# Opinion — Ex Parte Baldwin

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opinion
- **Published:** January 1, 1934
- **Citation:** 291 U.S. 610

## Text

SUPREME COURT OF THE UNITED STATES.

No. 19, Original—Ocroser Trem, 1933.

Ex parte: In the Matter of L. W.
Baldwin and Guy A. Thompson,
Trustees, et al., Petitioners.

[March 19, 1934.]

Mr. Justice Branpgis delivered the opinion of the Court.

This petition for a writ of mandamus, filed in this Court by
leave, prays that the federal court for southern Texas and Thomas
M. Kennerly, judge thereof, be commanded to take jurisdiction, on
a petition for removal, of a suit instituted in a state court of Texas
by Tyrrell-Garth Investment Company. The petitioners are the
defendants in that suit... Two of them, Baldwin and Thompson,
are the trustees in bankruptcy of the Missouri Pacifie Railroad
system and are operating it. They were appointed by orders of
the federal court for eastern Missouri entered in proceedings for
reorganization under §77 of the Bankruptey Act as amended
March 3, 1933, ec. 204, § 1, 47 Stat. 1474. The other two petitioners
are Texas corporations—Houston North Shore Railway Company
and Beaumont, Sour Lake & Western Railway sce iaaallatis are
parts of the Missouri Pacific system.”

The federal court entered an order denying the petition for re-
moval and returned the papers to the petitioners, on the ground that
it appears from the petition for removal that the suit is not one
in which it is sought to hold the trustees ‘‘responsible in their own
person and/or property but only in their representative capacity.
See Ruff v. Gay, 3 Fed. Supp. 264; 67 F. (2d) 684.’ The
Trustees claim that they are entitled to a writ of mandamus, be-
cause the suit in the state court is removable under § 33 of the
Judicial Code as amended by Act of August 23, 1916, ¢. 399, 39
Stat. 532, being an action against officers of a court ‘‘of the United

‘There is another defendant in the state court suit (Johnson) who did
not join in the petition for removal. The allegations concerning him are not
here material.

2All the stock of these corporations is owned by New Orleans, Texas &
Mexico Railway Company; and nearly all of the latter’s voting stock i»
owned by the Missouri Pacific.

2 Ex parte Baldwin and Thompson, Trustees, et al,

States on account of acts done under color of their office and in
performance of their duties as such officers.’”*

The petition for mandamus alleges that among the properties
of which the Trustees took possession is an interurban railway in
Texas, owned by the Houston North Shore Railway and leased to
the Beaument, Sour Lake & Western Railway ; that they had taken
possession of this property prior to the institution of the suit in
the state court; and that the necessary effect of the institution and
prosecution of the suit in the state co **is and will be to ma-
terially interfere with and obstruct the jurisdiction and powers
of the federal court for eastern Missouri, with respect to the prop-
erties and assets of said debtors, the Beaumont, Sour Lake & Weat-
ern Railway Company and Houston North Shore Railway Com-
pany, and each of them.”’ ?

The petition for mandamus shows further, by reference to the
complaint of the Investment Company, that a part of the interar-
ban railway’s right of way had been acquired by mesne convey-
ance from the predecessor in title of the Investment Company;
that, after the Trustees took possession of this interurban railway,
the Investment Company brought the suit in the state court in
which it claims that it is the owner of the fee of a part of the land
over which the railway extends and that the easement of right of
way has been forfeited by failure of the Texas corporations and
the Trustees to operate trains thereon in accordance with the con-
ditions contained in a contract which accompanied the grant of
the right of way,‘ and prayed as follows: That the deeds convey-
ing the right of way be cancelled ; that they be ‘‘annulled and held
for naught as an existing cloud upon plaintiff’s title to the lands

sJudicial Code, § 33 as amended provides: ‘‘When any civil suit . . . is
commenced in any court of a State . . . against any officer of the courts of the
United States for or on account of any act done under color of his office or is
the performance of his duties as such officer . . . the said suit . . . may,
at any time before the trial or final hearing thereof be removed for trial inte
the district court . . . im the district where the same is pending.’’
‘The contract provided for an easement subject to forfeiture for non-use
for the purpose of an interurban railroad. ‘*Non-user’’ is defined as failure
to operate the railroad for 30 successive days; and ‘‘operation’’ as involving
@ passenger schedule over which first-class coaches must run over the entire
line by electric or gas engines on a regular schedule of at least one train not
less than every two hours of each day from six o’clock a. m. until twelve

o’clock midnight.

Ez parte Baldwin and Thompson, Trustees, et al. 3

and properties therein conveyed’’; that the two railways and the
trustees be enjoined from. making further use of the lands for the
operation of the interurban railway or otherwise; and that the
complainant recover from Houston North Shore Railway and the
trustees ‘‘in their capacity as trustees’’ damages in the sum of
$150,000. ;

We are of opinioz that the Trustees may be entitled to have their
controversy with the Investment Company adjudicated in the fed-
eral court, but are not entitled to the remedy of mandamus, be-
cause to secure adjudication in the federal court of their rights and
duties, they ould have applied, and still can apply so far as now
appears, either in the original bankruptcy proceeding, or by an
ancillary bill in Texas, for an injunction to restrain the Invest-
ment Company from prosecuting its suit in the state court.

First. All property in the possession of a bankrupt of which he
claims the ownership passes, upon the filing of a petition in bank-
ruptey, into the custody of the court of bankruptcy. To protect
its jurisdiction from interference, that court may issue an injune-
tion. The power is not peculiar to bankruptcy or to the federal
courts. It is an application of the general principle that where a
court of competent jurisdiction has, through its officers, taken
property into its possession the property is thereby withdrawn from
the jurisdiction of other courts. Having possession, the court may
not only issue all writs necessary to protect its possession from
physical interference, but is entitled to determine all questions re-
specting the same. Julian v. Central Trust Co., 193 U. S. 98, 112;
compare Riehle v. Margolies, 279 U. S. 218, 223; Straton v. New,
283 U. 8. 319. The jurisdiction in such cases is exclusive of the
jurisdiction of other courts, although otherwise the controversy
would be cognizable in them. Murphy v. John Hoffman Co., 211
U. S. 562, 569. In bankruptcy, this rule applies regardless of
whether the property is located in the district in which the bank-
ruptey proceeding originated. The injunction to protect its
possession may issue either from the court of original jurisdiction,
or from the federal court for the district in which the state court
suit is brought or in which the plaintiff in that suit resides.
Isaacs v. Hobbs Tie and Timber Company, 282 U. 8. 734, 737-8.*

‘See In re Patterson Lumber Co., 228 Fed. 916; 247 Fed. 578; In re
Lookout Mountain Co., 50 F. (24) 421. As to railroads, see § 77 added to
the Bankruptey Act by Act of March 3, 1933, ¢. 204, § 1, 47 Stat. 1467, 1474.

Ez parte Baldwin and Thompson, Trustees, e¢ al.

Second. It is immaterial that the Investment Company, after
the petition for removal had been presented to the federal court,
amended its complaint in the state court by striking therefrom go
much of the prayer as sought to enjoin the two railways and the
Trustees from making further use of the lands for operation of the
interurban railway or otherwise. The purpose of the amendment
was evidently to confine the litigation in the state court to the
issue of the right and title to the property, as distinguished from
its use during the pendency of the bankruptcy proceedings, in
the hope of thereby removing the obvious interference with the
jurisdiction of the bankruptcy court. But the exclusive jurisdic.
tion acquired by the bankruptcy court through taking possession
of the interurban railway under claim of title, was not limited to
the prevention of interference with the use of the land. Com-
pare Chicago Board of Trade v. Johnson, 264 U. 8. 1, 11;
Taubel-Scott-Kitzmiller Co. v. Fox, 264 U. 8. 426, 438. The
jurisdiction extends also to the adjudication of questions re-
specting the title. White v. Schloerb, 178 U. S. 542; In re Epp-
stein, 156 Fed. 42. Compare Wabash Railroad vy. Adelbert Col-
lege, 208 U. 8. 38, 54; Security Mortgage Co. v. Powers, 278 U. 8.
149, 153."

Third. The inherent power of the bankruptcy court to pro-
tect its jurisdiction, over property of which it has taken possession,
from interference by suit thereafter begun in a state court has
not been abridged by any legislation of Congress. The power is
expressly reserved to the bankruptcy court in Judicial Code § 265,
which contains the general prohibition against staying proceedings
in state courts. Nor is this power of the bankruptcy court af-

*From the answer to the petition for removal filed by the Investment Company
in the federal court it appears that, after the filing of the petition for re
moval, and before action thereon by the federal court, the Investment Oom-
pany had moved in the state court to dismiss so much of the prayer in its
suit as seeks an injunction against the Trustees in their official capacity and
the two railway companies; and that the state court granted the motion
‘*without prejudice to the plaintiff hereafter to seek such injunction against
said defendant railway companies when and if they shall be discharged from
jurisdiction and control of’’ the federal court for eastern Missouri. We have
no occasion to consider the effect of the amendment so far as concerns the
right of removal.

TWhitney v. Wenman, 198 U. 8. 539. In re Rochford, 124 Fed. 182, 186;
In re Moody, 131 Fed. 525; Fidelity Trust v. Gaskell, 195 Fed. 865; In re
Dialogue, 241 Fed. 290; cases in Note 8, infra.

Ez parte Baldwin and Thompson, Trustees, et al. 5

fected by § 23 (a) of the Bankruptcy Act of 1898, o. 541, 30 Stat.
552, which declares: .

‘‘The United States District Courts shall have jurisdiction of
all controversies at law and in equity, as distinguished from pro-

versies had been between the bankrupts and such adverse claim-
ants.’’

That section relates only to suits in which the Trustees are plain-
tiffs. It has no restrictive effect on the right of trustees or re-
ceivers to protect their possession or title through proceedings in
the bankruptcy court.*

Nor is the inherent power of the bankruptsy court to protect its
jurisdiction in respect to property of which it has taken possession
abridged by Judicial Code § 66, which declares:

‘*Every receiver or manager of any property appointed by any
court of the United States may be sued in respect of any act or
transaction of his in carrying on the business connected with such
property, without the previous leave of the court in which such re-
ceiver or manager was appointed; but such suit shall be subject
to the genezal ecuity jurisdiction of the court in which such man-
ager or receiver wes appointed so far as the same may be necessary
to the ands of justice.’’

Thet section does not abridge the exclusive jurisdiction of the
ecurt over property of which it has taken possession. In re Tyler,
149 U. 8. 165, 182-4.*

Fourth. It is true that the Investment Company seeks, in addi-
tion to the adjudication of the forfeiture of the right of way,
damages ‘‘in the sum of $150,000’’ from the two railways and
‘*from the trustees in their said capacity as trustees’’ for failure
to maintain the daily schedule of passenger trains set forth in
the contract. This prayer of the complaint is no bar to staying
the suit in the state court. The exclusive jurisdiction of the
bankruptcy court is determined by the main purpose of the sv .,
which is to have the forfeiture declared and the alleged cloud

*J, I. Case Plow Works v. Finks, 81 Fed. 529; In re McCallum, 113 Fed.
393; In re Lipman, 201 Fed. 169; In re Williams, 53 F. (24) 486.

See also New River Coal Co. v. Baffmer Bros., 165 Fed. 881; Dickinsca ev.
Willis, 239 Fed. 171.

6 Ez parte Baldwin and Thompson, Trustees, et al.

upon title removed. The claim for damages is merely an inei-
dent. Moreover, the breach of contract for which damages are
claimed is not ‘‘an act or transaction of the ‘trustees’ in carrying
on the business connected with such property’’. The breach al-
leged is that of ‘‘wholly’’ ceasing to maintain the passenger train
schedule. It is alleged that this breach had occurred months before
the commencement of the bankruptcy proceeding. The only wrong
with which the Trustees are charged is in not ‘‘now maintaining”’
the service. Such non-feasance is not an ‘‘act or transaction’’
within the meaning of § 66.'°

We have no occasion to determine otherwise the scope of Judi-
cial Code §33. Nor need we consider whether the federal
court, if it had entertained the petition for removal, would have
been obliged to dismiss the suit on the ground that the state court
was without jurisdiction because the bankruptey court had posses-
sion of the res. Compare Isaacs v. Hobbs Timber & Tie Co.,
282 U. 8. 734, 738-9; Lambert Run Coal Co. v. Baltimore & Ohio
R. R. Co., 258 U. 8. 377, 382.1% It is sufficient that the extraordi-
nary remedy of mandamus should be denied, because the Trustees
may by the common remedy of injunction prevent any interference
with the jurisdiction of the bankruptcy court. Compare Ez parte
Park Square Automobile Station, 244 U. S. 412, 414; Ez parte
Riddle, 255 U. 8. 450; Ez parte Kreutler-Arnold Hinge Last Co.,
286 U. 8. 533. Moreover, the bankruptcy court might, in the exer-
cise of its discretion, conclude that it is desirable to have the
litigation proceed in the state court.’? ,

Rule discharged.

10Compare Buckhannon & W. R. Co. v. Davis, 135 Fed. 707, 711; Love v.
Louisville R. Co., 178 Fed. 507; Dickinson v. Willis, 239 Fed. 171; Field v.
Kansas City Refining Co., 296 Fed. 800; 9 F. (2d) 213.

11Compare In re Zehner, 193 Fed. 787; First Trust Co. v. Baylor, 1 F. (24)
24, 27. See note 12, infra.

13MecHenry v. La Société Francaise, 95 U. 8. 58; In re Johnson, 127 Fed.
618; In re Zehner, 193 Fed. 787; First Trust Co. v. Baylor, 1 F. (24) 2%,
27; In re Schulte-United, 50 F. (2d) 243; In re Gas Products Oo., 57 F. (24)
342; compare In re Schermerhorn, 145 Fed. 341; In re Locust Bldg., 272 Fed.
988; Field v. Kansas City Refining Co., 296 Fed. 800; 9 F. (2d) 218.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0036%3A3. Public record. Not legal advice.