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Appeal from the Circuit Court of the United States for the Northern District of Ohio.

This is a suit originally brought in the court of common pleas for Wyandotte county, Ohio, by Meck against the other appellees and the appellants, for the specific performance of a contract in writing for the sale to him by the said John A. Mathews and Rumina E., Anna, and David Ayres of a parcel of land in Upper Sandusky, in said county. The petition alleged the contract of sale, the performance of the contract by the petitioner, the refusal of the vendors to make the deed stipulated for in the contract, and the tender of the purchase money, which he brought into court. The petition represented that Ida Hurst Mathews was the wife of John A. Mathews, and claimed some interest in the premises, and that the other defendants asserted claims by way of assignments of parts of the purchase money, or, as in the case of the defendants Laden, by liens acquired by attachment, or, as in the case of other defendants, by liens upon the purchase money. The case was removed into the Circuit Court of the United States upon the petition of the defendants John A. and Ida Hurst Mathew's and Rumina E., Anna, and David Ayres. A motion was made by the defendant Fraser to remand the case to the state court upon the grounds that the petition for removal did not show suflicient facts to give jurisdiction to the Circuit Court of the United States, and because there was no separable controversy. The motion was denied. Pleadings were filed by the defendants, and proofs were taken before the master, whose report was confirmed by the decree of the court. The decree, wbich was for the enforcement of the contract, declared the rights of the various parties, and, among other things, denied the claim of the defendants Laden. These last-named parties thereupon appealed to this court.

Foran, McTighe & Gage, for appellants.
Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

SEVERENS, Circuit Judge, having made the preceding statement, delivered the opinion of the court.

When this appeal came on for hearing, it was observed that a question concerning the jurisdiction of the court below was presented by the record, but we consented to pass it and hear the arguments of counsel upon the merits. Upon consideration we are convinced that the removal into the Circuit Court was unauthorized, and that we cannot consider its decree upon the merits.

In view of the facts that the only concern of the removing defendants was with the question whether their contract with the complainant should be specifically enforced, while the other defendants were concerned with questions relating to the disposition of the purchase money, it may be that the removing defendants had a separable controversy with the complainant. We do not, however, decide that question. The petition did not in terms claim that there was a separable controversy. In respect to the citizenship of the parties the petition alleged "that, at the time said suit was brought, the plaintiff was, and still is, a resident and citizen of the state of Ohio, and that the defendants John A. Mathews and Ida Hurst Mathews were, and still are, residents and citizens of the state of Michigan; that the defendants Rumina Ayres, David Ayres, and Anna Ayres were, and still are, residents of the state of Illinois, and that none of your petitioners herein are residents and citizens of the state of Ohio.” The difficulty is that the citizenship of the defendants Ayres is not alleged. It appears only that they are residents of Illinois, and are not citizens of Ohio. It is not shown that they are citizens of any other state, and, for aught that appears, they may have been citizens of the District of Columbia or of some territory, in which case the suit would not have been removable. Hepburn v. Ellzey, 2 Cranch, 445,2 L. Ed. 332; New Orleans v. Winter, i Wheat. 91, 4 L. Ed. 44; Barney v. Baltimore, 6 Wall. 280, 18 L. Ed. 825; Hooe v. Jamieson, 166 U. S. 395, 17 Sup. Ct. 596, 41 L. Ed. 1019. Or, indeed, they may have been aliens. While the statute provides for the removal of some cases by aliens, in the instance of separable controversies the controversy must be "wholly between citizens of different states.” It is supposed, in Dillon on Removals by Black, $ 81, that “the failure to extend the right of removal in such a case is a casus omissus.” But Chief Justice Waite, in King v. Cornell, 106 U. S. 395, 1 Sup. Ct. 312, 27 L. Ed. 60, demonstrates that the omission was intentional. At all events, it is clear that the parties to the separable controversy must all be citizens of states, in order to found the right of removal from the state court. And the members of each of the respective parties to that controversy must all be citizens of different states from those of the members of the opposite party. Removal Cases, 100 U. S. 457, 25 L. Ed. 593 ; Fraser v. Jennison, 106 U. S. 191, 1 Sup. Ct. 171, 27 L. Ed. 131. And the question whether there is a separable controversy must be determined by the state of the pleadings and the record at the time of filing the petition for removal, and not by any subsequent proceedings which may be had in the case. Barney v. Latham, 103 U. S. 205, 26 L. Ed. 514; Wilson v. Oswego Township, 151 U. S. 56, 66, 14 Sup. Ct. 259, 38 L. Ed. 70.

It follows that the removal of this case from the state court was unauthorized. The decree of the court below must be reversed, and the cause remanded, with instructions to remand it to the state court from which it was removed, the costs of both the circuit and this court to be paid by the removing defendants.

In re SPITZER et al.

peals, Second Circuit. May 17, 1904.)

(Circuit Court of

No. 197.

OF

1. BANKRUPTCY-ACTION OF TROVER AGAINST RECEIVER- JURISDICTION

STATE COURT.

A state court has jurisdiction of an action of trover brought against a trustee or receiver in bankruptcy to recover the value of property al

leged to have been converted by him as a part of the assets of the estate. Petition to Review the Order of the District Court of the United States for the Southern District of New York.

This cause comes here upon petition for review of an order of the District Court, Southern District of New York, restraining the petitioner from prosecuting certain actions in the state court against Louis E. Binsse, who was duly appointed receiver of the assets of the bankrupt.

f1. See Bankruptcy, vol. 6, Cent. Dig. $ 414.

M. D. Steuer, for petitioner.
S. J. Rawak, for respondent.
Before LACOMBE, TOWNSEND, and COXE, Circuit Judges.

*

LACOMBE, Circuit Judge. The date of adjudication in bankruptcy does not appear, but Binsse was appointed receiver on November 25, 1903. Prior to his bankruptcy Spitzer assigned certain of his accounts receivable, amounting to about $20,000, to Rosenberg, for a valuable consideration. Rosenberg paid 80 per cent. of the face value of said accounts, less certain discounts in cash, and agreed that any amount in excess of that sum which he might collect-after retaining 2 per cent. a month-should eventually be paid over to Spitzer. Whether or not Rosenberg has collected from Spitzer's debtors 80 per cent of the total indebtedness besides the discounts and the 2 per cent does not appear. All that the receiver avers in his petition is that 20 per cent. of the total amount of said accounts (less the deductions) is an “indemnity fund,

part and parcel of the assets of the estate," and that Rosenberg is indebted to the estate of the bankrupt in a sum exceeding $2,500 on account of said assignment. It is not disputed that the assignment of the several choses in action to Rosenberg was a perfectly proper one, made in entire good faith; nor is it claimed that it is obnoxious to any provision of the bankrupt act. Whatever sum might be due or might eventually become due from Rosenberg to the bankrupt on account of the purchase price which he had agreed to pay, and of which he had paid 80 per cent. only, there can be no doubt that the property and title to each and every one of the choses in action specified in the assignment passed to Rosenberg. Rosenberg was examined as a witness in this proceeding, told of the assignment to him, and subsequently gave the receiver a transcript from his ledger showing precisely what accounts he had purchased from Spitzer. The record before us indicates that there were outstanding accounts of the bankrupt's debtors which were not transferred to Rosenberg. The receiver has collected various sums of money from several debtors of the bankrupts. Rosenberg claims that among them are items which were included in the assignment to himself, and he has brought actions against the receiver in the state court to recover damages for their conversion. The order sought to be reviewed restrained Rosenberg from further prosecution of these actions.

The sole question presented upon this appeal, viz., whether the state court has jurisdiction of these actions of trover, has already been disposed of in this court. In Re Russell & Birkett, 101 Fed. 248, 41 C. C. A. 323, a trustee in bankruptcy had taken into his custody certain property in the possession of the bankrupts, which it was claimed belonged to the Machinists' Supply Company. That company brought an action of replevin against the trustee in the state court to recover possession of such property, and the United States District Court enjoined the further prosecution of that action. We held that the action for replevin was properly enjoined, because it was one for the seizure of property in the custody of the bankruptcy court, which, upon the principle decided in Freeman v. Howe, 24 How. 450, 16 L. Ed. 749, is protected

from any interference by state process; but also held that: “We should entertain no doubt that the Machinists' Supply Company was entitled to bring an action of trespass or trover for the recovery of the value of the property against the trustee in the state court. And in Re Kanter & Cohen, 121 Fed. 984, 58 C. C. A. 260, which was an action of trover, we reaffirmed our decision in the Russell & Birkett Case.

The order of the District Court is therefore reversed, with costs.

In re FREDERICK L. GRANT SHOE CO.

(Circuit Court of Appeals, Second Circuit. April 21, 1904.)

No. 139.

.

1. BANKRUPTCY-PROVABLE CLAIMS-BREACH OF CONTRACT.

A claim for damages for breach of contract is one founded “upon a contract,” within the meaning of Bankr. Act July 1, 1898, c. 541, § 63a,

30 Stat. 562 [U. S. Comp. St. 1901, p. 3447), and is provable in bankruptcy. 1 SAME INVOLUNTARY PETITIONERS — CREDITOR HAVING UNLIQUIDATED

CLAIM.

A creditor having a provable claim, although the amount is unliquidated, may file a petition in bankruptcy against his debtor. In Error to the District Court of the United States for the Western District of New York.

For opinion below, see 125 Fed. 576.
P. M. French, for petitioner.
Hiram Wood, for respondent.

Before WALLACE, LACOMBE, and TOWNSEND, Circuit Judges.

!

TOWNSEND, Circuit Judge. The issues herein are raised by the petition of the alleged bankrupt to review the order of the United States District Court for the Western District of New York denying its motion to dismiss proceedings in involuntary bankruptcy. The questions of law presented appear from the following allegations of the petitioning creditor and of the alleged bankrupt: The alleged bankrupt is a corporation engaged in the manufacture of shoes. It owes debts to the amount of $1,000 and over, and is insolvent, and has less than 12 creditors. It sold to the petitioning creditor shoes under an express warranty, which warranty was broken, to the damage of petitioner in the sum of $3,732.80. Within four months prior to the filing of this petition it committed an act of bankruptcy, by assigning all its property to a single creditor, under an agreement that said creditor should, out of said property, reimburse itself and all other creditors except this petitioning creditor. The alleged bankrupt denied its insolvency and the alleged breach of warranty, and demanded a jury trial. It also moved to dismiss the petition on the ground that the damages for the alleged breach of warranty were unliquidated, and therefore were not a provable claim against it. The District Court denied the motion to dismiss, and directed that the claim of the petitioning creditor be liquidated at the jury trial demanded by the alleged bankrupt.

11. See Bankruptcy, vol. 6, Cent. Dig. $ 479.

130 F.-56

Section 59b of the bankrupt act (Act July 1, 1898, c. 641, 30 Stat. 561 [U. S. Comp. St. 1901, p. 3445]) provides for the filing of petitions in involuntary bankruptcy by "creditors who have provable claims."

Section 63 of said act (30 Stat. 562 [U. S. Comp. St. 1901, p. 3447]) includes among the "debts of the bankrupt which may be proved and allowed against his estate" those "founded upon an open account or upon a contract express or implied.” In the case at bar the petitioning creditor alleges that his claim is founded upon an express contract. The court below has found that the claim, although unliquidated, is a provable one, and, under the provisions of section 63b of said act (30 Stat. 563 (U. S. Comp. St. 1901, p. 3147]), has provided for its liquidation. The effect of the denial of the motion to dismiss is only to preserve and safeguard the rights of the parties until the petitioning creditor can have his day in court at the jury trial demanded by the alleged bankrupt, in order that the validity and amount of his claim may be determined. To hold, as is contended by the alleged bankrupt, that a claim is not provable because the amount of the claim itself is not determinable, or its validity is disputed, would defeat the purpose of the involuntary provisions of the bankrupt act. Thus, in the case at bar, if the petition were dismisscd, it would only be necessary for the alleged bankrupt to delay such proceedings as might be brought for the liquidation of said claim until after the expiration of the time for bringing involuntary proceedings, and then secure a dismissal of the petition on the ground that said petition was not seasonably brought. In In re Stern, 116 Fed. 604, 54 C. C. A. 60, we held, in a case where certain claims for breaches of contract were undisputed, that the mere fact that the damages therefrom were to accrue in the future did not prevent them from being provable. In disposing of the case at bar, it is unnecessary to add anything to what was there determined. It appears from the petition that this claim is for a debt founded upon a contract, and is therefore a provable claim.

The order of the District Court is affirmed, with costs.

BERGER et al. V. WILD.

(Circuit Court of Appeals, Third Circuit. June 27, 1904.)

No. 58. 1. MALICIOUS PROSECUTION-EVIDENCE-MALICE-PROBABLE CAUSE.

Defendant's superintendent, on being led to apprehend that plaintiff had tampered with certain accounts in her charge, sought the assistance of another of defendant's superintendents; and they, on examining the books, found what they supposed to be a considerable deficit. Defendant company was then notified, and sent a supervising inspector, who, after making an examination, confirmed the result previously arrived at, when, by defendant's direction, the superintendents submitted the books and papers

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