Pollack v. Meyer Bros. Drug Co.

• Decision Date: 04 May 1916
• Docket Number: 145.
• Citation: 233 F. 861
• Parties: POLLACK v. MEYER BROS. DRUG CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

233 F. 861

POLLACK v. MEYER BROS. DRUG CO. et al.

No. 145.

United States Court of Appeals, Eighth Circuit.

May 4, 1916

Per Smith, Circuit Judge.

A court of bankruptcy is an equity court, and subject to new equity rule 29 (198 F. xxvi), abolishing demurrers in equity suits.

The filing by a bankrupt of an answer to a petition by creditors to reopen the estate was a waiver of any error in a prior order overruling his demurrer, conceding that a demurrer could properly be entertained in such case.

On the hearing of a petition to reopen a bankrupt estate, the referee may properly take judicial notice of facts appearing in his own records of the original case.

That a fund in which a bankrupt had an interest was held in trust during the life of another by a trustee appointed by a state court did not deprive the court of bankruptcy of jurisdiction to administer such interest subject to the trust.

Under the form for schedule prescribed by General Orders in Bankruptcy No. 38 (18 S.Ct. iv), which requires a bankrupt to report 'property in reversion, remainder, or expectancy,' it is his duty to schedule any interest he has in property, real or personal, either in remainder vested or contingent, or in expectancy.

(Per Trieber, District Judge.)

Any interest of a bankrupt in property or a fund which he could by any means have transferred passes to his trustee, although it may not have been subject to seizure on execution against him.

By decree of a state court a fund was placed in trust, the income to be paid to the mother of the bankrupt during her natural life, and any deficiency in the income below a sum sufficient to give her a reasonable and comfortable living to be made up out of the principal. On her death the remaining principal, after paying expenses of her last illness and funeral, was to be equally divided between her children named, of whom bankrupt was one. At the time of the bankruptcy the mother was still living and the principal of the fund was intact. Held, that bankrupt's interest in the fund was a vested remainder, which passed to his trustee.

Benj. J. Klene, of St. Louis, Mo., and Charles B. Selby, of Oklahoma City, Okl., for petitioner.

Anthony F. Ittner, of St. Louis, Mo., for respondents.

Before SANBORN and SMITH, Circuit Judges, and TRIEBER, District Judge.

SMITH Circuit Judge.

The petitioner, Joseph Pollack, on July 1, 1907, was, on his voluntary petition, adjudged a bankrupt by the District Court of the United States for the Eastern District of Missouri.

A trustee was appointed, who took possession of the bankrupt's property as scheduled and converted it into cash and paid nearly 16 per cent. upon the claims proved and allowed. Among the claims so allowed were claims in favor of all the respondents. The estate was closed and the trustee discharged on June 2, 1908, and on September 14, 1908, the bankrupt was granted his final discharge. On September 24 1913, the respondent filed a petition to reopen the matter, alleging that at the time of the bankruptcy the bankrupt had an interest in a one-ninth share in a trust fund of $18,000; that he failed to schedule said property, and the same was fraudulently concealed by the bankrupt, and the respondents failed to discover the facts until within a few days of the filing of the present application to reopen the bankrupt estate, and asking also that an injunction issue against the St. Louis Union Trust Company of St. Louis, Mo., trustee, restraining it from paying over to the said Joseph Pollack the interest in the said trust fund, or any part thereof, or in any other matter deposited or held in trust for the said Joseph Pollack, pending the further order of court. The court on the same day ordered the matter referred to Hon. Walter D. Coles, a referee in bankruptcy, with full power to reopen the said bankruptcy estate. The referee issued an order to Joseph Pollack and to the St. Louis Union Trust Company to appear and show cause why the orders prayed should not be granted. The petitioner appeared, and filed on October 6, 1913, a demurrer to the petition of the respondents which was overruled. He then filed a return and answer to the pending application, to which respondents filed reply. The case was heard upon the issues and the referee made the following order:

That he 'doth find that the bankrupt, Joseph Pollack, at the time he filed his petition in bankruptcy, and was adjudicated a bankrupt, to wit, on July 1, 1907, had a vested title and interest, subject to the life estate therein of his mother, one Mary Pollack, in a certain trust fund held by the St. Louis Union Trust Company as trustee under a decree rendered by the circuit court of the city of St. Louis, state of Missouri, in the case of 'Mary Pollack, Plaintiff, v. Phillip Pollack, Joseph Pollack, et al., Defendants'; that said trust fund amounted to the sum of approximately $18,000, and that the said bankrupt was entitled, and is now entitled, to a one-ninth interest in said fund; that said bankrupt, at the time he filed his petition in bankruptcy, and was adjudicated a bankrupt, failed to schedule his interest in said trust fund, but knowingly and fraudulently concealed his interest therein from his creditors and his trustee in bankruptcy, for the purpose of preventing the said fund from being administered by his trustee under said bankruptcy; that the existence of said trust fund was not known to the trustee in bankruptcy of said bankrupt, or to his creditors, while the bankrupt estate was under administration in bankruptcy, and that said fund was not administered in the bankruptcy proceedings, and that knowledge of the existence of said trust fund was not acquired by the petitioners herein until shortly before the filing of their petition. The referee further finds that the interest of Mary Pollack, the mother of the bankrupt, in the trust fund before mentioned, has terminated by her death, and that the bankrupt's interest in said fund now amounts to approximately $2,000, and that the St. Louis Union Trust Company, trustee, is about to pay over to the bankrupt his interest in said fund. The referee further finds that the creditors of the bankrupt are entitled to have the bankrupt's interest in said trust fund administered in this bankruptcy proceeding, and the referee accordingly orders that the administration of the bankrupt estate of Joseph Pollack be, and the same is, hereby reopened for the purpose of administering the trust fund aforesaid, and for any other proper and appropriate purpose; and it is further ordered that, until the further order of the referee, the St. Louis Union Trust Company, trustee, be, and it is, hereby restrained and enjoined from paying over to the bankrupt, Joseph Pollack, or in any other way disposing of the interest of said Joseph Pollack in and to the trust fund held by said trustee under the decree of the circuit court of the city of St. Louis entered in the case of 'Mary Pollack, Plaintiff, v. Phillip Pollack, Joseph Pollack, et al., Defendants'; and it is further ordered that a meeting of the creditors of said Joseph Pollack, bankrupt, be held at the office of the referee on December 2, 1913, at 11 o'clock in the forenoon, for the purpose of appointing a trustee and transacting such other business as may properly come before such meeting, and that due notice of said meeting be given to the creditors of said bankrupt as required by law.'

Thereupon the bankrupt filed a petition for the review of said order by the United States District Court. The District Court upon hearing said application ordered:

'That the finding and order of the referee reopening said estate be and the same are in all things hereby approved and confirmed, and that the petition of said bankrupt for a review of the same be and the same is hereby denied and dismissed on the merits.'

And this is a proceeding to revise the said order of the District Court. This was not an application to set aside the order of discharge under Bankr. Act July 1, 1898, c. 541, Sec. 15, 30 Stat. 550 (Comp. St. 1913, Sec. 9599), but was an application to reopen the estate under section 2, and particularly subdivision 8 thereof, which is as follows:

The courts of bankruptcy are hereby invested with such jurisdiction at law and in equity as will enable them to--

'(8) Close estates, whenever it appears that they have been fully administered, by approving the final accounts and discharging the trustees, and reopen them whenever it appears they were closed before being fully administered. ' Comp. St. 1913, Sec. 9586.

The first point made here is that the referee erred in overruling the demurrer to the application to reopen the bankruptcy case. The court of bankruptcy is an equity court (section 2 of the Bankruptcy Act), and demurrers in such cases were abolished by rule 29 of the new equity rules, which became effective February 1, 1913, and this demurrer was not filed until October 6, 1913. It could have been well overruled on this ground. After the demurrer was overruled the bankrupt pleaded over in an answer which covers four pages of the printed record. Such action upon his part was a waiver of any error in the ruling on demurrer. Eau Clair National Bank v. Jackman, 204 U.S. 522, 535, 27 Sup.Ct. 391, 51 L.Ed 596; Campbell v. Haverhill, 155 U.S. 610, 612, 15 Sup.Ct. 217, 39 L.Ed. 280; Stanton v. Embry, Adm'r, 93 U.S. 548, 553, 23 L.Ed. 983; Marshall v. Vicksburg, 15 Wall. 146, 149, 21 L.Ed. 121; Railroad Co. v. Harris, 12 Wall. 65, 84, 20 L.Ed. 354; Campbell v. Wilcox, 10 Wall. 421, 423, 19 L.Ed. 973; Watkins v. United States, 9 Wall. 759, 761, 19 L.Ed. 820; Young v. Martin, 8 Wall. 354, 357, 19 L.Ed. 418; Aurora City v. West, 7 Wall. 82, 92, 19 L.Ed. 42; Bell v. Railroad Co., 4 Wall. 598, 602...