Nisbet v. Federal Title & Trust Co.

• Decision Date: 16 November 1915
• Docket Number: 4304.
• Citation: 229 F. 644
• Parties: NISBET, Commissioner of Safety, et al. v. FEDERAL TITLE & TRUST CO.
• Court: U.S. Court of Appeals — Eighth Circuit

229 F. 644

NISBET, Commissioner of Safety, et al. v. FEDERAL TITLE & TRUST CO.

No. 4304.

United States Court of Appeals, Eighth Circuit.

November 16, 1915

Rehearing Denied February 24, 1916.

July 21, 1913, Buffalo Bill's Wild West and Pawnee Bill's Great Far East, Combined, a corporation organized under the laws of the state of New Jersey, and hereinafter referred to as the circus corporation, was exhibiting in Denver. The property employed in its business was of two classes: That used strictly in the giving of its exhibitions, generally referred to as the show property; and also certain horses wagons, railroad cars, circus paraphernalia, and equipment commonly known as the 'plant' or 'plant equipment.' The former class was the property of the circus corporation. The latter class was leased to that corporation by one Thomas A. Smith and one G. W. Lillie under a written agreement dated June 6, 1912, and subsequently renewed for the season of 1913. Colonel W. F. Cody (Buffalo Bill) was vice president of the circus corporation, and Major G. W. lillie (Pawnee Bill) was its president.

On the date first above mentioned the United States Printing & Lithograph Company of Cincinnati, Ohio, brought suit in the state district court at Denver to recover an alleged indebtedness of $66,000 against the said circus corporation, W. F. Cody, and G. W. Lillie as defendants, and caused the defendant Nisbet, as ex officio sheriff, to levy an attachment upon all the property, show, and plant hereinabove referred to. The next day, the defendants in error, Bonfils and Tammen, under the Colorado statute permitting other creditors to become parties in such attachment proceeding and have like remedies against the defendant to secure their claims or demands as the law gives to the original plaintiff, caused a subsequent attachment to be issued out of the same court and a levy to be made upon the same property by the said acting sheriff. It is provided by the statutes of Colorado that before issuing a writ of attachment the clerk of the court shall require a written undertaking on the part of the plaintiff or plaintiffs, in not less than double the amount claimed, to indemnify the defendant in the attachment suit against all damages that may be sustained by reason of the wrongful suing out of the attachment. It is conceded that all parties plaintiff, in the attachment proceeding referred to, complied in all things with the laws of the state of Colorado relating thereto, including the giving of the bonds in question.

On July 22d, G. W. Lillie executed a bill of sale to Thomas A. Smith for his interest in the plant property; but this action was subsequent to the attachment levies. Shortly thereafter, in the District Court of the United States for the District of New Jersey, a petition in bankruptcy was filed against the circus corporation, and, upon application to the District Court of the United States for the District of Colorado, Dewey C. Bailey, United States marshal for the District of Colorado, was appointed ancillary receiver. Upon his demand, pursuant to order of the district court, the sheriff turned over to him all of the aforesaid property attached as the property of said bankrupt circus corporation and its codefendants in the state court. Subsequently, the ancillary receiver, in due course, advertised the sale of said property; and thereupon Smith filed in the bankruptcy court a petition claiming the ownership of all of said property, and praying that it be restored to his possession. To this petition the plaintiffs in error, Bonfils and Tammen, filed answer denying the claim of Smith, asserting their own, and that of the sheriff, under the writs of attachment, and praying that all of the property be redelivered to the latter officer, or, in case a sale had been made, then that the proceeds of such sale be delivered to said sheriff, to be by him dealt with as the state court should order, and also for other proper relief. No formal appearance otherwise was entered by the sheriff, nor by the United States Printing & Lithograph Company, the original plaintiff in the attachment suit.

The issues thus joined were heard before the District Judge, and August 18, 1913, an order was entered adjudging the title to the show property, in the possession of the ancillary receiver, to be in the bankrupt corporation, awarding an undivided one-half interest in the plant property to the intervener, Smith, and declining to determine whether the claim of said Smith was prior or superior to the claim of the sheriff under the writs of attachment to the remaining undivided one-half thereof. The receiver was further directed to tender the possession of all said property to the sheriff, and if the sheriff refused or failed forthwith to accept or receive the same, that the receiver should then deliver all of the plant property to Smith. The sheriff accepted this tender impressed with this judgment of the district court as to the ownership of the property involved. August 19, 1913, Smith executed to the Federal Title & Trust Company, defendant in error, a chattel mortgage upon all the plant property, and on August 22d that company made demand upon the sheriff therefor. Thereafter the sheriff, under order of the state court, offered for sale, and did sell for the sum of $34,185.50, an undivided one-half interest in the plant property as the interest of W. F. Cody and G. W. Lillie, as distinguished from the undivided one-half interest claimed by Smith as owner with said G. W. Lillie. The state court refused to confirm this sale, and, thereafter, upon application of all the plaintiffs in the attachment suit, said court ordered all of said property sold before the final determination of that action. This order was executed by the sheriff, and all of the property was sold by him for the aggregate sum of $49,257.25. Thereupon the defendant in error brought this suit against the sheriff and against Harry H. Tammen, Frederick G. Bonfils, and the United States Printing & Lithograph Company, plaintiffs in the attachment suit, for conversion of the personal property alleged to have been wrongfully attached, taken and sold. The jury returned a verdict in favor of plaintiff against defendants Nisbet, Bonfils, and Tammen, awarding damages in the sum of $43,390.55; of this plaintiff remitted $7,648.85, and judgment was entered in the sum of $35,741.70. In the course of the trial the following admission was made: 'All the acts done by the sheriff, in levying upon this property, were done in the first instance pursuant to instructions received from the attorneys of the United States Printing & Lithograph Company, viz. Mr. Bottom, Mr. Redmond, and Mr. Marks. And two days thereafter, when Bonfils and Tammen joined in the attachment suit, every act done by the sheriff, pursuant to this matter, from that time on, was done under directions and instructions from both Bonfils and Tammen and the Lithograph Company, and their attorneys, Bottom, Redmond and Marks.'

It is conceded that the same attorneys have at all times represented the sheriff and all attaching creditors both in the state court and in this court.

Adolph Marks, of Chicago, Ill., and John T. Bottom, of Denver, Colo. (Charles H. Redmond and Frederick P. Smith, both of Denver, Colo., on the brief), for plaintiffs in error.

Ernest Morris, of Denver, Colo. (William W. Grant, Jr., of Denver, Colo., on the brief), for defendant in error.

Before CARLAND, Circuit Judge, and AMIDON and VAN VALKENBURGH, District Judges.

VAN VALKENBURGH, District Judge (after stating the facts as above).

Thirty-five errors were assigned to the action of the court below, and 14 were specified in the brief as relied upon by plaintiffs in error. Stripped of repetition and alternative statement, the following considerations are presented:

(1) That the court of bankruptcy was without jurisdiction to hear and adjudicate the claim of Thomas A. Smith as against third parties, to wit, the sheriff and attaching creditors; and, as an incident thereto, that the court erred in holding that the judgment of the bankruptcy court, in making the award to Smith, was binding upon plaintiffs in error; further, that Smith and his mortgagee should have been required to litigate the question of ownership in the state court.

(2) That the court erred in refusing to hold as matter of law that Thomas A. Smith and the plaintiff were estopped from asserting title to or interest in the property in question and, in this connection, that certain evidence tendered by plaintiffs in error, was improperly excluded.

(3) That the court erred in directing a verdict for plaintiff and refusing to direct a verdict for the defendants.

(4) That the court erred in its charge respecting the measure of damages, that the verdict was excessive, and that a new trial should have been granted.

It is well settled that, where the bankruptcy court has acquired lawful custody of property to which conflicting liens attach it has jurisdiction to determine the priorities of such liens, though the trustee has no interest in such question; that the administration and distribution of the property of bankrupts is a proceeding in equity, and, when authorized by act of Congress, it becomes a branch of equity jurisprudence; that property in the custody of a court of equity for administration is always held by it in trust for those to whom it rightfully belongs. The jurisdiction to inquire and determine who the lawful owners are, and to that end to call before it all claimants by a reasonable notice or order to present their claims to the court within a reasonable time, or to be barred of any right or interest in the property in its custody, or in its proceeds, is a power inherent in every court...