# Respondents Brief in Opposition — Warren v. Palmer > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_1746%3A6 ## Record - **Collection:** Supreme Court brief - **Document type:** Respondents Brief in Opposition - **Published:** January 1, 1940 - **Citation:** 310 U.S. 132 ## Text ¥ £ sa? , -* , a 5° ¥ . a * ‘ s - ~ a , -- Sya —— - ae Ser ete: cna ommerenerenne senelbn eneenee a ‘ ‘ ” Co | J ’ IN THE | Ss a Supreine Cone nf the inited Staten | ‘ OCTOBER TERM, 1939. Ho Bs Mexevey We Wages’ and. Citannes We Muueatiy, as: the Triistees of the property of Boston and, Provylence Railroad Corporation, Debtor, t 7 ¥) arr Decisions of this Court Conclusion The ti with décisions of Circuit Courts of Appeal cited ‘by petitioners is supported by those decisions. . (a) Magnolia Petroleum Co, V.. Thompson, 106 OB cfd 217, C20. AL Sth, 1989, certiobri granted December, 4, 1939 (Petition, pp. 7-11) : | YVR ene eRe eee ee ee eS ee eee eee a a ee oe . . Thompson: Vv. Terminal Shares, lue.. WA F. (Pdi 1, 9 CLC. AL Sth, 1939.) certiorari : denied, October 9, 1989 (Supplement - to Petition) .«..... PER wer age hae General Motors Acceptance Corp, \. Horton, -85.F. (2d) 452, C. C. A. ad, 1986...... ethos Decisions of this Court have clearly settled the “question” of federal law that petitioners are. - . . ry 8 . e . seeking to present and Congress -has adopted the rule of these decisions into Section T7 of} the Bankruptey et : —0'6.06 & 6.4 '0,0 96 8 8 OO 2 BOS 2.0 OO Renee rewene eee fy fe (b)-The provisions of Section . ) G ~. Nura, 91 Pe gd 11S, i A Sth, 1087“... » Bostone ands Providence ° Railroad Corporation, lessor! and had operated that property éontinudusly since the commencement of proceedings under Section 77 of the Bankruptey Act to reorganize The New ‘York, New Haven and Hartford Railroad Company, sublessee, and Old Colony Railroad Company, lessee.* Petitioners fail to include this most important fact in the question as they present’ it to this Court. Their question also omits all reference to the fact that the ‘present controversy involves ascertaimment of the amatnt of the expenses: incurred by the. trustees ap- pointed by the Connecticut Court: in operating and alininistering: prec and Providence preperty, and the imposition of a-lien therefor on that property, The * question” eet have hoe ‘nN stated, i’ substance, as follows: on. ; : Caron Did the Conneefient Court, having come into phly- 1 Petitioners’: specification of error No. 3 is inconsistent with the facts in céatending that the trustees appointed by the Con- necticut Court did not have physical ‘possession of the. Boston and. Providence property. Those - trustees were and still are operating that property. ~ ‘ 2 The three railroad companies wil be referred to respectively as ‘‘the New Hayen’’, ‘‘the Qld Colony’ ‘and ‘‘the Boston and ’ Providence’, The District Court for the District of Connectient will be referred to as ‘‘the Connectleut Court’’. +The District: Court for the District of Massachusetts, in which proceedings for. the reorganization in bapkruptey of Boston and Providence were recently commenced, will. be referred to as ‘‘the Massachusetts | Court’. ae oe 3 : sical custody of thre property of Boston and p ke. dence, lessor, in proceedings under Section 77 of the Baukruptey Act to reorganize the New Sidon: stib- lessee, and the Old Colony, lessee, have jurisdietion to determine the expenses of its administration and operation of said property and to impose alien thereon for the. amount of said expenses, or wis such jurisdiction superseded by the subsequent. filing of a petition in the Massachusetts Court for reorganization of the lessor under said Sec¢tion? — — Be Statement.* Before the proceedings for the reorganization of - the New Haven began, it, as sublessee of Old Colony, | was in actual physical possession of and, operating the Boston and Providence property (R., p. 183, fols. 547, 548). After those proceedings started on Octo- her 23, 1935, the Boston and = Providence property came into the ac tual POSSeSSTOLL of respondents as trus- tees appointed, by the Connecticut Court OR. p. 183, fol. 548).. They “hayé possessed and operated it ever Since as officers of the Court which appointed them, and under that Court’s directions. They are do’ g so vow under an order of that Court CR... pp. 208-210) entered July 19.: 1938, when the lease was rejected (Rp. 211), and providing in part: eat: +5, Pending furthe 4 order of ¢ ‘ourt ‘the opera- tion of the property of Boston and. Providence for the account of that corporation shall be con- a lee * Emphasis should be placed on respondents’ possession under orders of the Connecticut and Massachusetts Courts. We do this here without restating the facts set forth in the petition (Rule 2% { 4 ; }e ° ‘ P 4 * e a etinued pursuant to subdivision (¢) (6) of See. i So of the Bankruptey Act, and sinve the Old Colony Railroad Company, as lessee of Boston.and Provi- * dence, and likewise the Old ¢ ‘olony Trustees, are | wholly without anv operating’ organization, the operation of Boston and Providence properties shall be conducted by the New Havew Trustees | im behalf and for the account of the Old“ Colony estate uit. without expense te the New Haven . estate." Indeed, the Massachusetts Court has errjomned ay interference with the “present operation’ of, the rail- road or properties of the Boston. and Providence: CR. p. 228, fol. 683), the petition of its creditor for | its reorganization having alleged, and it having by answer admitted, that the property was being oper-- ated for its aecount pursuant to Section 77(¢)(6) by respondents as trustees under the: foregoing order of the Connectient Eourt CR. p. 223, fols. 668, 669; p. 226, fol. 678). And the Massaéhusetts Court has eare- fully refrained from interfering in any way-with the — | present proceedings, in the custodial court for ascer- tainment aml charge of that Court's expenses of, operating and administering the property in the New. Haven-Old Colony reorganization proceedings (R., p. 250). At no time has the Boston and Providence— * Sec, 77(¢) (6. If a lease of a line of railroad -is rejected, and if the lessee, with the approval of the judge, shall elect no longer to operate the leased ime; it shall be the duty. of the lessor at the end of a period to be fixed by the. judge to begin the’ operation of such line, unless the judge, upoar the petition of the lessor, shall decree after hearing that it would) be- im- ‘practicable and, contrary, to ‘the public interest: for the lessor to: operate theo said line, in which event it shall be the- duty of the lessee to continue operation on or fer the account of the lessor until the abandonment of such dine is authorized by the Com- mission in accordance with the prov isions of section 1 of the luterstate Commerce ‘Act as amended.’ * 4s o or any one. for it—asked for repossession of its road. The fact of the matter is that respondents have: been required to operate it because fhus far no one else has been able to do so (R,, p. 508, fol. 923); Argument. The petition fails to show any: reason = the writ should be granted, for: (1) "Phe decision below; instead of be ing in couttic t with decisions of Circuit Courts of Appeal cited | hy petitioners. is strpported by those decisions, (a) Magnolia Petroleum Coy. Thompson, 106 FB, (2d) 217, C2. C. AL 8th, 1939, ¢ertiorari granted December 4, 1939 (Petition, pp. 7-11). : ‘In the ieeuslte case the Cirenit Court of Appeals stated that the jurisdiction of a court in charge of the reorganization of a railroad under Section 77 to deter- mine a question of title to mineral rights claimed by the railroad depended on whether the railroad’s trus- _ tee had physical possession of the subsoil: The sole “ question was whether of not: such possession existed, The adverse claimants argued that the deeds te the railroad had granted it a perpetual. easement for railroad purposes, limited to the surface and not: ex- terfiding to the’ subsoil The eourt held that as a matter‘of loeal law the deeds granted only an ease-. fnent.. The parties stipulated that this limited sur- . face easement did not give.the trustees > possession of . the subsoil, and. accordingly the reorganization eourt did not have jurisdiction to determine subsoil mineral rights. | 4 . 6 Thug there is uo conflict .or possibility of contlict hetween thie two cases on What constitutes possession ; and both cases illustrate in. striking fashion the familiar rule, of law, not disputed by petitioners in the Court below (R.,- pp. 306, 307, fols. 918, 919), that possession is the basis for bankyuptey jurisdic tion. The applie ation of this rule to property in the possession of a haukrupt lessee seéms never to: have heen questioned, Gazlay v. Williais, 210 UL 8. 41° (1908): Lindehke v. Associates Realty Cv., 146 Fed. 650, Ce Ci A. 8th (1906); Tn-re Bornhardt Coal & L. ('o., 265 Fed, 385, N. D.- Ohio (1919) 5 Tn re Chambers, «. Calder & Co., 98 Fed. 865, D. Ro Ie (1900); Ja re Kleinhans, 113 Fed. 107, W. D.-N. Y. (1902); Jn re Schivartzman, 167 Fed, 399, D. S. Ce (1909); 5 Rem- ington, Baukruptey (4th Ed. 1936), See. 2354; ef. Tun ore Adams, 134 Fed.’ 142, D.: Comm. (1905) ; Plaut vy. Gorham Mfq. Co., 159 Fed. 754,°S. D: N.Y. (1908); Eldridge v. White & Black River Ve R. Co., 194 Ark, 800, 109 S. W. (2d) 658 (1937). eG) Thompson vo Termiial Shares, Ine:, 104 BF. (2d) 1.9, C. C. AL 8th, 1939, certiorari denied, October. 9, 1939 (Supplement) to. Petition). | . In that ease all of the’ property in duestion was in the actual possession of adverse claimants not served in the distriet. For ‘that reason-the Cougt held it had no jurisdietion: over the property, ‘but stated. it would have had jurisdiction if the property had been ‘in the actual or constructive possession of the debtor at: the time the petition for reorganization was filed and approved * *°*#", thix being “the traditional juris- diction” off bankruptey courts. which was continued 7 by Section 77 (104 F. (2d) at p. 9). Here is con- currence and not vontlict, («) General Motors Acceptance Corp. hig | ton, 85 F. (2d) 452, C. C. AL 3d, In the tlosten cas? the lessor: sai. presumably hy reclamation petition to thé.bankruptey. ‘court, “to gain pdssession of the aufontobile ** * from the , lessee’s trustee in hankruptey*? (85. F (2d) at p. 45:3) and .the question presented, was~Whether or not. it should be returned. (The -possession. of the trustee made the court’s jurisdiction so ¢lear that, it was not even mentioned. Having jurisdiction, the Court erer-" cised it and decided that: the property should he re- turned, The same situation was presented in Ji re - Lake's Laundry, 79 F. (2d) 326, CC. C. A. 2d, 1935, certiorari denied 296 U. 8. 622.° Actual possession in.the present ease is as clear as it’was-in the Lake's Laundry and Horton cases, For that reason, juris: — dietion-is equally clear. i (2) Decisions of this Court have clearly settled ‘the ‘question’? of federal law that petitioners - are seeking ‘to present (see ‘Question Pre- sented’, supra, pp. 2-3) and Congress has ‘. adopted the pule of these decisions into Section 77 of the Bankruptey Act. (a) Decisions of this Court. pit gol i. Where courts would otherwise have concurrent jurisdiction over specific property, the actual posses- sion of it by one of them.withdraws the property from the jurisdiction of all others. This principle has been so clearly settled by decisions of this Courtothat no question with regard to it now exists’ It owes its ~ ~ ~ 2. origin to no statute. It is.not peculiar to courts of hbankruptey, but is applicable to all courts, . federal amd state, Murphy v. John. Hofman Co., 2117 U.S. 562 (1909). It- has ofteri been applied in favor of a hankruptey court, White v. Schloerb, 178 U.S. 542°. (1900); Tsaacs vo Jlobbs Tie and Timber Co,, 282 U.S. 754 (1931); and it has also been invoked against a, bankruptey court where jurisdiction over the prop- erty has first been obtained by another tribunal. Straton v. New, 283 U. Sy 318 (1931); Metcalf v. Barker, WT Us 8. 165 (1902) 3-Piekens v. Roy, 187 U.S. 177 (1902); Peck v. Jeiness, 7 How, 612 (1849). It iz applicable also as betweeil a receivership court and: another court, Wabash. RB. Co. v. Adelbert Col- —SHeye, 208_U. S. 38 (1908), as well as between receiv- ership, courts: See. Harkin v. Brundage, 276 UL S.. 16. 43 (1928). : . . ’ Petitioners, to be sure, suggest that. this well-estab-. - lishee basis of jurisdiction has been abandoied as to courts proceeding. under Seefion 77, but the re gil : tion flies in the face of -all that has been. said. « , decided on the matter. E.r parte Baidwin,* 291 U. s/ 610; Board of Directors of a Francis Levee District v. Aurn, 91 Ff f2d) 118, C. CLA. 8th (1937); Eldridge: ve White & Black River : PR. Co., 194 Ark. 800. Petitioners’ notions are based on language t taken out of its context in a note. found in Mr, J. W. Moore's ——— é *p ey in this comnec tion point to this Court's statement (2910. 610, 615) that: ** All property it the ‘possession of a [iad ety of which —he-claims the owne vship,. passes upon the. filing of a petition in bankruptcy, into the custody of the court of bankruptey.’ * But. jurisdiction in that ease did net turn upon title. Instead this Court sail it’ turned upon ** possession sf and possession gave ‘‘exclusive’’ jurisdiction under Section 77 to ‘determine all questious’’ regarding the property though ii.was . outside of the district. Indeed it cited most of the cases cited herein. : ; ; ° 1937 edition of Collier on Bankruptey, which dis- cusses ( ‘ontinental IN. National Bank v. Chicago, Ri I. & P. Ry. C6,, 294 U.S. 648 (1935). The rest of -the note discloses the author’s meaning to be that Section 77 abandons any limitation of jurisdiction té prop-— erty possessed by the debtor, not that the section abandons possession as a basis of jurisdiction. - And certainly no more unlikely inference can be drawn from the Rork Island ‘ease than that Section 77 has coutracted powers already ‘possessed by courts of bankruptey, — \, . (bh) The provisions of\Section 77.’ Before the reorganization amendments, the Bank- ruptey Act ‘itself “made no. mention of ‘exclusive | jurisdiction,” But this Court consistently used these _words to describe the power of 2 hankruptey court _ over property in its, physical’ possession. Hebert v. Crawford, 2283 U.S Saray 208 (1913) ; Murph y Vv. John Hofman Co, 211-0. : -p62, 569 (1909); Taylor Vv Sternberg, 293 U.S. on 472. (1985) : Stratowy. Ne 0: -983 U7. S. 318,321 (19551) 5 Isaacs. Vv. Hobbs Tie and Timber Co., 282 U. 8.734, 737 (19381). The language has never been thought to affect jurisdiction obtained by another court through prior possession of prop- ” erty, except where the bankruptey power is made paramount. Straton ve. New,, supra; Metcalf v: * Barker, 7 US. 165- (1902) ; Peck v. Jenness, 7 How. 612 Sid Tn re Continental Coal Corp. 8s red. 11, 7. * 6th ( (1916). Sec ‘tion 77(a) prov ides in pact that: ae eae ae petition is sO approved, the court in which sue ‘+h order is ente ‘red shall, during aL the pendency of the proceedings under this sec- tion and for the purposes thereof, have exclusive jurisdiction of thé debtor and its) property wherever located, * * *"" “Mud Section 77(1) states that: In proteédings under this seetion and con- sistent. with the provisions thereof, the jurisdic- tion and powers*of the court, the duties of the debtor aid the rights aud liabilities of creditors, and ofall persons with respect. to the debtor and its property, shall be the same as if a Spey petition for adjudic ation had been filed and. decree of adjudication’ had been entered ow a day when the debtor’s petition was filed.’ In this manner’a principle long familiar was adopted unequivocally by Congress, Eur parte Baldwin, 291. UC. S. 610, 615 (1935); and in adopting it, ‘Congress. | used familiar words—a fact that is not without signi- fiance, Case vy. Los Angeles Products ('o., Lid., S4 - L. Mal. 22, 29 (1989). In spite of 1 all this petitioners contended helow that the jurisdiction vested. in the Massachusetts Court by Section 77(a) and by the petition for the reorganiza- tion of Boston and Providence automatically over- rode the Connecticut Court's enstodial jurisdiction over that debtor's railroad. If this contention could | ever have raised a substantial question as to the niean- ing of the stetutory phrase, the question has been sét at rest by this Court's interpretation of the same words in an analogous statute, Di parquet Huot & -rMoneuse Co. Vv. Evans, 297. U. 8. 216 (1936). There it is distinctly held that where a debtor's property is Within the possession—and so, within the’ jurisdic- il és ienpet oo tion—of one court, such jurisdiction is not auto- matically super rseded. by subsequent. proceedings for the reorganization of the debtor (under Settion 77B) in another court (tnless the first court was engaged in reorganfZing or liquidating the same debtor), This ix true despite the grant of ‘texclusive jurisdiction” to the latter court, Anil by the very terms of Section, 77(a) above quoted the Massachusetts Court's juris. diction over Boston and’ Providence property. is not “exelusive’’ withouf qualification, but only for the gece of reorganizing the: Boston and Previdence,* ~ Petitidners argue that an exereise by the Comnee- tient Court. ofits jurisdiction in the present ease would defeat the reorganization of the Baton and Providence in “Massachusetts and be tantamount. to its reorganization “in Connecticut *(Petition, — pp. 13-14). A short: answer to this arg is to he. found in the opinion below CR... pp. 309, 310, fols, 929-930). Moreover in fact and at present the Boston and Prov idence is heing reorganized separately ani in its own proceedings | hefore, the Commission , and the. Massachusetts Court. 07 006 eet , “ : LY ae me . ss . a . ’ % Assume - by way of analogy that in the ordinary course of carrier operations “a fretght shipment had come into the hands of respondents in Massachusetts. The Connecticut Court would’ have jurisdiction to determine claims of the estate against that. property for. freight charges and to impose a liew therefor even though after the charges ‘had aecrued and while the shipment Was still in respondents’ Possession the owner of the shipment went inte 77B proceedings jin Massachusetts. The ‘texclusive + jurisdietion’’ of the 77B debtor and its property for the purpose - of its reorganization would’.net automatically oust thé Con- nesticut Court of - the jurisdiction resulting from its possession of the shipment—a jurisdiction incidental to the reorganization — of another debtor a part’ of whose estate: has -been expended. on ~ the property in qHestinn for the owner's benefit, ‘ ’ ‘ 7 ‘ . ‘ \ 12 CONCLUSION. Since the decisions on-this question are not in éon- flict and since the question has been settled by this Court, the petition should be denied. ; me NG Respectfully submitted, ee -dIlermon J. WEnLS, Couusel for Respondeuts. — FeeMing James, da, Aras "OF Counsel. be] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385002_1746%3A6. Public record. Not legal advice.