Petition for a Writ of Certiorari — Russell v. Atlanta Flooring & Insulation Co.
Supreme Court brief1945
Ask Donna
What actually matters in this document.
Text
’ SUPREME ‘oovRr oF THE UNITED STATS
FULLER, Ronan Now foe za
_
me
SS
yt
7
PETITION FoR. ‘WRIT OF: operionahe 2
URINE EAT omourr GouRT OF APP
TABLE OF CONTENTS
Page
Petition for writ of certiorari....................... 1
I. Summary statement of matters involved..__. 2
ccm by. ECE Ee oa ee 3
Present proceeding.................... 8
cng a PE en rae eee 10
Opinion and judgment of District Court
on second turn over petition. ........ 11
Judgments and opinions by the United
States Circuit Court of Appeals for the
PM Raut cece een acces: 14
iis WI ck tc i DU tert oS 14
Questions involved are substantial... _. 16
III. Reasons relied on for allowance of the writ. 17
Brief in support of petition for certiorari..........__. 23
I. The opinion of the court below..........__. 2:
My WOR etek ec fl 24
III. Statement of the case..................... 24
IV. Specification of errors..................... 24
Wh MU Ccs deren ieicei dies Ss dics ce 28
Point 1. Under Section 2, subsection
a(21) of the Bankruptcy Act, as well as
under the State of the law prior to the
enactment of that subsection, the Bank-
ruptey Court is without jurisdiction, by
summary proceedings, to require either .
delivery or accounting from a non-bank-
ruptey receiver, where the non-bank-
ruptcy receiver was appointed and took
possession of the res more than four
months before bankruptcy, where the
bankruptcy proceeding is not under either
Chapters X or XII of the Bankruptcy
Act, and the non-bankruptcy receiver
need not surrender any property to the
Bankruptcy Court unless there proves to
be a surplus over and above that neces-
sary to satisfy lienors and claimants in
the non-bankruptcy proceedings.. ..... 28
—8008
TS NAINA SWEAR HG
ii INDEX
6 reeset ming ET OS a ead
TABLE oF CAsEs
In Re: Antigo Screen Door Co., 123 Fed. 249, 59 C. C. A.
284
36
Astor v. Wells, 17 U. 8. 466, 4 Wheat. 416, 4 L. Ed. 616. 21,50
Atlanta Flooring & Insulation Co. v. Oberdorfer Insurance
Agency, Inc., 136 Fed. 2d 457, Cert. Denied 320 U. 8.
782 64 Sup. Ct. 189, Case No. 359, Oct. Term, 1943,
Scere: aera. a, eee a aaa
wert tie re en x SEC COE aT: 19,43
Blair v. Brailey, 221 Fed. 1, Cert. Denied 238 U. 8. 634,
ee Pe es 18 36
Central Railroad v. Pettus, 113 U. 8. 116, 124, 5 Sup. Ct.
eg te Sees ., ,, SORE Oe ies 35
City of Boston v. McGovern (C. C. A. Mass., 1923) 292
Fed. 705, Cert. Denied 265 U. S. 581, 44 Sup. Ct. 456,
sete: Bogs oo NE ES CLO RUE: 19,42
Clements v. Conyers (C. C. A. 7th Cir.) 32 Fed. 2d 5,
Cert. Denied 280 U, S. 584, 74 L, Ed. 633.......... 17 ,36
RN LT TIE IRE ACNE OS
INDEX iii
Page
Deadrich v. U.S. (C. C. A. Nev., 1935) 74 Fed. 2d 619. 21 50
Doyle v. Hamilton Fish Co., 234 Fed. 47, 148C.C. A. 63,
Cert. Denied 243 U. S. 649, 37 Sup. Ct. 476, 61
Ae tidecvuuhincs EG ce. i 5 43
Emil v. Hanley, 318 U. 8. 515, 63 _ See | Se 15,29
In Re: Farmers Loan & Trust Co., 129 U. S. 213, 32 L.
fe eT EE er EE CR Tre eee 15
Forgay v. Conrad, 6 Howard. 204, 12 L. Ed. 405...___ 15
Frazier v. Southern Loan & Trust Co., 99 Fed. 707, 713,
bee fag Be eb, PORE OP SITY PRO e ee ern em 35
Gould v. Evansville & C. R. Co., 91 U.S. 526, 23 L. Ed.
eh RT LS ee RI 1s OS Ney SoA tht 19,43
Grubb v. Public Utility Commission of Ohio, 281 U.S.
470, 50 Sup. Ct. 374, 74 L. Ed. 972............... 19,42
Hamburger Distillery (C. C. A. Pa.) 115 Fed. 2d 84.... 48
Hamilton Gas Co. v. Watters (C. C. A. W. Va.) 79 Fed.
ar hig y: Re Peet eee ee near iits 19,43
Hardin et al v. Dodd et al, 176 Ga. 119.............. 47
Denied 296 U. S. 635, 56 Sup. Ct. 157, 80 L. Ed. 452. 19,42
Hoover v. Mortgage Co. (C. C. A. 9th Cir.) 290 Fed. 891. 17,36
Horn v. Pere Marquette R. Co. (C. C.) 151 Fed. 626.___ 35
Horton v. Moore (C. C. A. Mich. 1940) 110 Fed. 2d 189,
Cert. Denied 311 U. S. 692, 61 Sup. Ct. 75, 85 L. Ed.
Meas Poh ete Wl jars GE hGKwene nite Clk eat: 44
International Shoe Co. v. Pinkus, Et Al., 278 U. S. 261,
40 Sup. Ct. 108, 73 L. Bd. 318... ..............« 31,35
Martin v. New York Life Insurance Co. (C. C. A. Il.
1939) 104 Fed. 2d 573, Cert. Denied 308 U. S. 594
coabpecte Ekg BTR SNARES eR cr ECCI RS el a a 44
Matter of Conservative M ortgage & Guaranty Co. (C.C. A.
Oe Rg ee eae is 17,36
May v. Henderson, 268 U.S. 111.................... 46
McLeon v. McLeod, 144 Ga. re 47
Metcalf v. Barker, 187 U. 8. 165, 14 L. Ed. 122....__. 17,33
Muffler v. Pettigrew Realty Co., (C. C. A. 6th Cir.) 132
Fed. 2d 479, Cert. Denied 319 U. S. 766, 63 Sup. Ct.
ey We Oe, Os BUM ok cekek cc 15,18 ,36
Murphy v. John Hoffman Co., 211 U.S. 662, 29 Sup. Ct.
WMS MM Ms 5 PE aN Uk cee ec ue ea. 36
iv INDEX
Page
Neely v. McGehee, 2 Fed. 24 853............___ ae
Ogden v. Saunders, 12 Wheat.213....... 32
Park Lane Dresses, Inc. vy. Haughton & Dutton Co.,
(C. C. A. Ist Cir.) 54 Fed. 2d33.............. .. ae
Peck v. Jennes, 7 Howard. _. See ee ee
Penn. Railroad Co. vy. ¢ ‘hamberlain, 288 U. 8. 333, 53
up: Se, Oe ee OO OO 21,50
Pickens v. Roy, 187 U.S. 177, 23 Sup. Ct. 78, 47 L. Ed.
cee Ger CETL EES ERE SEA Te oh aes Pe ae ee 35
Shapleigh v. United Farms, (C. C. A. Tex., 1913) 100
SR MP brite a ee At 21,50
Southern Minnesota Railway Extension Co. v. St. Paul &
Stovall v. Banks, 10 Wall. 586, 19 L. Ed. 1036....___. 15
Straton v. New, 283 U. 8. 327, 75 L. Ed. 1098........ . 17,31
Slurges v. Crown inshield, 4 Wheat. 122, 4 L. Ed. 529. 15,17,31
Thompson v. Dean, 7 Wall. 346, 19 L. Ed. 95......... 15
In Re: Tyler, 149 U.S. 164, 183, 13 Sup. Ct. 785, 37
kL. Ed. 687 oie SAIN eae, Oe ee RNS Reba alts Gin gai ec ok ca We 35
Wabash Railroad Co. v. Adelbert ( ‘allege, 208 U.S. 38
28 Sup. Ct. 182, 52 L. Ed. 379.................... 36
Waldon v. Maryland Casualty Co., 155 Ga. 76......... 7
STATUTES AND TExTs
Bankruptey Act:
(11 U.S.C. A. 1a (21)) Seetion 2, Subsection a(21) . 15,21 , 24
(11 U.S. C. A. 47e) Seetion 24, Subsection e
(11 U.S. C. A. 107a) Seetion 67, Subsection a........
(11 U.S. C. A. 109d) Seetion 69, Subsection d........
(11 U.S. C. A. 110a) Seetion 70, Subsection a
Georgia Code for 1933, As Amended:
Section 37-401 (Appendix One)..............._.
Section 37-405 (Appendix Two)............._..
INDEX
Section 37-407 (Appendix Se oe ee
Section 37-407 (Appendix Four)............
Section 37-410 (Appendix Five)........__..
Section 55-309 (Appendix Six)......_...
30 American Jurisprudence pp. 920-923......_...
Bouvier’s Law Dictionary, P.711...............
Judicial Code, as Amended:
2s We Donne Pere? ETO apes
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1944
No. 1227
MARVIN G. RUSSELL, RECEIVER,
sec Petitioner,
ATLANTA FLOORING & INSULATION CO., INC., ET
AL., Petirioninc Creprrors anp W. A. FU L LER, Rer-
CEIVER AND Trustee ror S. YOSHINU IMA, Bankrupt
PETITION FOR WRIT OF CERTIORARI TO THE
UNITED STATES CIRCUIT COURT OF APPEALS
FOR THE FIFTH CIRCUIT.
To the Honorable Supreme Court of the United States:
The petition of Marvin G. Russell, Receiver in the case of
Oberdorfer Insurance Agency Ine. v. S. Yoshinuma, pend-
ing as case number 138423 in the Superior Court of Fulton
_ County, Georgia, respectfully prays this Court to review on
| writ of certiorari the judgments of the United States Cir-
| cuit Court of Appeals for the Fifth Circuit in the case of
Atlanta Flooring & Insulation Co., Ine., Capitol Fish Com-
| pany, Alterman Brothers, Inc., Petitioning Creditors, and
\W. A. Fuller, Receiv er, now Srasian for S. Yoshinuma,
1k
mee
2
Bankrupt v. Marvin G. Russell, Receiver, rendered on No-
vember 22, 1944, based on a written opinion by the Court,
rendered on the same date (R. 45-49); bet which judgement
only became final on January 30, 1945, when said Court
denied petitioner’s petition for rehearing (R. 66-74).
I
Summary Statement of Matters Involved
The present litigation arises from a second petition for
a turn over between the same parties. The petitioning
creditors and the bankruptey receiver appealed to the Cir-
cuit Court of Appeals from an adverse ruling of the Dis-
trict Court on the first petition (United States Cireuit
Court of Appeals Fifth Cireuit 10,626); the judgement of
the District Court was affirmed (186 Fed. 2d 457). The
petitioning creditors and the bankruptey receiver then filed
their petition for a writ of certiorari in this Court (Case
+399, October term, 1943), which was denied (320 U. S.
782, 64S. Ct. 189).
On the appeal in the present proceeding by the petition-
ing creditors and the bankruptey receiver from an adverse
ruling by the District Court, it was stipulated between the
parties ‘*that the entire record and judgment of the Court
(C. C. A.) in case number 10,626 be considered and treated
as part of the record in this case for the purposes of argu-
ment and reference in the briefs of counsel for both parties,
wherever deemed relevant and pertinent, and that the par-
ties in this case on appeal may quote from the record in case
number 10,626 in their briefs or argument as freely as if
parts quoted were designated and incorporated in this ap-
peal”? (R. 27, 28, 35e, 35d, 40, 41, 42).
That record is in this Court in case number 359, October
Term, 1943, and petitioner prays reference thereto. Where
“tf
ro
—
3
necessary petitioner will refer to the record in that ‘ase in
this Court as ‘*Case 359”,
History of the Case
On the 13th day of May, 1942, the Oberdorfer Insurance
Agency, Ine., a judgment creditor of S. Yoshinuma, after
having exhausted its remedies at law for the satisfaction of
its jJudement, filed an equitable petition against the said
Yoshinuma, in the Superior Court of Fulton County, Geor-
via, alleging the above (R. 8, case 359), and further perti-
nent allegations as follows:
(a) ‘*Petitioner alleges that the defendant is insolvent,
that he owes to various and sundry creditors in excess of
$28,000.00. Of said total indebtedness there is secured to
ten creditors the sum of approximately $7,000.00, covering
all of the assets which the defendant owns and possesses.
The said liens were created at various times and are of
different rank and dignity, and cover ‘arious and sundry
items. Some of the liens are liens on specific items, whereas
others cover all of the assets of the defendant. The said
liens were made and recorded prior to the time petitioner
obtained its said judgment against the defendant. The bal-
ance of approximately seventy creditors, which are un-
secured and are represented by open account. All of the in-
debtedness of the defendant, secured or unsecured, is past
due and the lienholders will foreclose their mortgages and
the unsecured creditors will file suits to enforce their obliga-
tions and a multiplicity of suits will result’ (R. 29-30),
(b) ‘*Your petitioner further shows that the assets of
the defendant consist of valuable improvements made on
premises oceupied by the defendant, furniture and fixtures,
equipment, china ware, silver ware, glass ware, trucks,
merchandise, good will, and a lease-hold interest in the
premises for a period of ten years”’ (R. 30).
q
(c) ‘Petitioner shows the: the defendant is insolvent
and that during his absence the business was operated by
his wife, and during her management none of the creditors
have been paid. That the monies taken in from the opera-
tions of the business are expended for current operation, the
bills paid in cash, and that no bank account is being main-
tained on behalf of the defendant” (R. 30).
(d) ‘Your petitioner, in order to collect its said judg-
ment, ran a garnishment against various banking institu-
tions and it is informed and believes that the defendant
maintains no bank account in the City of Atlanta and its
judgment cannot be satisfied by that procedure’? (R. 30-31),
(ec) ‘*Petitioner shows that on account of the prior liens
it is unable to have its judgment levied on the property be-
longing to the defendant, and that in order to collect the
same it is necessary that a Court of equity take jurisdiction
over the affairs of the defendant and his property and that
a receiver be appointed’? (R. 31),
(f) ** Petitioner brings this bill on behalf of itself and all
creditors of the defendant. either similarly or dissimilarly
situated, aud shows that it is to the best interest of all
parties, the defendant, petitioner and all creditors, that a
receiver be appointed to operate said business until such
time that a prospective customer ean be found who is will-
ing and able to purchase said business as a going concern
or that said business be liquidated, that if the various lien-
holders are permitted to foreclose their liens and the un-
secured creditors be permitted to file suits that the good
will, which is the principal asset of said business, will be
destroyed, that no assets will remain to pay your petitioner
or other creditors, that on account of the lack of supervision
of the defendant's affairs, the federal license may be in
jeopardy, but that on the other hand, if a reeeiver is ap-
0
pointed to take charge under the supervision of a Court of
equity, and operate the said business through a receiver
until a final order, judgment and decree ean be entered, that
said business can be sold as a giong concern or liquidated
and the assets marshalled and the creditors paid according
to their rank, dignity, and priority, that the creditors will
realize all or a substantial portion of the amounts due
them’? (R. 21-22).
(g) ‘*Petitioner further shows that it has no adequate
remedy at law for the enforcement of its judgment against
the defendant, and unless a Court of equity will intervene
to protect the rights of petitioner, it will suffer irreparable
loss, and a multiplicity of law suits will arise”’ (R. 31).
(h) The prayers of this petition are set out in part in the
record in the Court below as follows:
“That a temporary receiver be appointed to take charge
of all of the assets belonging to the defendant and espe-
cially take charge of the business mentioned in the within
and foregoing petition, including any goods, wares, and
merchandise used in said premises, and that sued tempo-
rary receiver be authorized and directed to preserve and
protect all the assets of the defendant and be pernitted to
operate said business; that a permanent receiver be ap-
pointed with power to operate and maintain said business:
that each of the lienholders be restrained and enjoined from
foreclosing or in any wise changing their liens, but be
required to intervene in this petition; that all other ered-
itors be allowed, permitted and required to intervene herein
and be restrained and enjoined from prosecuting sepa-
rate actions, and that the respective rights, dignity and
priority of all creditors be set up and established herein:
that the petitioner have such other and further relief as is
equitable and meet in the premises’? (R. 22).
6
(i) The following is a portion of the order of the State
Court, dated May 13, 1942, appointing its receiver, as it
appears in the record in this ease:
‘In the meantime, and until further order of this Court,
all creditors, their agents or attorneys or other parties are
enjoined and restrained from foreclosing their liens, filing
suits, or in any wise taking action against the defendant or
interfering with his said property other than through inter-
ventions in this proceeding. The defendant, his agents
and attorneys are restrained and enjoined as prayed for
in the foregoing petition”? (R. 31).
On the same day, Marvin G. Russell, petitioner here, was
appointed receiver by the State Court in said vase (R. 31)
(R. 39, Case 359). The entire order appears in case number
309; in this case only a portion of the order appears in the
record, which is set out under subparagraph (i) above,
On June 25, 1942, Yoshinuma acknowledged service in
the State Court suit, and consented to making the receiver-
ship permanent, and to the sale by the receiver of his assets
(R. 11, Case 359). On September 15, 1942, two days more
than four months after the receiver had been appointed by
the State Court and taken possession of the assets of the
defendant, an involuntary yetition in bankruptey was filed
against Yoshinuma, and consenting to be adjudicated a
bankrupt, he was, on October 9, 1942, so adjudicated (R.
12, Case 359). On October 6, 1942, Fuller was appointed
receiver by the Bankruptey Court, and instructed to apply
to the State Court for a turn over order (R. 32). He ap-
plied and was refused (R. 33). Tle then applied to the
Bankruptey for such an order (R. 32, 33, 34), and his peti-
tion was referred to the Referee, as Special Master. In
that application for turn over order, the bankruptey re-
ceiver alleged, upon information and belief, ‘‘that under the
7
facts and circumstances of this case, and under the law as
applied thereto, he, petitioner, is entitled to possession of
said assets’? (R. 34); and prayed that the Bankruptey
Court pass an order directing the State Court receiver to
turn over ‘the assets and property of the bankrupt now in
their possession and control as State Court receivers”?
(R. 34). In response thereto, the State Court receiver
(Russell) filed his answer, in which he stated ‘‘this receiver
is respectfully of the opinion that, under Section 2 sub-
section a(21) of the Acts of Congress Relating to Bank-
ruptey, as Amended, that the provisions of Section 69 sub-
section D do not apply to him; and that the jurisdiction of
the Superior Court of Fulton County to administer the
property in the hands of this receiver until the claims of
all the intervenors therein are satisfied, is not affected by
the adjudication of the said S. Yoshinuma as a bankrupt’?
(R. 34). The State Court receiver further answered that
‘this receiver respectfully calls the attention of this Court
to Section 55-309 of the Code of Georgia for 1933, as
amended, which is as follows: ‘The receiver is an officer
and servant of the Court appointing him, is responsible to
no other tribunal than said Court and must in all things
obey its direction’ ’? (R. 07, Case 359). :
On October 23, 1942, the Special Master filed his report,
in which he determined and recommended accordingly that
the bankruptey proceeding having been instituted more
than four months after the filing of the bill in the State
Court, its appointment of the reeciver and his taking pos-
session of the res in controversy, the State Court is en-
titled to retain jurisdiction, and to administer the estate
(R. 35) (R. 27, Case 359) (Also see 136 Fed. 2d 457, note).
On November 20, 1942, the District Judge, overruling the
objections and exceptions to the Master’s report, and mak-
ing the findings of the Master the order and judgment of
8
the Court, denied the petition of the bankruptey receiver
(R. 16, Case 359). In announcing its judgment, denying the
petition, the District Court, at that time said:
“The Court rules that assuming the valid appointment
of the receiver (State Court receiver) more than four
months prior to the date of bankruptey, under the Court’s
construction of the Bankruptey Act, the Court has no au-
thority to require the State Court receiver to turn over the
property to the receiver appointed by this Court. That is
the ruling of the Court’? (R. 39-40) (R.58, Case 359),
The petitioning creditors in the Bankruptey Court and
the bankruptey receiver appealed the judgment of the Dis-
triet Court, denying the petition, to the United States Cir-
cuit Court of Appeals for the Fifth Cireuit, and on June
25, 1943, the United States Cireuit Court of Appeals for
the Fifth Cireuit entered its order affirming the judgment
of the District Court. (Atlanta Flooring & Insulation Co.,
Ine., et al., vy. Oberdorfer Insurance Agency, Ine., 136 Fed.
2d 457.)
Whereupon, petitioning creditors in bankruptcy and the
hankruptey receiver filed a petition in this Court for writ
of certiorari to be directed to the United States Cireuit
Court of Appeals for the Fifth Cireuit to the October term,
19435, of this Court, case number 399; this petition for certio-
rari was denied. (Atlanta Flooring & Insulation Co., Ine.
et al. v. Oberdor Insurance Agency, Inc., 64S. Ct. 189, 320
U.S. 782, Nov. 8, 1943.)
Present Proceeding
Immediately thereafter, the petition for summary turn
over order, from which the present litigation arises, was
filed in the United States District Court for the Northern
District of Georgia, by the petitioning creditors and the re-
9
ceiver in bankruptey, and, as amended and rewritten, was
dated the 29th day of November, 1943 (R. 2-6). In this
second petition for summary turn over order, the petition-
ing creditors in the bankruptcy case and the bankruptey
receiver sought a turn over order against the State Court
receiver for all of the assets in the hands of the State Court
receiver, except an amount sufficient to pay the judgment
of the original petitioner in the State Court case, including
his principal, interest, costs and the fee for the counsel of
said petitioner; it being contended by the bankruptcy re-
ceiver that all of the claimants who had become parties
plaintiff to the State Court bill had done so within four
months of bankruptcy and that they were not entitled to
have their claims adjudicated and satisfied in the State
Court. This contention was made as to creditors claiming
security or priority superior to the claim of the original
plaintiff in the State Court bill as well as to all other claim-
ants claiming priority or security, as well as those who were
simple unsecured contract creditors at the time of the filing
of the State Court bill on May 13, 1942 (R. 2-6).
The State Court receiver defended on the grounds:
(a) That under Section 2 subsection a(21) of the Bank-
ruptey Act that he, as an officer of the Superior Court of
Fulton County, Georgia, was not subject to the summary
jurisdiction of the Bankruptey Court for the purposes of
the relief sought; (R. 12).
(b) That the petition was res judicata, in that:
(b-1) The issues raised were decided by the District
Court on November 20, 1942, and that the judgment of the
District Court was affirmed by the United States Circuit
Court of Appeals for the Fifth Circuit ;
(b-2) That the judgment of the District Court, on Novem-
ber 20, 1942, and its affirmance by the Circuit Court of Ap-
2k
:
z
:
fy PE RO TU Se
10
peals was a decision that the Court was without summary
Jurisdiction in the premises ;
(b-3) That the petition was fatally defective under the
principles of estoppel by judgment, the rights sought hav-
ing been included in the previous turn over petition and
were adjudicated by the District Court on November 20,
1942, and that adjudication affirmed, or that the rights
sought could and should have been asserted in the previous
turn over petition; (R. 13).
(c) That the proceedings were summary proceedings
and that the Bankruptcy Court was without summary juris-
diction of the subject matter of the petition or of the re-
spondent; (R. 13).
(d) That the petition, at that time was premature in
that it sought a recovery of an unadjudicated quantity, the
adjudication of which was in the exclusive jurisdiction of
the Superior Court of Fulton County, Georgia; and that
the issues necessary for a determination of the quantity
sought were therein pending unadjudicated (R. 14).
Evidence
The evidence included all of the facts heretofore set out,
as well as all of the evidence and documents before the
Court in the previous case, the findings of the Referee, the
record before him, and the records before and the jude-
ments of the District Court, and the United States Cireuit
Court of Appeals were also introduced in evidence, or
Judicial notice thereof taken by the District Court.
It was also shown that since the previous petition for
turn over order, the State Court receiver, under order of
that Court, and under due authorization of the Bankruptey
Court, had sold the assets of the bankrupt, realizing there-
for the sum of $10,000.00; and that at that time, he had on
1]
hand approximately $10,000.00, which, however, was sub-
ject to claims of lien, priority, Court costs and costs of ad-
ministration before the State Court pending there un-
adjudicated (R. 3, 7, 8).
The evidence by the bankruptcy receiver’s witness was
that there were fifty two creditors, who had become parties
plaintiff to the State Court ease, but that no classification,
analysis, or total of the claims asserted had been made.
Witness in behalf of the State Court receiver testified that
he had examined and made analysis of the claims of the
claimants who became parties plaintiff to the case, and
found that of the parties plaintiff, eleven claimed to be
secured or entitled priority of payment from the funds in
the hands of the State Court receiver, and that the claims
asserted by them total $9,109.66. He further testified, as
attorney for the State Court receiver, that there had been
no adjudication of the issues formed in the State Court ease
by the State Court, that no claims had been adjudicated
in the State Court, that there had not been any adjudication
of the amount of money, if any, that the State Court re-
ceiver should pay to the original plaintiff, Oberdorfer, in
the State Court proceeding. (R. 19, 28, 29).
Opinion and Judgment of the District Court on Second
Turn Over Petition
At the conclusion of the evidence, the Court stated its
opinion from the bench (R. 15), as follows:
‘*T am inclined to the views in the main presented by the
State Court receiver, not as to all of them but as to a suffi-
cient number of them which would impel the Court to de-
cline to grant the turn over order as prayed by the receiver
in bankruptey.’’
‘“‘In the first place, I am of the opinion that in view of
the fact that the State Court receiver had possession of the
12
property, out of which was derived the funds now in his
hands, more than four months prior to bankruptey, that in
any event and regardless of any other reason for the ruling,
that it would be sufficient tu show that this Court does not
have jurisdiction by summary proceeding, to divest him of
the surplus or of the funds, the criterion of test of jurisdie-
tion being the possession of the property at the time of the
institution of bankruptey. Without exploring fully the full
scope of the effect of the former ruling in the ease, certainly
it was determined that that prossession was valid and
proper, and that it originated more than four months prior
to bankruptcy, so that the possession of the receiver was
legal and in his own right, or in the right of the State Court
proceedings at the time of the institution of bankruptey
and, as stated, for that reason, if no other, the Court would
not be authorized to proceed by exercise of summary juris-
diction.’’
‘*In order that counsel might have the Court’s additional
views in the matter, I do think that under the Georgia law
that the receiver (State Court receiver) in this case is en-
titled to retain this property, or the funds, until the State
Court has made a determination of the effect of the liens,
all of which are referred to in the State Court proceed-
ings, and must, of necessity, have anti-dated a (the) filing
of State Court proceedings, and therefore be more than
four months old, in and of themselves, which without regard
to interventions being filed within the four months period,
they would relate back to the lien. That is certainly true
as to the creditors participating in the State Court proceed-
ings who are proceeding upon lines (liens) * * * more
than four months prior to the institution of bankruptey and
in those circumstances, I think that the application, even
if the Court had power and * * * it was a proper case
FRE Gee ake LRRD NRE SIRI RR IES 2 TORE TRG DAES
13
for the exercise of jurisdiction, that it should not be exer-
cised in this proceeding because it would be premature in
that the bankruptcy receiver has no right to the funds at
this time.’’
“*s * * The Court is further of the opinion, and
thought it was so included within the former ruling, that
under the provisions of Section 2 subsection a(21), all ered-
itors are put on notice by its terms, that in case of an
application for receiver (non-bankruptey Court), that they
must proceed in bankruptey and avail themselves of the
congressional act, and failing in which, that they would
have to participate either in the State Court or in some
other manner; that the provision of that statute forbids
the Bankruptey Court by summary jurisdiction from re-
quiring the turn over of property which has been in the
hands of the State Court receiver appointed more than
four months prior to the institution of bankruptey. * * *
That is my view of that provision of (the) bankruptey
statute and for all those reasons the Court declines to
grant the petition for turn over order.”’
Immediately thereafter, the Court entered its order on
the petition for summary turn over order brought by the
petitioning creditors and the bankruptcy receiver, as fol-
lows:
‘““The above and foregoing motion coming on regularly
for a hearing before me, and after hearing evidence and
argument thereon and on the motion to dismiss by the State
Court receiver, it is the order and judgment of this Court
that the above and foregoing motion be and it hereby is
denied, on the grounds stated from the bench. This 15th
day of December, 1943’? (R. 15, 16, 17).
14
Judgments and Opinions by the United States Circuit
Court of Appeals for the Fifth Circuit
The opinion of the Cireuit Court of Appeals, affirming
the denial of the first petition for turn over order, is printed
in the official reports at 136 Fed. 2d 457.
In this proceeding on the second petition for turn over
order, the Cireuit Court of Appeals reversed the District
Court, and entered its judgement and opinion of reversal
on November 22, 1944 (R. 45-49).
On the 12th day of December, 1944, the United States
Circuit Court of Appeals entered its order staying its man-
date in said case, and extending the time for filing petition
for rehearing until the 23rd day of December, 1944,
Petition for rehearing was filed in said case by the ap-
pellee, petitioner here, on December 20, 1944 (R. 52-65).
The Circuit Court of Appeals entered its order denying
the petition for rehearing and a further opinion in said
case on January 30, 1945 (R, 66-74),
Thereafter, certain corrections were made in the latter
opinion. The word ‘‘appellee,’”? last paragraph record
69, was changed to read “‘appellants.’’ The paragraph
at the top of record 70 was changed and rewritten.
II
Jurisdiction
The date of the judgment sought to be reviewed was
November 22, 1944 (R. 45-49), but it became final only on
January 30, 1945, the date on which the Court below denied
petition for rehearing (R, 66-74),
The jurisdiction of this Court is invoked on the grounds
that:
(a) The petitioner, in the Courts below, claimed im-
munity from the jurisdiction of Courts of Bankvuptey un-
15
der Section 2, subsection a(21) (11U. S.C. A. 11 a(21)) of
the Acts of Congress Relating to Bankruptcy, a statute
of the United States, which rights, while sustained by the
District Court, were denied by the United States Cireuit
Court of Appeals for the Fifth Circuit, in conflict with
that Section of the Bankruptey Act, and this Court has
not heretofore construed the proviso contained in Section
2, subsection a(21) of the Bankruptey Act.
(b) The judgment of the Cireuit Court of Appeals is
final, in that it reversed the holding of the District Court
that the Bankruptey Court, under the Bankruptey Act,
was without authority to require delivery or accounting,
and violated the terms of the proviso in subsection a(21)
of Section 2 of the Act and the prior judgment on the first
petition for return over order.
(c) It is not now necessary to the jurisdiction of this
Court that the judgment sought to be reviewed on cer-
tiorari be final, in view of the elimination from subsection
a of Section 240 of the judicial code of the limitation for-
merly contained therein, limiting the jurisdiction in cer-
tiorari matters to final judgments.
Jurisdiction is invoked under Judicial Code Section 240,
as amended (28 U.S. C. A. 347a), and Section 24, sitbsection
¢ of the Bankruptey Act (11 U.S. C. A. 47 (c)).
Some of the cases believed to sustain the jurisdiction of
the Court, as to Paragraph (b) above are: Thompson v.
Dean, 7 Wall. 346, 19 L. Ed. 95; Forgay v. Conrad, 6 How-
ard, 204, 12 L. Ed. 405; Stovall v. Banks, 10 Wall. 586, 19
L. Ed. 1036; In re: Farmers Loan & Trust Co., 129 U.S,
213, 32 L. Ed. 657.
Generally: Sturges v. Crowninshield, 4 Wheat. 122, 4
L. Ed. 529; Stellwagen v. Clum, 245 U. S. 605, 62 L. Kd.
007; Emil v. Hanley, 63 S. Ct. 687, 318 U. S. 515; Muffler v.
Pettigrew Realty Co., 132 Fed. 2d 479,
16
The pertinent provision of Section 2, subsection a(21)
of the Bankruptey Act, referred to above, is the proviso
contained therein, the bankruptey proceeding in this ease
not being a proceeding under either Chapters X or XII
of the Bankruptey Act, which is as follows;
‘Provided, however, that such delivery and account-
ing shall not be required except in proceedings under
Chapters X and XII of this Act, if the receiver or trustee
Was appointed, the assignment was made, or the agent was
authorized more than four months prior to the date of
bankruptey.’’
Questions Involved are Substantial
The question involved here is substantial and of tremen-
dous importance to debtors and creditors alike and to State
and Federal Courts, in that the proviso contained in See-
tion 2, subsection a(21) of the Bankruptey Act defines a
clear point at which the jurisdiction of Bankruptey Courts
end and the jurisdiction of the State Courts become para-
mount and exclusive in eases where bankruptey follows a
proceeding in a State Court, where the Bankrupt’s prop-
erty is in the course of administration. It is important
that this Court should clearly and simply define the point
beyond which the jurisdiction of the Bankruptey Court shall
not extend, under the provisions of the Bankruptey Act.
There has been a long history of litigation between officers
of Bankruptey Courts and officers of State Courts because
of the difficulty of determining conflicting jurisdiction, and
this proviso in Section 2, subsection a(21) of the Act was
inserted to create a clear, simple and definite limitation
upon the effect of bankruptey for the purpose of eliminating
long, drawn-out, expensive litigation between officers of
Bankruptey and State Courts. A construction of the pro-
viso by this Court will saye other expensive litigation, not
only in this case, but in a multitude of other cases,
17
Ill
Reasons Relied On for Allowance of the Writ
(1) The reversal by the United States Cireuit Court of
_ Appeals for the Fifth Cireuit of the holding by the District
Court that under the provisions of Section 2, subsection
a(21) of the Bankruptey Act, the Bankruptey Court is
without jurisdiction, by summary proceedings, to require
either delivery or accounting, where the non-bankruptey
receiver Was appointed and took possession of the res more
than four months before bankruptey, violates the federal
law, as set out in such provision. That proviso has nor
BEEN, but SHOULD BE, CoNSTRUED and settled by this Court.
This reversal is also in conflict with decisions of other
Cireuit Courts of Appeal on the same point and with ap-
plicable decisions of this Court, which, while not constru-
ing the proviso contained in Section 2, subsection a(21)
(they having been decided before the enactment of subsec-
tion 2(21) of Section 2 of the Act) hold that where the
non-bankruptey receiver or trustee was appointed more
than four months before the filing of the bankruptey peti-
tion, the receivership or trustee proceeding will not be
superseded, and the non-bankruptey receiver or trustee
need not surrender any property to the Bankruptey Court
unless there proves to be a surplus over and above that
necessary to satisfy lienors and claimants in the non-
bankruptey proceeding, including Sturges v. Corwinshield,
4 Wheat. 122, 4 L. Ed. 529, Stellwagen v. Clum,-245 U. 8.
605, 62 L. Ed, 507; Metcalf vy. Barker, 187 U. 8. 165, 47
L. Ed, 122; Straton v. New, 283 U. S. 327, 75 L. Ed. 1098;
Hoover vy. Mortgage Co. (C. C, A. 9th Cireuit) 290 Fed.
891; Clements v. Conyers (C. C. A. 7th Cireuit) 32 Fed.
2d 5, Cert. denied 280 U. 8. 584, 74 L. Ed. 633; Park Lane
Dresses, Inc. v. Haughton & Dutton Co. (C. C. A. Ist Cir-
cuit) 54 Fed. 2d 33; Matter of Conservative Mortgage &
3k
18
Guaranty Co. (C. C. A. 6th Cireuit) 24 Fed. 2d 38; Muffler
v. Pettigrew Realty Co. (C. C. A. 6th Cireuit, 1943) 52
Am. B. R. (N. S.) 130, 132 Fed. 2d 479, Cert. denied 319
U.S. 766, 63 S. Ct. 1329, 87 L. Ed. 1715; and, also, the
following cases from the Fifth Circuit: Yaryan Naval
Stores Co. v, Borchardt Co., 217 Fed. 758: Blair v. Brailey,
221 Fed. 1, Cert. denied 238 U. 8. 634, 59 L. Ed. 1499;
Neely v. McGehee, 2 Fed. 2a 853.
(2) The first petition for turn over order and judgement
thereon was res judicata, or created an estopple by judg-
ment, to the second petition for turn over order. Peti-
tioner here, by his answer to the first petition for turn over
order, made an issue that: ‘Under Section 2, subsection
a(21) of the Acts of Congress Relating to Bankruptey, as
amended, the provisions of Section 69 subsection d do not
apply to him; and the jurisdiction of the Superior Court
of Fulton County to administer the property in the hands
of this receiver (petitioner) unrn. THE CLAIMS OF ALL. THE
INTERVENORS THEREIN ARE SATISFIED, is not affected by the
adjudication of theysaid S. Yoshinuma as a bankrupt.”
The District Court in that case sustained that position, hold-
ing: ‘*That assuming the valid appointment of the re-
ceiver (State Court receiver) more than four months prior
to the date of bankruptey, * * * the Court has no
authority to require the State Court receiver to turn over
the property to the receiver appointed by this Court.”
In that case, the District Court made the findings of the
Special Master the order and judgment of the Court, after
the holding quoted above. The Cireuit Court of Appeals,
in that ease, at 136 Fed. 2d 457, affirmed the judgment, and,
after having stated ‘““The Special Master filed his report
in which, summarizing the material evidence and carefully
and correctly settling down his conclusions of law’’, added
as a note to its opinion that part of the Specizl Master’s
19
findings are as follows: The bankruptey proceeding having
been instituted more than four months after the filing of
the bill in the State Court, its appointment of the receiver
and his taking possession of the res in controversy, the
State Court is entitled to retain jurisdiction and To apMIn-
ISTER THE ESTATE, (Capitals ours).
The Court below erred in refusing to hold that the
questions raised and decided in the first petition for sum-
mary turn over order were res judicata, or created an
estopple by judgment, as to the recovery sought in the
second petition for turn over order, and therein conflicted
with controlling decisions of this Court and of other Cir-
cuit Courts of Appeal, including the cases of: Grubb v.
Public Utility Commission of Ohio, 281 U. S. 470, 50 S. Ct.
374, 74 L. Ed. 972; Henderson v. U. S. Radiator Corp.
78 Fed. 2d 674, Cert. denied 296 U. S. 635, 56 S. Ct. 157,
80 L. Ed. 452; City of Boston v. McGovern (C. C. A. Mass.
1923) 292 Fed. 705, Cert, denied 265 U. 8. 581, 44 S. Ct.
456, 68 L. Ed. 1190; Southern Minnesota Railway Exten-
ston Co, v. St. Paul & S.C. R. Co. 55 Fed. 690,5 C. CLA
ake
249; Doyle v. Hamilton Fish Co. 234 Fed. 47, 148 C. C. A.
63, Cert. denied 243 U. S. 649, 37 S. Ct. 476, 61 L. Ed. 946;
Hamilton Gas Co. v. Watters (C. C. A. W. Va., 1935) 79
Fed. 2d 438; Baltimore S. S. Co. v. Phillips, 274 U.S. 316,
47S. Ct. 600, 71 L. Ed. 1069: Gould v. Evansville & C.R
Co. 91 U.S. 526, 23 L. Ed. 416.
(3) It was an error and a violation of the petitioner’s
rights, under the Acts of Congress Relating to Bankruptey,
for the Court to hold (opinion on the petition for rehearing,
dated January 30, 1945, R. 71): ‘It must be conceded
that the legal title to the res in controversy is in the trustee
in bankruptey, or will vest in him upon his appointment,
which title is not affected by the prior possession of the
20
State Court receiver; and that the original plaintiff in
the State proceeding is an adverse claimant whose lien
(whether inchoate, complete, or contingent) was not in-
validated by the adjudication in bankruptey; but what
about the intervenors? Some of them may be simple con-
tract creditors, without a lien upon or an interest in the
property, who were not entitled to receiver in order that
the property might be forthcoming to satisfy their de-
mands,’’ This holding violates the Federal and State law,
because the filing and sanction of the State Court bill, the
seizure of the res in controversy by the State Court,
through its receiver, amounted to an equitable attach-
ment and ‘levy’? within the meaning of that term as it is
used in Section 67 (a) of the Bankruptey Act for the pur-
poses sought to be accomplished by the suit, and established
an inchoate lien in favor of all creditors appearing and
becoming parties in a reasonable time; and conflicts with
the decisions of this Court (cases cited under reason 1),
and is contrary to the proper interpretation of Section
70 of the Acts of Congress Relating to Bankruptey (11
U.S. C. A. 110 a) and is a decision of a question of local
law, contrary to local statute, Georgia Code for 1933, as
amended, Section 37-407. (Appendix 3, page 52).
(+) The Court below held (Opinion on petition for rehear-
ing, R. 69): “If it is an insolvency proceeding, the burden
is on the appellants to show it’, and further (opinion on
petition for rehearing, R. 69-70): ‘*We need more facets
to answer these questions; the correct answer may turn
upon the proper construction of the plaintiff’s petition
(Petition in State Court) ; if it were before us in its entirety,
we might determine its nature; but to expect Courts to de-
cide cases without sufficient facts may be likened to re-
quiring the ancients to make brick without straw.’ After
21
holding that the burden was on the appellants and that ap-
pellants had not furnished the Court with sufficient evidence,
the Court held in favor of the appellants and reversed the
judgment of the Court below in favor of the appellee, and
assessed the costs of the appeal against the appellee (Peti-
tioner here). This holding amounts to a holding that the
burden was on the appellants to furnish the Court with
sufficient evidence to sustain the contentions made by them
in their petition for turn over order, and it amounts to a
holding that sufficient evidence was not furnished. This
was error and it was harmful and prejudicial to the appel-
lee because it is elementary that when a party fails to
carry the burden of proof resting on him, the judgment
should go against him and not against his opponent (Peti-
tioner here), and therein conflicted with the controlling
decisions of this Court and of other Cireuit Courts of
Appeal, including the cases of : Pennsylvania Railroad Com-
pany v. Chamberlain, 53 8. Ct. 391, 288 U. S. 333, 77 L.
Kd. 819; Astor v. Wells, 17 U. S. 466, 4 Wheat. 466, 4 L.
Kd. 616; Deadrich v. U. S. (C. C. A. Nev. 1935) 74 Fed.
2d 619; Shapleigh v. United Farms Co., (C. C. A. Texas,
1913) 100 Fed. 2d 287; Spain v. Powell (C. C. A. Va. 1937)
90 Fed. 2d 380.
(9) The United States Circuit Court of Appeals for the
Fifth Cireuit, in its opinion and judgment of reversal, al-
though the same was applicable and controlling, made no
reference to Section 2, subsection a(21) of the Bankruptey
Act (11 U.S. C. A. 11 a(21)), or to the fact that the appli-
cation of such Section was invoked by the petitioner in the
District Court, applied there, argued in petitioner’s brief,
and insisted upon in petitioner’s application for rehearing
(R. 52). This was error and was harmful and prejudicial
to petitioner. We respectfully urge that this constitutes
such a departure from the accepted and usual course of
22
judicial proceedings, as to call for an exercise of this
Court’s power of supervision.
Wuererore, because said decision and jndement of
the United States Cireuit Court of Appeals for the fifth
Cireuit decided the foregoing federal questions erroneously
and contrary to the decisions of this Court and the decisions
of other United States Cireuit Courts of Appeal, and be-
‘ause the proviso in subsection a(21) of Section 2 of the
Bankruptey Act has not been, but should be, construed and
settled by this Court, your petitioner, upon this petition,
upon the annexed brief, and upon a certified transcript of
all proceedings in the United States Cireuit Court of Ap-
peals for the Fifth Cireuit, prays that a writ of certiorari
be issued to the end that said eause may be reviewed and
determined by this Court, as provided by law, and that
upon such review the said judgment of the United States
Cireuit Court of Appeals for the Fifth Circuit be re-
versed,
Marvin G. Russet,
Receiver in the case of Oberdor-
fer Insurance Agency Inc. vy.
S. Yoshinuma, pending as case
number 138423, in the Superior
Court of Fulton County, Geor-
gia,
By H. A. ALEXANDER,
Benton E. Gatyes,
Jos. J. Frye,
Attorneys for Petitioner.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.