Wilkinson v. Walker

• Decision Date: 15 September 1923
• Docket Number: 986.,985
• Citation: 292 F. 395
• Parties: WILKINSON v. WALKER et al. SAME v. MASSACHUSETTS BONDING & INS. CO. et al.
• Court: U.S. District Court — Northern District of Texas

292 F. 395

WILKINSON v. WALKER et al.

SAME v. MASSACHUSETTS BONDING & INS. CO. et al.

Nos. 985, 986.

United States District Court, N.D. Texas, Fort Worth Division.

September 15, 1923

Stanley Boykin, of Forth Worth, Tex., for plaintiff.

J. A Templeton and Clay Cooke, both of Fort Worth, Tex., for defendants.

ATWELL District Judge.

The plaintiff sues as the trustee of the Walker Grain Company bankrupt, for recovery on a $25,000 bond in the first suit and for recovery on a $40,000 bond in the second suit. The plaintiff and the defendant in the first suit are residents of Tarrant county, Tex.; the plaintiff and the defendant J L. Walker, in the second suit, are residents of Tarrant county, Tex., and the defendant Massachusetts Bonding & Insurance Company is a foreign corporation having an office and an agent in Tarrant county, Tex.

On the 7th day of October, 1918, the referee, upon an involuntary petition in bankruptcy against the Walker Grain Company, filed on August 16, 1918, appointed the plaintiff receiver for the said Walker Grain Company pending adjudication. Wilkinson qualified as such receiver, and was ordered by the referee to take charge of all of the assets and property of the said Walker Grain Company and administer its affairs under the orders of the referee, pending such adjudication in bankruptcy. Before the receiver could take charge of such property and assets, the bankrupt filed a petition for a review of the said order appointing said receiver, by the District Court, and pending the review of said order by said court the referee, upon petition of the Walker Grain Company, granted a stay of said receivership proceedings, conditioned upon the giving by the said Walker Grain Company of a good and sufficient forthcoming bond. In compliance with said order bond was given, reading as follows:

'In the District Court of the United States for the Northern District of Texas,

at Fort Worth.

'In the matter of Walker Grain Company, Bankrupt. No. 1001, Bankruptcy.

'Know all men by these presents, that we, Walker Grain Company, as principal, and the subscribers hereto, as sureties, are held and firmly bound unto the United States of America in the full and just sum of twenty-five thousand ($25,000.00) dollars, to be paid to the said United States of America for the benefit of the petitioning creditors herein, which payment, well and truly to be made, we bind ourselves, our heirs, executors, and administrators, jointly and severally, by these presents. Signed and sealed this 7th day of October, A.D. 1918.

'The condition of this obligation is such that whereas, a petition for the appointment of a receiver of the Walker Grain Company has been filed in the United States District Court for the Northern District of Texas, by the petitioning creditors herein, and the said matter having been referred to Hon. W. B. Paddock, referee, he, the said referee, on the 7th day of October, 1918, made and entered his order nominating and appointing W. W. Wilkinson, Esq., as receiver of the estate of the said Walker Grain Company; and whereas, the said Walker Grain Company has applied for a stay of the proceedings in said matter until the matter can be finally passed upon by the honorable District Court of the United States for the Northern District of Texas; and whereas, said stay has been granted by Hon. W. B. Paddock, upon the filing and approval of this bond:

'Now, therefore, if the said Walker Grain Company shall turn over and deliver, when ordered to do so, by the District Court of the United States for the Northern District of Texas, to the said W. W. Wilkinson, receiver, all the property, funds, and effects of which it is possessed, and which may come into its possession at any time pending the hearing in the United States District Court, then the above obligation to be void; otherwise, to remain in full force and virtue.

'Walker Grain Company, by J. L. Walker, Pres., Principal.

'J. L. Walker, Surety.

'T. L. James, Surety.' The District Court affirmed the order of the referee appointing the receiver, and ordered the receiver to take charge and control of all of the property and assets of the Walker Grain Company, and likewise ordered the company to turn over and deliver all of the assets and properties of the said company to the said receiver. At that time there was in the possession of the company property, funds, and effects of the value of $37,027.31. The company ignored said order, and parted with the possession of the said property, and refused to turn the same over to the receiver or to the trustee; the company having, in due time, been adjudged a bankrupt.

Before such adjudication, however, and after the affirmance by the District Court, the bankrupt filed a petition to superintend and revise the order of the District Court by the Circuit Court of Appeals (260 F. 1022, 171 C.C.A. 669), and also applied to that court for a stay of the receivership proceedings pending the determination of such petition. The Circuit Court of Appeals granted the stay upon the giving of a bond in the sum of $40,000 by the Walker Grain Company. Such bond was executed and is as follows:

'State of Texas, County of Tarrant.

'Whereas, in the matter of Gregg Grain Company and others, in bankruptcy, versus Walker Grain Company, the said Walker Grain Company has filed its petition in the United States Circuit Court of Appeals to review and revise the order of the District Court of the Northern District of Texas, sustaining and affirming the order of the referee appointing a receiver of the property and assets of the said Walker Grain Company; and whereas, Hon. R. L. Batts, judge of said Circuit Court of Appeals, has granted an order suspending and superseding said order of the United States District Court, affirming the order of the referee appointing said receiver, until a decision can be had upon said petition to revise said order of said District Court, to take effect upon the execution and approval of this bond by the clerk of the District Court for the Northern District of Texas, or his deputy:

'Now, therefore, we, the said Walker Grain Company, as principal, and the undersigned sureties, as sureties, holding themselves jointly and severally bound unto the petitioning creditors in said cause in the penal sum of forty thousand dollars, conditioned that, in the event said petition to review said order of said District Court be denied, said Walker Grain Company will deliver unto said receiver or his successors or a trustee in bankruptcy, should the said Walker Grain Company be adjudicated a bankrupt, all the property and assets which may be found upon final judgment to be the property and assets of the said Walker Grain Company. In the event said order appointing said receiver be vacated, this bond shall thereupon be of no effect.

'Witness our hands this . . . day of Dec., 1918. Walker Grain Co., Principal, by J. L. Walker, Prest. Massachusetts Bonding & Insurance Co., by Geo. Beggs, Jr., Agent. J. L. Walker, Surety.

'Approved February 14, 1920.'

The Circuit Court of Appeals affirmed the action of the District Court. Thereafter, on the 22d day of November, 1919, the Walker Grain Company was adjudicated a bankrupt as of the 16th day of August, 1918, the date of the filing of the petition against it, and the receiver was made the trustee, and he is the plaintiff in these two suits.

The sum of $37,027.21 represents money and property that came into and was in the possession of the bankrupt as its own property at the time of the execution of this bond, and it is claimed that the bankrupt has wholly dissipated said sum of money and said property, and is unable to restore same or any part thereof, and has refused to restore same or any part thereof to the trustee, and that under the terms of the bond the defendants are liable for said breach.

The plaintiff has a second count in cause No. 985, wherein he declares upon the bond as a common-law right; there is no such second count in No. 986. In neither one of the petitions is there any allegation that the suit is one arising under the laws of the United States.

There is no apparent reason for the filing of two suits, since it appears that the same property was converted and kept from the rightful possession of the trustee; but these matters may be remedied by a consolidation of the actions and an amendment of the pleadings, if the plaintiff's counsel sees fit. There is no such diversity of citizenship as would give this court jurisdiction.

The defendants maintain that the bonds declared upon are mere voluntary obligations, neither authorized, required, nor provided for by any law or statute of the United States, and that therefore the suits are not suits arising under that provision of section 24 of the Judicial Code (Comp. St. Sec. 991), which gives this court jurisdiction of suits arising under the Constitution or laws of the United States, or treaties made, or which shall be made, under their authority.

The question presented is not without its difficulty. This difficulty is increased by the apparent, but not real similarity of the case under consideration with Lovell v. Newman, 227 U.S. 412, 33 Sup.Ct. 375, 57 L.Ed. 577. In that case Lovell, the trustee, brought suit to recover on a bond which had been given, not by the bankrupt, but by a third party, for the possession of certain cotton which the third party claimed. The third party challenged from the beginning the ownership and right of the trustee. In fact, the trustee was compelled to seek summary writs from the court for the taking of the property in question into his possession. The claimant executed bond for the property, which it claimed belonged to it. It was contended in that case, for...