In re Mueller

• Decision Date: 07 February 1905
• Docket Number: 1,369.
• Parties: In re MUELLER.
• Court: U.S. Court of Appeals — Sixth Circuit

135 F. 711

In re MUELLER.

No. 1,369.

United States Court of Appeals, Sixth Circuit.

February 7, 1905

Alfred Selligman, for petitioner.

O. A Wehle, for respondent.

Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

LURTON Circuit Judge.

This is a petition filed by A. E. Mueller, trustee in bankruptcy of the partnership styled L. DeWitt & Sons, and of the individuals composing same to review an order of the District Court allowing a certain claim in favor of the German Insurance Bank of Louisville, Ky., against the individual estate of Mary A. DeWitt, one of the members of the bankrupt firm. The matter comes on now to be heard upon a motion to dismiss the petition for review upon the ground that the order or judgment sought to be reviewed was a judgment allowing a debt or claim of $500 or over, and therefore not subject to be reviewed under the provisions of section 24b of the bankrupt act, but reviewable only by an appeal under section 25a, Act July 1, 1898, c. 541, 30 Stat. 553 (U.S.Comp.St. 1901, p. 3432). In Holden v. Stratton, 191 U.S. 115, 24 Sup.Ct. 45, 48 L.Ed. 116, it is said:

'The distinction between steps in bankruptcy proceedings proper and controversies arising out of the settlement of the estate of bankrupts is recognized in sections 23, 24 and 25 of the present act, and the provisions as to revision in matter of law and appeals were framed and must be construed in view of that distinction.'

There is no reason to suppose that one may elect whether he will bring up the order or judgment which he wishes to have reversed by appeal or by a petition for review. These remedies are exclusive of each other. That which may come here by appeal cannot come here for review; otherwise the distinction which the act recognizes will be ignored. Neither is there any reason for supposing that an order or judgment may be appealed when questions of fact are to be considered and reviewed upon petition if only a question of law is involved. The distinction between cases appealable and cases reviewable lies deeper, and turns upon the character of case or question. Cases which are appealable are of two classes:

1. There is the broad appellate jurisdiction conferred by section 6 of the Court of Appeals Act of March 3, 1891, c 517, 26 Stat. 828 (U.S.Comp.St. 1901, p. 549), by appeal or writ of error, from the final decisions of the District Court 'in all cases other than those provided for in the preceding section of this act. ' That the decree or judgment is one arising in a controversy relating to the settlement of the bankrupt's estate does not make it any of the less appealable or reviewable by writ of error. Upon the contrary, section 24a provides as follows:

'The Supreme Court of the United States, the Circuit Courts of Appeals of the United States, and the Supreme Courts of the territories, in vacation in chambers and during their respective terms, as now or as they may be hereafter held, are hereby invested with appellate jurisdiction of controversies arising in bankruptcy proceedings from the courts of bankruptcy from which they have appellate jurisdiciton in other cases. ' U.S. Comp. St. 1901, p. 3431.

That neither the fifth nor sixth section of the act of 1891 (26 Stat. 827, 828 (U.S.Comp.St. 1901, pp. 549, 550) was changed by the bankrupt act was expressly decided in Bardes v. Hawarden Bank, 175 U.S. 526, 20 Sup.Ct. 196, 44 L.Ed. 262, and Elliott v. Toeppner, 187 U.S. 327, 334, 23 Sup.Ct. 133, 47 L.Ed. 200. By 'controversies arising in bankruptcy proceedings' is meant those independent or plenary suits which concern the bankrupt's estate, and arise by intervention or otherwise between the trustee representing the bankrupt's estate and claimants asserting some right or interest adverse to the bankrupt or his general creditors. An illustration of such a controversy is found in Hewit v. Berlin Machine Works, 194 U.S. 296, 24 Sup.Ct. 690, 48 L.Ed. 986, wherein title to certain chattels in the hands of the trustee was asserted under an intervening petition. Another is found in Dolle v. Cassell (decided by this court January, 1905) 135 F. 52, wherein a vendor under a conditional sale of chattels sought to recover the articles under an unrecorded agreement for the retention of title until payment of the purchase price. Still another is found in the case entitled In re First National Bank of Canton, Ohio (decided by this court at its January session) 135 F. 62, in which a creditor of the bankrupt sought to enforce a mortgage lien upon a stock of merchandise belonging to the bankrupt, which stock had come to the possession of the bankrupt's trustee. The distinction between a 'controversy arising in bankruptcy' and 'proceedings in bankruptcy' is very sharply drawn by Judge Baker, speaking for the Seventh Circuit Court of Appeals, in the case of In re Friend et al., 134 F. 778. The learned judge there said:

'That section 23 establishes a clear distinction between 'proceedings in bankruptcy' and 'controversies at law and in equity arising in the course of bankruptcy proceedings'; the former, broadly speaking, covering questions between the alleged bankrupt and his creditors as such, commencing with the petition for adjudication, ending with the discharge, and including matters of administration generally, such as appointments of receivers and trustees, sales, exemption, allowances, and the like, to be disposed of summarily, all of which naturally occur in the settlement of the estate; and the latter, broadly speaking, involving questions between the trustee, representing the bankrupt and his creditors, on the one side, and adverse claimants on the other, concerning property in the possession of the trustee or of the claimants, to be litigated in appropriate plenary suits, and not affecting directly the administrative orders and judgments, but only the question of the extent of the estate. That the same distinction is maintained in section 24a on the one hand, and sections 24b and 25a on the other.'

2. But this general appellate jurisdiction conferred by 24a does not extend to certain specified proceedings. Thus section 25a provides for 'appeals, as in equity cases,' if taken within 10 days: (1) From a judgment adjudging or refusing to adjudge the defendant a bankrupt; (2) from a judgment granting or denying a discharge; (3) from a judgment allowing or rejecting a debt or claim of $500 or over. The time within which a writ of error may be taken out or an appeal prayed from a judgment or decree of the District Court in 'a controversy arising in bankruptcy,' such as is referred to in section 24a, is the time prescribed by the eleventh section of the judiciary act of 1891 (26 Stat. 829 (U.S.Comp.St. 1901, p. 552)), namely, six months. But no appeal can be taken in one of the cases specifically mentioned in this section unless taken within ten days. This short limitation was doubtless imposed because of the peculiar nature of the judgments mentioned, and the evil rights of delay upon the rights of other parties whose rights would be effected. But, whatever the reason, there is no way in which a judgment of the kind described by section 25a can be reviewed but by an appeal, and an appeal sued out within ten days. But when the judgment is upon the verdict of a jury, under section 19 of the bankrupt law (30 Stat. 551 (U.S.Comp.St. 1901, p. 3429)) it cannot be revised under an appeal as in an equity case, but only by writ of error. Elliott v. Toeppner, 187 U.S. 327, 23 Sup.Ct. 133 47 L.Ed. 200. The doubt as to what kinds of cases are appealable under the provisions of this section turns upon the meaning to be attached to the words 'a debt or claim.' That 'claim,' as used here, means a 'debt,' is settled by Holden v. Stratton, 191 U.S. 115, 118, 24 Sup.Ct. 45, 48 L.Ed. 116, where it was said by Chief Justice Fuller that, 'while the word 'claim' is used in its signification of the demand or assertion of a right in subdivision 11 of section 2, in respect of all claims of bankrupts to their exemptions, it is also used in many parts of the act, and, as we think, in section 25, as referring to debts * * * presented for proof against estates in bankruptcy. ' But where the appeal is from a judgment allowing or disallowing a debt, any question of lien or priority of the debt, if allowed, may be considered upon the appeal as an incident of the debt. Cunningham v. German Ins. Bank, 102 F. 932, 43 C.C.A. 377; Courier-Journal Co. v. Schafer-Brewing Co., 101 F. 699, 41 C.C.A. 614; Hutchinson v. Otis, 190 U.S. 552, 23 Sup.Ct. 778, 47 L.Ed. 1179. If, however, the debt or claim is not disputed, and the only question sought to be reviewed is one of the rank or priority of the claim by reason of its character or some lien in its favor against property of the bankrupt, it has been held by the Circuit Court of Appeals for the Seventh Circuit that, so far as the order or decree depended upon a question of law, it could be reviewed upon a petition for review. In re Rouse Hazard Co., 91 F. 96, 33 C.C.A. 356; In re Richards, 96 F. 935, 37 C.C.A. 634. This ruling we followed in Courier-Journal Co. v. Meyer Brewing Co., 101 F. 699, 41 C.C.A. 614. In ...