In re Detroit Mortgage Corporation

• Decision Date: 19 May 1926
• Docket Number: No. 4396.,4396.
• Citation: 12 F.2d 889
• Parties: In re DETROIT MORTGAGE CORPORATION. Petition of DELAND.
• Court: U.S. Court of Appeals — Sixth Circuit

12 F.2d 889 (1926)

In re DETROIT MORTGAGE CORPORATION Petition of DELAND.

No. 4396.

Circuit Court of Appeals, Sixth Circuit.

May 19, 1926.

Lee E. Joslyn, of Detroit, Mich. (Joslyn, Joslyn & Joslyn, of Detroit, Mich., on the brief), for appellant.

John C. Bills, of Detroit, Mich. (Stevenson, Butzel, Eaman & Long, of Detroit, Mich., on the brief), for appellee.

Before DENISON, MACK, and MOORMAN, Circuit Judges.

MACK, Circuit Judge (after stating the facts as above).

1. It is not contested that, but for the agreement of the parties, the receiver's fees would have been charged, at least primarily, to the petitioning creditors on a dismissal of their petition, and that they are to be paid in this case out of the estate only because of the agreement of the parties. The real question, therefore, is whether or not sections 48 and 72 limit such fees, when payable, not out of the estate, but by the petitioning creditors. On this exact question no case has been cited to or found by us. Each side argues that the legislative history of section 48, as amended in 1910, supports its contention. Senate Report No. 691, 61st Congress, 2d Session, May 16, 1910; 45 Cong. Rec. pt. 3 (1910) pp. 2260-2280, 7933.

Remington in his Bankruptcy (third edition, volume 1, sections 411, 460, and 488), expresses the opinion that sections 48 and 72 of the act were intended to govern the fees to be allowed in the event of adjudication and the consequent appointment of a trustee when they would necessarily come out of the bankrupt estate; that it was the protection of bankrupt estates and the ofttimes numerous small creditors thereof with which Congress was concerned, and not petitioning creditors, well able to protect themselves in the event of a contest, as to the reasonableness of such charges to be taxed as costs against them.

We cannot concur in this reasoning, or in these conclusions, because, however meritorious these considerations may be, they find no support in the text or context of the Bankruptcy Act. If on the face of the papers the jurisdictional facts are stated, the bankruptcy court has jurisdiction of the cause, even though those jurisdictional facts should subsequently not be proven. That jurisdiction includes the appointment of receivers.

Section 2 (3) of the act (Comp. St. § 9586) expressly authorizes the appointment of receivers to take charge of the property until the petition is dismissed or the trustee has qualified. It follows therefrom that, when a receiver is appointed, it is not because of any general equitable powers in the bankruptcy court, but because of the express provisions of the act, and in full contemplation of the possibility that the petition in bankruptcy may ultimately be dismissed, either for failure of proof or by agreement of all parties....