In re Steuer

• Decision Date: 24 November 1900
• Docket Number: 974.
• Citation: 104 F. 976
• Parties: In re STEUER.
• Court: U.S. District Court — District of Massachusetts

104 F. 976

In re STEUER.

No. 974.

United States District Court, D. Massachusetts.

November 24, 1900

Arthur S. Davis, one of the trustees, for himself and other trustees.

Philip Tworoger, for bankrupt.

LOWELL District Judge.

In this case a petition was filed April 20, 1899, by the trustees against the bankrupt, his wife, and the firm of Pangbourn &amp Wilson, asking that they be enjoined from disposing of certain brick alleged to have been transferred by the bankrupt to Pangbourn & Wilson by way of preference voidable under the bankrupt act. The petition was filed with the referee, and thereupon the following proceedings were had Besides the petition above mentioned, another petition was filed on the same date, praying that Pangbourn & Wilson and the bankrupt's wife might be made parties to the bankruptcy proceedings. This was allowed on the same date. Pursuant to the petition, an injunction was issued on the same date, with subpoenas to the several parties directing them to appear before the referee on May 8th. It is stated and apparently is not contested, that service upon these subpoenas was waived. On June 7th an agreement was made between the trustees and counsel for the respondents that the injunction should be dissolved, 'cash security having been given for the value of the brick mentioned in said injunction; the petition to proceed to a hearing upon the merits. ' Evidence was taken, and one or more hearings were had before the referee, at which counsel for the respondents argued their case without making any question of the referee's jurisdiction. On January 12, 1900, the referee rendered a decree declaring that the transfer of the brick was a voidable preference, 'and that the trustees recover said property, or any cash security deposited upon the dissolution of the injunction, from the respondents Pangbourn & Wilson, as a part of said estate; and that the said respondents deliver the same to the trustee. ' The respondents thereupon seasonably filed a petition for review, alleging that 'a decision was rendered in the said matter in favor of the petitioners; that the said decision is erroneous; wherefore they pray that the said matter may be certified for review to the district court, and that a summary of the evidence in the said case may be submitted to the said court. ' The parts of the referee's certificate material to the question of jurisdiction are as follows:

'I, James M. Olmstead, one of the referees of said court in bankruptcy, do hereby certify that in the course of the proceedings in said cause before me the following question arose pertinent to the said proceedings, to wit: This was a petition under section 60b of the bankruptcy act, to recover seventy-five thousand building bricks transferred by the bankrupt to the respondents William E. Pangbourn and William W. Wilson by bill of sale dated March 3, 1899. The petition in bankruptcy was filed on the 28th day of March, 1899, and this intervening petition was filed on the 20th day of April, 1899. That a petition is the proper form of proceeding under which to recover a preference or fraudulent conveyance, where the respondents are creditors, and hence before the court as parties, is held in the cases of (citing cases). ' The facts of the case are then set forth at some length. 'I accordingly entered a decree that the prayer of the petition should be granted, that the bricks be declared a preference, and that the trustees recover the cash security which was deposited upon the dissolution of the injunction. And the said question is certified to the judge for his opinion thereon.'

At the hearing before me the question of the referee's jurisdiction to make the order above stated was raised and discussed. The defendants object to the jurisdiction of the court on three grounds:

1. Because this court has no jurisdiction over suits brought by a trustee in bankruptcy to set aside a preference made before the institution of proceedings in bankruptcy by the bankrupt to third parties. That this contention of the defendants is well founded is settled by Bardes v. Bank, 178 U.S. 524, 20 Sup.Ct. 1000, 44 L.Ed. 1175, unless in the case at bar the defendants have consented to the jurisdiction. With the defendants' consent, this court has jurisdiction; without consent, it has none. No case has been referred to in which the court has considered what kind and amount of consent on the defendants' part will give jurisdiction; but in any reasonable view of the requirement, the acts of the defendants in this case amount to the consent required by section 23b of the bankrupt act, and upon this ground the defendants' first objection above stated must be overruled.

2. The defendants further object that this court has no jurisdiction to set aside a preference, even by the defendants' consent, unless the proceedings are by way of plenary suit. In Bardes v. Bank, above cited, it was said at page 532, 178 U.S.,page 1003, 20 Sup.Ct.,and page 1180, 44 L.Ed.:

'It was also repeatedly held by this court that the right of an assignee in bankruptcy to assert a title in property transferred by the bankrupt before the bankruptcy to a third person, who now claimed it adversely to the assignee, could only be enforced by a plenary suit, at law or in equity, under the second section of the act of 1867; and not by summary proceedings under the first section thereof, notwithstanding the declaration in that section that the jurisdiction in bankruptcy should extend 'to the collection of all the assets of the bankrupt,' and 'to all acts, matters, and things to be done under and in virtue of the bankruptcy' until the close of the proceedings in bankruptcy. Smith v. Mason (1871) 14 Wall. 419, 20 L.Ed. 748; Marshall v. Knox (1872) 16 Wall. 551, 557, 21 L.Ed. 481; Eyster v. Gaff (1875) 91 U.S. 521, 525, 23 L.Ed. 403.'

The above reaffirmance by the supreme court of the cases just cited must be held to overrule anything to the contrary found in certain decisions of that court later than Smith v. Mason and Marshall v. Knox, though considerably earlier than Bardes v. Bank. In Stickney v. Wilt, 23 Wall. 150, 23 L.Ed. 50, a petition in bankruptcy was brought to determine the rights of one claiming a lien on property of the bankrupt. Mr. Justice Clifford said:

'Rights of property were claimed in these lands by the appellee, and the suit in this case was commenced in the district court contesting that claim, which is plainly a subject-matter cognizable under that provision; nor is it any argument against that theory that the first pleading in the district court is, in form, a petition, as suits at law and in equity, in many jurisdictions, are commenced in that form of pleading. Beyond all doubt the petition contains every requisite of a good bill in equity, whether the pleading

...