Mauran v. Crown Carpet Lining Co.

• Decision Date: 13 November 1901
• Citation: 50 A. 331,23 R.I. 324
• Parties: MAURAN et al. v. CROWN CARPET LINING CO.
• Court: Rhode Island Supreme Court

50 A. 331

23 R.I. 324

MAURAN et al.

v. CROWN CARPET LINING CO.

Supreme Court of Rhode Island.

Nov. 13, 1901.

Application by Mendell W. Crane, trustee in bankruptcy of the Crown Carpet Lining Company, for an order requiring John H. Flanagan, receiver of such company, to deliver the property in his hands to the trustee. Granted.

Harry C. Curtis, for petitioner. Arthur W. Davis, for respondents. Dexter B. Potter, for attaching creditor. Frederick A. Jones, for trustee in bankruptcy and others. Tilling—hast & Tillingliast, for certain creditors.

ROGERS, J. This is an application by Mendell W. Crane, trustee in bankruptcy of the respondent corporation, for an order that John H. Flanagan, receiver of said corporation under an appointment by this court, be required to convey and deliver to the trustee in bankruptcy the property and effects of said Crown Carpet Lining Company, now in his possession as such receiver. The facts on which the application is based are undisputed, and are as follows: June 1, 1901, William J. Braitsch attached the personal property and effects of the respondent corporation for debt due him from It, and placed a keeper in charge thereof. June 14, 1901, William A. Mauran and Suchet Mauran, minority stockholders in the Crown Carpet Lining Company, filed a petition in this court under the provisions of Gen. Laws, c. 177, § 27, as amended by chapter 655, passed at the January session, 1899, representing that the estate and effects of said corporation are being misapplied, and are in danger of being wasted ana lost, and praying that said corporation might be dissolved, and a receiver of its estate and effects appointed. On June 20, 1901, upon the consent of the then parties to said lastmentioned petition, a decree was entered in this court appointing John H. Flanagan receiver of said corporation, and authorizing and directing him as such receiver to convert all the estate and property of said corporation Into cash by sale at public auction upon notice as prescribed in said decree, and to hold the proceeds of such sale, together with such other assets as might come into his hands, to await the further order of the court. The receiver at once took possession of the property of said corporation, and on June 21, 1901, Braitsch, the attaching creditor, surrendered possession of the attached property to said Flanagan as receiver, and withdrew his keeper. On June 26, 1901, a creditor's petition in bankruptcy was filed in the United States district court for the district of Rhode Island against said corporation, wherein on July 15, 1901, it was duly declared a bankrupt, and on July 26, 1901, the said Mendell W. Crane was elected as trustee in bankruptcy of said corporation, and duly qualified as such. The sale by Flanagan, the receiver appointed by this court, ordered to be made as hereinbefore set forth, was postponed from time to time on order of this court, but finally, after a stipulation was signed by all the parties in interest, wherein it was set out that, for the purpose of saving expense, it seemed best to the parties in interest that said estate and effects be sold without further adjournment, it was stipulated that said sale might be held on Friday, July 12, 1901, as advertised by John H. Flanagan, receiver, without further adjournment, and that the rights of all parties should be the same as if said sale was adjourned from time to time until after adjudication upon the petition in bankruptcy then pending against said Crown Carpet Lining Company and the election of a trustee in bankruptcy of the estate and effects of said corporation, which said trustee, if and when so appointed, should have the same right to claim the proceeds of sale, and under and subject to the same conditions, and none other, that he would have had to claim the estate and effects of said corporation had said sale not taken place, and should in all respects have the same rights against the receiver as if said sale had not taken place. Said stipulation was approved by this court July 11, 1901, the sale was had, and the receiver holds the proceeds thereof for the further order of this court Braitsch, the attaching creditor, as well as the petitioners for a dissolution of, and a receiver for, said corporation, oppose the granting of the application of the trustee in bankruptcy, and the sole question now before us is whether, in the condition of affairs as above set forth, the trustee's application should be granted.

It is to be observed that, while' the petition of the Maurans for the dissolution of and the appointment of a receiver fo>r said corporation describes them only as stockholders, the agreed statement of facts in the case shows that they were also creditors of said corporation. "The plenary and paramount power of congress to establish uniform laws on the subject of bankruptcies throughout the United States," says Hall, J., in Re Safe Deposit & Savings Inst, 21 Fed. Cas. 141 (No. 12,211), "is given in express terms by the constitution of the United States. It is therefore very clear that when congress has exercised the power thus conferred their action must necessarily control or limit the exercise of the power of the states over the same...