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CASES

ARGUED AND DETERMINED

IN THE

UNITED STATES CIRCUIT COURTS OF APPEALS AND THE CIRCUIT AND DISTRICT COURTS.

AMERICAN ASS'N, Limited, v. HURST et al.

(Circuit Court of Appeals, Sixth Circuit.

No. 100.

November 6, 1893.)

L COURTS INJUNCTION TO STAY PROCEEDING IN STATE COURT.

Sale of land by a sheriff under an execution issued out of a Kentucky court of equity on a sale bond filed against the sureties thereon is a "proceeding," within Rev. St. § 720, inhibiting injunctions by federal courts to stay proceedings in state courts, except in certain cases.

SAME.

The federal court cannot enjoin such a sale, even though the land levied upon belongs to a stranger to the proceeding.

Appeal from the Circuit Court of the United States for the District of Kentucky.

In Equity. Bill by the American Association, Limited, against E. Hurst and J. C. Colson, to enjoin a sheriff's sale. Bill dismissed. Complainant appeals. Affirmed.

Statement by TAFT, Circuit Judge:

This was an appeal from a decree of the United States circuit court for the district of Kentucky, dismissing the bill of the appellant, the American Association, Limited, on the ground that the court had no jurisdiction to grant the relief prayed for.

After averring that the American Association, Limited, was a corporation and citizen of the kingdom of Great Britain, and an alien, and that the defendants were citizens of Kentucky, and that the amount in controversy exceeded $2,000, the bill set forth that the complainant was the owner of real estate in Bell county, Ky., the legal title to part of which was in the name of the complainant, and the legal title to the rest of which was in the name of Alex. A. Arthur, trustee; that all of the property described had lately been levied upon by Colson, one of the defendants, as sheriff of Bell county, Ky., under an execution issued in the Bell common pleas court in favor of the other defendant, E. Hurst, who was described in the execution as the master commissioner of said court; that this execution was issued against Alex. A. Arthur, trustee, and one John M. Brooks, for the sum of $14,834.63; that the levy was made by Colson against all of this property as the property of the complainant, and that, as sheriff, Colson had advertised that he would on a v.59F.no.1-1

2

FEDERAL REPORTER,

day subsequent to the filing of the bill, offer the property for sale to the highest and best bidder for cash in hand paid, under the execution; that before this, there had been instituted in the Bell court of common pleas an action in equity to procure the sale of certain real estate described in the proceeding as the property of the heirs of one Robert George; that the order for the sale of the real estate was entered, and the defendant Hurst was directed. as master commissioner, to make the sale; that, at the sale, the property was purchased by one Fish and another, who failed to comply with the terms of the sale, and subsequently transferred the benefit of their bid to one Alex. A. Arthur, denominated in the transfer as Alex. A. Arthur, trustee; that thereupon Arthur, trustee, and Brooks, above mentioned, executed two sale bonds as purchase money for the property, each in the sum of $10,827.25; that the execution levied upon complainant's property was issued on these bonds, which are given by the statute of Kentucky the force of judgments; that Arthur had no authority, as trustee for complainant, to purchase the property, to sign the bonds, or to make the complainant in any way liable to pay the purchase money; that the assignment was not made to him for the benefit of the complainant, and he did not in fact intend, and did not have any right, to bind the complainant in the execution of the bond; that nevertheless, upon the claim that Arthur, as trustee, was acting merely for the complainant in signing the bonds, Hurst, as commissioner of the court, caused the execution upon said bonds to be issued; that Colson had levied the execution, and was about to sell the property; that a cloud would be cast upon the title of the complainant to the property if Colson did sell it, and that the complainant would be unable to sell the same, and would be thereby irreparably damaged. The prayer of the bill was that Colson be enjoined from selling the property under the execution, and that Hurst be enjoined from directing such sale.

Humphrey & Davie, for appellant.

Richards, Weissinger & Baskin, for appellees.

Before TAFT and LURTON, Circuit Judges, and SEVERENS, District Judge.

The court below TAFT, Circuit Judge, (after stating the facts.) held that the remedy sought by complainant was forbidden in the federal court by section 720 of the Revised Statutes, which declares that the writ of injunction shall not be granted by any court of the United States to stop proceedings in any court of a state, except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy.

The questions necessary for us to consider are--First, whether the sale of land by a sheriff under an execution issued out of a Kentucky court of equity on a sale bond filed therein against the sureties thereon is "a proceeding" in that court, within the meaning of section 720, Rev. St.; and, second, whether such a sale is "a proceeding," within the section, even if the land to be sold has been improperly levied upon as the land of a surety in the sale bond, and in fact belongs to another person, a stranger to the proceeding.

1. The provision authorizing executions on sale bonds is to be found in chapter 38, art. 11, of Bullitt & Feland's Statutes of Kentucky, (page 560.) The first section of the chapter is as follows:

"Every bond taken on the sale of property under an order or judgment in chancery or on the sale of property under execution and every replevin and forthcoming bond shall be signed by the principal and sureties and attested by the person taking the same, or by some one in his presence. to the proper office with a Subsec. 1. A bond so taken shall be returned

report of the acts of the person taking it; and if taken under an execution, the latter must be returned with the bond. 2. All such bonds shall have the force and effect of a judgment, and on which if not paid at maturity, an execution may issue and shall be indorsed that no surety of any kind is to be taken."

Under the foregoing statute, the sale bond is a judgment against the principal and sureties thereon. In Kentucky the sale made by the commissioner in equity is not complete until a report of its terms and the sale bond taken shall have been returned to the court, and approved by a decree of confirmation. The right of the purchaser to take the property depends upon the sanction of that decree. Arnett v. Anderson, 11 Ky. Law Rep. 671, 672; Forman v. Hunt, 3 Dana, 614, 621; Busey v. Hardin, 2 B. Mon. 411; Taylor v. Gilpin, 3 Metc. (Ky.) 546; Freem. Ex'ns, 304a. When the crder confirming the action of the commissioner is entered, it gives life to the sale bond, which then becomes an accepted obligation binding the principal and sureties to complete the sale in accordance with the terms of the bond, and is in effect a confessed judgment for the amount of the bond. It was formerly the practice in Kentucky, in proceedings in equity, for the chancellor to make an express provision in the order of sale that a sale bond for the deferred payments should be taken, which sale bond should have the effect of a judgment upon which an execution might issue. The bond was then taken by the commissioner, reported to the court, and his proceedings were confirmed. Debard v. Crow, 7 J. J. Marsh. 7, 10; Leavitt & Co. v. Goggin, 11 B. Mon. 229. It could hardly be contended that the execution issued on a sale bond, which was given the effect of a judgment by special order of the court, was not a proceeding in that court. Now that, by express statute, every order of sale impliedly requires the giving of a sale bond, which shall have the effect of a judgment, it is equally clear that the approval of the sale bond makes the execution, issued thereon in accordance with the statute, a proceeding of the court in which the bond is filed. The claim of counsel that it is a mere ministerial process issuing from the office of the court, without judicial sanction, cannot be sustained. It has been held in a number of cases that a purchaser at a judicial sale becomes a quasi party, and that, where credit is given to him under an order of a court of equity, the court retains jurisdiction to compel payment by him of the residue through attachment, or by resale of the property. Wood v. Mann, 3 Sumn. 318; Clarkson v. Read, 15 Grat. 288; Stephens v. Magruder, 31 Md. 168; Freem. Ex'ns, (2d Ed.) 313e. The statutory provision which we are considering merely gives another remedy, by which the court is required to secure to the parties in the case before it, payment of the purchase price bid at the sale had and confirmed by its decree.

2. But it is said that, even if an execution on a sale bond levied on the property of the obligees is a "proceeding" of the court in which the bond is filed, an attempt to levy such execution on the property of another, as the property of an obligor in the bond, is void, and as it is not authorized by the execution, and is without

4

the authority of the court, neither the levy nor the sale under it
are "proceedings" of the court, within section 720.
appellant, to sustain this contention, rely on the case of Cropper
Counsel for
v. Coburn, 2 Curt. 465, in which it was held by Mr. Justice Curtis,
on the circuit, that the fifth section of the act of March 2, 1793,
(1 Stat. 334; now section 720, Rev. St.,) did not prevent a United
States court from enjoining a sheriff from levying on the property
of A. under a process issued by a state court against B.
case, Mr. Justice Curtis said:
In that

"It must be admitted that an attachment on mense process out of a state court, which the sheriff is authorized by that process to make, is a proceeding in a court of a state, within the meaning of this act of congress; for the word 'proceedings' may properly include all steps taken by the court, or by its officers under its precepts, from the institution of the suit to the close of the final process which may issue thereon. But it is equally clear that an attachment on mesne process, which the sheriff was not authorized by that process to make, is in no sense a proceeding of the court from which such process issued. Thus, if a sheriff, under a writ of attachment against the property of A., should take his body, or the property of B., this would not be a proceeding of the court, but a mere trespass, for which any appropriate remedy may be instantly sought in any court having jurisdiction. As Chancellor Kent remarked in his fourth Commentary, (page 410:) 'If a marshal of the United States, under an execution in favor of the United States against A., should seize the person or property of B., then the state courts have jurisdiction to protect the person or property so illegally invaded.'"

If this is sound, complainant's bill ought not to have been dismissed, but the proposition thus laid down by Mr. Justice Curtis has not met the approval of the supreme court of the United States. In Freeman v. Howe, 24 How. 450, that court held that when property was taken and held under process, mesne or final, by a court of the United States, it was in the custody of the law, and within the exclusive jurisdiction of the court from which the process issued, and that the possession of the officer of such court could not be disturbed by process from any state court. ion the supreme court dissented from the language of Chancellor In this opinKent, quoted and relied upon by Justice Curtis in Cropper v. Coburn, and reversed the decision of the supreme court of Massachusetts in Howe v. Freeman, reported in 14 Gray, 566, which was based on the decision in Cropper v. Coburn. man v. Howe is commented on at length, and reaffirmed, in Covell The decision of Freev. Heyman, 111 U. S. 176, 4 Sup. Ct. 355, in which Mr. Justice Matthews delivered the opinion of the court. tice, when sitting on the circuit in Perry v. Sharpe, 8 Fed. 15, refers The same learned justo Cropper v. Coburn, 2 Curt. 465, as contrary to subsequent authority. The principle of Freeman v. Howe, was reaffirmed, also, in the case of Buck v. Colbath, 3 Wall. 334, and was followed in Daly v. Sheriff, 1 Woods, 175, and in Ruggles v. Simonton, 3 Biss. 325. It is contended that Freeman v. Howe and the subsequent cases do not apply to the case at bar because the result reached in them was founded solely on the public necessity of avoiding unseemly conflicts between courts over the possession of property, while this proceeding will affect only the levy of an execution on land and a sale thereunder; and by the law of Kentucky (McBurnie v. Over

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