In re Goldberg

• Decision Date: 18 March 1903
• Citation: 121 F. 578
• Parties: In re GOLDBERG.
• Court: U.S. District Court — Northern District of New York

121 F. 578

In re GOLDBERG.

United States District Court, N.D. New York.

March 18, 1903

Ashley & Williams, for the motion.

Walter A. Chambers, opposed.

RAYDistrict Judge.

On or about July 19, 1902, Jonathan Levi and Edward F. Cohn commenced an action in the Supreme Court of the state of New York against said bankrupt, in which one or more warrants of attachment were issued, and by virtue of which the sheriff of Warren county seized certain property then in Goldberg's possession or under his control, and caused an inventory thereof to be made.The value of the property so attached was fixed by the appraisal at the sum of $1,548.The claim of the plaintiffs amounted to the sum of $335.33 and interest from July 10, 1902.August 1, 1902, the county judge of Warren county authorized and directed the sale of a portion of said property, marked 'Perishable,' which was appraised at more than $500, and a sale thereof was made August 8, 1902.August 7, 1902, a petition in bankruptcy was filed against said Harry Daniel Goldberg, and a subpoena was issued, but he had fled the state; and there was long delay in securing service of the subpoena and procuring an adjudication and the appointment of a trustee of the estate of the bankrupt.

It is claimed, and for the purposes of this motion will not be questioned, that notice of the sale was given as required by law.The fact remains, however, that the sale was attended by Albert Levi, a son of one of the plaintiffs in such attachment suits, by the attorney for the plaintiffs therein and by the officer making the sale, only, and goods inventoried at more than $500, and which were worth that sum were then and there offered for sale and struck off to said Albert Levi for the sum of $50.Under this alleged sale the purchaser undertook to take possession, and ordered the goods shipped.It is now asserted that prior to the filing of the petition in bankruptcy, but within the four months preceding however, the bankrupt had made a bill of sale of a portion of these goods to one Mollie White, and that this fact accounts for the small sum bid, and for which the goods sold.This vendee in the bill of sale had not taken possession of the goods or of any part thereof, nor has she ever asserted any claim or right thereto under such bill of sale, or, if she did, she shortly abandoned such goods and all claim thereto.The evidence shows that it was fraudulent and void both in fact and under the provisions of the bankrupt law.There is some evidence showing collusion, by which the attendance of bidders at the sale was prevented, and some evidence tending to show that much of the property sold to Albert Levi was not perishable or of a perishable nature, and therefore the sale of such part was not authorized by the ex parte order of the county judge.

The Supreme Court, at Special Term, vacated this sale, but the Appellate Division reversed the order and held (seeLevi v. Goldberg,76 A.D. 210, 78 N.Y.Supp. 367):

'A junior attachment creditor is not entitled to have a sale of a portion of the attached property set aside on the ground that the purchase price was inadequate, where it appears that the remainder of the attached property is more than sufficient to satisfy the claims of both the senior and the junior attachment creditors.An order directing a resale of the property in question should not be granted by the Supreme Court of the state of New York after the United States court, in bankruptcy proceedings against the debtor, has assumed jurisdiction over the debtor's property, and has issued an order restraining all parties from taking any further proceeding in the attachment action, and directing that all things should remain in statu quo.The United States court should not be hampered by orders of a state court touching property over which it has assumed jurisdiction in proceedings in bankruptcy.'

And in the opinion said:

'That portion of the order of the federal court restraining all parties from taking any further proceedings in the attachment action, as well as the other provisions of the order providing that all things shall remain in statu quo, seems to have been wholly ignored.That the federal court, in the pending proceedings in bankruptcy, has ample power to determine all matters before the court on the motion for a resale, cannot be doubted.The federal court should not be hampered with orders of a state court touching property over which it has assumed jurisdiction in proceedings in bankruptcy.The order appealed from was therefore, we think, improvidently granted, and should be set aside.'It is claimed on this motion that this court never had jurisdiction to grant the restraining order now sought to be vacated.If this be true, Levi should have appealed from the order to the Circuit Court of Appeals, where the order would undoubtedly have been reversed.The cases cited by the attorney for Albert Levi on this motion have no application whatever.It has been decided by the Supreme Court of the United States that the filing of a petition in bankruptcy is notice to all the world of the pendency of the proceeding; that same is, in effect, an attachment and injunction.Mueller v. Nugent,184 U.S. 1, 14, 22 Sup.Ct. 269, 46 L.Ed. 405.Therefore the sheriff making the sale, had notice of the pendency of the bankruptcy proceeding.They knew that Goldberg was gone, and they knew that more than $500 worth of the bankrupt's property was offered for sale upon a judgment of less than $350, and they knew that this amount of property was struck off to a son of one of the plaintiffs for the sum of $50, and it now appears that they knew some of the property was not perishable, and that its sale was not authorized.When that transaction comes up in this court in an appropriate manner, it will be the duty of the court to set aside

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