In re C.M. Burkhalter & Co.

• Decision Date: 11 May 1910
• Citation: 179 F. 403
• Court: U.S. District Court — Northern District of Alabama
• Parties: In re C. M. BURKHALTER & CO. v. PEOPLE'S SAVINGS BANK & TRUST CO. ROGERS

179 F. 403

In re C. M. BURKHALTER & CO.

ROGERS v. PEOPLE'S SAVINGS BANK & TRUST CO.

United States District Court, N.D. Alabama, Southern Division.

May 11, 1910

Weatherly & Stokely, for People's Savings Bank & Trust Company.

London & Fitts, for receiver.

GRUBB District Judge.

This matter comes on to be heard upon the petition of the receiver for a rule upon the respondent to show cause for not paying back to the receiver $4,285.55, with interest, being the amount paid it by the former receiver in disobedience of an order of court, directing him to pay out no funds thereafter except upon order of court.

The amount was paid by the former receiver as a credit on a claimed indebtedness of the receiver to the respondent of $11,000, evidenced by a receiver's certificate in that amount issued to it for money loaned by it to the receiver. The present receiver disputes the existence of any such indebtedness at the time of the payment. The Circuit Court of Appeals declined to pass upon this issue because of the unsatisfactory condition of the record, and remanded the case with instructions that it be referred to the special master to state the account between the bank and the receiver in conformity to its opinion.

The opinion was to the effect that whatever indebtedness was due the respondent was a preferred claim against the fund, that the only issue was the amount of such indebtedness, and that the money, though paid wrongfully and in violation of the order of the court, should not be ordered paid back to the present receiver unless and until it was determined upon such reference that there was due respondent out of the fund on its certificate a less amount.

It seems clear from this opinion that the Circuit Court of Appeals (177 F. 386) held (1) that the money was wrongfully paid by the original receiver to the respondent, and should for that reason have been restored to the fund in court except that to do so would be a vain thing, if there was due respondent as much or more out of the same fund; and (2) that the issue as to the amount of such indebtedness to respondent should be determined in the bankrupt cause by a reference to a special master for the purpose of restating the account between the receiver and the respondent, and not in a plenary suit to be brought by the receiver.

If the money was paid by the original receiver in disobedience to the court's order, it was wrongfully paid by him, whether justly owing to the respondent or not. If the payment was made, not only without the authority of the court, but contrary to its instructions to the receiver, it would be competent for the court to order it restored, regardless of the state of account between the parties. The Circuit Court of Appeals did not hold that the court was without authority to order such payment, but that it would be a useless exercise of it until it was determined that the receiver would not, by the state of the account between the parties be required immediately to repay it to the respondent. The respondent had accepted the payment without knowledge of the court's prohibition upon the receiver of its payment, and was not in contempt in so doing; so that no useful purpose could...