Opposition Brief — Glover v. Coffing

INDEX

re PAGE

Statement of the Case 1

I; III sicatssemssintisihcioitaiasininisigmacnhinaingnnnisienbainnting 5

IID seitharianrnsstpneinsnndsssnansicseniscnmndiatsisnennenisnesnhimatininanintatssigaaseuttetive 11

Conclusion ............. 31

TABLE OF CasEs

Adler v. Seaman, 266 Fed. 828; 841; Cert. denied 41

S. Ct. 218 .. ; 8, 22

Batlum Realty Company, In re: 62 F. Supp. 81, 86,

affirmed 154 F (2d) 562, 157 Fed. (2d) 408 -............. 7, 16

Citizen’s Bank & Trust Co. v. Union Mining & Cold

I I a lid atin sceainteniecbaeilipsinhiecinalibocientiontine 23

Cauffiel v. Lawrence, 256 Fed. 714 23

Coburn vy. Cedar Valley Land & Title Company, 11 S.

Ct. 258; 34 L. Ed. 876 23

Columbia Real Estate Company, In re: (D. C. Ind.)

101 Fed. 965, 969 5, 6, 12

Country Life Apartments v. Buckley, 145 Fed. (2d)

935, 938 7, 16

Commerce Trust Company v. Woodbury, 77 F (2d)

478; Cert. denied Woodbury v. Commerce Trust

Co., 296 U. S. 614, 56 S. Ct. 134 2... 8

Central Trust Co. v. McGeorge, 151 U. S. 129; 14 S.

Ct. 286; 38 L. Ed. 98 23

Curtis v. Curtis, 180 Ala. 64; 60 So. 167 23

i

Denver First National Bank v. Klug, 186 U. S. 202;

22 S. Ct. 899 5

Duggan v. Sansberry, 66 S. Ct. 657; 90 L. Ed. 809;

814-816, . 7, 16, 17

Deputy v. duPont, 308 U. S. 488; 60 S. Ct. 363 ....... 10, 31

Fidelity Trust & Safety Vault Co. v. Mobile St. Ry.

Co., 53 F. 850 24

First Nat. Bank of Belle Fourche, 152 Fed. 64 ........ 6

Fireman’s Ins, Co. v. Hova, 141 La. 347; 75 So. 76... 9

Grand Trunk Ry. Co. v. Central Vermont R. Co.,

85 F. 87 ; 23

Gray, Ex parte, 157 Ala. 358; 47 So. 286, 288; 131

Am. St. Rep. 62 24

Horn v. Pere Marquette R. Co., 151 Fed. 626 ............ 23

Hopkins v. Lancaster, 254 F. 190 23

Johnson v. Manhattan Ry. Co., 280 U. S. 459; 53 8S.

Ct. 721 8

Long v. Charles A. Kaufman Co., 127 La. 333; 53 So.

583 9

Matter of 4136 Wileox Bldg. Corp., 100 Fed. (2d)

588, 590 eae 5,6

Matter of 211 East Del. Place Bldg. Corp., (D. C. il.)

14 F. Supp. 96 6

Matter of Park Beach Bldg. Corp. (C.C.A. 7), 96 F

(2d) 886 7, 15, 22

Matter of V. Loewer’s Gambrinus Brewery Co., Inc.,

141 F (2d) 747 7, 16

iii

Matter of Louis Joliet Garage Corp. (C.C.A. 7), 100

F (2d) 751 7,16

Matter of 1030 North Dearborn Bidg. Corp. (D. C.

Ill.), 7 F. Supp. 896 7, 8, 20, 23

Mueller v. Adler, 292 Fed. 138, 139 8, 22

Magnum Import Co. v. Houbigant, Inc., 262 U. 8. 159;

43 S. Ct. 531 10, 30

North American Co. v. S. F. R. Co., 288 Fed. 612... 8

Nauvoo v. Ritter, 97 U. S. 389; 24 L. Ed. 1050 .......... 23

National Aircraft Corporation (Duggan v. Sans-

Renfro Bro. v. Goetter, Weil & Co., 78 Ala. 311, 313-

315 24

Rhinehart v. Victor Talking Machine Co., 261 F. 646 24

St. Louis & S. F. Ry. Co. v. MacClellan, 62 F. 116,

118 8, 25

Texas & P. R. Co. v. Gulf C. & S. F. R. Co., 270 U. S.

266, 274 13

Troell v. Del. L. & W. R. Co., 33 S. Ct. 74; 57 L. Ed.

586 23

U. S. v. Calumet Cooperative Canneries, 49 S. Ct.

423, 424; 73 Law Ed. 838, 841 8, 22

Veach, In re: 4 F (2d) 334 8

Van Camp v. City of Huntington, 39 Ind. App. 28;

78 N. E. 1057, 1060 Col 1 9, 25

Woolsey v. Security Trust Company (C.C.A. 4), 74

F. (2d) 334 9, 26

iv

Western Machine Works v. Edwards Machine & Tool

Corp., 223 Ind. 655, 660 and 663

Whitaker v. Brictson (C.C.A. 7), 48 F. (2d) 485

9, 28

Yakus v. United States, 64 S. Ct. 660; 88 L. Ed. 834. 18

SratutTes AND TEXT

11 U.8.C. A. 1 5

11 U. S. C. A. 1(10) 11

11 U. S. C. A. 11(a) 5, 11

11 U. S. C. A. 606 7,19

11 U.S. C. A. 537 7,19

11 U. S. C. A. 501-676 11

11 U.S. C. A. 549 6, 16, 17

Bankruptcy Act, Sec. 206 19

Bankruptcy Act, Sec. 137 7, 19

Bankruptcy Act, See. 1(10) 11

Bankruptcy Act, Sec. 101-276 11

Bankruptcy Act, Sec. 149 17

Bankruptcy Act, Sec. 2(a) 11

1933 Burns Ind. Anno. Stat. Sec. 25-219 27, 28

1933 Burns Ind. Anno. Stat. See. 25-218 27, 28

10 Cye. Fed. Proced. (2nd Ed.) Sec. 5096, pp. 594-

595 8, 25

10 Cyc. Fed. Proced. (2nd Ed.) Sec. 5096, page 596... 25

Senate Report 1916 on H. R. 8046, 75th Cong. 3rd

Sess (1938) 27

6,17

|

SUPREME COURT OF THE UNITED STATES

Oocrosgr Trrm, 1949.

No. 534

In THE Matter or V-I-D, INC.,

Debtor.

MARGUERITE S. GLOVER,

Petitioner,

vs.

McM. COFFING, Trustez,

V-I-D, INC., Dzsror,

LAWRENCE H. PRYBYLSKI,

INDENTURE TRUSTEE,

CHARLES J. KRAMER, Intervenor,

Respondents.

BRIEF OF RESPONDENT IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI.

I.

STATEMENT OF THE CASE.

May it Please the Court:

The question arose in the District Court, and was

disposed of there and on appeal, in the manner following:

2

The Corporate Debtor (Respondent V-I-D, Inc.) filed

a verified petition for reorganization, under and pursu-

ant to the provisions of Chapter X of the Acts of Congress

of the United States relating to Bankruptcy, on the 24th

day of June, 1939 (R. 1-6) and claimed therein, as an

asset of the Debtor estate, the real estate therein de.

scribed (R. 1, Par. 4).

Thereafter, and on the 28th day of August, 1939,

the Judge being satisfied that the petition complied

with Chapter X of the Bankruptcy Act, and had been

filed in good faith, entered an order approving the said

petition as properly filed under Chapter X of the Bank-

ruptey Act (R. 6).

On December 1, 1939, Marguerite S. Glover (Petitioner

here) filed her intervening petition in said proceedings,

claiming to be the owner of the said real estate scheduled

as an asset by the Debtor corporation and praying that

she be adjudged the entire fee simple owner thereof

and for possession (R. 12-15) to which MeM. Coffing,

as Trustee of the debtor estate filed answer on December

21, 1939 (R. 15-17); Lawrence H. Prybylski, Indenture

Trustee filed answer on February 13, 1940 (R. 17-19);

and said MeM. Coffing as Trustee filed an amended and

supplemental answer on April 10, 1941 (R. 19-25), and

on October 27, 1944, a second amended and supplemental

answer and counterclaim (R. 33-42).

June 2, 1943, Petitioner Glover filed her motion pray-

ing that the Court investigate its jurisdiction ‘‘over this

bankruptcy and over this real estate which is the sole

scheduled asset of the bankruptcy * * *’’ (R. 25-28),

to which the Indenture Trustee addressed a motion to

strike (R. 29) and the Debtor Corporation likewise filed

a motion to strike (R. 30) which latter motion was

3

granted by the District Court on Febriary 4, 1944, with

memorandum opinion (R. 32). From this ruling, Peti-

tioner Glover appealed, which appeal on motion of MoM.

Coffing, as Trtstee, was dismissed on June 14, 1944

(RB. 104).

The issues raised by Petitioner Glover’s intervening

or reclamation petition and the answers of the Trustee

and Debtor addressed thereto were decided adversely to

Petitioner and the Debtor was adjudged the owner in

fee simple of the real estate by the District Court on

December 2, 1945 (R. 43-45).

On appeal, the decree of the District Court was af-

firmed and mandate issued (R. 46), and a petition for

rehearing filed January 20, 1947, was denied (R. 46).

Thereafter Petitioner, Glover, applied for Certiorari

to the Supreme Court of the United States, which was

likewise denied (R. 105).

Subsequently, and on June 25, 1947, Petitioner Glover

filed her petition for surrender of the real estate for

lack of jurisdiction (R. 47-58) the factual basis of which

was substantially the same as that set out in her peti-

tion for the Court to investigate its jurisdiction filed on

June 2, 1943 (R. 25-28) and denied February 4, 1944

(R. 32).

To the Petitioner’s petition for surrender of the

real estate for lack of jurisdiction, McM. Coffing as

Trustee and the Debtor corporation addressed a motion

to strike (R. 59), which motion was, on July 21, 1948,

granted by the District Court (R. 63).

4

From the order of the District Court granting the

motion of McM. Coffing, as Trustee, and the Debtor

corporation to strike her petition for surrender of the

real estate for lack of jurisdiction, an appeal was taken

by her (R. 63) and the order of the District court was

affirmed by the Circuit Court of Appeals for the Seventh

Cireuit, with opinion, on the 13th day of October, 1949

(R. 102-106).

5

Il.

Summary Argument.

Point A.

Courts of bankruptcy include the District Court of the

United States and such courts are invested with such

jurisdiction at law and in equity as will enable them to

exercise original jurisdiction in proceedings under the

Bankruptcy Act.

11 U. S. C. A. See. 1;

11 U. 8. C. A. See. 11(a)

Point B.

Courts of record having authority over the subject

matter are competent to decide their own jurisdiction and

exercise it to final judgment. Their records are absolute

verities not to be impugned by averment or proof to

the contrary.

In re Columbia Real Estate Company (D. C. Ind.)

101 Fed. 965, 969;

Matter of 4136 Wilcox Bldg. Corp., 100 Fed. (2d)

588, 590;

Denver First National Bank v. Klug, 186 U. 8S. 202,

22 S. Ct. 899.

Point C.

The presumption which attaches to all judgments of

courts of record, together with a direct finding that upon

6

consideration had a petition in reorganization complies

with Chapter X of the Bankruptcy Act and has been

filed in good faith, and an order approving the same

as properly filed soueludes all collateral inquiry as to

whether the corporation is subject to the act. It will be

presumed that the Court heard and determined the

question,

In re Columbia Real Estate Company (D. C. Ind.)

101 Fed. 965.

Point D.

The United States District Court has jurisdiction of

the subject of bankruptcy and where the court has juris-

diction of the subject matter and makes erroneous rul-

ings during the exercise of the court’s jurisdiction, its

orders and decrees cannot be collaterally attacked. Failure

to appeal gives to such order a res judicata status.

In re First Nat, Bank of Belle Fourche, 15.

Fed. 64;

Matter of 211 E. Del. Place Bldg. Corp. (D. C.

Ill.) 14 Fed. Supp. 96;

Matter of Forty-One-Thirty-Six Wilcox Bldg.

Corp., 100 Fed. (2) 588, 590.

Point E.

Upon the order approving the petition for reorganiza-

tion under Chapter X becoming final, such jurisdictional

questions as the amenability of the debtor to reorganize,

the good faith of the petition, as well as all questions of

venue may no longer be raised, directly or collaterally.

11 U. S. C. A. See. 549;

Senate Report 1916 on H. R. 8046, 75th Congress,

3rd Session (1938) 27;

7

In the Maiter of Park Beach Bldg. Corp.

(C. C. A. 7) 96 Fed. (2) 886;

In the Matter of V. Loewer’s Gambrinus Brew-

ery Co., Inc., 141 Fed. (2) 747;

Country Life Apartments v. Buckly, 145 Fed. (2)

935, 938;

In the Matter of Louis Joliet Garage Corp. (C.

C. A. 7) 100 Fed. (2) 751;

In re Barlum Realty Company, 62 Fed. Supp.

81, 86, affirmed in 154 Fed. (2) 562; 157 Fed.

(2) 408;

Duggan v. Sansberry, 66 S. Ct. 657.

Point F.

Only the debtor, the indenture trustee, and any creditor

or stockholder of the debtor is entitled to be heard on

all matters arising in a proceeding for reorganization.

11 U. S. C. A. See. 606.

Point G.

The allegations of a petition for reorganization may

be controverted only by a creditor, the indenture trustee,

or if the debtor is insolvent, by any stockholder of the

debtor.

Bankruptcy Act. Sec. 137, 11 U. S. C. A. 587.

Point H.

fn a reorganization proceedings, one not a creditor but

claiming to be the owner of property in possession of

the court is a complete stranger as to the proceedings

providing for the approval of the petition for reorganiza-

tion and under the Bankruptcy Act as amended is not

& proper party to be allowed to intervene to defend and

controvert the Court’s jurisdiction.

Matter of 1030 North Dearborn Bldg. Corp. (D.

C. Ill.) 7 Fed. Supp. 896.

8

Point I.

Intervention is held to be in recognition of the Court’s

jurisdiction over the proceedings and one invoking that

jurisdiction may not deny it.

Matter of 1030 North Dearborn Bldg. Corp., 7

Fed. Supp. 896;

Adler v. Seamen, 266 Fed. 828, 841; certiorari

denied, 41 S. Ct. 218;

Mueller v. Adler, 292 Fed. 138, 139;

U. 8. v. Calumet Cooperative Canneries, 49 §.

Ct. 423, 424;

In re: Veach, 4 Fed. (2) 334;

North American Co. v. 8S. F. R. Co. 288 Fed.

612;

Johnson v. Manhattan Ry. Co. 280 U. S. 459;

53 S. Ct. 721;

Commerce Trust Company v. Woodbury, 77 Fed.

(2) 478; certiorari denied Woodbury v. Com-

merce Trust Company 296 U. S. 614; 56 8.

Ct. 134;

Wiliam Whitaker et al v. Brictson Mfg. Company

(C. C. A. 7) 48 F. (2d) 485.

Point J.

A second appeal is not allowable to review errors which

might have been incorporated in the record of a former

appeal.

10 Cyclopedia Fed. Proced. (2nd Ed.) Sec. 5096

pgs. 594-595;

St. Lowis d 8. F. Ry Co. v. MacClellan, 62 F. 116,

118.

9

Point K.

The conelusiveness of a judgment of a competent tri-

bunal extends to what was actually determined and also

to every matter which the parties might have litigated in

the case.

Van Camp v. City of Huntington, 39 Ind. App.

28; 78 N. E. 1057, 1060 Col. 1.

Point L.

In determining the nature of a corporation where

jurisdiction of the Bankruptcy Court is challenged the

determining factors are the status of the corporation

under the state law.

Woolsey v. Security Trust Company (C. C. A. 4)

74 F. (2d) 334.

Point M.

Under the law of the State of Indiana a de jure cor-

poration comes into existence when the certificate of in-

corporation has been issued by the Secretary of State.

Western Machine Works v. Edwards Machine &

Tool Corporation, et al., 223 Ind. 655, 660 and

663.

Point N.

A court will refuse to exercise its power of superin-

tending control over an inferior tribunal where the party

seeking to invoke such power has not exhausted his reme-

dies in the tribunal sought to be controlled.

Long v. Charles A. Kaufman Co., 127 La. 333,

53 So. 583;

Fireman’s Ins. Co. v. Hova, 141 La. 347, 75 So.

76.

10

Point O.

The Supreme Court will not take on certiorari cases

fully heard and adjudicated below for the mere purpose

of examining the result.

Deputy v. duPont, 308 U. S. 488; 60 S. Ct. 363

(dissenting opinion of Mr. Justice Roberts);

Magnum Import Co. v. Houbigant, Inc. 262 U. §.

159 43 S. Ct. 531.

Point A.

Courts of bankruptcy include the District Court of the

United States and such courts are invested with such

jurisdiction at law and in equity as will enable them to

exercise original jurisdiction in proceedings under the

Bankruptcy Act.

This proceeding was filed in the District Court of the

United States for the Northern District of Indiana,

Hammond Division (R. 1), which is a “Court of Bank-

ruptcy’’ as defined by See. 1(10) of the Bankruptcy Act,

11 U. S. C. A. See. 1(10), and which court, as so defined,

is invested within its territorial limits with such juris-

diction at law and in equity as will enable it to exercise

original jurisdiction under the Bankruptey Act. Bank-

ruptey Act Sec. 2a, 11 U. S. C. A. Sec. lla.

The jurisdiction of the Court was invoked by the

Debtor coroporation on June 24, 1939, on which date it

filed, in the office of the Clerk thereof, a voluntary peti-

tion for reorganization under Chapter X of the Bank-

ruptey Act. Bankruptcy Act See. 101-276, 11 U. S. C. A.

Sec. 501-676.

The petition alleged, among other things, that the

debtor

“is a eorporation, duly organized and existing under

and by virtue of the laws of the State of Indiana, and

has for more than six months last past had its prin-

cipal place of business in the City of Gary, Lake

County, Indiana, and within the territorial jurisdic-

tion of the Court; that it is not insolvent, but is un-

able to pay its debts as they mature”’ (R. 1).

12

It is elementary that by jurisdiction of the subject

matter is meant jurisdiction of the class of cases to which

the particular case belongs. In this case, corporate re.

organization under the Bankruptcy Act.

Point B.

Courts of record, having authority of the subject mat-

ter, are competent to decide their own jurisdiction and

exercise it to final judgment. Their records are absolute

verities not to be impugned by averment or proof to the

contrary.

Petitioner Glover, being neither a creditor of nor

a stockholder in the Debtor Corporation, nor an inden-

ture trustee, but one claiming ownership of property

in possession of the Court through its Trustee (R. 12)

and therefore, as will hereinafter be shown, a complete

stranger to the proceedings providing for the approval

of the petition for reorganization, did, subsequently to

the date of the entry of the order approving Debtor’s

petition or being properly filed under Chapter X of the

Bankruptcy Act, did file her intervening (actually a

reclamation) petition wherein no mention of any ob-

jection to jurisdiction was made (R. 12). Not until June

2, 1943, was the petition filed requesting the court to in-

vestigate its jurisdiction.

As has been stated by this Court through Mr. Justice

Brandeis in First National Bank v. Klug, 22%.*Ct. 899,

at page 900, 186 U. S. 202,

“The conclusion was, it is true, that Klug could

not be adjudged a bankrupt, but the court had juris-

diction to so determine, and its jurisdiction over

the subject matter could not be questioned.’’

Farther, in In re Columbia Real Estate Company (D. C.

Ind.) 101 Fed. 965, at page 969, where one claiming to

13

be a creditor of a bankrupt but who in fact was not,

sought to vacate and annul an adjudication in bank-

ruptcy, the court said:

‘*The presumption which attached to all judgments

of courts of record, as well as the direct finding that,

upon due consideration had, the Columbia Real Es-

tate Company is adjudged a bankrupt ‘within the true

intent and meaning of the acts of Congress relating

to bankruptcy,’ concludes all collateral inquiry as to

whether or not the corporation was of a class subject

to be adjudicated a bankrupt. It will be presumed

that the court had heard and determined that ques-

tion, and it was not necessary to set out upon the

face of the record the facts or the evidence upon

whieh its conclusion was reached. ‘Courts of record,

having authority over the subject matter, are compe-

tent to decide upon their own jurisdiction, and to ex-

ercise it to final judgment, without setting forth upon

their records the facts and evidence upon which their

decision is based. Their records are absolute veri-

ties, not to be impugned by averment or proof to the

contrary.’ ‘Every matter adjudicated becomes a part

of their record, which thenceforth proves itself, with-

out referring to the evidence on which it has been

adjudged.’ * * * In the present case neither the bank-

rupt nor any creditor is objecting to the adjudication.

Their acquiescence shows that they are content.’’

Not only does the presumption flow from the entry

of the order approving the petition for reorganization

that the court considered and determined whether the

Debtor was one entitled to the benefits of Chapter X,

but also from the rulings of the Court on petitioner’s

motion to investigate its jurisdiction entered February

4, 1944 (R. 32) and on her motion to surrender property

for lack of jurisdiction entered July 21, 1948 (R. 63).

Again this court stated in Teras & P. R. Co. v. Gulf C.

€ 8. F. R. Co., 270 U. S. 266, at page 274:

14

‘‘In the case at bar, the district court, having jur.

isdiction generally of the parties and of the subject

matter, was called upon to determine whether an

allegation in the bill, essential to the cause of action,

was established. This, the court clearly had power

to do. Moreover, even if the question presented were,

as contended, properly one of jurisdiction, the ob-

jection urged could not prevail. Every court of

general jurisdiction has power to determine whether

the conditions essential to its exercise exist.’’

It is significant here, that neither the Debtor corpora-

tion, nor any creditor of or stockholder therein, nor the

indenture trustee, has at any time made any objection to

the proceedings or the jurisdiction of the court there-

over. Indeed the Debtor and Indenture Trustee have con-

tinuously resisted, since December 1, 1939, and are still

resisting Petitioner’s claim of ownership of the real estate

and her attacks upon the jurisdiction of the Court.

Petitioner’s only complaint seems to be that she is

dissatisfied with the manner in which the District Court,

first through Judge Slick having once and second Judge

Swygert, twice, determined that the Court has juris-

diction, and the apparent respect and weight given to

those determinations by the Circuit Court of Appeals.

Point C.

The presumption which attaches to all judgments of

courts of record, together with a direct finding that upon

consideration had a petition in reorganization complies

with Chapter X of the Bankruptcy Act and has been

filed in good faith, and an order approving the same as

properly filed concludes all collateral inquiry as to

whether the corporation is subject to the act. It will be

presumed that the Court heard and determined the ques-

tion.

15

The argument in support of Point B of this argument

is applicable in support of this point, and, we feel, re-

quires no elaboration.

Point D.

The United States District Court has jurisdiction of

the subject of bankruptcy and where the court has juris-

diction of the subject matter and makes erroneous rul-

ings during the exercise of the court’s jurisdiction, its

orders and decrees cannot be collaterally attacked. Fail-

ure to appeal gives to such order a res judicata status.

Not only was no appeal taken by Petitioner from the

order taking jurisdiction, but under no circumstances,

as will be hereinafter shown, could the Petitioner, a com-

plete stranger as to the proceedings providing for the

approval of the petition for reorganization have taken

such an appeal, that right being conferred by statute

upon the parties thereby authorized.

It has been repeatedly held by the Courts that in the

absence of such appeal, it is beyond the power of the

Cireuit Court of Appeals to review the order taking

jurisdiction. We qucte from some of such holdings as

follows:

“It was well said by this Court in 1938, that:

‘Furthermore, there having been no appeal from

the order taking jurisdiction, and the proceedings

having been prosecuted to a completion of the re-

organization, it is beyond the power of this Court

to review the order even though it were erroneous.’

In the Matter of Park Beach Hotel Bldg. Corp. (C,

C. A. 7th), 96 Fed. (2) 886; 37 A. B. R. (N.S) 22, 32.

Again, the Circuit Court of Appeals for the Second

Circuit has stated:

16

‘The Court found that the petition was filed in

good faith and there was no appeal from its order

to that effect. Under Section 149 of the Act (11

U. S. C. A. See. 549) such an order cannot be at.

tacked for lack of jurisdiction.’ And to the same

effect In the matter of V. Loewer’s Gambrinus Brew.

ery Co., Inc., 141 Fed. (2) 747, 55 A. B. R. (N.S.)

282, 287, and again in Country Life Apartments y,

Buckley, 145 Fed. (2) 935, 938; 57 A. B. R. (N.S.)

651, 658.

Further, where an attempt was made to question

the good faith of a reorganization proceedings, after

the order approving said petition became final, the

Cireuit Court of Appeals, speaking through Major,

Circuit Judge, said:

‘We see no occasion for our discussing or decid-

ing the propriety of such action, however, in the in-

stant ease as the question is not properly before

us. The proceeding in this respect is not subject

to collateral attack.’ In the Matter of Louis Joliet

Garage Corp. (C.C.A. 7th) 100 Fed. (2) 751, 38

A. B. R. (N.S.) 728, 732.

Also the District Court of Michigan, Eastern Di-

vision, through Moinett, District Judge, stated:

‘The order of December 14, 1943, found that the

petition had been filed in good faith, from which

no appeal was ever taken. Good faith cannot, at

this late date be collaterally attacked, thus when

the order approving the petition has become final, it

is a conclusive determination of the jurisdiction of

the Court.’ In re: Barlum Realty Company, 62 Fed.

Supp. 81, 86, Affirmed in 154 Fed. (2) 562; 157 Fed.

(2) 408.

As the Supreme Court stated in Duggan v. Sans-

berry, 327 U. S. 506, 508, 90 Law Ed. 809, 815:

‘Inasmuch as the interested parties thus had an

opportunity in the reorganization proceeding to dis-

pute the allegation of National’s petition that a par-

ent subsidiary relationship existed between it and

17

Christopher and by doing so, to have that issue de-

termined on the facts, we think it plain that Congress

intended that the same issue should not be tried

collaterally in the bankruptcy proceeding.’ ’’

Point E.

Upon the order approving the petition becoming final,

such jurisdictional questions as to the amenability of the

debtor to reorganize, the good faith of the petition, as

well as all questions of venue may no longer be raised,

either directly or collaterally.

In ordinary bankruptcy, the issue of a jurisdictional

defect may ordinarily be raised by a proper direct at-

tack in the bankruptcy court at any stage of the pro-

ceedings, but in corporate reorganization under Chapter

X by reason of Section 149 of the Act 11 U.S.C. A. 549,

an order which becomes final approving a petition filed

under the Chapter is conclusive as to jurisdiction. This

rrovision is designed to foreclose all direct or collateral

attack upon jurisdiction or venue, once the period for

appeal from the order of approval has expired. The

draftsmen of Chapter X went further and also elim-

inated the possibility that after the reorganization pro-

ceedings are well under way everything might be ren-

dered nugatory by a direct attack based on some newly

discovered jurisdictional defect. See Senate Report 1916

on H. R. 8046, 75th Cong. 3rd Sess. (1938) 27.

A case in which the holding, it seems to us, violates

the foregoing principle, in re: National Aircraft Cor-

poration (Duggan v. Sansberry, C. C. A. 7th) 149 Fed.

(2) 548, was reversed by the Supreme Court (Duggan

v. Sansberry) im re: National Aircraft Corporation) 66

Supreme Court 657; 90 Law Ed. 809.

€

Congress may constitutionally provide for the litiga.

tion of certain matters in a specific court, Yakus v. United

States (1944) 64 Sup. St. 660; 88 Law Ed. 834, and we

believe it has dere so in Chapter X by making the re

organization court where the petition is filed the arbiter

as to questions of its jurisdiction and related matters

arising in the reorganization proceeding. This view finds

support in the statement of Judge Briggle as follows:

**Section 111 of the Act provides for exclusive

jurisdiction; Section 113 clothes the reorganization

court with power to stay all proceedings concern-

ing debtor; Section 148 makes the order approving

the petition an automatic stay of other proceedings,

including a pending bankruptcy, and Section 149

provides that when such order shall become final, it

shall constitute a conclusive determination of juris-

diction.’’

In Re: National Aircraft Corporation, supra.

We believe that the decisions of the Courts, including

this Court, some of which have been set forth under

Point E of this brief, are uniform in hoiding that ap-

proval of the petition is conclusive as to the jurisdiction

of the Court and particularly is this true where an at-

tack upon the jurisdiction is attempted by a stranger to

the proceedings.

18

Points F and G.

Further the allegations of a petition for reorganization

may be controverted only by a creditor, the indenture

trustee, or if the debtor is insolvent, by any stockholder

of the debtor.

Only the debtor, the indenture trustee, and any cred-

itor or stockholder of the debtor is entitled to be heard

on all matters arising in a proceeding for reorganization.

_—

19

The Congress has fixed the rights of parties in con-

nection with a reorganization proceedings by providing

that the allegations of a petition for reorganization may

be controverted only by a creditor or indenture trustee,

or if the debtor is not insolvent, by any stockholder of

the debtor, Bankruptcy Act Sec. 137; 11 U. S. C. A. See.

537, and further that as of right, only the debtor, the

indenture trustees «nd sny creditor or stockholder of

the Debtor may be’ beard on all matters arising in a pro-

ceedings under the\\‘t«tute, a permissive right only being

given to certain otncr parties. Bankruptcy Act, Sec.

206, 11 U. S. C. A. See. 606.

It is important to note that there is a distinction as

to the rights granted, one, to certain defined parties

to controvert the petition which is of course inclusive

of controverting jurisdiction and the other rights granted

to be heard on all matters arising in a proceeding. It is

evident, we think, that the right growing out of an in-

tervention with permission of the Court, is merely the

right to be heard on all matters arising in the proceedings,

which presupposes the existence of jurisdiction and is

not inclusive of the right specifically granted under

Section 137, 11 U. S. C. A. Sec. 537, to controvert the

allegations of the petition, including jurisdictional alle-

gations. As will be shown under Point H of this brief,

this reasoning is approved.

Here, Petitioner falls within the class whose rights ex-

tend only to a right to be heard on matters arising in

the proceeding which includes the right to have her claim

determined by the Court. The Court determined Decem-

ber 3, 1945, that she has no right, title or interest in

the real estate involved (R. 105) and adjudging the

Debtor to be the fee simple owner thereof. There her

rights ended.

“=

20

Point H.

In a reorganization proceedings, one not a creditor but

claiming to be the owner of property in possession of the

court is a complete stranger as to the proceedings pro.

viding for the approval of the petition for reorganiza.

tion and under the Bankruptcy Act as amended is not a

proper party to be allowed to intervene to defend and

controvert the Court’s jurisdiction.

As has been pointed out in argument under Point B,

the intervention of Petitioner in the proceedings was upon

the basis of her claiming ownership of property claimed

and scheduled by the Debtor as an asset. Only after the

filing of answers on the merits to the intervening or

reclamation petition (R. 15, 17, 19) did the Petitioner

attack the jurisdiction of the Court (R. 25). Had the

petitioner attempted to intervene for the purpose of at-

tacking the jurisdiction, rather than for the purpose

above mentioned, and then after no objection and the

filing of answers, and then making her attack, both the

respondents and the District Court would have been af-

forded the opportunity of preventing the intervention.

The facet, is, one who is neither a creditor or stockholder

of the Debtor nor an indenture trustee, may not inter-

vene to controvert the allegations of the petition for re-

organization.

In a well reasoned case under former Sec. 77(b) of

the Bankruptcy Act, the District Court of Illinois,

Matter of 1030 North Dearborn Bidg. Corp., 7 Fed. Supp.

896, wherein the M. Stein Hotel Company claimed owner-

ship of real estate claimed by the Debtor Corporation

sought to file an answer seeking to defeat the original

proceedings and secure a dismissal thereof, the Court

in denying the right to intervene said:

21

“Section 77B, subsection (a) of the Bankruptcy

Act as amended provides for the filing of a petition

such as filed here by three or more creditors. The

same subsection provides that three or more creditors

holding claims of $1,000 or more in value in excess

of securities held or stockholders aggregating 5 per

cent of the total shares of capital stock shall have

the right to appear and controvert the facts alleged

in the petition, whereupon the court shall hear and

determine the issues. There is no other provision

for any other person appearing in defense of the

petition.

Subsection (c) of Section 77B has to do with pro-

ceedings after the preliminary hearings upon the

validity of the petition, including the appointment

of the trustee and all other proceedings in court

thereafter. In this subsection it is provided that

any stockholder shall have the right, upon filing a

petition to intervene, to be heard upon questions

arising in the proceeding, as the court shall de-

termine. It thus appears that so far as the prelim-

inary hearing is concerned, and so far as the relief

which may then be granted is concerned, the M.

Stein Hotel Company is a complete stranger. It is

not a creditor but claims to be the owner of the prop-

erty. Consequently under the provision of the Bank-

ruptey as amended, it is not a proper party to be

allowed to intervene to defend and controvert the

propriety of the filing of the original petition, or the

court’s jurisdiction thereunder.’’

The rule that a stranger to a proceeding is indeed

a salutary one. Any other would result only in an un-

justified burden on the Courts in determining jurisdic-

tional questions at the behest of parties having no in-

terest in the litigation.

2

Point I.

Intervention is held to be in recognition of the Court's

jurisdiction over the proceedings and one invoking that

jurisdiction may hot deny it.

There is a farther insurmountable hurdle in the way

of the Petitioner prevailing in the rule uniformly snus.

tained by the decisions that one may not invoke the juris-

diction of a Court and having come in, challenge the

propriety of the main action.

The Courts have uniformly held that under this rule

the intervener cannot challenge the propriety of the main

litigation but must accept it. Adler v. Seamen, 266 Fed.

$28, 841; that an intervener cannot attack the jurisdiction

of the Court; Mueller v. Adler, swpra; and that an inter-

vention will not be allowed for the purpose of impeach-

ing a decree already made. United States v. Calumet Co-

operative Camneries, 49 Sup. Ct. 423, 424; 73 Law Ed

838, 841. Quite obviously then, if one may not be per-

mitted to intervene for the purpose of attacking the

jurisdiction of the Court, much less may he intervene

fot a specific purpose, and intervention having been

granted for that purpose, then as intervener attack the

jurisdiction of the Court.

This Court, speaking through Lindley, District Judge,

In the matter of Park Beach Hotel Bldg. Corp. (C. C. A.

7th) 96 Fed. (2) 886; 37 A. B. R. (NS) 22, 32, states:

“*\ complete answer to the receiver’s assertion

of lavk of jurisdiction is found im his own acquies-

eenee therein. Recognizing patamonnt jurisdiction

in the bankruptcy court he surrendered the premises

without controversy. He even invoked exercise of

jurisdiction by asking in his petition for additional

compensation and for approval of his accounts as

receiver. He could not play both hot and cold with

23

this question. He could not in one breath invoke the

beneficence of the jurisdiction and in the other deny

in toto its existence.’’ Citing Troell v. Del. L. & W.

R. Co., 33 Sup. Ct. 74, 57 Law Ed. 586; Coburn v.

Cedar Valley Land and Title Company, 11 Sup. Ct.

258; 34 Law Ed. 876; Nauvoo v. Ritter, 97 U. S. 389,

24 Law Ed. 1050 (Emphasis ours).

Again In Matter of 1030 North Dearborn Bldg. Corp.

(D. C. Ill.) 7 Fed. Supp. 896, the Court carefully con-

sidered the question and stated:

“The qualification, that the intervention shall be -

in subordination to and in recognition of the proceed-

ing is in accord with the practice as it had been pre-

viously established in federal courts. Thus in Central

Trust Co. v. McGeorge, 151 U. S. 129, 14 S. Ct. 286,

38 L. Ed. 98, the court said:

‘It is scarcely necessary to say that, as the defend-

ant company had submitted itself to the jurisdiction

of the court, such voluntary action could not be over-

ruled at the instance of stockholders and creditors,

not parties to the suit as brought, but who were per-

mitted to become such by an intervening petition.’

This has been followed in numerous cases. Citizens

Bank & Trust Co. v. Union Mining & Gold Co., 106

F. 97; Horn v. Pere Marquette R. Co. et al., 151 F.

626 (opinion Judge Lurton, Justice of Supreme

Court); Grand Trunk Ry. Co. v. Central Vermont

R. Co., 85 F. 87. In Cauffiel v. Lawrence, 256 F. 714,

Judge Sanford, afterwards Justice of the Supreme

Court, announced that intervention could not be

permitted for the purpose of contesting claimant’s

ownership of the cause of action mentioned in the

bill. In Hopkins v. Lancaster, 254 F. 190, the court

approved the doctrine announced by the Supreme

Court of Alabama in Curtis v. Curtis, 180 Ala. 64,

60 So. 167, as follows:

‘Our own court has recognized the right of inter-

vention, but held that a stranger could not intervene

24

for the purpose of defeating the entire suit, nor for

the purpose of litigating with the complainant his

right or title to any relief; also that, if it is desire

to set up a new and independent claim, it must be

done by an original bill in the nature of a crossbill

Renfro Bro. v. Goetter, Weil & Co., 78 Ala. 311, 313

315’ Ex parte Gray, 157 Ala. 358, 47 So. 286, 288

131 Am. St. Rep. 62.

On the other hand it is in accord with well recog.

nized equity practice that any party in interest, that

is any party having a valuable interest in the sub-

ject matter of litigation, may, in subordination to

and in recognition of the original proceeding, be al-

lowed to intervene for the protection of such interest.

Examples of such approved intervention are Rhine-

hart v. Victor Talking Mach. Co., 261 F. 646; Fidel-

ity Trust & Safety Vault Co. v. Mobile St. Ry. Co.,

53 F. 850; ° ° °,

Accordingly, giving consideration to the provisions

of the Bankruptcy Act aforesaid, and applying the

rules governing equity procedure, which, in the ab-

sence of statutory directions, control in bankruptcy,

I am of the opinion that the applicants for inter-

vention may not properly be admitted for the purpose

of contesting the jurisdiction of the court or for the

purpose of defeating the petition, but that they may

be admitted upon proper petitions for intervention

in subordination to and in recognition of the original

proceeding for the purpose of presenting by bill of

intervention or other appropriate pleadings their re-

spective rights and interests in any property involved

in this litigation.

Accordingly the respective applicants for leave

to file answer for the purpose of defeating the original

petition will be denied and exception allowed.

This memorandum, however, is not an approval of

the petition. It is the court’s duty to determine wheth-

er or not the same has been filed in good faith and

no evidence has as yet been submitted upon that

question.”’

accel

25

Point J.

A second appeal is not allowable to review errors which

might have been incorporated in the record of a former

appeal.

The identical question involved in this appeal was

raised by petitioner appellant on June 2, 1943 (R. 25)

by a petition praying that the court investigate its juris-

diction which was stricken out on motion (R. 32).

Thereafter, on appeal to this court, from an adverse

judgment entered against petitioner appellant on her

intervening or reclamation petition, In Re: V-I-D, INC.,

and in which no question as to the jurisdiction of the

Court was raised, said judgment was affirmed, 158 F.

(2d) 963.

A second appeal is not allowable to review errors which

might have been incorporated in a record of a former

appeal, 10 Cyc. Fed. Procedure, 2nd Ed. p. 596, section

5096, St. Louis and S. F. Ry. Co. v. MacClellan, 62 Fed.

116, 118. Assuredly this question might have been in-

corporated in the record in petitioner appellant’s former

appeal and the question presented to this court for its

decision. Appeals from judgments or court orders after

appeal and mandate are not allowable unless some new

matter has developed and then only to reach such new

matters, 10 Cyc. Fed. Procedure, 2nd Ed. p. 594-595,

Section 5096, and the conclusiveness of a judgment of

a competent tribunal extends to what was actually deter-

mined and also to every matter which the parties might

have litigated in the case. Van Camp v. City of Hunting-

ton, 39 Ind. App. 28, 78 N. E. 1057, 1060, Col. 1.

26

Points K, L and M.

The conclusiveness of a judgment of a competent tr.

bunal extends to what was actually determined and als

to every matter which the parties might have litigated

in the case.

In determining the nature of a corporation where

jurisdiction of the Bankruptey Court is challenged the

determining factors are the status of the corporation

under the state law.

Under the law of the State of Indiana a de jure cor.

poration comes into existence when the eertifieate of in-

corporation has been issued by the Seeretary of State.

In determining the nature of a corporation where juris-

diction of the Bankruptcy Court is challenged, the

determining factors are the status of the corporation

under the state law which licensed it, Woolsey v. Security

Trust Company (C. C. A. 4th) 74 F. (2d) 334, and under

the Indiana Law a de jure corporation eomes imto ex

istence when the certificate of ineorporation has been

issued by the Secretary of State.

It is urged by petitioner appellant that the reorganiza-

tion of the debter corporation was defective and that

by reason thereof, and for other reasons, urges that an

apparent jurisdiction in the Court was created, when,

as a matter of faet, the jurisdictional requirements were

not present.

In support of such alleged defect, she cites Indiana

cases, all of which were decided under the Indiana Gen-

eral Corporation Act of 1921. The corporate debtor here

was incorporated long subsequent to the adoption of

the Indiana General Corporation Act. of 1929. In 1945,

the Supreme Court of the State of Indiana, in a case

27

wherein it was asserted that by reason of a corporate

entity having failed to comply with a provision of the

1929 General Corporation Act of Indiana as set forth

in 1933 Burns Indiana Annotated Statutes, Section 25-219,

such entity had no power to invoke the jurisdiction of the

State court and exercise a remedy provided by the Indiana

Law. The Court in passing upon this question stated:

‘‘In order to decide this cause, it is necessary to

determine whether it was the intent of the Legisla-

ture in drafting the Domestic Corporation Act to

give the appellants the right to make this attack upon

the appellee, corporation, for failure to pay in the

required amount of capital, or whether the Legisla-

ture intended that such failure should merely be

grounds for a proceedings to be instituted by the

State to dissolve, wind up and terminate said cor-

poration * * *.

It will be noted that said Section 25-218 (Sec. 4918)

specifically refers to conditions necessary to be per-

formed in order to constitute a corporation and

also conditions precedent to beginning business.

Clearly the phrase ‘conditions prescribed by this

act as precedent to beginning business’ is referring

to those conditions set out in said Section 25-219

(Sec. 4919). Furthermore, Section 25-219 (Sec. 4919)

also provides that the officers and directors who

participate in such business or incur such indebted-

ness shall be personally liable. This would also indi-

cate that the conditions set out in said section are

conditions subsequent to the organization of a corpor-

ation and are conditions precedent as to doing busi-

ness only, for if they were conditions necessary to

be performed in order to bring the corporation into

existence, then their failure to be so performed would

cause said officers and directors to be personally liable

without any such express provision. Coleman v. Cole-

man et al. 1881, 78 Ind. 344. From an examination

of the foregoing sections, it is our opinion that by

28

said See. 25-218 (Sec. 4918) a de jure corporation,

comes into existence when the certificate of incorpor.

ation has been issued by the Secretary of State. This

being true, all citations of authority as to de fact

corporations, have no bearing on the question before

us, nor is there any question of estoppel involved

in this ease as the record discloses that the appellants

have not had any dealing whatsoever with the ap.

pellee company. The conditions set forth in said

Section 25-219 (Sec. 4919) are merely conditions

precedent to beginning business and have nothing

to do with the organization necessary to be carried

out in order to make the appellant company a de jure

corporation’? (Emphasis ours). Western Machine

Works v. Edwards Machine & Tool Corporation, et al;

223 Ind. 655, 660 and 663; 63 N. E. (2) 535.

Point N.

A court will refuse to exercise its power to superin-

tending control over an inferior tribunal where the party

seeking to invoke such power has not exhausted his

remedies in the tribunal sought to be controlled.

Petitioner asks this court to remove the ‘‘contuma-

cious’’ stigma with which the Court of Appeals unjustly

handled her because she raised the jurisdictional ques-

tion (Petition for Writ, page 2, paragraph numbered

(2) ).

The record here is silent as to the Petitioner having

filed a petition for rehearing before the Court of Appeals,

and silent as to any effort being made to have eliminated

the portion of the opinion to which she objects, before

publication thereof.

It is axiomatic, we think, and requires the citation of

no authority, that a court will refuse to exercise its

power of superintending control over an inferior tribunal,

a Ta a

29

where the party seeking relief has given no opportunity

to the court sought to be controlled to afford a remedy.

Further, as shown in argument, infra, under Points F

and G, the District Court by its decree entered December

3, 1945, denied in all things the intervening or reclama-

tion petition of petitioner and adjudged the Debtor Cor-

poration to be the owner of said real estate in fee simple.

That judgment was affirmed by the Court of Appeals, a

petition for rehearing denied and certiorari denied. and

mandate issued and was filed in the District Court, May

26, 1947 (R. 104-105).

There all petitioner’s right to further relief terminated.

She was no longer entitled to proceed further as a per-

missive intervener or in any other capacity.

Thereafter, and on June 25, 1947, denominating her-

self ‘“‘intervener,’’ filed her petition for surrender of

property for lack of jurisdiction, the factual basis of

which is substantially the same as that of the former peti-

tion seeking investigation of jurisdiction of the District

Court filed June 2, 1943 (R. 105).

On motion of McM. Coffing, Trustee, and of V-I-D,

Inc., the debtor corporation, the petition of Glover was

stricken, and the third appeal followed, in connection

with which Glover seeks certiorari (R. 105).

It is respectfully submitted that action taken by the

Petitioner after May 26, 1947, was in defiance of the

validity of the main proceeding, could fairly be char-

acterized as contumacious and surely under the facts

and circumstances here involving among other things

eontinuous litigation for over ten years over what was

held to be a baseless claim in 1947, public policy requires

that there be an end to it.

30

Point O.

The Supreme Court will not take on certiorari cage

fully heard and adjudicated below for the mere PUTPose

of examining the result.

Petitioner in her brief fails to set forth any reasons

for the granting of the writ sought other than a dis

satisfaction with the manner in which the District Court

and Circuit Court of Appeals determined the question

below, and complaint as to certain language used in the

opinion by the Cireuit Court of Appeals. In view of her

being a stranger to the proceedings providing for the

approval of the petition and a stranger to the entire

proceeding after she was adjudged to have no interest

in the real estate, we cannot believe that she seriously

relies upon the grounds for certiorari set forth in Supreme

Court Rule 38(b) and there is no other ground.

This Court will exercise its power of certiorari sparingly

and with caution and issue its writ only in matters of

great public interest. Its position was well stated by

Mr. Chief Justice Taft in Magnum Import Company v.

Houbigant, Inc. 262 U. S. 159; 67 Law Ed. 922, 43 Sup.

Ct. 531:

“The question how the Court should exercise this

power (to issue writ of certiorari) next arises. The

jurisdiction to bring up cases by certiorari from the

Cireuit Court of Appeals was given for two pur-

poses: first, to secure uniformity of decision between

those courts in the nine circuits; and, second, to

bring up cases involving questions of importance

which it is in the public interest to huye decided by

this court of last resort. The jurisdiction was not cor-

ferred upon this court merely to give the defeated

party in the Cireuit Court of Appeals another

hearing.’’

31

And further as said by Mr. Justice Roberts in Deputy

y. duPont 308 U. S. 488, 84 L. Ed. 416, 60 S. Ct. 363,

“The function of this court is to resolve conflicts

of decision and to settle important principles of law.

The discretionary power of this court to review

judgments of lower Federal Courts was not intended

to be exercised in every case where these courts

have adjudicated the conflicting claims of the parties,

which involves no important principle of law and

no conflict of decision amongst the Federal Courts.

* * * we will not take cases fully heard and ad-

judicated below for the mere purpose of reexamining

the correctness of the result.’’

Conclusion.

It is therefore respectfully submitted that this case is

not a proper one for review by certiorari in this Court,

and that the petition for a writ of certiorari should be

denied.

Respectfully submitted,

Aurrep P. Draper,

KennetH Cal,

Attorneys for Respondents.