Hull v. Burr

• Decision Date: 02 April 1907
• Docket Number: 1,639.
• Parties: HULL v. BURR.
• Court: U.S. Court of Appeals — Fifth Circuit

153 F. 945

HULL v. BURR.

No. 1,639.

United States Court of Appeals, Fifth Circuit.

April 2, 1907

The respondent, Arthur E. Burr, filed in the court below the following petition:

'In the District Court of the United States in and for the

Southern District

of Florida.

'In the Matter of the Petition of Arthur E. Burr, Trustee

the Estate of the Port Tampa Phosphate Company, a

Corporation against Joseph Hull, of Savannah, in the

State of Georgia.

'Your petitioner, Arthur E. Burr, trustee in bankruptcy of the estate of the Port Tampa Phosphate Company, a corporation respectfully represents that, on November 9, 1905, a petition in bankruptcy was filed in the District Court of the United States for the District of Massachusetts, against the Port Tampa Phosphate Company, a corporation duly established according to the laws of the commonwealth of Massachusetts that thereafter, on the 27th day of November, 1905, the said Port Tampa Phosphate Company was duly adjudged bankrupt; that your petitioner was duly appointed trustee of the estate of said bankrupt corporation on the 27th day of December, 1905, and thereafter duly qualified; that your petitioner brings this petition in his capacity as such trustee in bankruptcy of said corporation.

'On or about May 27, 1905, said bankrupt corporation caused to be executed and delivered to the respondent, Joseph Hull, a deed of certain real estate and personal property then belonging to and owned by said corporation, and situated in the county of Polk, and state of Florida, to wit:

'The south half and the south half of the northeast quarter, and the southeast quarter of the northwest quarter of section thirty-four (34) in township twenty-nine (29) south, range twenty-three (23) east, Polk county, Florida; also,' etc. (The description of the fixtures is omitted.)

'Said deed was caused by said corporation to be made, executed, and delivered to the respondent as and for security for certain money, at that time advanced, and for money to be thereafter advanced, to said corporation by the respondent.

'As a part of the same transaction, and at or about the same time, to wit, June 9, 1905, the said Joseph Hull and said bankrupt corporation executed and delivered a certain instrument and agreement of defeasance, wherein said Hull agreed to reconvey to the said bankrupt corporation all of the said above-described property upon the payment to the said Hull of certain sums set forth in said instrument. Your petitioner is informed and believes, and therefore avers, that said Hull duly recorded said deed to said property.

'On the 9th day of November, 1905, and for a long time prior thereto said bankrupt corporation was the owner of and in actual and legal possession of said property, both real and personal, and thereafter your petitioner by operation of law became vested with the title to all the property belonging to the bankrupt corporation on the 9th day of November, 1905, and came into legal possession thereof as of the said date. After said date, and after the filing of said petition in bankruptcy, the respondent well knowing all of the aforesaid facts, and that the said property was the property of the said trustee of the aforesaid corporation, on or about December 15, 1905, entered upon said real estate and took possession of said above-described personal property, and now holds the same, both real and personal property, and has refused to deliver or convey the same or any part of it to your petitioner.

'Said deed and instrument of defeasance constitute in law and equity a mortgage, and said property is now the property of your petitioner as such trustee, subject to a lien in favor of the respondent for the amounts loaned and advanced by him to said bankrupt corporation.

'Your petitioner is without information, and therefore cannot aver as to the amount of indebtedness due the respondent upon November 9, 1905, by said bankrupt corporation, for the reason that the amount thereof is entirely within the knowledge of the respondent; but your petitioner is informed and believes, and therefore avers, that the amount of said indebtedness due said Hull by said corporation at said time did not exceed the amount of twenty-five thousand dollars ($25,000).

'Said property is of great value, and is worth a large amount in excess of said indebtedness due said Hull by said corporation.

'Since said Hull took possession of said property on December 15, 1905, he has used and operated it, and mined a large amount of phosphate therefrom. Your petitioner is unable to state the exact amount received by said Hull from said use and operation aforesaid, as your petitioner is unable to obtain an accounting thereof from said Hull. * * *

'Your petitioner is informed and believes and avers that there is danger that said Hull may make a conveyance of said real estate to a bona fide purchaser for value.

'Wherefore your petitioner prays:

'(1) That this honorable court may issue forthwith a preliminary decree restraining and enjoining said Joseph Hull from conveying or transferring said real property until the further order of this court.

'(2) That said deed and instrument of defeasance may be declared to be a mortgage.

'(3) That all of said property, both real and personal, be declared to be the property of your petitioner as such trustee.

'(4) That an accounting may be had of the amount due said Hull by said bankrupt corporation on November 9, 1905; and that a further accounting may be had of the amount received by said Joseph Hull from the operation and use of said property since December 15, 1905; and that this court will determine the amount of the lien now held by said Joseph Hull.

'(5) That said Joseph Hull be ordered forthwith to convey and deliver to your petitioner all of said personal property taken by him from the possession of your petitioner, or to account for the value thereof.

'(6) That your petitioner may be authorized and empowered to sell at private sale all of said property either subject to the lien, if any, of the said Joseph Hull, or free from incumbrances, reserving to the said Joseph Hull the right to be reimbursed out of the proceeds of the sale of the said real estate.

'(7) That due and proper process be issued forthwith out of this honorable court to enforce its decrees and orders.

'(8) For such other and further general relief as to this honorable court seems meet.

'And that a writ of subpoena of the United States of America may issue directed to the said Joseph Hull, commanding him on a certain day to appear and answer to this petition, and to abide by and perform such orders and decrees in the premises as to this honorable court may seem meet and proper.'

The petition was signed by petitioner's solicitor, and was duly verified.

The respondent, Joseph Hull, appeared, and filed the following plea to the jurisdiction:

'Now comes the above-named defendant, Joseph Hull, and appearing for the special purpose, and no other until the question herein raised is decided, of objecting to the jurisdiction of this court, doth object to this court entertaining the petition of Arthur E. Burr, as trustee in bankruptcy of the estate of the Port Tampa Phosphate Company, a corporation, against this defendant, or further proceedings thereon, because under the Constitution and laws of the United States a District Court of the United States is precluded from entertaining and adjudging any such matter or controversy as is by said petition set up; and prays judgment whether this court has jurisdiction, and asks to be dismissed with his costs.'

The plea was signed by counsel and sworn to.

The court overruled the objection to its jurisdiction, and thereupon Joseph Hull filed his petition in this court to revise and reverse the decree of the District Court, alleging that 'under the bankruptcy law of the United States any remedy the said Burr has must be pursued by proceedings at law or in equity in the state or federal court as they may have jurisdiction and otherwise than by summary proceeding in bankruptcy.'

H. Bisbee and George C. Bedell, for petitioner.

E. R. Gunby, for respondent.

Before PARDEE, McCORMICK, and SHELBY, Circuit Judges.

SHELBY Circuit Judge, having made the foregoing statement of the case, .

1. The sole question to be decided is whether or not the District Court had jurisdiction of the case presented by the petition of the trustee. The question must, of course, be answered by an examination of the relevant parts of the bankruptcy act of 1898. Act July 1, 1898, c. 541, 30 Stat. 544 (U.S. Comp. St. 1901, p. 3418). The second section of the act makes the District Courts of the United States courts of bankruptcy and confers on them jurisdiction. Clauses 3 and 7 of the section are relied on as conferring jurisdiction in this case.

By those subdivisions jurisdiction is conferred to '(3) appoint receivers or the marshals, upon application of parties in interest, in case the courts shall find it absolutely necessary for the preservation of estates to take charge of the property of bankrupts after the filing of the petition and until it is dismissed, or the trustee is qualified * * * '; and to '(7) cause the estates of bankrupts to be collected, reduced to money and distributed, and determine controversies in relation thereto, except as herein otherwise provided.' The jurisdiction conferred by the seventh clause is limited by the words 'except as herein otherwise provided.' These words refer to section 23 of the act, which relates to the jurisdiction of the United States and state courts. We here insert that section, placing in italics the amendment of 1903:

'Sec. 23. (a) The United States Circuit Courts shall have

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