Progressive Bldg. & Loan Co., Inc. v. Hall

• Decision Date: 08 September 1914
• Docket Number: 1259.
• Citation: 220 F. 45
• Parties: PROGRESSIVE BUILDING & LOAN CO., Inc., v. HALL.
• Court: U.S. Court of Appeals — Fourth Circuit

220 F. 45

PROGRESSIVE BUILDING & LOAN CO., Inc., v. HALL.

No. 1259.

United States Court of Appeals, Fourth Circuit.

September 8, 1914

On Rehearing, November 27, 1914.

Harper & Goodman, of Lynchburg, Va., for petitioner.

Robert D. Yancey, of Lynchburg, Va., for respondent.

Before PRITCHARD, KNAPP, and WOODS, Circuit Judges.

PRITCHARD Circuit Judge.

This is a petition to superintend and revise in a matter of law a judgment of the District Court of the United States for the Eastern District of Virginia, wherein an injunction was issued perpetually restraining the petitioner, a citizen and resident of the Western District of Virginia, from taking any steps to enforce an assignment of wages which had been made by respondent, as will hereinafter appear.

It appears that on November 3, 1913, upon a petition of involuntary bankruptcy, J. W. Hall, respondent, was adjudicated a bankrupt. It further appears that no trustee was appointed in said proceedings. The petitioner is a corporation organized under the laws of the state of Virginia, with its principal office in the city of Lynchburg. It further appears that the respondent secured a loan from the petitioner on the 29th of September, 1913, amounting to $214.50, and duly executed his note for that sum as of that date, payable to appellant at which time he also executed and delivered an assignment of his wages to be thereafter earned for the amount of said debt.

On that date respondent was employed by the Norfolk & Western Railway Company, and was still employed by said company at the time of the institution of these proceedings. It further appears that the railway company declined to honor the assignment and also failed to pay the accrued wages to respondent, and on the 14th day of February, 1914, respondent secured an order from the District Court of the United States for the Eastern District of Virginia enjoining and restraining petitioner from the collection of this debt save in the bankruptcy proceedings which were then pending. On the 10th day of March, 1914, petitioner filed a motion to dismiss the injunction and petition on the ground that the court had no jurisdiction, and upon the further ground that, even if the court had such jurisdiction, the assignment of wages held by the petitioner was a valid lien under the provisions of section 67d of the Bankruptcy Act (Act July 1, 1898, c. 541 30 Stat. 564 (Comp. St. 1913, Sec. 9651)) which gave petitioner the legal right to collect its debts 'free from restraint on the part of the District Court. ' The learned judge who heard the cause in the court below, after a hearing, refused to dissolve the injunction and discharge the petition of the bankrupt, and entered an order making the injunction permanent, and restraining petitioner from attempting to collect from the Railway Company any sum that might be due by virtue of said assignment of wages.

The lower court based its ruling upon the ground that the fund in controversy was in the custody of the court together with the other property of the bankrupt's estate, and as such was under the control of the court. But, it should be borne in mind that this fund was created by wages earned after the respondent had been adjudged a bankrupt, and therefore was not properly a part of the bankrupt's assets to be administered by the court. 1 Loveland on Bankruptcy, Sec. 28.

However we do not deem it necessary to enter into a discussion of this phase of the dispute, inasmuch as we are met at the threshold of this cause with the question: Did the District Court, sitting as a court of bankruptcy in the Eastern District of Virginia, have jurisdiction to issue an injunction against the petitioner, a citizen and resident of the Western District of that state?

In the cause of the Acme Harvester Co. v. Beekman Lumber Co., 222 U.S. 300, 32 Sup.Ct. 96, 56 L.Ed. 208, the Supreme Court passed directly upon this question, and in disposing of the same said:

'As to the injunction, we are of the opinion that there was no power in the District Court to issue an ex parte injunction, without notice or service of process, attempting to restrain the Beekman Lumber Company from suing in a state outside the jurisdiction of the District Court. Such proceeding could only have binding force upon the lumber company if jurisdiction were obtained over it by proceedings in a court having jurisdiction, and upon service of process upon such creditor.

'Whether ancillary proceedings could be had in a District Court in aid of the jurisdiction of an original court of bankruptcy was a subject of much discussion and divers decisions in the federal courts. In Babbitt, Trustee, v. Dutcher, 216 U.S. 102 (30 Sup.Ct. 372, 54 L.Ed. 402, 17 Ann.Cas. 969), and on the petition of Elkus in the matter of the Madison Steel Company, a bankrupt, Elkus, Petitioner, 216 U.S. 115 (30 Sup.Ct. 377, 54 L.Ed. 407), the matter came before

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