Moore v. Scott

• Decision Date: 25 January 1932
• Docket Number: No. 6505.,6505.
• Citation: 55 F.2d 863
• Parties: MOORE v. SCOTT.
• Court: U.S. Court of Appeals — Ninth Circuit

55 F.2d 863 (1932)

MOORE v. SCOTT.

No. 6505.

Circuit Court of Appeals, Ninth Circuit.

January 25, 1932.

Reuben G. Hunt, of San Francisco, Cal., for appellant.

W. I. Titus, of Los Angeles, Cal., for appellee.

Before WILBUR and SAWTELLE, Circuit Judges, and ST. SURE, District Judge.

SAWTELLE, Circuit Judge.

Sitting in equity the United States District Court for the Southern District of California, on April 6, 1931, made an order allowing the final account of David B. Scott as receiver in equity of the assets of the Tungsten Products Company, and awarding compensation to the receiver and his counsel, W. I. Titus. This appeal is brought by the trustee in bankruptcy, the bankruptcy having superseded the receivership by virtue of an adjudication dated November 21, 1930.

By the terms of the order of adjudication, the District Court reserved the hearing and determination of the accounts of the equity receiver and the fixing of allowances for services of such receiver and his counsel, in Equity No. C-55 in that court, wherein B. W. Holeman, receiver of the First National Bank of Bishop, California, is the plaintiff, and Tungsten Products Company, the defendant, the matters thus reserved to be heard and determined "before and by the court equity only."

On November 22, 1927, Equity Action No. C-55 was commenced in the same District Court, in which action Holeman was plaintiff and the bankrupt corporation was defendant. On November 25, 1927, David B. Scott, the appellee herein, was appointed and qualified as receiver in equity of the property of the defendant corporation, and he administered it until the date of the adjudication, November 21, 1930, an involuntary petition having been filed in the meantime in that court on March 19, 1928.

On December 3, 1930, the equity receiver filed in the equity suit his final account and application for compensation for himself and his counsel. To this account, on December 13, 1930, the trustee in bankruptcy, the appellant herein, filed in the bankruptcy matter a number of exceptions, and on January 22, 1931, filed some additional exceptions.

On February 2, 1931, an order was made by the judge of the District Court for the Southern District of California, in case No. C-55-J-Eq., entitled "B. W. Holeman, Receiver, Plaintiff, v. Tungsten Products Company, Defendant," consolidating the equity case and the bankruptcy case "for the purpose of considering exceptions to Report of Receiver."

On April 1, 1931, the same judge entered a memorandum of conclusions on settlement of final accounts of receiver, in Equity Suits No. C-55-Eq., styled "B. W. Holeman, Receiver, Plaintiff, v. Tungsten Products Company, Defendant," and No. C-56-Eq., entitled "B. W. Holeman, Receiver, Plaintiff, v. Coso Hot Springs, Inc., Defendant."

The order appealed from, set forth above, was entered five days later, the case there bearing the number "C-55-M," conforming to the designation used by the receiver in filing his final account.

The appellant contends that the equity court should not have acted at all, and should have relinquished the settlement of the receiver's account and the award of compensation to the bankruptcy court. In our view of the case, consideration of the other assignments of error is unnecessary.

The Supreme Court has repeatedly emphasized the exclusive nature of the bankruptcy court's jurisdiction.

In Mueller v. Nugent, 184 U. S. 1, 14, 22 S. Ct. 269, 275, 46 L. Ed. 405, Mr. Chief Justice Fuller used the following oft-quoted language: "It is as true of the present law as it was of that of 1867, that the filing of the petition in bankruptcy is a caveat to all the world, and in effect an attachment and injunction (International Bank v. Sherman, 101 U. S. 407, 25 L. Ed. 867), and on adjudication title to the bankrupt's property became vested in the trustee (sections 70, 21e 11 USCA §§ 44, 110) with actual or constructive possession, and placed in the custody of the bankruptcy court."

The same jurist, in Re Watts & Sachs, 190 U. S. 1, 27, 23 S. Ct. 718, 724, 47 L. Ed. 933, said: "The bankruptcy law is paramount, and the jurisdiction of the Federal courts in bankruptcy, when properly invoked, in the administration of the affairs of insolvent persons and corporations, is essentially exclusive. Necessarily, when like proceedings in the state courts are determined by the commencement of proceedings in bankruptcy, care has to be taken to avoid collision in respect of property in possession of the state courts. Such cases are not cases of adverse possession, or of possession in enforcement of pre-existing liens, or in aid of the bankruptcy proceedings. The general rule as between courts of concurrent jurisdiction is that property already in possession of the receiver of one court cannot rightfully be taken from him without the court's consent, by the receiver of another court appointed in a subsequent suit; but that rule can have only a qualified application where winding-up proceedings are superseded by those in bankruptcy as to which the jurisdiction is not concurrent." (Italics our own.)

Again, in the same opinion, the Chief Justice says "that the intent of the bankruptcy law is to place the administration of affairs of insolvents exclusively under the jurisdiction of the bankruptcy courts." See also May v. Henderson, 268 U. S. 111, 117, 45 S. Ct. 456, 69 L. Ed. 870, and Straton v. New, 283 U. S. 318, 331, 51 S. Ct. 465, 75 L. Ed. 1060.

Should there remain any doubt as to whether the Supreme Court intended that this doctrine should apply to the fixing of the fees of a receiver named by another court, the statement by Mr. Justice Brandeis in Lion Bonding & Surety Co. v. Karatz, 262 U. S. 640, 642, 43 S. Ct. 641, 642, 67 L. Ed. 1151, removes that doubt, as much as may be done by human language: "Even where the court which appoints a receiver had jurisdiction at the time, but loses it, as upon supervening bankruptcy, the first court cannot thereafter make an allowance for his expenses and compensation. He must apply to the bankruptcy court." (Italics our own.)

Nor can the bankruptcy court itself surrender this exclusive jurisdiction: "Indeed, a court of bankruptcy itself is powerless to surrender its control of the administration of the estate." Isaacs v. Hobbs Tie & T. Co., 282 U. S. 734, 739, 51 S. Ct. 270, 272, 75 L. Ed. 645.

The Isaacs Case involved two federal courts and a state court, and therefore may be said to indicate that the Supreme Court makes no distinction between state and federal courts as to their inability to encroach upon the exclusive jurisdiction of the bankruptcy courts. On page 739 of 282 U. S., 51 S. Ct. 270, 272, in the Isaacs Case, we find the following language used by Mr. Justice...