In re Hammond

• Decision Date: 22 December 1899
• Docket Number: 1097.
• Citation: 98 F. 845
• Parties: In re HAMMOND
• Court: U.S. District Court — District of Massachusetts

98 F. 845

In re HAMMOND

No. 1097.

United States District Court, D. Massachusetts.

December 22, 1899

William W. Dwyer, for bankrupt.

LOWELL District Judge.

In this case the trustee seeks to obtain certain property held under attachment on mesne process by a creditor of the bankrupt. The property in question belonged to the bankrupt's wife and was used by her in a business which she carried on. She did not file a married woman's certificate, as required by Pub.St.Mass. c. 147, § 11. The property was, therefore subject to attachment as the property of her husband by the husband's creditors. The court has to determine (1) if it has jurisdiction to compel the delivery by the creditor and his agents to the trustee of property to which the trustee is entitled, and (2) if the property here in question passed to the trustee by virtue of the bankrupt act.

1. Has the district court jurisdiction of proceedings to compel an attaching creditor of the bankrupt to deliver up to the trustee property in the creditor's possession to which the trustee is entitled by virtue of the bankrupt act? Before seeking to interpret the provisions of the bankrupt act concerning the jurisdiction of this court, certain general observations should be made. An answer absolutely satisfactory to the question proposed is made impossible by the composition of the existing bankrupt act. This statute as finally passed, is the last revision of a bill which had been before congress and the country about 10 years. The provisions of the original bill, as prepared by Mr. Torrey may have been altogether consistent, though this can hardly be asserted positively of any draft of important and complicated legislation. Whatever was the consistency of the original Torrey bill, the numerous modifications made in it from time to time have introduced into the several sections of the original bill some inconsistencies, so that the problem sometimes presented to the courts in construing the finished act is not, it must frankly be said, the making of a consistent whole out of several parts, but rather the rejection of one of two inharmonious parts at least in accord with the general plan of the whole. A study of the development of the bill through its successive drafts shows clearly that jurisdiction originally conferred in one section has been taken away or enlarged by a modification of that section, without a corresponding amendment of other sections in which the jurisdiction originally conferred was asserted or implied. There is no intention to declare that in this respect the bankrupt act of 1898 is more faulty than other measures of important legislation passed by congress, by the legislature of the states, or by the legislatures of foreign countries. It may be impossible to frame an important legislative measure, where much change by way of compromise is necessary, without the inadvertent introduction of some inconsistencies, especially if the measure has been discussed through a number of years; but it is well that the court should recognize the nature of the problem under consideration, and should not pretend to seek for absolute harmony in the provisions of a statute where absolute harmony is demonstrably nonexistent.

In re Richards, 37 C.C.A. 634, 96 F. 935, 939. The jurisdiction of the district court is supposed to be conferred principally by section 2 of the act, and especially in clauses which read substantially as follows:

'The district courts are hereby invested with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings;' to '(6) bring in and substitute additional persons or parties in proceedings in bankruptcy when necessary for the complete determination of a matter in controversy; (7) cause the estates of bankrupts to be collected, reduced to money and distributed, and determine controversies in relation thereto, except as herein otherwise provided;' '(13) enforce obedience by bankrupts, officers, and other persons to all lawful orders, by fine or imprisonment or fine and imprisonment;' '(15) make such orders, issue such process, and enter such judgments in addition to those specifically provided for as may be necessary for the enforcement of the provisions of this act.'

Section 2 is said to be derived from section 6 of the bankrupt act of 1841 and section 1 of the bankrupt act of 1867, both which last-mentioned sections, it is said, conferred jurisdiction upon the district court for the determination of controversies like that presented in this case. The interpretation thus put upon section 6 of the act 1841 appears to be pretty well established by Ex parte Christy, 3 How. 292, 11 L.Ed. 603. As to the act of 1867, the case is not so clear. See Smith v. Mason, 14 Wall. 419, 430, 20 L.Ed. 748. It may be admitted however, that if section 2 of the act of 1898 stood unaffected by subsequent sections, and by the phrase, 'except as herein otherwise provided,' it might fairly be supposed to give to the district court that jurisdiction over suits brought by the trustee to recover property alleged to belong to the bankrupt's estate which was exercised in this country under acts of 1841 and 1867 by the United States courts. The omission in the existing bankrupt act of any section corresponding to section 8 of the act of 1841 or to section 2 of the act of 1867, if it were merely an omission, probably would not be taken to deprive the district court of so important a part of the jurisdiction conferred upon United States courts by earlier bankrupt acts. The difficulty in the present act, though aggravated by the vagueness of section 2, is created mainly by section 23. Subsection 'a' does not concern immediately the question presented in this case. It limits the jurisdiction of the circuit courts of the United States, and has no direct reference to the district courts, or to the state courts. Its form retains traces, however, of an epoch when the circuit court of appeals did not exist, and when an appeal lay to the circuit court from the district court. So far as I can discover, the circuit court has, under the act of 1898, no jurisdiction whatever over 'proceedings in bankruptcy' in the sense in which these words are evidently used in subsection 'a.' In the earlier drafts of the bill prepared before the establishment of the circuit court of appeals, the circuit court was naturally given an appellate jurisdiction in bankruptcy. See H. R. 3316, 51st Cong., 1st Sess. Secs. 8, 10. Subsection 23b provided that:

'Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt, whose estate is being administered by such trustee might have brought or prosecuted them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant.' In discussion and in decided cases, three constructions have been put upon the limitations imposed by this subsection. The first construction, as it will hereinafter be called, limits the operation of the subsection to the circuit court. By this first construction, therefore, no limitation is imposed upon the jurisdiction given to the district court by section 2. The second construction interprets subsection 'b' as giving to the state courts exclusive jurisdiction, except with the defendent's consent, of all suits concerning the bankrupt's estate brought by the trustee against any person other than the bankrupt. The third construction by way of compromise, gives to the state courts exclusive jurisdiction, except with the defendant's consent, of suits concerning the bankrupt's estate, if they be suits which the bankrupt himself could have brought had he not been a bankrupt, but gives to the district court jurisdiction, at least concurrent, of those suits brought by the trustee against an outside claimant which the bankrupt himself could not have brought; as, for instance, suits brought to set aside an assignment which is avoided by the bankrupt act, or to restrain the sale of property held under an attachment avoided by the act. The history of the development of section 23 from the original provisions of the Torrey bankrupt bill does not furnish an authoritative interpretation of the section as finally passed, but, if the language of the section be ambiguous, the court may properly look to this history for light upon the meaning of that language. In re Richards, 37 C.C.A. 634, 96 F. 935. The eleventh section of the original Torrey bill read as follows:

'Sec. 11. Jurisdiction of State Courts. Controversies between trustees and adverse claimants, concerning the property and rights acquired by the trustee as such, may, with the approval of the courts of bankruptcy in which the proceedings are pending, be litigated in state courts, in the same manner as if such controversies had been contested between the bankrupt, prior to becoming such, and the adverse claimants.'

Under the amended act of 1867 the court of bankruptcy had some authority to direct the trustee to bring suit in the state courts. See Acts 1874, c. 390. Sec. 2; 18 Stat. 178. See also, section 9 of the socalled 'Lowell Bill.' S. 1372, 48th Cong., 1st Sess. In the modified Torrey bill, introduced into the house of representatives, and printed H.R. 3316, 51st Cong., 1st Sess., section 11, above quoted, appears in substantially the same form. It is somewhat difficult to determine whether (1) section 10 of H.R. 3316 was intended to confer upon the court of bankruptcy summary and plenary jurisdiction, while section 11 merely permitted that court to direct that some of the controversies over which it had jurisdiction should be, for reasons of convenience, litigated in the state courts; or (2) that section 10 was intended to give to the court of bankruptcy only summary...