Griffin v. Lenhart

• Decision Date: 17 April 1920
• Docket Number: 1730.
• Citation: 266 F. 671
• Parties: GRIFFIN et al. v. LENHART et al. In re SEMANS.
• Court: U.S. Court of Appeals — Fourth Circuit

266 F. 671

GRIFFIN et al. v. LENHART et al.

In re SEMANS.

No. 1730.

United States Court of Appeals, Fourth Circuit.

April 17, 1920

M. G Sperry and George M. Hoffheimer, both of Clarksburg, W.Va (R. S. douglass and E. Bryan Templeman, both of Clarksburg W. Va., on the brief), for appellants.

John J Coniff, of Wheeling, W.Va. (E. C. Higbee, of Uniontown, Pa., on the brief), for appellees.

Before PRITCHARD, KNAPP, and WOODS, Circuit Judges.

WOODS Circuit Judge.

A petition in bankruptcy was filed against Isaac W. Semans in the District Court for the Western District of Pennsylvania May 29, 1917, and he was adjudicated bankrupt July 31, 1917. A petition was also filed against Josiah V. Thompson in the same court August 20, 1917, and he was adjudicated bankrupt September 10, 1917. Ancillary proceedings were instituted in the District Court for the Northern District of West Virginia, where both bankrupts had property. About two years prior to the adjudication of Semans and Thompson as bankrupts, the several appellants obtained, in chancery suits brought by them, respectively, in the circuit court of Harrison county, W. Va., attachments against the property of Semans, and, except in the cases of Supler and the Empire National Bank, against the property of Thompson. These attachments were levied on tracts of land owned by Semans and Thompson, situated in various counties in West Virginia. The orders of attachment were duly returned, notice of lis pendens filed, and the attachment suits proceeded to decrees that Semans and Thompson were indebted to the respective appellants (except Supler, John W. Brown, Buena W. Brown, and Empire National Bank) in the sums of money ascertained by the court, with interest and costs, that property had been attached as above mentioned, and that the respective appellants were entitled to have the property so attached, or so much thereof as might be necessary for that purpose, sold to pay the debts so ascertained, with interest and costs. The court did not order or decree the sale of the attached property, but of its further directions and decrees in the premises the court took time to consider.

On May 10, 1917, the above-mentioned decrees having been entered by the state court, all the appellants and the other attachment creditors of Thompson in that court (except one William Morgan) moved that all the attachment suits be heard together, and that all of the causes be referred to a commissioner in chancery to ascertain and report all of the attached property and the liens thereon. After argument, the circuit court took time to consider the motion. This motion is still pending and undetermined, because of the pendency of several consecutive injunction writs. As to these injunction proceedings it is only necessary to say that they have been dismissed, and that until they were dismissed they prevented further proceedings in the attachment suits.

On January 21, 1919, C. E. Lenhart, Frederick G. Kay, and W. W. Parshall, trustees of the estate of Semans, bankrupt, filed a petition in the United States District Court for the Northern District of West Virginia, setting forth an agreement entered into between themselves and J. M. MacDonald for the sale at a valuation of $800 an acre of the undivided one-half interest of Semans in a tract of coal land located in Harrison county, W. Va., which was included in the attached property of Semans. The trustees asked in their petition that the agreement for sale to MacDonald be ratified and confirmed, alleging that the property of Semans within the jurisdiction of the court greatly exceeded in value the amount of liens and incumbrances against it and that it was advantageous to consummate the sale.

On February 18, 1919, the appellants in this case filed jointly a motion in the District Court to dismiss the petition of the trustees and an answer thereto, setting forth in their answer that under proceedings in the circuit court of Harrison county the attachments had been levied more than four months prior to the filing of petition in bankruptcy, and that that court had acquired prior and exclusive jurisdiction over the property of the bankrupt for the enforcement of the attachment liens by sale. On March 29, 1919, the District Court overruled the motion to dismiss, and ordered the consummation of the sale to MacDonald. The decree directed that the sale be free of all the attachment liens, which liens were transferred to the purchase price subject to such defenses as might be made against them. This ruling we are asked to review.

In brief, the case is this: Under attachment liens acquired in the state court on the land more than four months before the filing of the petition in bankruptcy, the state court, in equitable proceedings instituted by creditors to enforce the attachments more than four months before the filing of the petition, had adjudged the amounts due and was proceeding to enforce the attachment liens by sale of the land. The question is whether the court of bankruptcy should by the order appealed from take the control of the attached property from the state court.

Doubtless it might have been held with strong reason that the court of bankruptcy upon adjudication drew to itself for the purpose of administration all the assets and liabilities of the bankrupt of every form, giving, however, full effect to all liens lawfully acquired more than four months before the filing of the petition. But the Supreme Court, considering the reasons stronger for a different view, laid down the general rule that, where a state court has obtained complete jurisdiction by proceedings, either legal or equitable instituted by creditors for the enforcement of their demands, and under which they have acquired liens upon the property more than four months before the filing of the petition, the state courts should proceed with the enforcement of the liens and a final disposition of the property and of the cause without interference from the bankruptcy court. Eyster v. Gaff, 91 U.S. 521, 23 L.Ed. 403; Pickens v. Dent, 106 F. 653, 45 C.C.A. 522 (4th Circuit); Metcalf v. Barker, 187 U.S. 165, 23 Sup.Ct. 67, 47 L.Ed. 122; Pickens v. Roy, 187 U.S. 177, 23 Sup.Ct. 78, 47 L.Ed. 128. The authority of Metcalf v. Barker, 187 U.S. 165, 23 Sup.Ct. 67, 47 L.Ed. 122, is recognized, and the distinction between an attachment or any other liens created more than four months before the filing of the petition and one created within the four months period, is restated in Clarke v. Larremore, 188 U.S. 486, 23 Sup.Ct. 363, 47 L.Ed. 555; globe Bank & Trust Co....