In re United Button Co.

• Decision Date: 17 September 1904
• Citation: 137 F. 668
• Parties: In re UNITED BUTTON CO.
• Court: U.S. District Court — District of Delaware

137 F. 668

In re UNITED BUTTON CO.

United States District Court, D. Delaware.

September 17, 1904

Bowers & Sands, Latson & Bonynge, Philbin, Beekman & Menken, Sherman & Sterling, and Thomas F. Bayard, for the motion.

Benjamin Nields and James, Schell & Elkus, opposed.

BRADFORD District Judge.

This is an application for the removal of the Security Trust and Safe Deposit Company, as receiver in bankruptcy of the United Button Company, adjudged bankrupt by this court, and for the transfer of the proceedings in bankruptcy to the District court for the Southern District of New York and the relinquishment by this court of all jurisdiction of the case. The bankrupt is a manufacturing corporation organized under the laws of Delaware, and since its incorporation, in 1902, and until the institution of bankruptcy proceedings as hereinafter stated, was engaged in the manufacture and sale of buttons. It was the owner of three manufacturing plants situated in Massachusetts, at Boston, Easthampton and Springfield. It did not manufacture outside of Massachusetts. As created and existing under the laws of Delaware, that State was its domicile. The bankrupt had and maintained business offices in the city of New York where it contracted principally, if not wholly, for the manufacture and sale of buttons. In that city it also had its warerooms, where a large amount of its manufactured produce was kept. In Chicago it had a branch office, where samples of its buttons were kept; but orders received in that city were forwarded to the New York office, where they were filled. The manufacturing plants of the bankrupt were operated under orders or directions from the New York office. A petition in involuntary bankruptcy was filed in this court August 4 1904, against the bankrupt, and it was duly adjudged bankrupt August 10th, 1904. On the latter day, the Security Trust and Safe Deposit Company, a corporation of Delaware, was appointed receiver of the property and effects of the bankrupt and duly qualified on the next following day. An involuntary petition was also filed August 6, 1904, against the bankrupt in the District Court for the Southern District of New York, and on the same day that court made an order appointing Peter Alexander receiver, purporting to confer on him power to continue the business of the bankrupt in its several branches. Alexander forthwith gave bond as required and on the day the order was made for his appointment took actual possession of the assets of the bankrupt located in the city of New York. The District Court for the District of Massachusetts made an order August 8, 1904, ancillary in its purpose or nature, purporting to give full force and effect throughout Massachusetts to the appointment of Alexander as receiver of the bankrupt. On the next following day Alexander, acting ostensibly as receiver, took possession of the several manufacturing plants of the bankrupt. An order ancillary in its purpose or nature was made August 12, 1904, by the District Court for the Northern Division of the Northern District of Illinois of the same character as the order made by the District Court in Massachusetts, and on the same day Alexander, acting ostensibly as receiver, took possession of all the assets of the bankrupt within the territorial jurisdiction of the District Court in Illinois, granting the order. A petition in involuntary bankruptcy was also filed August 13, 1904, in the District Court for the District of Massachusetts, against the bankrupt, and two days thereafter an application was made to that court for the appointment of a receiver in bankruptcy. It appears, however, that the court of Massachusetts did not make such appointment, and further, that the proceedings in Massachusetts have since been dismissed. The Security Trust and Safe Deposit Company, as receiver appointed by this court, applied August 17, 1904, to the District Court for the Southern District of New York for an order staying all proceedings in that court against the bankrupt and directing Alexander to deliver all its assets within that jurisdiction to it, the Delaware receiver, and seeking its own appointment or recognition as ancillary receiver throughout the southern district of New York. Judge Thomas granted, August 30, 1904, the above application of the Delaware receiver, saying, among other things, in his opinion (12 Am.Bankr.Rep. 767, 132 F. 378):

'The District Court of Delaware first took jurisdiction; it adjudicated the corporation bankrupt; it is the court within the district of the domicile. These facts severally vest it with exclusive jurisdiction to proceed with the administration. * * * These views lead to the conclusion that the proceedings in this court should be stayed, and that the corporation appointed receiver in the Delaware district should be appointed ancillary receiver in this district, and that the receiver heretofore appointed in these proceedings should transfer to such other receiver all property of the bankrupt within his control, upon payment of all expenses of administration in this district, so far as it has proceeded.'

Accordingly the same judge, September 1, 1904, ordered that all proceedings under the involuntary petition filed in the southern district of New York against the bankrupt be stayed; that the petitioning creditors in that petition be restrained from taking any further proceedings under it; that the Delaware receiver be appointed ancillary receiver of the assets of the bankrupt in the southern district of New York with authority to take into its possession and custody all the property of the bankrupt situated in that district, 'subject to the payment of the bankrupt situated in that district, 'subject to the payment of all indebtedness incurred properly by the receiver, Alexander, accordingly as this court shall determine and allow'; that Alexander forthwith surrender and turn over to the Delaware receiver all the assets of the bankrupt then in his possession or under his control, 'subject to the audit and allowance by this court of his accounts, but said Alexander, receiver, shall retain from the moneys in his hands the sum of ten thousand dollars ($10,000) as a fund to meet legal expenses, the balance thereafter to be paid to the ancillary receiver'; and that Alexander should forthwith 'prepare and file his accounts as receiver herein, setting forth all expenses of administration in the southern district of New York so far as it has proceeded, and upon the allowance of such account by this court the same shall be a lien on all property delivered to the ancillary receiver pursuant to this order.' On the same day Judge Holt, in the District Court for the Southern District of New York, on the application of the petitioning creditors in the bankruptcy proceedings in that district, ordered that the Delaware receiver show cause September 14, 1904, why all proceedings under and by virtue of the order of that court made by Judge Thomas should not be stayed pending the presentation to and determination by this court on an application for an order removing the Security Trust and Safe Deposit Company as receiver, and staying all proceedings by virtue of its appointment and relinquishing the jurisdiction of this court in the premises to the District Court for the Southern District of New York. The foregoing proceedings resulted in the filing, September 7, 1904, of the...