Dugan v. Gardner

• Decision Date: 11 October 1946
• Citation: 68 F. Supp. 709
• Parties: DUGAN v. GARDNER. HIGLEY v. SAME.
• Court: U.S. District Court — Southern District of New York

68 F. Supp. 709

DUGAN v. GARDNER.

HIGLEY v. SAME.

District Court, S. D. New York.

October 11, 1946.

George J. Engelman, of New York City, for plaintiffs.

John J. McElhinny, of New York City, for defendant, appearing specially for the sole purpose of objecting to the jurisdiction of the court over the person of the defendant and over the causes of action alleged.

CAFFEY, District Judge.

Motions, argued together, to dismiss the two above-entitled actions, brought to recover damages for personal injuries, on the ground that the venue is improperly laid in the Southern District of New York because they are actions based on diversity of citizenship and the defendant is a resident of the State of New Jersey and the plaintiffs are residents of the States of Washington and Minnesota, respectively. No objection is made that service of process was not properly made in this District.

The residence of the respective parties is admitted. The Central Railroad Company of New Jersey, in re-organization under Sec. 77 of the Bankruptcy Act, Sec. 205, Title 11, U.S.C.A., was incorporated in the State of New Jersey and, many years ago, obtained authority to do business as a foreign corporation in this State and appointed an agent in this State to receive service of process in suits against it, as required by the New York law, neither of which has been revoked. There appears to have been maintained, ever since, an office in this City and State. Plaintiffs contend that, upon these facts, this court has jurisdiction, while defendant contends that the railroad ceased doing business upon the due appointment of trustees in re-organization by the District Court of New Jersey (there were originally two trustees, the other, also a resident of New Jersey, having died), that he is now the owner of its property and that the office in this City is his office and not that of the railroad.

The Exhibits submitted by defendant upon these motions show that, pursuant to Section 77 of the Bankruptcy Act, Section 205, Title 11 U.S.C.A., the railroad company, on October 30, 1939, filed in the U. S. District Court for New Jersey its petition for re-organization under said Section, in which it stated that its principal operating office was in Jersey City, New Jersey; that on said day the court made an order approving its petition as properly filed, continuing the railroad company in the possession and operation of its railroad, and restraining and enjoining all persons from commencing any proceeding for obtaining any judgment, except that suits for damages caused by the operation of trains might be filed and prosecuted to judgment in any court of competent jurisdiction; that on November 28, 1939, the court made an order appointing the defendant (together with another, who has since died) trustees of the railroad company's property, vesting them with all its property and conferring upon them all rights, privileges, powers and duties which had been conferred upon the railroad in its order of October 30, 1939, with the same force and effect as though they had been named therein; that the trustees thereafter duly qualified; and that the court, by order dated June 24, 1946, conferred upon the defendant, as surviving trustee, all the rights, powers, privileges and duties conferred upon both trustees by its previous order of November 28, 1939.

Section 205, sub. c(2), 11 U.S.C.A., Section 77, sub. c(2), of the Bankruptcy Act, provides that a trustee, so appointed, "shall have all the title and shall exercise * * * all of the powers of a trustee appointed pursuant to section 72 or any other section of this title * * * and * * * the power to operate the business of the debtor."

In Meyer v. Fleming, 327 U.S. 161, 164, 66 S.Ct. 382, 384, the court said that "the title and powers of the trustee are by § 77, sub. c(2) assimilated to those of trustees in ordinary bankruptcy proceedings," and, in a footnote, 327 U.S. at page 165, 66 S.Ct. at page 385, pointed to Section 70, Section 110, 11 U.S.C.A., of the Bankruptcy Act as vesting title to the bankrupt's property in his trustee, adding that "The same is true under § 77 by reason of the provisions in § 77 sub. c(2)."

Section 70 provides that "the trustee of the estate of a bankrupt, upon his appointment and qualification, * * * shall * * * be vested by operation of law with the title of the bankrupt, * * * to all * * * (5) property which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him."

In Isaacs, Trustee v. Hobbs Tie & Timber Co., 282 U.S. 734, 737, 51 S.Ct. 270, 271, 75 L.Ed. 645, the court said:

"The title and right to possession of all property owned and possessed by the bankrupt vests in the trustee."

Thus, it is conclusively clear that the title to all the property of the railroad...