# In re Brown > District Court, N.D. Ohio · November 8, 1960 · 85 Ohio Law. Abs. 463 URL: https://www.frixlaw.com/law-library/cases/6751192 ## Case - **Full name:** BROWN, Bankrupt, In re - **Court:** District Court, N.D. Ohio - **Decided:** November 8, 1960 - **Citations:** 85 Ohio Law. Abs. 463; 1960 U.S. Dist. LEXIS 5247; 1960 WL 12172 - **Precedential status:** Published - **Opinion:** Opinion of the court by Doylereferee - **Judges:** Doyle, Referee - **Cited by:** 3 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/6751192 ## How later opinions describe it (automated extraction) - stating “[f]unds in the hands of a Municipal Court trustee represent only an attempt to transfer assets of a debtor and they remain in custodia legis” at p. 467 ## Opinion text ISSUES Doyle, Referee in Bankruptcy. The questions involved in this proceeding are whether this Court has summary jurisdiction and if so, authority to issue a turnover order directing the Clerk of the Municipal Court of Warren, Ohio to pay to the trustee in bankruptcy a fund held by said Clerk on the date of the filing of the petition in bankruptcy. The fund was derived from payments made from wages assigned by the bankrupt to the Municipal Court Clerk as Trustee under the provisions of Sections 2329.70 and .71, Revised Code, relating to statutory trusteeships in county and municipal courts. FACTS Prior to the filing of petition in bankruptcy and, on or about June 25, 1959, the then debtor, Brown, filed Ms application in the Municipal Court of Warren, Ohio, for the appointment of the clerk of that court to act as trustee under Sections 2329.70 *465 and .71, Revised Code, to receive and distribute non-exempt wages of tbe debtor to creditors joining in tbe trusteeship. Numerous payments were made by tbe debtor and distributed prior to tbe bankruptcy. Additional payments were made to tbe Municipal Court trustee prior to tbe filing of tbe petition in bankruptcy in tbe amount of $623.74, wbicb sum was in tbe bands of tbe Municipal Court trustee on tbe date of tbe filing of petition in bankruptcy, April 7, 1960, and for approximately two weeks thereafter. Tbe Clerk of tbe Municipal Court was notified by tbe attorney for tbe bankrupt, of the filing of petition in bankruptcy while tbe funds were in tbe hands of said Clerk of Municipal Court who was instructed by said attorney to bold tbe funds subject to tbe order of tbe bankruptcy court. Said Clerk of Municipal Court disregarded this notice and made distribution of said funds to tbe creditors fisted in tbe Municipal Court trusteeship, on or about April 23, 1960. Tbe trustee in bankruptcy thereupon filed a petition for a turnover order to wbicb answers have been filed by various respondents, bearings held, oral arguments made, and briefs submitted. DISCUSSIONS AND LAW. What law applies to a situation where funds are accumulated by a trustee in a Municipal Court trusteeship prior to bankruptcy and are held by tbe Clerk of that Court as trustee on tbe date of tbe fifing of tbe petition in bankruptcy? Should tbe fund be paid to tbe creditors of tbe debtor or is tbe trustee in bankruptcy entitled to tbe fund? Tbe applicable sections of tbe Ohio Statutes are Sections 2329.70 and .71, Revised Code. Tbe statutes state in detail the procedure for tbe establishment and operation of Municipal Court trusteeships. By reason of tbe length of Section 2329.70, Revised Code, these sections will not be incorporated in this memorandum but reference is made thereto. It is settled law that tbe Court of bankruptcy has summary jurisdiction over all property in tbe actual or constructive possession of tbe bankrupt or of tbe bankruptcy court at tbe time of tbe fifing of petition in bankruptcy. The bankruptcy court *466 also has authority to hear testimony and determine whether it has such jurisdiction. Under 11 U. S. Code, Section 11, Chapter 2; Section 2A (21) of the Bankruptcy Act, it is provided that the courts of the United States hereinbefore defined as courts of bankruptcy are hereby created courts of bankruptcy and are hereby invested, within their respective territorial limits as now established or as they may be hereafter changed, with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in proceedings under this Act, in vacation, in chambers, and during their respective terms, as they are now or may hereafter be held, to — (2-A-21), require receivers or trustees appointed in proceedings not under this Act, assignees for the benefit of creditors, and agents authorized to take possession of or to liquidate a person’s property, to deliver the property in their possession or under their control to the receiver or trustee appointed under this Act. An assignment of wages to be earned in the future is valid but not enforceable until earned. Rodejlciet v. Andrews, 74 Ohio St., 104 , followed and approved in Public Finance Co. v. Rowe, 123 Ohio St., 206 . A distribution by a court trustee more than four months prior to the filing of a petition in bankruptcy is not recoverable by the trustee in bankruptcy on a summary order but the distribution of funds in the hands of such trustee on the date of filing of petition in bankruptcy, not having been distributed prior to that date is not necessarily controlled by that same rule of law. The fact that the trusteeship was created more than four months before bankruptcy or that funds were received by the Municipal Court trustee more than four months before bankruptcy is not the determining factor. The payments made to a county or Municipal Court trusteeship prior to the filing of petition in bankruptcy and not distributed prior to bankruptcy are in custodia legis. This is true also of funds held by sheriff who sold personal property and held the proceeds of such sale at the time of the filing of a voluntary petition in bankruptcy. The claim of the creditor cannot be perfected by the payment to him thereafter. The power to consummate inchoate rights ceases upon the filing of a petition in bankruptcy. *467 Nyer v. Donnelly Corporation, 78 Ohio App., 216 , cited and approved in S the statutory trustee prior to bankruptcy. The court found on the facts and laws in that case, that the trustee in bankruptcy was entitled to the fund so held by the clerk-trustee on the date of the filing of the petition in bankruptcy. The same ruling was made in the later cases previously cited. To the same effect is the rule in Nyer v. Donnelly, 78 Ohio App., 216 , previously cited. CONCLUSIONS AND DECISIONS. This court finds that it has summary jurisdiction in the matter involved in this proceeding and that the trustee in bank-rutcy is entitled to receive the funds held by the Clerk of Municipal Court of Warren, Ohio on the date of the filing of petition in bankruptcy herein. An entry may be drawn in accordance with this Memorandum, directing the Clerk of Municipal Court of Warren, Ohio, to pay to the trustee in bankruptcy herein forthwith, the amount held by said clerk as trustee on the date of the filing of petition in bankruptcy. Exceptions. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/6751192. Public record. Not legal advice.