Schumacher v. Beeler
| Citation | 79 L.Ed. 433,55 S.Ct. 230,293 U.S. 367 |
| Decision Date | 17 December 1934 |
| Docket Number | No. 215,215 |
| Parties | SCHUMACHER, Sheriff, v. BEELER |
| Court | United States Supreme Court |
Messrs. Coleman Avery, John W. Peck, and Frank H. Shaffer, Jr., all of Cincinnati, Ohio, for petitioner.
Messrs. Henry B. Street and Province M. Pogue, both of Cincinnati, Ohio, for respondent.
In granting the writ of certiorari, we limited our review to the question of the jurisdiction of the District Court under section 23b of the Bankruptcy Act. That provision, and its immediate context, section 23a, are set forth in the margin.1 44 Stat. 664, 11 U.S.C. § 46(a)(b), 11 USCA § 46(a, b).
This is a plenary suit brought by respondent, trustee in bankruptcy, in the District Court to enjoin the sale of certain property, alleged to be fixtures, attached to the manufacturing plant of the bankrupt, which petitioner, as sheriff, was threatening to sell under an execution issued more than four months prior to the bankruptcy proceeding upon a judgment recovered against the bank- rupt in the court of common pleas of Hamilton county, Ohio. The trustee's petition alleged that sale by the sheriff, pending a determination whether or not the property was a part of the realty, would cause irreparable damage to the bankrupt's estate. The trustee contends that the sheriff's levy upon the property in question was invalid under the law of Ohio, and that at the time of the filing of the petition in bankruptcy all writs of venditioni exponas, or orders for the sale of the real estate, had expired, and also that, as there were mortgages upon the property, the appropriate method of the enforcing the judgment was by a creditor's bill.
The sheriff first appeared specially, asserting his claim by virtue of levy under execution, and sought dismissal of the suit upon the ground that the court was without jurisdiction. Shortly after, the sheriff withdrew his motion to dismiss, entered his general appearance, and made answer to the petition, expressly consenting that the District Court should hear and determine all matters to which the petition referred. The sheriff in this answer, after stating that he had levied upon personal property and real estate of the judgment debtor, said that a controversy had arisen whether or not certain items of 'chattel property,' set forth in the exhibit attached to the trustee's petition, were 'in law fixtures and therefore a part of the real estate'; that it would be necessary to have that question determined so that he might be advised as to what part of the 'chattel property' he had a right to sell under the execution; and that he did not know 'as a matter of law whether the levy so made by him upon the real estate' was or was not a valid levy, and therefore he put the plaintiff 'on proof thereof.' The next day the sheriff asked leave to withdraw his answer. The disposition of that motion does not appear and the court below has assumed that it was not pressed. Later, the sheriff again moved to dismiss the cause for the want of jurisdiction, and the motion was granted.
This order was reversed by the Circuit Court of Appeals. That court concluded that the validity of the trustee's claim, and of that of the sheriff, depended upon disputed facts and issues of law; that the adverse claim of the sheriff was substantial and that its merits could be adjudged only in a plenary suit; that this proceeding should be treated as one of that nature and that there was consent to the jurisdiction of the District Court within the meaning of section 23b of the Bankruptcy Act. As the case had not been heard upon its merits, and the record presented no findings of fact or conclusions of law, the Circuit Court of Appeals did not deal with any question except that of jurisdiction and directed that the cause be remanded to the District Court with instructions to hear and determine the controversy.
The trustee's petition, which the Circuit Court of Appeals treated as a bill of complaint, did not allege diversity of citizenship. Nor did it contain clear and sufficient averments showing that the complainant, as against the sheriff claiming under a judgment recovered and an execution issued more than four months before the bankruptcy, had possession of the property in question by virtue of which the District Court would have jurisdiction of the suit irrespective of the consent of the defendant.2
The case thus turns on the effect of the sheriff's consent under section 23b. The sheriff contends that he had no authority to give the consent; but he was the defendant in the suit and his consent was actually given. We find no ground for concluding that the consent was invalid.
Conflicting views have been held of the meaning of the provision for consent in section 23b. In one view, the provision relates merely to venue, that is, only to a consent to the 'local jurisdiction.' Matthew v. Coppin (C.C.A.) 32 F.(2d) 100, 101. See, also, McEldowney v. Card (C.C.) 193 F. 475, 479; De Friece v. Bryant (D.C.) 232 F. 233, 236; Operators' Piano Co. v. First Wisconsin Trust Co. (C.C.A.) 283 F. 904, 906; Coyle v. Duncan Spangler Coal Co. (D.C.) 288 F. 897, 901; Stiefel v. 14th Street & Broadway Realty Corporation (C.C.A.) 48 F.(2d) 1041, 1043. Compare Lovell v. Isidore Newman & Son, 227 U.S. 412, 426, 33 S.Ct. 375, 57 L.Ed. 577. It has been said that if section 23b affects 'substantive jurisdiction,' as distinct from venue, section 23a appears to be redundant. Stiefel v. 14th Street & Broadway Realty Corporation, supra. The opposing view was set forth by the court below in Toledo Fence & Post Co. v. Lyons (C.C.A.) 290 F. 637, 645, and that decision was followed in the instant case. See, also, Boonville National Bank v. Blakey (C.C.A.) 107 F. 891, 893; Seegmiller v. Day (C.C.A.) 249 F. 177, 178; Stiefel v. 14th Street & Broadway Realty Corporation, supra; Lowenstein v. Reikes (C.C.A.) 60 F.(2d) 933, 935. It proceeds upon the ground that the Congress had power to permit suits by trustees in bankruptcy in the federal courts against adverse claimants, regardless of diversity of citizenship, and that by section 23b the Congress intended that the federal courts should have that jurisdiction in cases where the defendant gave consent, and, without that consent, in cases which fell within the stated exceptions.
We think that the latter view is the correct one. The provisions of the earlier bankruptcy acts and the purpose and significance of section 23 of the Act of 1898, as originally enacted (30 Stat. 552), were elaborately considered in Bardes v. Hawarden Bank, 178 U.S. 524, 20 S.Ct. 1000, 44 L.Ed. 1175. Section 8 of the Act of August 19, 1841 (5 Stat. 446), conferred on the Circuit Courts con- current jurisdiction with the District Courts of all suits, at law or in equity, between assignees in bankruptcy and adverse claimants. This broad grant of jurisdiction was continued in section 2 of the Act of March 2, 1867 (14 Stat. 518). Lathrop v. Drake, 91 U.S. 516, 23 L.Ed. 414. The Act of 1867 recognized and emphatically declared the distinction between proceedings in bankruptcy, properly so called, and independent suits between assignees in bankruptcy and adverse claimants. Jurisdiction of such suits was conferred upon the District Courts and Circuit Courts of the United States by the express provision to that effect in section 2 of that act, and was not derived from the other provisions of sections 1 and 2, conferring jurisdiction of proceedings in bankruptcy. Bardes v. Hawarden Bank, supra, page 533 of 178 U.S., 20 S.Ct. 1000. The jurisdiction of such suits in law and equity was of the same character as that conferred upon the Circuit Courts by the eleventh section of the Judiciary Act of Sept. 24, 1789, 1 Stat. 78 (Morgan v. Thornhill, 11 Wall. 65, 80, 20 L.Ed. 60) and the conferring of that jurisdiction upon the federal courts did not divest or impair the jurisdiction of the state courts over like cases. Eyster v. Gaff, 91 U.S. 521, 525, 23 L.Ed. 403; Bardes v. Hawarden Bank, supra, pages 532, 533 of 178 U.S., 20 S.Ct. 1000.
It was with this legislative background that the Congress undertook the framing of the Act of 1898 (30 Stat. 544). The distinction between proceedings in bankruptcy and suits between trustees in bankruptcy and adverse claimants was maintained. As appellate jurisdiction had been vested in the Circuit Courts of Appeals by the Act of March 3, 1891 (26 Stat. 826), the Act of 1898, in lieu of the 'general superintendence and jurisdiction' given to the Circuit Courts by the Act of 1867 (section 2) 'of all cases and questions' arising in bankruptcy, conferred upon the Circuit Courts of Appeals the jurisdiction 'to superintend and revise in matter of law the proceedings of the several inferior courts of bankruptcy within their jurisdiction.' Section 24b (11 USCA § 47(b). But the Circuit Courts at that time were still courts of original jurisdiction and, by section 23 of the Act of 1898, the Congress provided the extent to which the Circuit Courts should have jurisdiction of suits at law or in equity between trustees in bankruptcy and adverse claimants. Section 23, as originally enacted, was as follows (30 Stat. 552, 553):
'a The United States circuit courts shall have jurisdiction of all controversies at law and in equity, as distinguished from proceedings in bankruptcy, between trustees as such and adverse claimants concerning the property acquired or claimed by the trustees, in the same manner and to the same extent only as though bankruptcy proceedings had not been instituted and such controversies had been between the bankrupts and such adverse claimants.
'b Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt, whose estate is being administered by such trustee, might have brought or prosecuted them if proceedings in bankruptcy had not been...
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