In re J.W. Zeigler Co., Inc.

• Decision Date: 19 July 1911
• Docket Number: 2,629.
• Citation: 189 F. 259
• Parties: In re J. W. ZEIGLER CO., Inc.
• Court: U.S. District Court — District of Connecticut

189 F. 259

In re J. W. ZEIGLER CO., Inc.

No. 2,629.

United States District Court, D. Connecticut.

July 19, 1911

Shapiro & Shapiro, for federal receiver.

De Forest & Klein, for state receiver.

PLATT District Judge.

The motion is for an attachment in contempt against Nathan C Herz, as receiver of the J. W. Zeigler Company, Incorporated under a state court appointment. It is not directed against him as an individual, and this distinction must be constantly kept in mind while seeking a correct answer to the motion. The order of this court was that its receiver 'should take charge of and hold' the estate of the alleged bankrupt corporation. The federal receiver was appointed very shortly prior to a previously arranged and advertised sale of the bulk of the corporation's estate. He now reports that on May 24th (the day of the sale under the state court order) he personally informed Mr. Herz, as state receiver, of our order, and that said Herz, 'with full knowledge and notice thereof, refused to obey said order and refused to deliver possession of the alleged bankrupt's estate, and later in the day sold a greater portion of said estate. ' The order under which our receiver acted might have been made more explicit, definite, and comprehensive, but, if Mr. Herz had no other excuse than the form of the order, his answer would be lame and impotent. He knew what the order meant, and deliberately prevented its execution under advice of counsel. When the federal receiver brought home to the state receiver full knowledge of our order, it was the plain duty of Mr Herz to turn over at once to our receiver all property belonging to the alleged bankrupt which was in his possession, unless he was holding it under an honest adverse claim. The counsel who advised him assert, and seem to believe, that his position as state receiver was a stronger one than if he had merely been holding the same as an individual with honestly entertained adverse rights. They insist that he would have been in contempt of the state court, if he had surrendered the property without first obtaining the permission of the court so to do.

As I understand the law, the jurisdiction of this court when our order was passed was exclusive, and its order was therefore paramount. The state court itself was bound to obey it, and obedience thereto by the receiver could in no sense have been treated by that court as a contempt of its own order. The argument of counsel upon this aspect of the case is not persuasive. In a general way, therefore, it is clear to me that under the law Mr. Herz, as state receiver, was hindering and obstructing an order of this court, which was at the moment the exclusive and dominating order which both he and the court under which he was acting were bound to obey.

There is, however, in the case a grave question of comity which may perhaps go deeper than a simple rule of etiquette. In ordinary cases the state and federal courts exercising jurisdiction over the same territory are as a matter of theory foreign to each other. This creates a unique situation which has grown out of the peculiar internal organization of our country, and that we live together under it as happily as we do deserves to be ranked as one of the great wonders of the world.

There is a suggestion in these two classes of courts of the family. There are bound to be differences of opinion, but it is expected that the strength of the family tie...