In re King

• Decision Date: 29 June 1935
• Citation: 11 F. Supp. 351
• Parties: In re KING, Referee.
• Court: U.S. District Court — Western District of Tennessee

11 F. Supp. 351

In re KING, Referee.

District Court, W. D. Tennessee.

June 29, 1935.

MARTIN, District Judge.

(1) An order entered on May 19, 1933, by the predecessor judge of this court, directing the purchase by the United States District Court for the Western Division of the Western District of Tennessee from C. H. King, referee in bankruptcy for the Western Division of the Western District of Tennessee, of the office furniture, fixtures, equipment, and law library owned by the said C. H. King, individually, for the sum of $5,173, upon the terms of payment described in said order with title retained in the seller, is declared to be contrary to law, null and void; and C. H. King, referee in bankruptcy, is directed to restore to each of the bankrupt estates all moneys drawn therefrom and paid to himself by virtue of said order, and the title to the office furniture, fixtures, equipment, and law library attempted to be sold to the United States District Court by said C. H. King, pursuant to said order, will remain in the seller, C. H. King.

Said void order is as follows:

"Order Relating to Referee's Expense Account, Office Furniture, Fixtures and Equipment and Law Library.

"It having been brought to the attention of the Court that in various districts over the United States the office furniture, fixtures and equipment and law library of the offices of the Referees in Bankruptcy are acquired and maintained through the Referee's Expense Account as the property of the District Court for the district where such Referee's office is located, and the Court having considered the feasibility and advisability of establishing such a practice in the Referee's office for the Western Division of the Western District of Tennessee, and having been furnished by C. H. King, the present Referee in Bankruptcy for said Western Division of the Western District of Tennessee, with a list or inventory of the office furniture, fixtures and equipment and law library now belonging to and used by him in his office as Referee; and an appraisal having been made of the present value of such office furniture, fixtures and equipment and law library by three reputable practicing members of the bar, showing the value of all of the same to be $5,173.00, and the said C. H. King, Referee in Bankruptcy of said district having offered to sell said office furniture, fixtures and equipment and law library as shown upon said inventory to the District Court at said appraised value, and the Court being of the opinion that it is for the best interest of creditors and other interested parties in bankruptcy proceedings that the same should be acquired as the property of the United States District Court for the Western Division of the Western District of Tennessee at said price and upon the terms hereinafter stated, and should thereafter be maintained as hereinafter provided;

"It is therefore ordered:

"That the Referee in Bankruptcy for the Western Division of the Western District of Tennessee at all times maintain a reasonable fund to be known as the Referee's Expense Account, which fund shall be accumulated by the Referee by deducting and taking from each asset case in bankruptcy a reasonable sum, depending upon the assets in each case, to cover the Referee's expenses, and said fund shall be carried on deposit at some bank to be selected by the Referee in Bankruptcy and all disbursements shall be made therefrom by checks signed by the Referee, the same as heretofore has been the practice in said district, and from this fund the Referee shall pay the reasonable and necessary operating expenses in his office, including rent, lights, telephone and telephone calls, stationery, clerk hire, notices to creditors, printing, book binding, multigraphing, office supplies and all other ordinary and reasonable operating expenses of such office, and in addition out of said fund there shall be purchased and maintained the office furniture, fixtures, equipment and law library of said office as the property of the United States District Court for the Western Division of the Western District of Tennessee;

"And it is further ordered:

"That the United States District Court for the Western Division of the Western District of Tennessee acquire from C. H. King, the present Referee in Bankruptcy, the office furniture, fixtures, equipment and law library now located in his office as Referee in Bankruptcy as shown upon the inventory above mentioned and attached hereto at and for said sum of $5,173.00, and that he be paid therefor by checks drawn upon said Referee's Expense Account by himself or any successor in office, and that for this purpose he be paid an initial check out of the said expense account in the sum of $1,000.00, and that he thereafter be paid a check on said expense account monthly for not less than $100.00 until the total amount of said appraised value has been paid in full, and that the title to said property to be retained and remain in said C. H. King until the same is fully paid for, but the possession thereof to immediately pass to the United States District Court for the Western Division of the Western District of Tennessee;

"And it is further ordered:

"That said office furniture, fixtures, equipment and law library of the Referee's office shall be in the custody and charge of the Referee in Bankruptcy for the Western Division of the Western District of Tennessee, and that in the maintenance thereof in the future the Referee for said division and district shall out of said expense account purchase such additional office furniture, fixtures, equipment and law books as he may deem advisable and necessary for said office and may repair, exchange in the purchase of new, or dispose of to the best possible advantage any office furniture, fixtures, equipment and law books that may become damaged, worn cat or obsolete.

"Enter this May 19th, 1933 "H. B. Anderson, Judge."

The court here lists four typewritten pages of office furniture, fixtures and equipment, with appraisement opposite each item.

This court finds no authority, warrant, or justification in law for the entry of the foregoing order, and is constrained to declare and hold the said order null and void. A United States District Court cannot acquire and hold property at the expense of bankrupt estates. The arbitrary taxation of costs against bankrupt estates is not consistent with either the letter or the spirit of the law.

It is not conceivable to this court that it is "for the best interest of creditors and other interested parties in bankruptcy proceedings" that the referee in bankruptcy be directed to "at all times maintain a reasonable fund to be known as the Referee's Expense Account, which fund shall be accumulated by the Referee by deducting and taking from each asset case in bankruptcy a reasonable sum, depending upon the assets in each case, to cover the Referee's expenses; and out of said fund to purchase and maintain, as the property of the United States District Court, office furniture, fixtures, equipment and law library for the Referee's office." What possible benefit could be derived by a creditor from the referee's taking from the assets of a bankrupt estate in which the creditor has filed a claim an allowance to apply on the purchase, for the referee, of a glass window ventilator guard, an iron window guard, a glass top on a table, a red leather lounging chair (at a cost of $75), linoleum for the floor, a law book on Civil Procedure in a state court, another on Personal Injuries, a set of American Law Reports, vols. 1 to 74 inclusive, valued at $555, and several cuspidors? From the inventory listed, it is evident that the referee sold the court such personal office furniture, fixtures, equipment, and law books as he happened to possess at the time of the sale to the court.

But even more inconceivable does the validity of the order become, when the referee, by the provisions of the order, is permitted to pay himself individually for law books, office furniture, fixtures, and equipment transferred to the court on terms providing for an initial partial payment of $1,000, the balance to be paid in monthly installments of not less than $100 each, until the total amount of the consideration of $5,173 is paid, with title reserved in the referee, individually, until he has been paid in full out of future estates in bankruptcy by deducting and taking from each asset case a "reasonable sum" to be determined by himself.

By what possible warrant of law could a District Judge authorize a referee in bankruptcy to purchase, out of an expense account so arbitrarily maintained, "such additional office furniture, fixtures, equipment and law books as he may deem advisable and necessary" and "repair, exchange in the purchase of new, or dispose of to the best possible advantage any office furniture, fixtures, equipment and law books that may become damaged, worn out or obsolete?"

Even were it lawful for a United States District Court, as an arm of the federal government, to acquire and own property in its own right, certainly it would be contrary to the well-established and recognized care with which the United States of America conserves public property to vest in any official, as the void order vests in the referee in bankruptcy, such unbridled latitude to deal with public property by barter and exchange.

It is the opinion of this court that the title to public property, consisting of law books, furniture, fixtures, and equipment furnished by the Department of Justice pursuant to appropriation of Congress to a United States Court, for use in the performance of judicial duty, is not and cannot be vested in the court. The title to all such property remains vested in the United States of America. The court, as an arm of the government, can own nothing in its own right. The order under consideration purports to acquire property for the United States District Court in its own right and...