In re Walker Grain Co.

• Decision Date: 24 January 1925
• Docket Number: 4407.,No. 4346,4406,4346
• Citation: 3 F.2d 872
• Parties: In re WALKER GRAIN CO. WILKINSON v. WALKER (two cases). WALKER v. WILKINSON.
• Court: U.S. Court of Appeals — Fifth Circuit

3 F.2d 872 (1925)

In re WALKER GRAIN CO.

WILKINSON v. WALKER (two cases).

WALKER v. WILKINSON.

Nos. 4346, 4406, 4407.

Circuit Court of Appeals, Fifth Circuit.

January 24, 1925.

Stanley Boykin and H. C. Ray, both of Fort Worth, Tex. (Geo. M. Conner and

Capps, Cantey, Hanger & Short, all of Fort Worth, Tex., on the brief), for petitioner, defendant in error, and plaintiff in error on cross-writ of error.

J. A. Templeton, of Fort Worth, Tex., W. E. Spell, of Waco, Tex., Clay Cooke, of Fort Worth, Tex., and G. A. Stultz, of Wichita, Kan., for respondent, plaintiff in error, and defendant in error on cross-writ of error.

Before WALKER and BRYAN, Circuit Judges, and DAWKINS, District Judge.

BRYAN, Circuit Judge.

These suits arise out of bankruptcy proceedings instituted against the Walker Grain Company.

No. 4346 is a petition to superintend and revise an order of the District Court refusing to enforce a summary order theretofore issued by it, which required the respondent, J. L. Walker, to pay over to the trustee of the bankrupt the sum of $5,290, which he had collected from the bankrupt and appropriated to his own use as salary during the period intervening the filing of the petition in bankruptcy and the adjudication.

No. 4406 is a plenary suit by the trustee against J. L. Walker as surety on a bond, dated October 7, 1918, for $25,000, payable to the United States for the benefit of petitioning creditors, and conditioned to deliver to W. W. Wilkinson, receiver, all the property, funds, and effects of which the bankrupt was at that time possessed, or which might come into its possession at any time pending hearing by the District Court. The referee on October 7, 1918, entered an order appointing Wilkinson receiver, and authorizing him to take immediate possession of the assets of the bankrupt, and this order was on November 26, 1918, in all things confirmed by the District Judge. However, the bankrupt remained in possession of its property, by reason of the giving of the bond above mentioned and another bond on appeal to this court, until November 22, 1919, when the Walker Grain Company was adjudicated a bankrupt, after which the receiver, Wilkinson, was appointed trustee in bankruptcy.

The petition in the suit on the bond (No. 4406) alleged that, pending the hearing before the District Court on November 26, 1918, the bankrupt became possessed of money and property of the value of $37,000, which it had never delivered to the receiver or any officer of the bankrupt court. The petition prayed judgment for the full amount of the bond. Walker in his answer denied the averments of the petition and demanded strict proof, and pleaded further that whatever amounts of money the bankrupt failed to pay over to the receiver or the trustee had been properly paid out to carry on its business, and that none of the funds received by it had been wrongfully converted, used, or appropriated. At the close of the evidence each of the parties moved for a directed verdict in his favor; the trustee for the full amount of the bond, and the defendant Walker that the trustee take nothing by his suit. Thereupon the court found that the bankrupt had collected $25,812.99 from the assets of the bankrupt estate, which it had failed to pay over to the receiver or the trustee. From this amount the court deducted $14,065.52, of which $5,290 was allowed as salary to the defendant Walker, and the balance as reasonable and necessary expenses for the hire of clerks and employees, and for the preservation of the bankrupt estate.

In Walker v. Wilkinson, 295 F. 123, this court affirmed the order of the District Court requiring Walker to pay to the trustee in bankruptcy the sum of money involved in the petition to superintend and revise. Upon the record as presented to us in this case, it is not claimed that Walker is unable to comply with that order. It therefore was the duty of the District Judge to give effect to the mandate of this court. Illinois v. Ill. Central Railroad Co., 184 U. S. 77, 22 S. Ct. 300, 46 L. Ed. 440; Farmers' & Mechanics' National Bank v. Wilkinson, Trustee, 45 S. Ct. 144, 69 L. Ed. ___, decided by the Supreme Court January 5, 1925.

In No. 4406 the contentions are: (1) That the court was without jurisdiction, because there was no diversity of citizenship, and no law of the United States requiring or authorizing the taking or giving of the bond sued on; (2) that, inasmuch as the bond was made payable to the United States for the benefit of petitioning creditors, suit could not be brought thereon by the trustee, who is neither the payee nor beneficiary therein named; (3) that the condition of the bond required the delivery of the assets of the bankrupt estate only upon an order to that effect being made by the district court, whereas the court, instead of requiring all of such assets to be delivered to the trustee, allowed a part thereof to be applied to salaries and expenses, and further that the trustee was undertaking to enforce by a summary order the payment to him of the sum so withheld; and (4) that the court admitted in evidence a copy of the bond and did not require the original to be produced.

1. It is to be conceded that the District Court did not acquire jurisdiction by reason of diversity of citizenship of the parties; but we are of opinion that the court did acquire jurisdiction, because the laws of the United States authorize the taking of the bond in suit by the bankruptcy court. The case of Lovell v. Newman, 227 U. S. 412, 33 S. Ct. 375, 57 L. Ed. 577, is not in point, because the property released on the bond in that case was not within the custody...