Harris v. First National Bank of Mt Pleasant, Texas

• Decision Date: 21 February 1910
• Docket Number: No. 98,98
• Citation: 54 L.Ed. 528,216 U.S. 382,30 S.Ct. 296
• Parties: W. R. HARRIS, Trustee of the Estate of John Hargrove, Bankrupt, Plff. in Err., v. FIRST NATIONAL BANK OF MT. PLEASANT, TEXAS
• Court: U.S. Supreme Court

216 U.S. 382

30 S.Ct. 296

54 L.Ed. 528

W. R. HARRIS, Trustee of the Estate of John Hargrove, Bankrupt, Plff. in Err.,

v FIRST NATIONAL BANK OF MT. PLEASANT, TEXAS.

No. 98.

Argued and submitted January 21, 1910.

Decided February 21, 1910.

Messrs. Charles S. Todd, George Q. McGown, John A. Hurley, and T. E. Webber for plaintiff in error.

Messrs. W. L. Estes, Hiram Glass, John J. King, and A. L. Burford for defendant in error.

Mr. Justice Day delivered the opinion of the court:

This case presents the single question of the jurisdiction of the district court of the United States to entertain a suit brought by Harris, as trustee in bankruptcy, against the First National Bank of Mount Pleasant, Texas.

The petition alleged that Hargrove, the bankrupt, was indebted to the defendant bank for an overdraft in the sum of $2,000; that, to secure the payment of the same, Hargrove delivered into the bank's possession as collateral security certain notes; that, at the time of the adjudication in bankruptcy, Hargrove had paid the overdraft in full.

Further, the petition alleged that, at the time Hargrove was adjudged a bankrupt, the bank had in its possession two certain promissory notes, which had been signed by one McGee as principal and by Hargrove as surety. That prior to the bankruptcy Hargrove paid the notes, and thus became entitled to the same. That defendant refuses to account for said notes, and wrongfully withholds them from the trustee. The prayer of the petition is that the bank be required to surrender to the trustee the notes so pledged as collateral security, and also the notes paid by Hargrove as surety, or, in default thereof, judgment against the bank in the sum of $3,500, the value of all the notes. Upon issue made as to its jurisdiction, the district court held it was without jurisdiction, and dismissed the suit.

In Bardes v. First Nat. Bank, 178 U. S. 524, 44 L. ed. 1175, 20 Sup. Ct. Rep. 1000, this court held that under § 23 of the bankruptcy act of 1898 [30 Stat. at L. 544, chap. 541, U. S. Comp. Stat. 1901, p. 3418], the district court of the United States could, by the consent of the defendant, and not otherwise, entertain suits by the trustee against third persons to recover property conveyed by the bankrupt before the institution of proceedings in bankruptcy.

Subsequently, Congress, by the act of February 5, 1903 (32 Stat. at L. 797, chap. 487, U. S. Comp. Stat. Supp. 1909, p. 1308), amended certain sections of the bankruptcy act. To § 23b, which provided that suits by the trustee should only be brought in courts where the bankrupt, whose estate was being administered by the trustee might have brought them if proceedings in bankruptcy had not been instituted, unless by the defendant's consent, these words were added: 'Except suits for the recovery of property under section sixty, subdivision b, and section sixty-seven, subdivision e

Subdivision b of § 60 made provision for the recovery of preferences given by the bankrupt within four months before the filing of the petition in bankruptcy. To that subdivision these words were added: 'And, for the purpose of such recovery, any court of bankruptcy, as hereinbefore defined, and any state court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction.'

Subdivision e of § 67 made provision for setting aside fraudulent conveyances, and the recovery of property so conveyed at the suit of the trustee. To that subdivision these words were added: 'For the purpose of such recovery, any court of bankruptcy, as hereinbefore defined, and any state court which would have had jurisdiction if...