# Petition for a Writ of Certiorari — Engebretson v. West > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386415_0058%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for a Writ of Certiorari - **Published:** January 1, 1940 - **Citation:** 311 U.S. 663 ## Text Office - ¢ oupreme IN THE Supreme Court of the Anited States. OCTOBER TERM, 1939 MARTIN ENGEBRETSON, TRUSTEE OF THE ESTATE OF THE BRICTSON MANUFACTURING COMPANY, A CORPORATION, BANKRUPT, Petitioner, Us. RALPH M. WEST, AND THE AETNA CASUALTY AND SURETY COMPANY, A CORPORATION. MARTIN ENGEBRETSON, TRUSTEE OF THE ESTATE OF THE BRICTSON MANUFACTURING COMPANY, A CORPORATION, BANKRUPT, Petitioner, US. JOHN T. MARCELL, HARRY S. BYRNE, AND FIDELITY AND DE- POSIT COMPANY OF MARYLAND, A CORPORATION. PETITION FOR WRITS OF CERTIORARI TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE EIGHTH CIRCUIT. WILLIAM M. GILLER, Attorney for Petitioner, 400 Brandeis Theatre Building, - M. E. CULHANE, Omaha, Nebcaska. Minneapolis, Minnesota, OLAF EIDEM, Brookings, South Dakota, Of Counsel. 2 Hayward Brief Co., 601-7 Fourth Ave. So., Minneapolis Court, U. FILWD JUN 18 1949 CHARLES ant Lis ELIAORE CAOPL : CLERK j ; Page OER rg ard tae Gi hentia SR Rked SSN a ee he LR iS ase Ve Oe ee 1 DUIGH TIGIOW oii. bn so Sig BW ee we 4 ya 8 mele ee wos EES ews Gees 2 peg he a1 Sale apedia ye See kent aaa el eae MNS Sar Deg WR OY eee SSP a” AW ME AW 2 Summary Statement of Matters Involved..........+e+ seer eeeee 2 Questions Presented ........- cee eeeeceeresrvccrcssnvveees 5 Specification of Errors to be Urged... .....- esse ee eee cere eeees 8 Reasons Relied on for Allowance of Writ. ...... 06. .e eee eee eees 10 ee bl Meta Aer nears ewer are LOCC SEN ea ee kL eee Sear mere cok 10 GCS cs ak gg hs biwia eee WNC EARS ee ACER PO Re eer CRITE OI 13 PT Ee. | Sere ieee Peas or enor t: are Oe Way eat @ PO ek Sn 16 RS 3, ES ee a ar en Pe ean Se erat ery ec Lary ere wee ek eh, 18 Sk ag Naar Sere Mea rar Rg ty tr Rao yt CON AC a Sr we ok Ah alg 18 2 ES SS UE ae ern ern eee ge ewan eT eer Mee eee eg 20 Appendix A—Article VIII of 1922 Statutes. ......-e eee eee reece 21 TABLE OF CASES CITED Blake vs. McClung, 172 U. S. 239, 43 L. Ed. 432, 19 S. Ct. 165.... 15 Chicago T. & T. Co. vs. Forty-One Thirty-Six W. Building Corp., 302 U. S. 120, 126, 82 L. Ed. 147, 58 S. Ct. 125, 128.......... 15 Cohens vs. Virginia, 6 Wheaton 264, 399, 5 L. Ed. 257........+-- 12 Cook vs. Rogers, 31 Mich. 391, 398........+. sees ecceessoes 14 Cresson & Clearfield Coal & Coke Co. vs. Staffer (3 C. C. A.), 148 a Ce ee oS n re ree Bae wn aren Sr eer oy tere Ge oe 15 Deposit Bank of Frankfort vs. Board of Councilmen, 191 U. S. 499, 510, 48 L. Ed. 276, 280, 24 S. Ct. 154, 158........ eee eee eee 12 Duparquet Hout & Moneuse Co. vs. Evans, 297 U. 8. 316, 222, 80 kL. Bid. 413> 66 BS. Ct. 422, 4255 i cae ies cea swene eae oes 15 Engebretson vs. Marcell, et al. (8 C. C. A.), 84 F. (3) 836. 4,6, 7, 2¢ Fayerweather vs. Ritch, 195 U. S. 276, 297, 298, 49 L. Ed. 193, 25 SOS. ORR as ala hoy oes ae ae ha a ye Fe REARS ON eae oes 20 First National Bank vs. Robinson, et al. (10 C. C. A.), 107 F. (2) RS Gea a ere ra et see OT A RN an Tt gir nat CEE 14 Gamble vs. Daniel (8 C. C. A.), 39 Fed. (2) 447, 453.......-..6-- 11 Gross vs. Irving Trust Co., 289 U. S. 342, 345, 77 L. Ed. 12438, 53 S. Ct. 605, 606, 607, 90 A. L. R. 1216....... cee ene 16, 18, 19 Hammond vs. Lyon Realty Co., et al. (4 C. C. A.), 59 F. (2) 592, Bee i ads are WS OERS. ae te pci ms a ANGER OLR, Rind TOL ncaa Te Rees RS 14 Hanover National Bank vs. Moyses, 186 U. S. 181, 46 L. Ed. 1113, ea A a oS ee ea REE Oe ae eee hirer en kas wa GA 13 Hitchcock vs. Sedgewick (1690), 2 Vernon's Reports 155........ 14 Hughes vs. U. S., 4 Wall. 232, 233, 18 L. Ed. 303, arrester: 12 In re American & British Mfg. Corporation (1 C. C. A.), 300 F. OE lan or eae t aeg in RIRp eh Cu gS shen Marte er Ararat ers sree cra ges e.g meme eh 15 In re Diamond's Estate (6 C. C. A.), 259 F. 70, 73, 75.......6-- 18 22ers In re Harrison vs. Chamberlin, 271 U. S. 191, 194, 70 L. Ed. 897, BRE OE SEs Casals ss cone nerdlegere ee es shines ests In re Klein, Fed. Cas. 7865, 1 How. 277, $2 Be. Md. BSS. 6 cc i sces In re National Labor Relations Board, 304 U. S. 486, 494, 82 L. Ed. ¥495.-6S S.Ct. FOOL; 2OOG 2 2c rece rece earecorensesasers tn ve Salmon (D. .C.), 142 Fe. TPS. 25. cee wee eens ccrerescees In re Watts & Sachs, 190 U. S. 1, 27, 47 L. Ed. 933, 941, 23 S. Ct. eG ER ecg able Galea ae ele at Bie eiecis 4 ¥Se Sie a Fle #45 ees 18, In re Weedman Stave Co. (D. C.), 199 F. | RR OLE aren pe International Shoe Co. vs. Pinkus, et al., 278 U. S. 261, 267, 73 TW) BES, SOB, Cl TOS, TGs cea ic ce eee ens Cae eee ee me Isaacs vs. Hobbs Tie & Timber Co., 282 U. S. 7134, 737, 75 L. Ed. OE. Ga Oe GR, BUG Re ae aac svi sch nsec er vn ctv ennacnesens 2 Kalb, et ux., vs. Feuerstein, et ux., 308 U. S. 433, 84 L. Ed. 280, Sn ote aa ae nae Bil OS te mo Dyn Mra eelaan om Os 14, 16, Louisville Joint Stock Land Bank vs. Radford, 295 U. S. 555, 588, 79 L. Ed. 1593, 55 S. Ct. 854, 862, note Se oc cea ene cue os Marcell, et al., vs. Engebretson (& %. C. A.), 74 ¥. €2) 93 ..4, &, 7%, MeGilvra vs. Ross, 215 U. S. 70, 80, 54 L. Ed. 94, 101, 30 S. Ct. 27, BN heres ak ore MN a ea reo I BIS PN Kite FIA Se ENE ESR ACTS SS ESS Palmer vs. Texas, 212 U. S. 118, 53 L. Ed. 435, 29 S. Ct. 230..7, 18, Pobresle vs. Boyd, 287 U. S. 518, 526, 77 L. Ed. 469, 53 S. Ct. 262, U. S. 462, 472, 55 L. Ed. 544, 547, 31 S. Ct. BES, BOG. cess Straton vs. New, 283 U. S. 318, 330, 75 L. Ed. 1060, 51 S. Ct. 465, A NO 2 ois so ciate es Whe Senne Sw we cell's <5 65 Si ele'e is o's e's 14, Taylor vs. Sternberg, 293 U. S. 470, 79 L. Ed. 599, 55 S. Ct. Ee a at as elang heat a ei nre ome Pn A REA ara’ e. 9-6 Stal eRe aigre S88 SF 16, Thompson vs. Magnolia Patroleum Co.; «.. U.S... 05... Ed. 2 oy 60 S. Ct. 628, 630, note 4... . 2... es wees ercececcsersces U. S. vs. Corrick, 298 U. S. 435, 440, 80 L. Ed. 263, 56 S. Ct. 829, re. Mp eORaRGe Vata RAN Le PRS Ab OE ser a Ura ae te Rh tol reat ee Wright vs. Union Central Life Ins. Co., 304 U. S. 502, 516, 86 L. Bd. 1490, 58 S. Ct. 1025, 1038. . 2... nce e reece reece neens 16, IN THE Supreme Court of the Anited States OCTOBER TERM, 1939 MARTIN ENGEBRETSON, TRUSTEE OF THE ESTATE OF TIIE BrRICTSON MANUFACTURING COMPANY, A CORPORATION, BANKRUPT, Petitioner, Us. RaLtpu M. WEstT, AND THE AETNA CASUALTY AND SURETY COMPANY, A CORPORATION. MARTIN ENGEBRETSON, TRUSTEE OF THE ESTATE OF THE BRICTSON MANUFACTURING COMPANY, A CORPORATION, BANKRUPT, Petitioner, Us. JOHN T. MARCELL, HARRY S. BYRNE, AND FIDELITY AND DE- ’ POSIT COMPANY OF MARYLAND, A CORPORATION. PETITION FOR WRITS OF CERTIORARI TO THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE EIGHTH CIRCUIT. To the Honorable Chief Justice and Associate Justices of the Supreme Court of the United States: The petitioner, Martin Engebretson, Trustee of the Es- tate of The Brictson Manufacturing Company, a corpora- 9 tion, bankrupt, prays that writs of certiorari issue to review the judgments of the Circuit Court of Appeals for the Eighth Circuit, entered in the above causes on May 6, 1940, contirm- ing judgments of the District Court of the United States for the District of South Dakota, Southern Division, dated April 17, 1939. OPINION BELOW The opinion of the Circuit Court of Appeals is reported in . F. (2) ...., and is found at page 211 of the record herein. JURISDICTION The jurisdiction of this court is invoked pursuant to Sec. 240 of the Judicial Code as amended by 43 Stat. at Large, 938, Sec. 1 (February 13, 1935). 28 U.S.C. AL, See. 347, SUMMARY STATEMENT OF MATTERS INVOLVED The above causes were consolidated for trial by the Dis- trict Court with separate findings of fact, conclusions of law and judgment. The judgment in each instance was against the trustee in bankruptcy, the petitioner here. Separate ap- peals were perfected with the record on appeal in the first case containing the evidence received on the trial of the con- solidated actions. The cases were argued together in the Circuit Court of Appeals with one opinion by that court. We will designate the record in the first case as “R” and the record in the second case as “R,.” The District Court of the United States, District Court of Nebraska, Omaha Division, hereinafter called Federal Court, appointed Ralph M. West of Omaha, Nebraska, hereinafter called West, receiver of all of the property of The Brictson 3 Manufacturing Company, a South Dakota corporation, here- inafter called corporation, on September 3, 1921, in an action wherein H. E. Close, et al., were complainants, and The Brictson Manufacturing Company, was defendant, herein- after called Close case (R. 24). West gave bond as re- ceiver (R. 26, finding V, 61) and took possession of all of the corporate property (R. 62, finding VI). On appeal the order appointing West receiver was reversed upon the ground that there was no basis in pleading or fact for the appoint- ment of a receiver and the District Court was ordered to re- quire the receiver to return the property in his hands “to those from whom he received it” and that he be thereupon discharged (R. 123, 124; 280 F. 297). Before the property was returned the corporation was ousted as a foreign corpo- ration from Nebraska in a quo warranto action in the State Court of Douglas County, Nebraska, hereinafter called State Court, in an action wherein State of Nebraska, er rel. Ora S. Spillman, attorney general, was plaintiff, and The Brict- son Manufacturing Company was defendant, hereinafter celled quo iwwarranto action, and John T. Marcell and others, hereinafter called Nebraska trustees, were appointed trus- tees for the corporation on February 16, 1924 (R. 154, 157). On appeal the judgment of ouster and appointment of the Nebraska trustees “to collect the debts due the corporation, pay the liabilities of the corporation and when properly ordered to pay the surplus, if any, to those entitled thereto as provided by Section 9298, Compiled Statutes of Nebraska for 1922" was affirmed (R. 159, 160). The quo warranto law of Nebraska will be found in the Appendix to this petition. On June 24, 1929, in the Close case, the Federal Court di- rected West to deliver the property of the corporation to the Nebraska trustees (R. 40, 42), but before he did so the cor- poration, on August 21, 1929, on a_ petition filed August 4 8, 1929, in the Federal Court of South Dakota, was adjudi- cated a bankrupt and petitioner is the trustee of the bank- rupt estate (R. 61, finding IIL). West delivered the prop- erty to the Nebraska trustees September 7, 1929 (R. 62, 63, finding VII), who at all times since have exercised dominion and control over the same (R,. 60, finding IX). On May 14, 1930, this petitioner as the trustee in bankruptcy ad- vised the State Court that the corporation had been adjudi- cated a bankrupt and that he was trustee and petitioned that court to have the Nebraska trustees deliver to him the assets of the bankrupt estate which they held, but the court denied the relief (R. 170-173,.R.. 43, 44). Next, this peti- tioner as the trustee in bankruptey, obtained an order from the bankruptcy court in a summary proceeding adjudg- ing he had the title to the property of the bankrupt estate then held by the Nebraska trustees and that he was entitled to the possession thereof. On appeal this order was reversed and the bankruptey court in Marcell, et al., vs. Engebretson (SC. CC. A.), 74 F. (2) 93, hereinafter called summary pro- ceeding, was directed to dismiss the summary proceeding for want of jurisdiction. Next, this petitioner as the trus- tee in bankruptcy, commenced a plenary action in the Fed- eral Court of Nebraska against the Nebraska trustees claim- ing he had title to the assets that West delivered to them and was entitled to the possession of the same. That ac- tion was dismissed on the ground that the court was with- out jurisdiction of the subject matter. On appeal in Enge- bretson vs. Marcell, et al. (8 C. GC. A.), 84 F. (2) 315, here- inafter called plenary action, the dismissal was affirmed. The Federal Court in the Close case with actual notice that the corporation had been adjudicated a bankrupt and that no trustee had yet been appointed, made an order on No- vember 27, 1929, purporting to release and discharge West 5 and exonerate his bond. The order will be found in the record at page 45 and the notice at page 115. The causes at bar result from a suit brought against West and the surety on his bond and a suit brought against the Nebraska trus- tees and the surety on their bond Claiming that West breached his bond and the Nebraska trustees breached their bond when after supervening bankruptcy West delivered the assets of the bankrupt estate to and the Nebraska trustees took possession of the same and exercised dominion and con- trol over the same. The cases at bar do not disturb the pos- session of the State Court. A suit to obtain possession of the bankrupt assets that West delivered to the Nebraska trustees would be unavailing as the District Court found most of such property has been dissipated (Rs. 62, finding XIV). The District Court in each instance rendered judg- ments against this petitioner as trustee in bankruptey. QUESTIONS PRESENTED 1. Whether the judgment of the Circuit Court of Appeals, or its reasons therefor, or its dictum in connection therewith, reversing and ordering the bankruptcy court to dismiss Mar- cell, et al., vs. Enyebretson, 74 F. (2) 93, for lack of summary jurisdiction ; or the judgment of the Circuit Court of Appeals, or its reason therefor, or its dictwm in connection therewith; affirming the judgment of the District Court dismiss- ing Hngebretson vs. Marcell, et al., 84 F. (2) 315, for want of jurisdiction of the subject matter, determine any issue of merits in either case or that anything done in either case constituted res judicata of the issue whether West breached his bond as receiver; and whether the Nebraska trustees breached their bond as trustees when after supervening Rk PREZ ee. pen st SERRA aa Fe Viet tea ke Rea as Ae mis a haat Ws NT Rea CEE HORE CIN Hee Bose GRABER RES 6 bankruptcy West delivered to and the Nebraska trustees took possession of the assets of the bankrupt estate and ex- ercised dominion and control over the same. 9 Whether the judgment of the State Court in the quo war- ranto action and its orders and the quo warranto law of Nebraska, so far as the same provided for collecting the debts due the corporation, paying the liabilities and when properly ordered to pay the surplus, if any, to those entitled thereto, were superseded by the National Bankruptcy Act and the jurisdiction of the bankruptey court. 3. Whether with supervening bankruptey whatever jurisdic- tion the Nebraska Federal Court had over the assets that West had received from the corporation and that were then in the actual possession of West came to an end, and such assets passed to the custody of the law in the bankruptcy court with West the mere repository for same subject to the jurisdiction of the bankruptcy court, Whether after super- vening bankruptey West could justify his delivering the assets of the bankrupt estate to the Nebraska trustees upon the ground that in doing so he obeyed the order of the court that appointed him. 4. Whether the order of the State Court in the quo warrento action refusing to direct the Nebraska trustees to deliver the assets of the bankrupt estate to the trustee in bank- ruptey constituted res judicata of the issue whether West breached his bond as receiver and whether the Nebraska T trustees breached their bond as trustee when after superven- ing bankruptcy West delivered to and the Nebraska trus- tees took possession of the assets of the bankrupt estate and exercised dominion and control over the same. ». Whether the Circuit Court of Appeals has misapplied the rule of this court in /saacs rs. Hobbs Tie & Timber Co., 282 U. S. 734, 737, 75 L. Ed. 645, 51 8. Ct. 270, 272, and Palmer vs. Teras, 212 U.S. 118, 53 L. Ed. 425, 29 8. Ct. 250, as to conflict between Federal and State Courts exercising a con- current jurisdiction by ay plying it to the bankruptey court exercising an exclusive paramount jurisdiction 6. Whether the holding of the Circuit Court of Appeals that Marcell, et al., rs. Eugebretson, T4 FL (2) 923 (dismissed for lack of summary jurisdiction), and Kugebretson vs. Mar- cell, et al., 84 F. (2) 315 (dismissed for want of jurisdiction over the subject maiter), constituted res judicata of the issue whether West breached his bond as receiver: and whether the Nebraska trustees breached their bond as trus- tees when after supervening bankruptcy West delivered to and the Nebraska trustees took possession of the assets of the bankrupt estate and exercised dominion and control over the same, gave an unwarranted effect to its judgments in these cases and by so doing deprived the trustee in bank- ruptey of his property without due process of law contrary to the fifth amendment to the United States Constitution. SPECIFICATION OF ERRORS TO BE URGED The Cirenit Court of Appeals erred: 1. In affirming the judgment of the District Court of the United States for the District of South Dakota, appealed from in favor of Ralph M. West and The Aetna Casualty & Surety Company, a corporation, and against Martin Eenge- bretson, trustee. 2. In affirming the judgment of the District Court of the United States for the District of South Dakota, appealed from in favor of John T. Marcell, Harry S. Byrne and Fi- delity and Deposit Company of Maryland, a corporation, and against Martin Engebretson, trustee, 3. In holding that the Federal Court discharged West as receiver and released and exonerated his bond on Novem- ber 27, 1929. 4. In holding that the order of the State Court, dated May 17, 1930, denying the application of the trustee in bankruptcy for possession of the assets of the bankrupt estate held by the Nebraska trustees constituted res judi- cata in the cases at bar. 5. In holding that the issue determined in the summary proceeding and the plenary action was the right of the State Court trustee to possession of the assets of the bank- rupt as against the trustee in bankruptey and that the court of bankruptey was without jurisdiction to deal with such assets because the same were in the exclusive jurisdiction of the State Court which court had jurisdiction over such property and that the Nebraska state trustees had the right to administer such property, 6. In holding that West was an officer of the Federal tt ia | 9 Court and could not have breached his bond by obeying the order of the court appointing him. 7. In holding that the judgment or reasons of the court or its dictum in the summary proceeding and also in the plenary action constituted res judicata of the issues in each of the cases at bar. 8. In failing to give effect to the National Bankruptcy Act and the exclusive paramount jurisdiction of the bank- ruptey court, 9. In taking the property of this petitioner, trustee in bankruptey, without due process of law contrary to the Fifth Amendment to the United States Constitution, by giving un- warranted effect to its judgments in the summary proceed- ing and in the plenary action and denying to this petitioner his day in court. 10. In failing to hold that with supervening bankruptcy whatever jurisdiction the State Court had over the assets of the bankrupt came to an end. 11. In failing to hold that with snpervening bankruptcy the jurisdiction of the Federal Court and its unexecuted or- der directing West to deliver the property of the corpora- tion to the Nebraska trustees, came to an end and any un- executed orders of the Federal Court or any orders it made thereafter were without force or effect, so far as the trustee in bankruptcy or the bankrupt estate was concerned, and that the bankrupt assets were held by West as the mere repository for the bankruptcy court and subject to its juris- diction. 10 REASONS RELIED ON FOR ALLOWANCE OF WRIT REASON I — — PN a ———_——_——— Pees The Cireuit Court of Appeals has decided an important question of general law in a way probably untenable or in conflict with the weight of authority as well as in conflict with the decisions of this Court. The Circuit Court of Ap- peals, in its opinion in this connection, holds: “In our view, it will not be necessary to go beyond the decisions of this court in Marcell rs. Engebretson, 2 74 F. 2d 93, and Engebretson vs. Marcell, St F. 2d 315 3 * * * The issue which was determined was the right of the State Court trustees to possession of the assets of the bankrupt as against the trustee in bankruptcy. In Marcell vs. Engebretson, 74 F. 2d 938, it was necessary that this court determine the status of the property at the time of the filing of the petition in bankruptcy, and it was held that the constructive possession of that property was in the State Court and for that reason the court of bankruptey was without jurisdiction to deal with it, it being in the exclusive jurisdiction of the State Court * * *. The disposition of these issues dis- poses of the questions presented by Plaintiff, for if pos- session was rightfully in the State Court trustees and the State Court had acquired jurisdiction of the assets long before bankruptcy, then the receiver delivered the assets to the right person and the Plaintiff was not en- titled tothem * * *. This court held that the Nebras- ka State Court had jurisdiction over the property and that the Nebraska State trustees had the right to ad- minister it. Such a decision was evidence that Plain- tiff was without right to receive the assets at the time West delivered them to the trustees” (R. 216, 217). It is not clear from the above language whether the Circuit SP CERT LAT ARAL tat Sha (eared SIR Bees Court of Appeals considers its previous opinions referred to as constituting res judicata, or whether it considers its rea- 11 sons or dictum set forth in these opinions as good law and is following the same for that reason. If the court relies upon its former opinions above mentioned, we submit they do not constitute res judicata because the judgment of the Cireuit Court of Appeals in each case did not and the court in each ‘ase Was without jurisdiction to determine title, right to possession or which court should administer the assets of the bankrupt estate that West delivered to the Nebraska! trustees. In the summary proceeding the Circuit Court of Appeals found that the bankruptey court was without jurisdiction to adjudicate title and it directed the District Court to dis- miss the summary proceedings for lack of jurisdiction, 74 Fed. (2) 93, 99. In the summary proceeding the jurisdic- tion of the bankruptcy court was limited to whether the bankrupt had possession when the petition in bankruptcy was filed and if possession was lacking whether an adverse claim was asserted. Thompson vs. Magnolia Petroleum Co., ...U.8....,...L. Ed...., 60'S. Ct. 628, 630, note 4. Jn re Harrison vs. Chamberlin, 271 U. 8. 191, 194, 70 L. Ed. S97, 46 8S. Ct. 467, 468. Since the summary jurisdiction was lacking the bankruptcy Court could not pass on the merits. In Harrison vs. Chamberlin, supra, this court said that where the bankruptey court lacked summary jurisdiction it must decline to determine the merits. To the same effect is Gamble vs. Daniel (8 C. C. A.), 89 Fed. (2) 447, 453. So far as the plenary action was concerned the Federal Court dismissed it for lack of jurisdiction over the subject matter. The subject matter was the title and right to pos- session of the property West had delivered to and the Nebraska trustees as officers of the State Court claimed. It is well settled that where a court dismisses an action for want of jurisdiction no question of merit can be passed upon. a ag 4 pay PURE Ghee eae DAR ALEC a ee Ak ROE RE BARES iP GEE ee MODS PRE EES RIS. E TEER Hughes vs. U. S., 4 beac 239 933,18 L. Ed. 308, 305. Me- Gilvra vs. Ross, 215 U. 8. 70, 80, 54 L. Ed. 94, 101, 30 8. Ct, 27, 31. Nhainee Sewerage & Drainage Company vs. Frank P. Stearns, 220 U. 8. 462, 472, 55 L. Ed. 54 1, 547, 31 S. Ct. 452, 456. In re National Labor Relations Board, 304 U. S. 486, 494, 82 L. Ed. 1482, 58 8. Ct. 1001, 1005. In U.S. rs. Corrick, 298 U. 8. 485, 440, 80 L. Ed. 263, 56. 8. Ct. 829, 832, this court said as to the jurisdiction on appeal: “While the distriet court lacked jurisdiction, we have juris- diction on appeal, not of the merits, but merely for the pur- pose of correcting the error of the lower court in entertain- ing the suit.’ If the reasons or dictum of the Cireuit Court of Appeals, in its two former opinions, are relied upon, the same does not constitute res judicata. In Deposit Bank of Frankfort rs. Board of Councilmen, 191 U. 8. 499, 510, 48 L. Ed. 276, 280, 24.8. Ct. 154, 158, this court held that a judgment not the court’s reason is necessary to constitute res judicata. That dictum does not constitute res judicata is well estab- lished. Cohens vs. Virginia, 6 Wheaton 264, 399, 5 L. Ed. 957. If the court’s dictum holds as claimed by the Circuit Court of Appeals, we submit that it is not good law and should not be followed. The law in that connection we will discuss in connection with Reason IT. If on an appeal, on the question of summary jurisdiction, the appellate court may pass on the merits, an adverse claimant no longer is entitled to a plenary action because by appealing an adju- dication can be had in the appellate court. of 13 REASON II The Circuit Court of Appeals has failed to give effect to the National Bankruptcy Act, the exclusive paramount juris- diction of the bankruptey court and the applicable decisions of this court so far as the effect of supervening bankruptcy may be concerned on the quo warranto law of Nebraska, the jurisdiction of the State Court, the Nebraska trustees as trustees and on the conditions on the bond of the Nebrask: trustees to collect the debts due the corporation and pay the liabilities. The Circuit Court of Appeals holds that the bankruptey court was without jurisdiction to deal with the assets of the bankrupt estate that West delivered to the Nebraska trustees, it being in the exclusive jurisdiction of the State Court and that the State Court had the right to administer such assets (R. 217). That is, that the State Court will collect the debts due the corporation, pay the lia- bilities, ete. That is, the corporation’s property was taken by the Nebraska state law to be distributed by the Nebraska State Court to creditors. The duties of the Nebraska trus- tees made them liquidating or winding-up officers of the State Court. The quo warranto law of Nebraska and the judgment and orders of the State Court in so far as the same provid- ed for collecting the corporate debts, paying the liabilities and winding up the affairs of the corporation were super- seded by the exclusive paramount jurisdiction of the bank- ruptey court and the National Bankruptcy Act. Jn re Klein, Fed. Cas. 7865, 1 How. 277, 11 L. Ed. 132, holds that any state law that distributes the property of the debtor among creditors conflicts with the National Bankruptcy Act. This case is cited with approval in Hanover National Bank vs. Moyses, 186 U.S. 181, 46 L. Ed. 1118, 22 8. Ct. 857, and yo" eT | Cea RIE RRR Re aa ae Sta age oo 14 Louisville Joint Stock Land Bank rs. Radford, 295 U. 8. 555, 588, 79 L. Ed. 1593, 55.8. Ct. 854, 862, note 18. Neither the legislature nor the courts of a state can take action which restricts the scope of the National Bankriiptey Act. Kalb, et wr. vs. Feuerstein, et wr., 308 U. 8. 433, 84 L. Ed. 280, 260) 8. Ct. BAB. Hammond rs. Lyon Realty Co., et al, (4C. C. A.), 59 F. (2) 592, 594. International Shoe Co. rs. Pinkus, el al., 278 U. S. 261, 267, 73 L. Ed. 318, 49 8. Ct. 108, 110. Our examination of this court’s decisions has failed to dis- close a single case in which a state law that took the debtor’s property and distributed it to creditors has been sustained. This court has sustained state laws where the substantive right under an assignment for benefit of creditors depended upon contract and the legislation merely governed the execu- tion of the trust on which the property was conveyed. Pobresle vs. Boyd, 287 U.S. 518, 526, T7 L. Ed. 469, 53 8. Ct. 262, 264. The distinction between a state law that divests a debtor of his property for the purpose of compulsory dis- tribution among his creditors and a state law that merely implements the debtor's inherent capacity to divest himself of that property by the voluntary exercise of his natural power to contract concerning his own property was recog- nized at an early time. //itcheock rs. Sedgewick (1690), 2 Vernon’s Reports 155. This principle is discussed in Cook rs. Rogers, 31 Mich. 391, 398. In Straton vs. New, 283 U.S. 818, 330, 75 L. Ed. 1060, 51 S. Ct. 465, 470, note 13, this court cites cases where the functions of the court's officers were that of winding up which conflicted with the National Bankrupety Act. In First National Bank vs. Robinson, et al. (10 C. @. A.), 107 F. (2) 50, 53, a New Mexico law pro- viding for the dissolution of a domestic corporation unless reorganized was held to be superseded by the National Bank- ruptey Act. The ousting of the corporation from its fran- ee ee — ——— 15 chise was no part of the liquidation. Chicago T. & T. Co, vs. Forty-One Thirty-Sir W. Bldg. Corp., 802 U.S. 120, 126, 82 L. Ed. 147, 58 8. Ct. 125, 128. While the Nebraska Supreme Court in its opinion in 207 N. W. 664, 665, construed the quo warranto law as authorizing the Nebraska trustees “to pay the liabilities thereof that may be due to citizens or resi- dents of this state,” its mandate (R. 160) contains no such limitation. If the statute is subject to this limitation it would be unconstitutional. Blake vs. McClung, 172 U. 8. 239, 43 LE Ed. 432, 19 8. Ct. 165. A) state law pro- viding for the taking of part of the debtor's assets for the payment of a portion of his creditors would not. pre- vent it from conflicting with the National Bankruptey Law. Tn re Salmon (1D. C.), 148 BF. 395, cited in Straton vs. Neir, supra, note 138, involved the distribution of the assets of a private state bank among bank creditors and the state law was held to conflict with the National Bankruptey Act. The lapse of time does not save the jurisdiction of a court acting under a law superseded by the National Bankruptey Act. In re Weedman Stave Co. (DD. C.), 199 F. 948, cited in NStraton vs. New, supra, note 18, the receiver in the State Court was in actual possession for more than four months before bankruptey. The same was true in Cresson & Clear- field Coal & Coke Co, vs. Staffer (8.C. C. AL), 148 FP. 981, and in In re American & British Mfg. Corporation (1 C. GC. A.), 300 F. 839. If the Nebraska trustees be considered equity receivers they would still have to yield to the trustee in bankruptey. Duparquet Hout & Moneuse Co, vs. Evans, 297 U. 8. 216, 222, 80 L. Ed. 413, 56 8. Ct. 412, 415. We submit that at the time West delivered the property tol the Nebraska trustees that property belonged to the trustee in bankruptcy, was in the custody of the law in the bank- ruptey court with West the mere repository of the same sub- sci tpt arias Cag opie a EX IS BEER AOE LER ARRON ADs AE TH TE % : b;! 33 a3 16 ject to the jurisdiction of the bankruptey court and that whatever jurisdiction, if any, the State Court ever had over such property that the same came to an end with superven- ing bankruptcy. (ross rs. Irving Trust Company, 289 U. S. 342, 77 L. Ed. 1243, 53 8. Ct. 605. Taylor vs. Sternberg, 298 U. S. 470, 79 L. Ed. 599, 55.8. Ct. 260. Kalb vs. Feuerstein, supra. The bankruptcy law was impliedly read into the bond of the Nebraska trustees and after supervening bank- ruptcy the Nebraska trustees’ bond became subject to the conditions of the National Bankruptcy Law. Wright vs. Union Central Life Ins. Co., 304 U. 8. 502, 516, 86 L. Ed. 1490, 58 8. Ct. 1025, 1083. REASON III The Circuit Court of Appeals failed to give effect to the National Bankruptcy Law, the exclusive paramount juris- diction of the bankruptcy court and the applicable decisions of this court; so far as the effect may be concerned of super- vening bankruptcy on the jurisdiction of the Federal Court, on West as receiver and on the condition of the bond of West as receiver. The Circuit Court of Appeals holds: that the trustee in bankruptcy could not receive the assets of the bankrupt estate from West at the time he delivered the assets to the Nebraska trustees (R. 217); that West was an officer of the United States District Court of Nebraska and the condition of his bond was that he should obey the orders of that court in relation to his trust and that he could not breach his bond by obeying the order of the court appointing him (R. 219) ; and, that the Federal Court after actual notice of the corporation having been adjudicated a bankrupt made an order releasing and discharging West as receiver and exonerating his bond (R. 214). 17 We submit that with supervening bankruptey the jurisdic- tion of the Federal Court came to an end. Taylor vs. Stern- berg, supra; Kalb vs. Feuerstein, supra, So far as West was concerned after supervening bankruptcy he was the mere repository of property, the title to which had passed to the trustee in bankruptey, with the property im the custody of the law in the bankruptey court and West subject to the jurisdiction of the bankruptcy court. Taylor vs. Sternberg, supra. The bankruptey law was impliedly written into West's bond as receiver. Wright rs. Union Central Life Ins. Co., 304 U.S. 502, 516, 86 L. Ed. 1490, 58 8S. Ct. 1025, 1033. After supervening bankruptcy the condition of West's bond required him to obey not the orders of the Federal Court but the bankruptcy court. After supervening bankruptcy not only was the order of the Federal Court directing West to deliver the property of the corporation to the Nebraska trus- tees without further force or effect, but the title to that prop- erty had passed to the trustee in bankruptey and the prop- erty that West delivered to, and the Nebraska trustees re- ceived, was no longer the property of the corporation but the property of the trustee in bankruptey. After supervening bankruptey it was beyond the jurisdiction of the Federal Court to release and discharge West or exonerate his bond. Taylor vs. Sternberg, supra, and cases cited therein. SISTERS Brendan: 18 REASON IV The holding of the Circuit Court of Appeals, that the State Court’s order denying the application of the trustee in bankruptcy for possession of the property of the estate of the bankrupt constituted res judicata of the issue whether West breached his bond as receiver by delivering the assets of the bankrupt estate to the bankruptcy trustees conflicts with the following cases among others: In re Diamond’s Estate (6 C. Cc. A. ), 259 F. 70, 78, 75; In re Watts & Sachs, 190 U.S. 1, 27, 47 L. Ed. 933, 941, 23 8S. Ct. 718, 724; Gross vs. Irving Trust Co., 289 U. 8. 342, 845, 77 L. Ed. 1243, 53 8. Ct. 605, 606, 607, 90 A. L. R. 1215. These cases hold that with due regard for comity a trustee in bankruptcy should apply to the non-bankruptey court having possession of the assets of the bankrupt estate, calling its attention to the superven- ing bankruptey and asking for possession of such assets and that such court’s refusal to surrender possession did not constitute res judicata. REASON V The Cireuit Court of Appeals has misapplied this court's holdings in /saacs vs. Hobbs Tie & Timber Co., 282 U. 8. Ti, 737, 738, 75 L. Ed. 645, 51 8. Ct. 27), 272, and in Palmer vs. State of Teras, 212 U. 8. 118, 53 L. Ed. 435, 29 8. Ct. 230. In [saacs vs. Hobbs Tie & Timber Co., supra, by virtue of the exclusive paramount jurisdiction of the bankruptey court, the real estate in Arkansas, part of the bankrupt estate was brought into the possession of that court in Texas. The property being in the possession of the bankruptey court it exercised its concurrent jurisdiction relative to the mortgage lien to the exclusion of other courts the same as a court of SG ar = SS ee ae ee ~e 19 concurrent jurisdiction would do. The Circuit Court of Ap- peals in applying the rule in the Isaacs case holds that the State Court exercising a jurisdiction to take possession of the corporate assets, “collect the debts due the corporation and pay the liabilities, ete.” was an exclusive jurisdiction which prevented the bankruptey court from exercising its exclusive paramount jurisdiction as to the property belong- ing to the estate of the bankrupt and in the actual possession of West at the time that bankruptey supervened. — In other words, the State Court taking the property of the corporation by virtue of the state law to distribute it to creditors is exercising an exclusive jurisdiction, and since it is claimed to have first obtained constructive pos- session, it is to exercise its jurisdiction without inter- ference from the bankruptey court. This holding conflicts with numerous decisions of the Circuit Courts of Appeal and the applicable decisions of this court. In Jn re Watts & Sacha, 190 U. 8. 1, 27, 47 L. Ed. 933, 941, 23 8. Ct. 718, 724, this court said: “But that rule can have only a qualified application where winding-up proceedings are superseded by those in bankruptcy as to which the jurisdiction is not con- current.” In Gross rs, Irving Trust Co., 289 U.S. 342, 344, 77 L. Ed. 1243, 53.8. Ct. 605, this court holds that the rule hetween courts of concurrent jurisdiction does not apply to a bankruptey court exercising a paramount jurisdiction, In Palmer vs. Teras, supra, both the State Court and the Federal Court were exercising a concurrent jurisdiction and since the State Court was held to have first obtained juris- diction the Federal Court was required to relinquish its juris- diction. No question of the exercise of the exclusive para- mount jurisdiction of a bankruptcy court was involved in that case. We submit that neither of the above mentioned cases sustains the holding of the Circuit Court of Appeals. aR PERE nat PRARE TEAS, Sia eas ER Mts ate ee ery 5S BPG OODLES Rant Beas eee 20 REASON VI The holding of the Circuit Court of Appeals that Marcell, et al., vs. Engebretson, T4 Fed. (2) 93, and Engebretson vs. Marcell, et al., 84 Fed. (2) 315, constituted res judicata of the issue whether West breached his bond as receiver when he turned the assets that he had received from the corpora- tion to the Nebraska trustees gave an unwarranted effect to its judgment in these cases and by so doing has deprived the trustee in bankruptcy of his property without due process of law contrary to the Fifth Amendment to the United States Constitution. Fayerweather vs. Ritch, 195 U. S. 276, 297, 298, 49 L. Ed. 193, 25 8. Ct. 58, 63, 64. The trustee in bankruptcy has been denied his day in court be - cause in the summary proceeding and in the plenary action te was denied relief because in each instance the court was without jurisdiction. In the cases at bar he is again denied relief because it is now claimed that his rights were deter- mined in the summary proceeding and in the plenary action. It is, therefore, respectfully submitted that this case is one calling for the exercise by this court of its supervisory powers and that a writ of certiorari should be granted. Respectfully submitted, WILLIAM M. GILLER, Attorney for Petitioner, 400 Brandeis Theatre Building, Omaha, Nebraska. M. E. CULHANE, Minneapolis, Minnesota, OLAF EIDEM, Brookings, South Dakota, Of Counsel. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386415_0058%3A1. Public record. Not legal advice.