Frank Jones v. Charles Springer

• Decision Date: 02 December 1912
• Docket Number: No. 23,23
• Citation: 57 L.Ed. 161,33 S.Ct. 64,226 U.S. 148
• Parties: FRANK H. JONES, Trustee in Bankruptcy of the Oro Dredging Company, Appt., v. CHARLES SPRINGER
• Court: U.S. Supreme Court

226 U.S. 148

33 S.Ct. 64

57 L.Ed. 161

FRANK H. JONES, Trustee in Bankruptcy of the Oro Dredging Company, Appt.,

v CHARLES SPRINGER.

No. 23.

Argued October 30 and November 4, 1912.

Decided December 2, 1912.

Messrs. Elmer E. Studley, J. E. MacLeish, Frank H. Scott, and Edgar A. Bancroft for appellant.

[Argument of Counsel from pages 149-151 intentionally omitted] Messrs. Ernest Knaebel, Charles A. Spiess, Aldis B. Browne, Alexander Britton, and Evans Browne for appellee.

[Argument of Counsel from pages 151-153 intentionally omitted] Mr. Justice Holmes delivered the opinion of the court:

This case comes here upon appeal from a judgment denying the title of the appellant, as trustee in bankruptcy, to property formerly belonging to the bankrupt and sold in this suit by order of the local court. The facts are these. The property in question is a mining dredge. It was attached on February 27, 1906, and a receiver was appointed on March 19. On May 1, a petition was filed for an order directing the dredge to be sold on the ground that it was 'of a perishable nature, and liable to be lost or diminished in value before the final adjudication of the case,' within the Compiled Laws of New Mexico, 1897, § 2716, and an order to that effect was made on the same day. The ground of the finding on which the sale was ordered was that the dredge was anchored in an embanked pond fed by a mountain stream subject to heavy floods, and was liable to damage from that source. The sale took place on June 26, and the dredge was bought in good faith and without notice of the defendant's insolvency, at a price of $5,000, paid into court by the appellee, Springer. The sale was confirmed on July 17. But on March 12, 1906, a petition in bankruptcy had been filed in the northern district of Illinois against the Oro Dredging Company, the defendant in this suit. On April 23, the company was adjudged a bankrupt. On July 9, the appellant was appointed trustee, and on July 19 qualified. On August 2, he first appeared in this cause, that being the first notice of the adjudication received by the parties concerned or the court. He filed an intervening petition praying that the order of sale be set aside, the attachment dissolved, and the property turned over to him. The petition, so far as it affects the dredge, was denied, the judgment was affirmed by the supreme court of the territory, and the trustee appealed.

The main ground of the appeal is that by § 70 of the bankruptcy act¹ the title of the trustee related back to the date of the adjudication of bankruptcy, and that, as matter of law, Springer could not be a bona fide purchaser within the proviso of § 67f, saving the title of a bona fide purchaser for value who shall have acquired the property by the attachment without notice or reasonable cause for inquiry. It is argued that filing the petition in bankruptcy was a caveat to all the world (Mueller v. Nugent, 184 U. S. 1, 14, 46 L. ed. 405, 411, 22 Sup. Ct. Rep. 269, and that the above proviso can have effect only when the judgment and sale took place before the petition was filed.

We have no occasion to consider the last proposition in order to decide this case, or what effect, if any, the pro- viso has upon some language in Conner v. Long, 104 U. S. 228, 26 L. ed. 723, relied upon by the appellant (see Clarke v. Larremore, 188 U. S. 486, 488, 47 L. ed. 555, 557, 23 Sup. Ct. Rep. 363), the proceeding not having been one to enforce the lien of the attachment, but simply an order made on a finding that, in the language of the New Mexico statute, 'the interests of both plaintiff and defendant will be promoted by the sale of the property.' But the proposition quoted from Mueller v. Nugent must be taken with reference to the facts then before the court, and not as applicable to all intents and purposes. York Mfg. Co. v. Cassell, 201 U. S. 344, 353, 50 L. ed. 782, 785, 26 Sup. Ct. Rep. 481; Hiscock v. Varick Bank, 206 U. S. 28, 41, 51 L. ed. 945, 953, 27 Sup. Ct. Rep. 681; Re Rathman, 106 C. C. A. 253, 183 Fed. 913, 924, 925. It is true that the estate is regarded as in custodia legis from the date of the petition, as against a subsequent attachment. Acme Harvester Co. v. Beekman Lumber Co. 222 U. S. 300, 306, 307, 56 L. ed. 208, 213, 32 Sup. Ct. Rep. 96. But in a case like the present, where, under an attachment levied before the petition was filed, the property had been put into the hands of a receiver, without notice of the petition, it is not true that all power and jurisdiction of the local court were ended before notice of the bankruptcy proceedings. Eyster v. Gaff, 91 U. S. 521, 524, 525, 23 L. ed. 403-405; Scott v. Ellery, 142 U. S. 381, 384, 35 L. ed. 1050, 1051, 12 Sup. Ct. Rep. 233; Jaquith v. Rowley, 188 U. S. 620, 626, 47 L. ed. 620, 623, 23 Sup. Ct. Rep. 369; Frank v. Vollkommer, 205 U. S. 521, 529, 51 L. ed. 911, 915, 27 Sup. Ct. Rep. 596; Revere Copper Co. v. Dimock, 90 N. Y. 33.

The jurisdiction of the territorial court not having been avoided, and that court having the actual custody of the res, it had the power to preserve the subject-matter of the controversy that necessarily is incident to such conditions. An illustration, although not a perfect analogy, is to found in United States v. Shipp, 203 U. S. 563, 573, 51 L. ed. 319, 323, 27 Sup. Ct. Rep. 165, 8 Ann. Cas. 265. An appeal had been taken to this court on a petition for habeas corpus, where a prisoner was held under sentence of a state court, and pending the appeal this court had ordered the custody of the appellant to be retained. Shipp was charged with contempt for having been party to a conspiracy that ended in lynching the prisoner. It was strongly argued that neither the...