Story & Clark Piano Co. v. Holmes

• Decision Date: 09 April 1918
• Docket Number: 2479.
• Court: U.S. Court of Appeals — Seventh Circuit
• Parties: STORY & CLARK PIANO CO. v. HOLMES. In re MAHONEY.

251 F. 565

STORY & CLARK PIANO CO. v. HOLMES.

In re MAHONEY.

No. 2479.

United States Court of Appeals, Seventh Circuit.

April 9, 1918

J. A Baer, of Milwaukee, Wis., for appellant.

Fred Hartwell, of La Crosse, Wis., for appellee.

Before BAKER, ALSCHULER, and EVANS, Circuit Judges.

BAKER Circuit Judge.

Appellant at Milwaukee, Wis., delivered a piano to Mahoney, who at the same time signed a conditional sale contract. One Mitchell who in fact was a sales agent of appellant, joined in signing the instrument, but only personally, not describing himself as agent of appellant; and appellant did not otherwise execute the written contract. When three monthly installments had become due and remained unpaid, Mahoney informed appellant that he was unable to make the payments and advised appellant to come and take possession of the piano under the provision in the contract to that effect. Appellant's reply was a refusal to receive the piano and the institution of an action in debt and garnishment. Thereupon Mahoney went into bankruptcy and turned over the piano to Holmes, trustee. Appellant dismissed its action, and notified appellee that it claimed right of possession under the conditional sale contract; appellee asserted that the contract was void as against creditors, and, appellant taking no steps to enforce its alleged right, filed in the court below a petition in the nature of a bill to quiet title, asking that appellant be ruled to appear and set up its claim. In response to the rule appellant appeared specially, objected to the jurisdiction of the court, and also contended that it was entitled to have the matter of the asserted title determined in a plenary independent suit. On the overruling of these objections appellant withdrew, and the hearing resulted in a decree of title in appellee.

1. Appellant confuses an asserted right of possession with actual possession. Mahoney's actual physical possession lawfully passed to appellee, and thereby the piano came into the custody of the law. When this situation arises in a bankruptcy court, as in any other, the general equity principle applies that the court that has actual possession of property has an ancillary jurisdiction to hear and determine all questions respecting title, possession, or control of the property. Murphy v. Hofman, 211 U.S. 562, 29 Sup.Ct. 154, 53 L.Ed. 327; Mining Co. v. Walsh (D.C.) 198 F. 351; Fidelity Trust Co. v. Gaskell, 195 F. 865, 115 C.C.A. 527.

2. True, appellant's good-faith assertion of title and right of possession constituted an adverse claim, as distinguished from a 'proceeding in bankruptcy,' and entitled appellant to a plenary hearing, but only the kind of plenary hearing that would fit the situation. In re Eppstein, 156 F. 42, 84 C.C.A. 208, 17 L.R.A. (N.S.) 465; In re Rathman, 183 F. 913, 106 C.C.A. 253. As in a railroad receivership suit, appellant could have intervened with a bill, on which it would have had the right to demand a full and orderly trial of its adverse claim. But the same ancillary jurisdiction that is available to one party to a controversy is of course open to the adversary. So appellee's petition and the rule thereon were an invitation to appellant to have a plenary determination of its alleged rights. If appellee...