Dodge v. Norlin

• Decision Date: 11 November 1904
• Docket Number: 2,091.
• Parties: DODGE v. NORLIN.
• Court: U.S. Court of Appeals — Eighth Circuit

133 F. 363

DODGE v. NORLIN.

No. 2,091.

United States Court of Appeals, Eighth Circuit.

November 11, 1904

Syllabus by the Court

Section 24a of the bankruptcy law of July 1, 1898, c. 541, 30 Stat 553 (U.S.Comp.St. 1901, p. 3431), vests in the Circuit Courts of Appeals appellate jurisdiction over all controversies arising in bankruptcy proceedings over which those courts would have had jurisdiction if those controversies had arisen in the federal courts in other cases outside of proceedings in bankruptcy.

This appellate jurisdiction is not excluded or revoked by the provision of section 25a which grants jurisdiction over three specified classes of cases, and limits the time for invoking it to 10 days, nor by section 24b (30 Stat. 553 (U.S.Comp.St. 1901, p. 3432)), which vests the power of supervision and revision in matter of law in the Court of Appeals. A litigant has the option, in a proper case, to review a decision by appeal or by a petition for revision as matter of law.

A judgment of a court of bankruptcy that a chattel mortgage upon the alleged property of the bankrupt is voidable by his trustee, that it entitled the mortgage to no lien upon the property and to no preference in payment out of its proceeds is a final decision of a controversy arising in bankruptcy proceedings, of which the Circuit Court of Appeals would have had appellate jurisdiction if it had arisen in any other case in a federal court, and the decision may be reviewed by appeal.

A bill of exceptions has no function and accomplishes no purpose in proceedings in bankruptcy.

A proceeding in bankruptcy is a proceeding in equity.

An appeal makes the entire record available to the appellant and imposes the duty upon him and upon the clerk of the lower court to place the material parts of it in the transcript sent to the appellate court. Teller v. U.S. 111 F 119, 49 C.C.A. 263.

The validity of a chattel mortgage is determined in the national courts by the decisions of the highest judicial tribunal of the state in which it was made.

A chattel mortgage is voidable by creditors, according to the decisions of the courts of Colorado, if it covers merchandise and other property, and the mortgage consents to the sale of the merchandise in the usual course of business, without requiring the application of the proceeds to the payment of the debt; and where such a mortgage is voidable as to part of the mortgaged property it is voidable as to all of it.

Where the court below has considered a question and made a finding on conflicting evidence, its conclusion is presumptively correct, and it should not be disturbed by an appellate court unless it appears that a serious mistake has been made in the consideration of the facts, or that an obvious error has intervened in the application of the law.

The Modern Machine Works Company, a corporation, was adjudged a bankrupt on December 21, 1903. It was a manufacturing corporation, and on April 24, 1903, it had given a chattel mortgage upon its machinery, materials, and merchandise to the appellant, David C. Dodge, to secure the payment to him of a debt of $4,000, which it had incurred for the purchase of a part of this property. Three thousand five hundred dollars of this debt remained unpaid of the mortgaged property, and the mortgagee filed a claim wherein he set forth his mortgage, the specific property covered by it, and the amount of the debt secured by it. The referee adjudged that the chattel mortgage was void, and that it constituted no security for Dodge, because it described a stock of goods, wares, and merchandise, and permitted the mortgagor to remain in possession and to use and enjoy them until the maturity of the debt without applying the proceeds of the sales of them to its payment. Upon a petition for a review of this decision the District Court rendered a judgment of affirmance, and within 10 days after its rendition the mortgagor appealed from that judgment to this court.

Joel F. Vaile (Edward O. Wolcott, Charles W. Waterman, and W. W. Field, on the brief), for appellant.

Daniel B. Ellis (Henry T. Rogers, Lucius M. Cuthbert, Lewis B. Johnson, and Pierpont Fuller, on the brief), for appellee.

Before SANBORN and HOOK, Circuit Judges, and LOCHREN, District Judge.

SANBORN Circuit Judge, after stating the case as above, .

The appellant is met at the threshold of his case by a motion to dismiss his appeal upon the ground that the judgment which has determined that his mortgage lien upon the property and the proceeds of the property covered by it is void in the face of the attack of the trustee of the bankrupt, is not subject to review by appeal.

The provisions of the Bankruptcy law which relate to the question presented by this motion are:

'The Circuit Court of Appeals of the United States * * * are hereby invested with appellate jurisdiction of controversies arising in bankruptcy proceedings from the courts of bankruptcy from which they have appellate jurisdiction in other cases. ' Section 24a.

'The several Circuit Courts of Appeals 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. ' Section 24b.

'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 * * * 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. Such appeal shall be taken within ten days after the judgment appealed from has been rendered. ' Section 25a.

3 U.S.Comp.St. 1901, pp. 3431, 3432, 30 Stat. 553, c. 541.

Under the judiciary act of March 3, 1891, the Circuit Courts of Appeals had 'jurisdiction to review by appeal or by writ of error final decision in the District Court and the existing Circuit Courts in all cases other than those provided for in the preceding section of this act, unless otherwise provided by law.' 1 U.S.Comp.St 1901, p. 549, section 6, c. 517, 26 Stat. 828.

The case here under consideration was not provided for in the preceding section of the act or in any other way than in section 6. The decision of the District Court that the lien by mortgage claimed by the appellant could not be enforced against the trustee who had seized the property which constituted the security for his debt was a final decision. It rendered the question of the mortgagee's right to his security res adjudicata. It finally determined a separate collateral controversy distinct from the general subject of litigation in the proceeding in bankruptcy. Withenbury v. U.S., 5 Wall. 819, 18 L.Ed. 613; Williams v. Morgan, 111 U.S. 684, 4 Sup.Ct. 638, 28 L.Ed. 559; Standley v. Roberts, 8 C.C.A. 305, 308, 59 F. 836, 839; Salmon v. Mills, 68 F. 180, 15 C.C.A. 356; Central Trust Co. v. Marietta, etc., Ry. Co., 48 F. 850, 1 C.C.A. 116; Grant v. Railroad Co., 50 F. 795, 1 C.C.A. 681. If this controversy had arisen in a federal court when it was not sitting in bankruptcy, the final decision of it would have been reviewable in this court by writ of error or appeal. Section 25a vests the Courts of Appeals with appellate jurisdiction of controversies arising in bankruptcy proceedings of which they have jurisdiction in other cases. As this court has appellate jurisdiction of this controversy in other cases in which it might be presented in a federal court, it has such jurisdiction when it arises in proceedings in bankruptcy.

The jurisdiction of the court of bankruptcy to render its judgment in this case was derived from section 2 (7) of the bankruptcy act of 1898, which empowers that court to 'cause the estates of bankrupts to be collected, reduced to money and distributed and determine controversies in relation thereto. ' It was these controversies, among others, over which section 24a vested appellate jurisdiction in the Circuit Courts of Appeals. Hewit v. Berlin Machine Works, 194 U.S. 296, 24 Sup.Ct. 690, 691, 48 L.Ed. 986; Steele v. Buel, 104 F. 968, 969, 44 C.C.A. 287, 288; Cunningham v. German Ins. Bank, 103 F. 933, 935, 43 C.C.A. 377, 380; In re Columbia Real Estate Co., 112 F. 643, 645, 50 C.C.A. 406, 408.

Counsel for the appellee have persuasively argued in opposition to this conclusion that this appeal ought not to be maintained (1) because the allowance of appeals by section 25a from the decisions of courts of bankruptcy within ten days after their rendition in the three classes of cases there specified excludes appellate jurisdiction in those courts in all other cases, and the case at bar does not belong to either of these three classes (In re Whitener, 105 F. 180, 186, 44 C.C.A. 434, 440; In re Columbia Real Estate Co., 112 F. 643, 50 C.C.A. 406; Fisher v. Cushman, 103 F 860, 43 C.C.A. 381, 51 L.R.A. 292; Hutchinson v. Le Roy, 113 F. 202, 51 C.C.A. 159); and (2) because, as they contend, no appeal may be maintained from any decision which may be superintended and revised in matter of law under section 24b, and the judgment in this case is susceptible of such superintendence and revision (In re Worcester County, 102 F. 808, 813, 42 C.C.A. 637; Hutchinson v. Le Roy, 113 F. 202, 51 C.C.A. 159; In re Good, 99 F. 389, 39 C.C.A. 581). They have called attention to some of the cases which have been cited, and some of these cases tend to sustain the premises upon which this argument is based. Nevertheless these premises have never appeared to this court to be sound. The provision for appeals within 10 days from the renditions of the decisions in the three classes of cases...