupts, in respect of said membership or its proceeds; and that he be required to come in and assert any right, interest, or lien he may have in the bankrupt court. Upon the day before the filing of this petition O'Dell filed a bill in the Superior Court of New York against the bankrupts, Boyden as bankrupt trustee, and the New York Stock Exchange, in which, after setting out his claim and the sale of the membership, he sought to have the surplus of the sale, after paying the claims first payable under the association rules, paid to him. A temporary injunction was awarded, enjoining the New York Stock Exchange from paying the surplus proceeds out until further orders of the court. The filing of this bill was unknown to Boyden when he filed this petition. The bankrupts, as well as Boyden, were not residents of New York, and have not yet been served nor appeared. O'Dell appeared in the bankrupt court for the purpose of denying the jurisdiction of the court, and to this end he denied the possession of this membership or the proceeds thereof by the bankrupt court or its trustee, and insisted that he was an adverse claimant in good faith, and that he was a citizen of Ohio, of which state the bankrupts were also citizens.

Upon a hearing the court held that this membership was an asset which passed to Boyden as trustee, and that as a species of property it came into the possession of Boyden as trustee and had been reduced to money...