In re American Home Furnishers' Corp.

• Decision Date: 19 February 1924
• Docket Number: 2218.
• Citation: 296 F. 605
• Parties: In re AMERICAN HOME FURNISHERS' CORPORATION. v. WILLCOX et al. ROSS et al.
• Court: U.S. Court of Appeals — Fourth Circuit

296 F. 605

In re AMERICAN HOME FURNISHERS' CORPORATION.

ROSS et al. v. WILLCOX et al.

No. 2218.

United States Court of Appeals, Fourth Circuit.

February 19, 1924

William Leigh Williams, of Norfolk, Va., and Joseph C. France, of Baltimore, Md. (Harry K. Wolcott, of Norfolk, Va., R Randolph Hicks, Huger W. Jervey, Arthur Leonard Ross, J Frank McDavitt, Benjamin M. Kaye, and Jacob Scholer, all of New York City, on the brief), for petitioners.

H. H Rumble, of Norfolk, Va., and S.D. Timberlake, Jr., of Staunton, Va. (Frank C. Miller and Paul W. Kear, both of Norfolk, Va., on the brief), for respondents.

Before WOODS and ROSE, Circuit Judges, and WATKINS, District Judge.

WOODS Circuit Judge.

In the bankruptcy of the American Home Furnishers' Corporation the District Judge made an order on January 12, 1924, for the sale of the property. The order provided for advertisement by the trustees for sealed bids to be filed with the referee in bankruptcy on or before noon of January 21, 1924, and for a deposit of 5 per cent. of the bid. It also provided:

'In the event the referee on January 21, 1924, shall be of opinion, after ascertaining the sense of the creditors present and voting at the creditors' meeting to be held on said date, that it is unwise and not to the best interest of creditors to accept any bid tendered on said date, he shall forthwith, by proper order, direct the trustees heretofore named in this proceeding, to immediately advertise all the assets of the bankrupt (except cash) for sale at public auction for cash on Saturday, January 26, 1924, at 12 m., * * * at which time said property will be offered for sale first in separate units, * * * and also all the real estate of the bankrupt wherever situated, which shall be offered in separate parcels wherever they may be, may be sold free of liens; and in any case in which the title to any real estate is outstanding, the trustees will assume the obligation of obtaining the legal title to same and convey it to the purchaser.'

Of the bids received and opened by the referee at an adjourned meeting of creditors on January 21, it was found that the two highest were made by Arthur L. Ross, attorney, and Sidney Bieber. These bids differed somewhat in terms, but upon analysis it turned out that the Ross bid was larger by about $47,000. After discussion by the creditors, Bieber proposed that if all the bids were rejected, he would deposit with the trustees not later than January 22, 1924, $100,000, to be forfeited unless he should bid for the property $1,000 in excess of the bid of Ross. A majority in number of the creditors present were in favor of rejecting and a majority in interest were in favor of accepting the bid of Ross. On the faith of Bieber's offer, the referee ordered a sale of the property at auction, after due advertisement as allowed by the court's order of January 12. At this meeting on January 21, verbal notice was given of dissatisfaction with this order of the referee, and of intended application to the District Judge to reverse it and direct acceptance of the bid of Ross. On January 22, Ross, as the highest bidder and also as the representative of some of the creditors, filed his petition with the District Judge, asking a reversal of the order of the referee rejecting his bid and ordering a sale at public auction. The petition to review and reverse the order of the referee was presented to Judge Groner, then holding court at Parkersburg, W. Va., by designation under sections 13 and 14 of the Judicial Code (Comp. St. Secs. 980, 981). There were present at the hearing Mr. Lankford and Mr. Hicks, representing Ross; Mr. Kear, attorney for Bieber; and Mr. Miller for a number of creditors. Argument was presented to the District Judge for and against the acceptance of the bid of Ross. No objection was made to the jurisdiction or power of the judge to hear the matter outside the Eastern district of Virginia. Immediately on conclusion of the argument, on January 23, the District Judge at Parkersburg made an order adjudging that--

The bid of Ross be accepted and confirmed, and that the trustees be directed upon payment of the bid to turn over all the assets of the bankrupt to him, 'unless the said Sidney Bieber shall on or before 2 o'clock p.m. on Friday, January 25, 1924, deposit with the said R. T. Thorp, referee in bankruptcy, in the city of Norfolk, Virginia, an additional sum of $100,000, in cash, or by certified check, which, together with the $100,000 already deposited by him, will make a total of $200,000, and further agrees in writing with the said referee to start the bidding at the auction sale now advertised to be held on January 26, 1924, at 12 o'clock noon, in the city of Norfolk, Va., at the figure of $1,387,000, plus the sum of $25,000, and plus in addition thereto a sum equal to such amount as may have been expended in the aggregate by the receivers or trustees in bankruptcy herein, out of funds which should have been turned over to Wayhab and Walcott, trustees-- this last sum to be fixed and certified to by a certificate of Wayhab, the auditor of the bankrupt corporation.'

There were other conditions not involved here. Thereafter the referee certified that Bieber had not deposited the $100,000 as provided by this order, and that his attorney had stated to him that the deposit would not be made. On January 26, one day after the failure of Bieber to make the deposit, the trustees, under the terms of Judge Groner's order, executed a bill of sale to Ross and received from him the amount of his bid. On January 28, Harry Coplan, a creditor, and R. H. Clemmer and H. C. Miller, attorneys in fact for creditors, and Sidney Bieber, the unsuccessful bidder, filed petitions in the District Court asking Judge Groner to declare null and void his order made at Parkersburg, and to order a sale at public auction of the property of the bankrupt. Upon hearing this petition, the District Judge held that his order above recited made in Parkersburg on the 23d of January was null and void for the reason that he was without jurisdiction to hear the petition outside the Eastern District of Virginia, and ordered a resale of the property.

The petition to this court alleges that the District Judge erred: First, in not holding that he had power to make the order of January 23, 1924, in Parkersburg; and, second, in not making a similar order after his return to the Eastern district of Virginia.

The chief question here is whether the District Judge had the power at chambers in Parkersburg, where he was holding court under a special assignment provided by the Judicial Code, to entertain a petition to review the action of the referee in bankruptcy in ordering a sale of the property. The general rule is that a judge has no power to try cases, either in law or in equity, outside his own...