Wallace Wood, Jr v. Wilbert Sons Shingle Lumber Company

• Citation: 57 L.Ed. 264,33 S.Ct. 125,226 U.S. 384
• Decision Date: 23 December 1912
• Docket Number: No. 61,61
• Parties: WALLACE WOOD, JR., Trustee in Bankruptcy of Edward D. Leche, Appt., v. A. WILBERT'S SONS SHINGLE & LUMBER COMPANY and Frederic Wilbert
• Court: United States Supreme Court

226 U.S. 384

33 S.Ct. 125

57 L.Ed. 264

WALLACE WOOD, JR., Trustee in Bankruptcy of Edward D. Leche, Appt.,

v A. WILBERT'S SONS SHINGLE & LUMBER COMPANY and Frederic Wilbert.

No. 61.

Argued December 5, 1912.

Decided December 23, 1912.

Messrs. Benjamin Rice Forman and William Lee Hughes for appellant.

Messrs. Clarence Samuel Hebert and Walter Guion for appellees.

Mr. Justice McKenna delivered the opinion of the court:

The case is here on a question of jurisdiction. Appellant brought suit in the district court November 3, 1909, as trustee of one Edward Douglas Leche, to set aside a sale of lands made by Leche to appellee, A. Wilbert's Sons Shingle & Lumber Company, herein called the shingle and lumber company, and to account for the rents thereof or the proceeds of the land that may have been sold, and to otherwise render a full account to appellant of the transactions with Leche, individually or otherwise.

Appellees, on the 3d of December, 1909, filed an exception to the jurisdiction of the court, alleging as cause thereof that they were domiciled in the parish of Iberville, and that the court was without jurisdiction over their persons and over the subject-matter of the litigation. A demurrer to like effect was filed on the 10th of December, and stated that it was 'by way of amendment to the form of demurrer filed herein on December 3, 1909.'

The demurrer was sustained. The court said: 'From the oral argument and brief filed it is evident the trustee brings his action under the provisions of § 70, subdivision e, of the bankruptcy act, and the bill does not disclose any cause of action under either § 60, subdivision b, or § 67, subdivision e; and therefore, by virtue of the authority of Hull v. Burr, 83 C. C. A. 61, 153 Fed. 945, this court has no jurisdiction to entertain the suit except by the consent of the defendants.' The bill was dismissed without prejudice to complainant.

The certificate of the judge recites that the sole question decided by him and certified to this court was whether or not the district court 'has jurisdiction in behalf of the trustee in bankruptcy to recover assets of the bankrupt from a third person under a revocatory action allowed under the law of Louisiana, of an insolvent, without the consent of the defendant, under the bankrupt act as amended in 1903 [32 Stat. at L. 797, chap. 487 U. S. Comp. Stat. Supp. 1911, p. 1493].'

There are some minor questions presented by the brief of counsel of which we must first dispose. It was contended in the court below that the appellees, by entering a formal appearance, waived their right to object to the jurisdiction. But they at the same time filed an exception to the jurisdiction, and the district court decided that the two papers should be considered together, and, so considering them, held that they could not be regarded as a consent on the part of the defendants to submit themselves to the jurisdiction of the codurt. The ruling is not assigned as error. It is urged further that neither the exception nor the demurrer complied with the thirty-first equity rule, in that the appellees, did not make affidavit that they were not interposed for delay. It is sufficient to answer that the objection was not made in the court below and is not assigned as error on this appeal. We therefore pass to the consideration of the question certified.

The bill charges with much circumstantial detail, which it is not possible to briefly state or analyze that the lumber and shingle company and its president, Frederic Wilbert, has entered into a conspiracy with the bankrupt and certain other parties by which, on June 6, 1906, the shingle and lumber company acquired title to certain plantations belonging to the bankrupt, situated in the parish of Iberville, Louisiana. The purpose of the conspiracy, it is charged, was to conceal from his creditors the bankrupt's assets and property, and to protect them from the pursuit of his creditors, with the understanding that when he got his discharge in bankruptcy the property was to be transferred to him. It was prayed that the sale to be set aside and the defendants be decreed to convey the lands to complainant in trust for the creditors of the bankrupt. Without further detail of the bill, we shall assume, for the purpose of the consideration of the question, that it states facts sufficient to constitute a ground of relief if the court have jurisdiction.

The bankruptcy act is very comprehensive of the whole subject of bankruptcy. It creates courts of bankruptcy and is full in its provisions for the collection and preservation of the estate of the bankrupt through trustees appointed by creditors, who are given power to bring suits to recover the property of the bankrupt which has been conveyed by him in fraud of his creditors, or to give a preference to any of them; the purpose of the act being to secure an equality of distribution of the assets of the bankrupt among his creditors.

Section 23a gives jurisdiction of such suits to the circuit courts of the United States which involve controversies at law or in equity, as distinguished from proceedings in bankruptcy, '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 the 'adverse claimants.' [30 Stat. at L. 552, chap. 541, U. S. Comp. Stat. Supp. 1911, p. 1499]. By subdivision b of § 23 it is provided that suits by the trustee shall only be brought or prosecuted where the bankrupt might have brought or prosecuted them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant; 'except suits for the recovery of property under § 60, subdivision b, and § 67 subdivision e.' The words in italics were added as amendment by act of February 5, 1903, chap. 487, § 8, 32 Stat. at L. 797, U. S. Comp. Stat. Supp. 1911, p. 1493. Upon them the question in the case turns. Prior to the amendment, and passing on § 23 as originally enacted, this court decided in Bardes v. First Nat. Bank, 178 U. S. 524, 44 L. ed. 1175, 20 Sup. Ct. Rep. 1000, that that section controlled and limited the jurisdiction of all courts over suits brought by trustees to collect debts due...