Ex parte American Steel Barrel Company and Elizabeth C. Seaman. riginal

• Citation: 33 S.Ct. 1007,230 U.S. 35,57 L.Ed. 1379
• Decision Date: 16 June 1913
• Docket Number: No. 14,O,14
• Parties: EX PARTE AMERICAN STEEL BARREL COMPANY and Elizabeth C. Seaman. riginal
• Court: United States Supreme Court

230 U.S. 35

33 S.Ct. 1007

57 L.Ed. 1379

EX PARTE AMERICAN STEEL BARREL COMPANY and Elizabeth C. Seaman.

No. 14, Original.

Argued April 21, 1913.

Decided June 16, 1913.

Messrs. John C. Spooner, Aldis B. Browne, Louis O. Van Doren, and G. Murray Hulbert for petitioners.

Messrs. John A. Garver, Edwin T. Rice, and Charles A. Riegelman for respondents.

Mr. Justice Lurton delivered the opinion of the court:

This is a proceeding for a rule on the Honorable Thos. I. Chatfield, district judge of the United States for the eastern district of New York, the Honorable Julius Mayer, district judge for the southern district of New York, and the Honorable E. Henry Lacombe, senior circuit judge for the second judicial circuit of the United States, to show cause why a writ of mandamus shall not be issued commanding the Honorable Thos. I. Chatfield to resume jurisdiction and proceed to hear and determine all matters which may arise or have arisen in a certain proceeding pending in the said district court for the eastern district of New York, wherein the Iron Clad Manufacturing Company has been adjudicated a bankrupt; and directing the vacation of an order made in said case by the Honorable E. Henry Lacombe, as senior circuit judge, on April 2, 1912, designating and appointing the said Judge Mayer district judge to hear and exercise in the eastern district of New York, the same powers that are now vested in the district judges of said district, or either of them, 'and quashing and setting aside all proceedings in said matter of Iron Clad Manufacturing Co., Bankrupt, had before said Honorable Julius M. Mayer . . . subsequent to the said order of Judge Lacombe . . . , and especially commanding the said Judge Chatfield to exercise the jurisdiction thereof which he had and was exercising on and prior to the 29th of March, 1912.'

A rule to show cause issued, and a return has been made.

The question now is whether a writ of mandamus shall issue.

Shortly stated, the facts necessary to be understood are these:

1. Creditors of the Iron Clad Manufacturing Company filed on May 23, 1911, a petition in the district court of the United States for the eastern district of New York, praying its adjudication as a bankrupt. The proceeding was long contested, but on December 2, 1911, the company was adjudged judged a bankrupt by Judge Chatfield.

2. In the meantime, controversies had arisen as to what constituted the assets of that company. On June 20, 1911, certain of the creditors filed a petition in the case, charging that the corporate capital, property, and assets of another corporation, the American Steel Barrel Company, belonged to the Iron Clad Manufacturing Company, and had been controlled and managed in the interest of the latter, and praying that the receivership under the proceeding against the Iron Clad Manufacturing Company should be extended to the American Steel Barrel Company.

3. This was bitterly resisted, and the independent ownership of the Steel Barrel Company asserted. Elizabeth C. Seaman was the president and manager of both companies, and the nominal owner of all of the shares in each, save a few qualifying shares in the hands of directors. Mrs. Seaman seems to have been not only active in resisting the proceedings against the Iron Clad Company, but also in resisting every claim to the property of the Steel Barrel Company made by the creditors of the Iron Clad Company.

4. The hearing of this application was postponed from time to time, and there was disagreement as to whether it should be heard upon affidavits before Judge Chatfield, or referred to a commissioner to take proof and report. Finally, on March 15, 1912, Judge Chatfield filed an opinion refusing to extend the receivership to the property of the American Steel Barrel Company, or to take summary possession of its assets, as he had been asked to do. The ground upon which he acted, as shown by his opinion (194 Fed. 906), was that the claim to the assets of the Steel Barrel Company was one which should be asserted in a plenary suit. An order in accordance with this opinion was not entered, because counsel for the creditors asked for time to make a new application, and such application was made on March 29, 1912, followed, however, on the same day, by the filing of an affidavit under § 21 of the Judicial Code [36 Stat. at L. 1090, chap. 231, U. S. Comp. Stat. Supp. 1911, p. 133] to prevent further hearing of the case by Judge Chatfield. That affidavit, in substance, alleged that throughout the proceedings in the case Judge Chatfield had manifested 'a strong bias and prejudice against the petitioning creditors and against their counsel, and has shown a strong bias toward Mrs. Elizabeth C. Seaman who was and is the sole person interested in the subject-matter of the bankrupt corporation's property other than the creditors.'

The motion to rehear the application to extend the receivership was made when District Judge Veeder was holding the bankrupt court, and was by him at once referred to Judge Chatfield. In view of the filing of the disqualifying affidavit, Judge Chatfield declined to hear the motion and application to reopen and rehear the motion which had been decided by the opinion handed down on March 15th, and made a certificate in these words:

UNITED STATES DISTRICT COURT, EASTERN DISTRICT OF NEW YORK.

IN THE MATTER OF IRON CLAD MANUFACTURING COMPANY, BANKRUPT.*) March 29, 1912.

IN THE MATTER OF A MOTION TO REOPEN THE APPLICATION TO EXTEND RECEIVERSHIP, FOR A DIRECTION THAT THE PETITIONERS BE AFFORDED AN OPPORTUNITY TO TAKE TESTIMONY, ETC., AND FOR POSTPONEMENT OF THE ENTRY OF ANY ORDER OR DECREE UPON THE APPLICATION DECIDED MARCH 15, 1912, AND FOR OTHER RELIEF.

Before Veeder, J.

Appearances: Whitridge, Butler & Rice, for petitioning creditors, in support of motion, James A. Allen, specially for Elizabeth C. Seaman and the American Steel Barrel Co., Emanuel Hertz, specially for George A. Wheelock, in opposition.

Motion respectfully referred to Judge Chatfield.

Van Vechten Veeder, U. S. J.

The within application having been referred upon the return day to me, Judge Veeder, who called the motion calendar, and the motion papers having been presented by the clerk, in the presence of James A. Allen, appearing specially, and desiring to be heard in opposition, as attorney for certain parties, Emanuel Hertz, appearing specially for George A. Wheelock, and also desiring to be heard in opposition, and Erskine B. Essig, representing certain creditors, but not taking part in said motion, and no one appearing before me on behalf of the petitioners, but a certain affidavit, by Thatcher M. Brown, having been brought to the attention of the court, which affidavit was filed after the motion was referred to me by Judge Veeder and before any of the parties appeared before me, in which said Thatcher M. Brown, as a party to the proceeding, makes an affidavit that I have a personal bias either against the creditors or in favor of the opposite party to the proceeding, and asking that another judge be designated in the matter prescribed in section 20, to hear this motion,——

I do hereby, in accordance with the provisions of section 21 of the law known as the Judicial Code, and now in effect, proceed no further in this motion, and order that an authenticated copy of this statement be forthwith certified to the Honorable E. Henry Lacombe, senior circuit judge now present in this circuit in order that proceedings may be had under section 14 of said act, it being apparent that this motion cannot proceed under section 23, which is prescribed as an alternative method in said section 21 of said law.

The court further certifies that it does not make an en- try upon the records of the court (nor does it admit) that it has any personal bias or prejudice, but on the contrary might call in question many of the statements or controvert many of the allegations contained in said papers. And this court feels that if any disqualification exists it was also present when this court directed a verdict of adjudication and made other decisions in favor of said creditors, and when the judge now holding the court upheld the findings of the special commissioner as to charges of contempt against Mrs. Seaman.

The court however feels that the intent of section 21 is to cause a transfer of the case, without reference to the merits of the charge of bias, and therefore does so immediately, in order that the application of the creditors may be considered as speedily as possible by such judge as may be designated.

Thomas I. Chatfield,...