In re Browne

• Decision Date: 20 November 1900
• Docket Number: 775,776.
• Citation: 104 F. 762
• Parties: In re BROWNE et al. In re PHOENIX MILLS CO.
• Court: U.S. District Court — Eastern District of Pennsylvania

104 F. 762

In re BROWNE et al. In re PHOENIX MILLS CO.

Nos. 775, 776.

United States District Court, E.D. Pennsylvania.

November 20, 1900

John Dickey, Jr., for receiver.

John Douglass Brown, Jr., Geo. Stuart Patterson, Edwd. L. Perkins Morgan & Lewis, T. De Witt Cuyler, and John G. Johnson, for creditors.

McPHERSON District Judge.

Certain creditors of these bankrupts hold promissory notes for a large amount, secured by the pledge of wool; the notes being in the ordinary collateral form, and giving the creditors power to sell at public or private sale without previous demand or notice. The receivers avers that the power of sale is about to be exercised, and that the bankrupt's equity in the pledged property will probably be sacrificed unless the court intervenes, and so controls the exercise of the power that the receivers are given an opportunity to obtain purchasers for the wool at a full and fair value. The petition asks for an order forbidding the creditors to sell until after, say, 10 days' notice to the receivers that a sale is intended. A temporary restraining order was issued forbidding a sale under any circumstances, and it is now to be determined whether the court has the power to make the order prayed for, or any other order interfering with the creditor's right to sell.

I do not pass upon the question, whether the court may interfere to prevent a fraudulent or oppressive exercise of such a right. No such exercise is threatened in the present case. It is agreed that the creditors intend to deal fairly with the property pledged, and will make an honest effort to seel for the best prices that can be obtained. This being so, I am of opinion that the bankrupt act gives the court no authority to intervene between these creditors and their exercise of the right to seel given by the collateral notes. Each of these creditors has a line, which I must assume, in the absence of evidence to the contrary, was given and accepted in good faith for a present consideration, and not in contemplation of, or in fraud upon, the statute; and such liens are declared by clause 'd' of section 67 to be unaffected by the act. The phrase 'unaffected by the act' may perhaps be too broad. Other sections do affect such liens in some respects not now material, but the general meaning of the phrase is clear. Such liens are left as the act finds them, and (passing the question whether the court may interfere in the case...