In re Hollins
| Decision Date | 11 January 1916 |
| Docket Number | 55. |
| Citation | 229 F. 349 |
| Parties | In re HOLLINS et al. |
| Court | U.S. Court of Appeals — Second Circuit |
Beekman Menken & Griscom, of New York City (William C. Armstrong, of New York City, of counsel), for petitioners and appellants.
Leonard B. Smith, of New York City, for respondents.
Before LACOMBE, WARD, and ROGERS, Circuit Judges.
This case presents an interesting question relating to the marshalling of securities. The respondents, Crossman & Sielcken, pledged certain securities with the firm of H. B Hollins & Co. before the alleged bankruptcy of the latter who repledged them to the Chase National Bank. At the same time the securities of the respondents were pledged, H. B. Hollins & Co. pledged with the bank certain securities of their own. Subsequently the respondents paid the bank what was due from H. B. Hollins & Co., and all the securities were turned over to them. The present action is brought to determine whether H. B. Hollins & Co. have a right to require that all the securities which the bank held should contribute pro rata to the payment of the debt due from them to the bank, or whether the respondents had the right to apply in the first instance the securities which belonged to H. B. Hollins & Co. We are not, however, at liberty to decide the question upon the merits, as we think the bankruptcy court was without jurisdiction to hear and determine the matter.
It appears that on November 13, 1913, a petition in bankruptcy was filed against the firm of H. B. Hollins & Co., and that on that day a receiver was appointed. On November 21, 1913, the firm of Crossman & Sielcken, the respondents herein, presented a petition, to the District Court wherein they sought to obtain an order directing the receiver to consent to the purchase by the firm from the Chase National Bank of certain notes having a face value of $950,000, drawn to the order of the bank and executed by H. B. Hollins & Co., and to the delivery by the bank to the firm of Crossman & Sielcken upon the purchase of the aforesaid notes of all collateral which had been deposited by the firm of H. B. Hollins & Co. with the bank, consisting of $1,073,000 New York City bonds, belonging to Crossman & Sielcken and by them pledged to H. B. Hollins & Co., together with certain securities which belonged to H. B. Hollins & Co., consisting of 50 shares of the stock of the Northern Pacific Railroad Company, and certain bonds of the St. Louis & San Francisco Railroad of the New Orleans, Texas & Mexico Division. On November 22, 1913, the above petition was granted, and in pursuance thereof Crossman & Sielcken paid the bank the sum of $962,439.69, and the securities which had been pledged to the bank by H. B. Hollins & Co. were then turned over to Crossman & Sielcken and by them were subsequently sold. On June 29, 1914, an order was made by the court confirming an offer of composition made by the firm of H. B. Hollins & Co. to its creditors. On April 21, 1915, H. B. Hollins & Co. filed a petition demanding that the firm of Crossman & Sielcken be directed to pay over forthwith to the petitioners or to the receiver the sum of $4,860.83, the proceeds then remaining in their hands of the securities turned over by the bank and which at the time were the property of H. B. Hollins & Co. On May 12, 1915, that petition was denied. On May 24, 1915, a petition for appeal was presented to the District Court and allowed.
The United States District Courts are by the Bankruptcy Act created into bankruptcy courts, and their jurisdiction as such is limited. All the courts of the United States are of limited jurisdiction. They possess only such powers as are either expressly or by necessary implication conferred upon them. Kempe's Lessee v. Kennedy, 5 Cranch, 173 3 L.Ed. 70 (1809). Their jurisdiction and powers are derived from the Constitution and the acts of Congress passed in pursuance thereof. Rice v. Minnesota, etc., R. Co., 1 Black, 358, 17 L.Ed. 147 (1861). It is possible under the Bankruptcy Act for a bankrupt to take his estate out of the bankruptcy...
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