Opposition Brief — Benevolent & Protective Order of Elks v. Joslyn
Supreme Court brief1953
Ask Donna
What actually matters in this document.
Text
ee
i
L.
ae
co
IN THE
Supreme Court of the United States
Ocroser TreRM, 1952.
No. 445
In THE Matter or GEORGE R. JOSLYN, Bankrupt.
BENEVOLENT AND PROTECTIVE ORDER OF ELKS
OF THE UNITED STATES OF AMERICA,
Petitioner,
vs.
GEORGE R. JOSLYN, et at.,
Respondents.
BRIEF OF GEORGE R. JOSLYN IN OPPOSITION TO
PETITION FOR CERTIORARI.
Atvin GLen Husparp,
Reese Hvupsarp,
Dominick VARRAVETO, JR.,
Counsel for Respondent,
George R. Joslyn.
« GUNTHORP-WARREN PRINTING COMPANY, CHICAGO
big tae BELL TALES EEE I ELLE EGIL I LIN LET SR
eR ATES Ve Me OO TRIE, Seer ee Hee
FTE Ta ee ee OER TLE Ee CUE ree
a ge eee er Pere Pee
Having obtained jurisdiction over George R. Joslyn
long prior to the intervention of bankruptcy, the Su-
perior Court retained jurisdiction of George R. Joslyn
te CUOUNONNS” GONE Sooo ias conn dereneceeeresebetet
The decrees of the Superior Court are binding upon
the creditors of the Chicago Bank of Commerce. There
is no question of the right of the Bankruptcy Court
to re-examine a judgment when used as the basis of a
claim in the Bankruptcy Court. In such case the rights
of other creditors are considered by the court and the
court may examine the claim in order to see that an
inflated claim is not allowed to diminish the distribu-
Mons to the other Creditors i.e. e866 i
The decree of September 20, 1951, denying the mo-
tion of The Elks to vacate the decree of July 18, 1951,
and the injunction issued at the same time are a bar
to the claims of creditors herein.................4..
IV.
George R. Joslyn’s liability upon the stock was for
the equal and prorated benefit of a class. A few cred-
itors could not appropriate the same to the exclusion
of other creditors equally entitled.................. 10-11
il
V.
The creditors’ bill effected an equitable attachment
upon George R. Joslyn’s liability. This equitable lien
was not obviated by the bankruptcy................ 12
VI.
The bank creditors had effected an equitable attach-
ment upon the $57,100 stock liability in the state court
proceeding. This equitable attachment was not af-
SOC er A COIS 68 SA ews 13-14
SE re a tae Chaar basa Ve caiuedceepewke 14-15
OE SEO ETN POT Cee eee Tree er 16
TABLE OF CASES.
In re Armour (1951, 7 Cir.), 186 F. 2d 503 at 504.... 7
Babka Plastering Co. v. City State Bank (1931), 264
BE PA Oe aa soho cake hee bs fed eee ks 9, 11
Boynton v. Ball (1887), 121 U. S. 457.............. 10
Decker v. Domoney (1944), 387 Ill. 524, 529.......... 9,11
In re Devereaux (1935, 2 Cir.), 76 Fed. (2d) 522, 523.. 11
Dimock v. Revere Copper Co. (1886), 117 U. S. 559.. 10
Eames v. Doris (1882), 102 Ill. 350, 357.............. 12
Emil v: Hanley (1943), 318 U. S. 515; 87 L. Ed. 954.. 14
Goldfarb v. Wright (1948, 2 Cir.), 1385 Fed. (2d) 188,
2s Sek aie pte Ai ik MA cee Ba bach Sh eh gc ele 11
Groves v. Farmers State Bank (1938), 368 Ill. 35,
OMEN. Son Sp cn PE A Besa ba ee eae Chee Hde Rees 9, 10
Hobbs v. Fganklin Jewelry Co. (1942, 5 Cir.), 131 Fed.
CE oc. Grits mis ke baseene VaLncal eis vex cenes< 11
In re Innis (1944, 7 Cir.), 140 Fed. (2d) 479-480...... 10
Leonard v. Bye (1935), 361 Ill. 185, 190, 192........ 9, 11
Ye
Metcalf v. Barker (1902), 187 U. S. 165; 23 S. Ct. 67,
Be RA ME ake nk abba h wkd ak ae ases ka eS 14
Sanders v. Merchants State Bank (1932), 349 Ill. 547
BE Fah eck cuet re olcnseele tesserae. becbeee es 13
Straton v. New (1931), 283 U. S. 318; 51 S. Cit. 465,
SPE eT tka cS. Lapicin boeare aoa acta Seen 14
Thebus v. Smiley (1884), 110 Ill. 316 at 319-320.... 13
Town of Agawam v. Connors (1947, 1 Cir.), 159 F.
EE TC hUGA Seas hese s ded ae bee nan weet ke 7
United States v. Paddock (1950, 5 Cir.), 180 F. (2d)
TE MR a ine wicca k Bn aig ay MAS EDA aeA mee ee we 8
Walters v. Wilson (1944, 9 Cir.), 142 Fed. (2d) 59,
Bee ated Or SO tla pe” SE eee ee eS Om 11
Walton v. Albers (1942), 380 Ill. 423................ 9,11
Zimmerman v. Ziemer (1936), 363 Ill. 220............ 12
TEXTWRITERS AND STATUTES.
Collier on Bankruptey, Vol. 1, Sec. 2.63, p. 297...... 14
an. Comb. of 1870, Att. Al, Bee. 6: .. 2c... k. . cae ci ks 2
Ill. R. S. 1951, Chap. 163, See. 11, Page 254.......... 12
Sec. 67, U. S. C., Tit. 11, Chap. 7, Sec. 107.......... 13-14
FR Ble, Se ee ee ere Peer er 7
ee a a re Se 8
U. S. C., Tit. 28, Judiciary and Judicial Procedure,
CY CUT CL Saees kG ecwds Sn Vandaees aeealheews 9,11
IN THE
Supreme Court of the United States
Ocroser Term, 1952.
No. 445.
In THE Matter or GEORGE R. JOSLYN, Bankrupt.
BENEVOLENT AND PROTECTIVE ORDER OF ELKS
OF THE UNITED STATES OF AMERICA,
Petitioner,
vs.
GEORGE R. JOSLYN, er an.,
Respondents.
BRIEF OF GEORGE R. JOSLYN IN OPPOSITION TO
PETITION FOR CERTIORARI.
To the Honorable Justices of the Supreme Court of the
United States:
The ‘‘Summary Statement’’ in the petition is mislead-
ing and incorrect.
The assertion:
‘‘The petitioner is a large creditor in the bank-
ruptey proceeding (Tr. 68, 142, 381).’’
isuntrue. The ‘‘Elks”’ is not a creditor of the bankruptcy
estate.
Counsel’s reference (Tr. 68) is to a petition of George
2
R. Joslyn filed June 30, 1950, offering to pay everything
in full. The text does not state that the Elks is a creditor
of the bankruptcy estate (Tr. 68).
Transcript page 381 does not indicate the Elks is a
creditor.
Counsel’s reference (Tr. 142) is to the referee’s report.
It does not state that the Elks is a creditor of the bank-
ruptcy estate. The referee found the Elks had not proved
a claim (Tr. 170-173).
As to which creditors of the bank had provable claims,
the referee in said report held:
“Tt appears that under Illinois law, the bankrupt is
liable only for the debts of the bank that accrued while
he was a stockholder, and only to creditors whose
claims accrued during that period’’ (Tr. 170).
Section 6 of Article XI of the Illinois Constitution of
1870 to which the referee refers provided:
‘*Every stockholder in a banking corporation or in-
stitution shall be individually responsible and liable
to its creditors, over and above the amount of stock by
him or her held, to an amount equal to his or her re-
spective shares so held, for all its liabilities accruing
while he or she remains such stockholder.’’ Ill. R. 8.
1951, St. Bar Ed., Page 20. (Emphasis added.)
Nore: Bank stockholders’ liability has since been abol-
ished in Illinois. See Appendix page 16, infra.
The referee found that neither the Elks nor any other
bank creditor either by pleading or by proof had shown a
provable claim:
‘‘neither the pleadings, the claims filed herein, nor
the evidence received in the hearings before the un-
dersigned establish that any of the claimants in the
instant bankruptcy proceeding, including Hillmer and
the Elks, became creditors of the bank in the period of
February 10, 1932, to June 25, 1932, when the bank-
re
3
rupt, George R. Joslyn, owned stock thereof. In fact,
the petition to intervene indicates that the Elks be-
came creditors of the bank in a different period’”’ (Tr.
173).
All the referee’s findings were adopted by the Judge
(Tr. 384-385). The finding that the Elks proved no claim
either by pleading or by evidence was not contested in the
Court of Appeals. The evidence on which the referee
based his finding is not in the printed record.
A Chronological statement follows:
On February 10, 1932, George R. Joslyn acquired 1142
shares of Chicago Bank of Commerce par value of $57,-
100.00 (Tr. 372). On June 25, 1932, the bank failed. Armin
F. Hillmer, et al., filed a class suit on behalf of all the
bank’s ereditors, Cause No. 560305 in the Superior Court
of Cook County, Illinois, against the stockholders including
Joslyn (Tr. 372-373). The court in 1932 appointed a re-
ceiver to receive funds from stockholders. It enjoined the
other creditors from suing the stockholders (Tr. 372-373).
The Elks received its share of the distributions in said
proceeding as a member of the class (Tr. 375).
On February 27, 1936, George R. Joslyn filed a petition
in bankruptcy. He did not schedule his interest in two
family trusts created by his mother and father August
14 and 15, 1935 (Tr. 372). He was discharged on June
29, 1936 (Tr. 371-372). On May 20, 1946, the court re-
opened the bankruptey (Tr. 372).
The only undischarged claim was stockholder’s liability
upon 1142 shares of $50 par value—$57,100 (Tr. 374-375).
On May 22, 1946, Armin F. Hillmer filed a class claim
for $57,100.00 and interest as a representative of all credi-
tors of Chicago Bank of Commerce (Tr. 3-4).
The Honorable Elwyn R. Shaw dismissed the entire pro-
ceeding. The Court of Appeals (In re Joslyn’s Estate,
— LOUIS: RINGS IA RRL ETL MEMES TOR I CAST OEE SY MRS
4
January 4, 1949, 171 F. 2d 159) reversed Judge Shaw’s
order.
On March 31, 1949, Wade Fetzer, et al., stockholders of
the defunct bank who had overpaid their stockholders’
liability, petitioned for leave to intervene in the bank-
ruptcy. The court at the same time granted leave to J. A,
Whalen, Receiver, appointed in said Cause No. 560305 to
be made a party (Tr. 47). On May 5, 1949, the Honorable
Elwyn R. Shaw dismissed a suit brought by Young trustee
herein against the trustees of the Joslyn family trusts
(Tr. 380).
The Court of Appeals in Young v. Handwork, 179 F. 2d
70, reversed Judge Shaw’s order.
On June 30, 1950 George R. Joslyn filed a petition offer-
ing to pay his liability upon the 1142 shares and all fees,
in full. He asked that the court fix the amounts (Tr. 128-
9). He proposed to pay everything (Tr. 71-2). The dis-
trict judge on June 30, 1950, referred the petition to the
referee (Tr. 67). The referee found:
a. The petition was filed in good faith (Tr. 149).
b. A proposal to pay all claims was a proposal to which
valid objection could hardly be made (Tr. 150).
ce. Thomas H. Fisher, attorney for the Elks, was plan-
ning to file a lien and claim any moneys paid to Young
trustee in advance of adjudication of the amounts to be
paid. Young in one of his briefs filed with the Referee
stated that Charlotte C. Joslyn was alleged to have ‘‘an
equitable lien or other claim to part of the bankruptcy
estate.’’ In Young’s brief, Fisher was alleged to have a
‘derivative interest in Mrs. Joslyn’s claim’’ (Tr. 154).
The referee concluded that the only way to avoid re-
sumption of pending litigation as well as additional liti-
gation of extraneous nature was to grant the request of the
bankrupt (Tr. 154).
.
5
The Referee recommended as the most feasible method
of establishing the bankrupt’s liability on the 1142 shares
that the parties be ordered to proceed against the bank-
rupt in Case No. 560305, Hillmer v. Chicago Bank of Com-
merce, pending in the Superior Court of Cook County, Illi-
nois (Tr. 176-177).
The evidence and the accounting had already been taken
in the said class suit No. 560305 (Tr. 176).
The Referee’s report of 78 pages was filed March 16,
1951 (Tr. 128-183).
Young on April 13, 1951, filed 15 pages of objections to
this report (Tr. 227-240). The Elks on April 13, 1951,
adopted Young’s objections (Tr. 222-27). Armin F. Hill-
mer, the representative of all the bank creditors, concurred
in the report except insofar as it recommended that the
matter be sent to the state court for determination (Tr.
225-6).
On April 20, 1951, Armin F. Hillmer withdrew his objec-
tion (Tr. 241). The intervening stockholders filed no ob-
jections. The state-court receiver, Luke F. Cunniff, suc-
cessor to J. A. Whalen who was a party (Tr. 47) filed no
objections. The Honorable Michael L. Igoe took the cause
under advisement upon the objections of Young and of the
Elks on April 20, 1951 (Tr. 242).
On July 12, 1951, while the court had under advisement
the report of the referee, M. L. Joslyn, the bankrupt’s
father, filed a petition in the Superior Court in the cause
of Hillmer v. Chicago Bank of Commerce, No. 560305. He
offered to pay the liability upon the 1142 shares (Tr. 246).
On July 18, 1951, the court adjudicated the liability to be
$57,100.00 and directed that the $57,100.00 be paid to Luke
F. Cunniff, the successor receiver. M. L. Joslyn paid the
$57,100.00 into court. The court by its decree discharged
the liability of George R. Joslyn. It restrained all the
PERALTA ELLE EIB LS IRENE RRO AS. GNC NEAR TE ROE NE BILE EIT ENE
PR
6
creditors of Chicago Bank of Commerce from asserting
against George R. Joslyn any liability on account of owner-
ship of the 1142 shares. It ordered Luke F. Cunniff to
execute a release (Tr. 350-353).
On July 19, 1951, Luke F. Cunniff, the successor receiver,
released George R. Joslyn from all liability on account of
the 1142 shares (Tr. 247-248).
On September 13, 1951, in said proceeding the Elks by
John S. Miller, Thomas H. Fisher, and Norman Crawford,
its attorneys, presented a petition to the Superior Court
in the cause of Hillmer v. Chicago Bank of Commerce, No.
560305. It asked that the aforesaid decree of July 18, 1951
be vacated (Tr. 2$a-310).
On September 20, 1951, the Superior Court found the
Elks’ petition to be without merit. The court denied leave
to file (Tr. 294). At the same hearing on September 20,
1951, the court at the instance of the Elks modified the
decree of July 18, 1951, and then decreed as follows:
‘*said creditors are individually and severally per-
manently enjoined and restrained from claiming or
asserting in said bankruptcy proceeding (this identical
proceeding) that the stockholder’s liability of George
R. Joslyn by reason of his ownership of 1,142 shares
of capital stock of Chicago Bank of Commerce includ-
ing liability for interest, if any, exceeds the sum of
$57,100 heretofore paid to Luke F. Cunniff, Receiver
herein, and from claiming or asserting in said bank-
ruptey proceeding that said stockholder’s liability of
George R. Joslyn has not been released and satisfied
in full pursuant to said order of July 18, 1951, here-
tofore entered herein’’ (Tr. 357 to 358).
The three decrees of the state court, namely, the one
entered July 18, 1951, and the other two entered Septem-
ber 20, 1951, remain in full force and effect.
PSST
a
a
HILLMER, ET AL., FILED A CLASS SUIT ON BEHALF OF ALL
CREDITORS OF THE CHICAGO BANK OF COMMERCE IN THE
STATE COURT ON JUNE 25, 1932. GEORGE R. JOSLYN WAS
SERVED WITH PROCESS IN SAID SUIT LONG PRIOR TO THE
j BANKRUPTCY OF FEBRUARY 27, 1936. THE JURISDICTION
OF THE SUPERIOR COURT THUS OBTAINED OVER GEORGE
R. JOSLYN WAS NOT SUPERSEDED BY THE BANKRUPTCY.
THE SUPERIOR COURT RETAINED JURISDICTION FOR THE
PURPOSES OF SAID CLASS SUIT.
A.
The Bankruptcy Act Implicitly Provides That the Inter-
vention of Bankruptcy Shall Not Deprive the State Court
in a Pending Suit of Jurisdiction.
U.S. C., Tit. 11, Chap. 3, See. 29:
“$11. Suits By and Against Bankrupts. a. A suit
which is founded upon a claim from which a discharge
would be a release, and which is pending against a
person at the time of the filing of a petition by or
against him, shall be stayed until an adjudication or
the dismissal of the petition; if such person is ad-
judged a bankrupt, such action may be further stayed
until the question of his discharge is determined by
the court after a hearing, or by the bankrupt’s filing
a waiver of, or having lost, his right to a discharge.’’
In Re Armour (1951, 7 Cir.), 186 F. 2d 503 at 504.
Town of Agawam v. Connors (1947, 1 Cir.), 159
F, 2d 360.
. . EPR ELE LE IELTS AERIS Py OE DN SSE HA LITHO BEIT RI OP RENT AE SNE OUR
THES ROO NEE LIB IR PIETY IELTS IES i a i Eee .
——
8
II.
THERE IS NO QUESTION HERE OF THE RIGHT OF A COURT IN
BANKRUPTCY TO RE-EXAMINE A CLAIM BASED UPON A
JUDGMENT IN THE STATE COURT RENDERED AFTER THE
INTERVENTION OF BANKRUPTCY. SUCH AUTHORITY, HOW-
EVER, IS LIMITED TO THE RIGHT OF THE CREDITOR TO
SHARE IN PROPERTY IN THE POSSESSION OF THE BANK-
RUPTCY COURT BEING ADMINISTERED FOR THE BENEFIT
OF ALL CREDITORS. EVEN IN SUCH CASES THE ACT EX-
PRESSLY PROVIDES THAT THE STATE COURT’S JUDGMENT
UNDER CERTAIN CIRCUMSTANCES MAY BE BINDING UPON
THE BANKRUPTCY COURT FOR THE PURPOSE OF PROVING
A CLAIM AGAINST THE PROPERTY BEING ADMINISTERED
FOR CREDITORS IN THE BANKRUPTCY COURT.
U.S. C., Tit. 11, Chap. 7, Sec. 103:
‘$63. Debts Which May Be Proved. a. Debts of
the bankrupt may be proved and allowed against his
estate which are founded upon * * * (5) provable debts
reduced to judgments after the filing of t’\e petition
and before the consideration of the bankrupt’s ap-
plication for a discharge, less costs incurred and in-
terest accrued after the filing of the petition and up to
the time of the entry of such judgments ;’’
United States v. Paddock (1950, 5 Cir.), 180 F.
2d 121 at 123.
SOR pRisen RieN Se ee er ee . .
PRE PRA CE TT IRR DANN IE Di SRE I i Gan eRe boas cas Soe wie
2
9
Iil.
THE STATE COURT DECREE OF JULY 18, 1951, AND THE RE-
LEASE EXTINGUISHED GEORGE R. JOSLYN’S LIABILITY
UPON THE BANK STOCK. THIS DECREE AND THE RELEASE
CONCLUSIVELY BAR THE BANK CREDITORS IN ILLINOIS
COURTS. THIS DECREE AND RELEASE ARE EQUALLY CON.
CLUSIVE IN THIS PROCEEDING.
A.
The Superior Court Decree of J uly 18, 1951, Discharging
George R. Joslyn and Enjoining the Creditors of the
Chicago Bank of Commerce From Suing Him, and the
Release Executed by the Receiver Pursuant Thereto, Bar
Every Creditor of the Bank in the Courts of Illinois From
Asserting Against George R. Joslyn Any Claim Based on
His Stock Liability.
Groves v. Farmers State Bank ( 1938), 368 Ill. 35,
47-48; 12 N. E. 2d 618.
Decker v. Domoney (1944), 387 II. 524, 529; 56
N. E. 2d 750.
Babka Plastering Co. v. City State Bank (1931),
264 Ill. App. 142 at 153.
Leonard v. Bye (1935), 361 Tll. 185, 190, 192; 197
N. E. 546.
Walton v. Albers (1942), 380 Ill. 423; 44 N. E. 2d
145.
B.
The District Court Was Bound to Give the Same Full Faith
and Credit to the Decree of July 18, 1951, and the Release
as Is Given By the Courts of Illinois.
‘Title 28 Judiciary and Judicial Procedure.
‘“*S. 1738 State and Territorial Statutes and Judi-
cial Proceedings; Full Faith and Credit.
* *
a ESET TARR ANS TERS EPO SY AR OLRT ER HY RE RY ane mace ante FRELIS EPRI LES BN
10
‘“‘Such Acts, records and judicial proceedings of
copies thereof, so authenticated, shall have the same
full faith and credit in every court within the United
States * * * as they have by law or usage in the courts
of such State, * * * from which they are taken.’’
In Re Innis (1944, 7 Cir.), 140 Fed. (2d) 479-480.
Dimock v. Revere Copper Co. (1886), 117 U. S.
559.
Boynton v. Ball (1887), 121 U. S. 457.
IV.
THE DECREE (Tr. 294) OF THE STATE COURT ENTERED SEP-
TEMBER 20, 1951, DENYING THE MOTION OF ELKS TO VA-
CATE THE DECREE OF JULY 18 IS CONCLUSIVE AGAINST
THE BANK’S CREDITORS IN THIS PROCEEDING. THE JUDG-
MENT ENTERED SEPTEMBER 20, 1951, BY THE STATE COURT
ORDERING THAT EACH AND ALL CREDITORS OF CHICAGO
BANK OF COMMERCE “ARE INDIVIDUALLY AND SEVERALLY
PERMANENTLY ENJOINED AND RESTRAINED FROM CLAIM-
ING OR ASSERTING IN SAID BANKRUPTCY PROCEEDING
(THIS PROCEEDING) THAT THE STOCKHOLDERS LIABILITY
OF GEORGE R. JOSLYN BY REASON OF HIS OWNERSHIP OF
1142 SHARES OF CHICAGO BANK OF COMMERCE INCLUDING
LIABILITY FOR INTEREST EXCEEDS THE SUM OF $57,100.00
HERETOFORE PAID TO LUKE F. CUNNIFF, RECEIVER HERE-
IN, AND FROM CLAIMING OR ASSERTING IN SAID BANK-
RUPTCY PROCEEDING THAT SAID STOCKHOLDERS LIABIL-
ITY OF GEORGE R. JOSLYN HAS NOT BEEN RELEASED AND
SATISFIED IN FULL” (Tr. 357-358) BY THE SAID DECREE OF
JULY 18, 1951, IS ALSO CONCLUSIVE AGAINST THE BANK’S
CREDITORS IN THIS PROCEEDING.
A.
By Illinois Law Said Decree of September 20, 1951 (Tr.
294), and the Injunction Order of the Same (Tr. 357-358)
Day Conclusively Bar Each and Every Creditor of the
Chicago Bank of Commerce From Asserting in the Courts
of Illinois Any Claim Upon George R. Joslyn’s Stock
Liability.
Groves v. Farmers State Bank (1938), 368 Ill. 35,
47-48; 12 N. E. 2d 618.
t
£
p
;
is
ae
é
igh, Gennes aan poe teg eae cae ncaa CERT RN so.
ll
Decker v. Domoney (1944), 387 Ill. 524, 529; 56
N. E. 2d 750.
Babka Plastering Co. v. City State Bank (1931),
264 Ill. App. 142 at 153.
Leonard v. Bye (1935), 361 Ill. 185, 190, 192; 197
N. E. 546.
Walton v. Albers (1942), 380 Ill. 423; 44 N. E. 2d
145.
B.
U. 8. District Court Was Bound to Give the Same Full
Faith and Credit to Said Decree of September 20th and
the Injunction Order of the Same Day as Said Decree and
Order Would Have By Law and Usage in the Courts of
Illinois.
‘Title 28 Judiciary and Judicial Procedure.
‘*S. 1738. State and Territorial Statutes and Judi-
cial Proceedings; Full Faith and Credit.
* * * * *
‘Such Acts, records and judicial proceedings or
copies thereof, so authenticated, shall have the same
full faith and credit in every court within the United
States * * * as they have by law or usage in the courts
of such State * * * from which they are taken.’
Goldfarb v. Wright (1943, 2 Cir.), 135 Fed. (2d)
188, 191.
In Re Devereaux (1935, 2 Cir.), 76 Fed. (2d) 522,
523.
Walters v. Wilson (1944, 9 Cir.), 142 Fed. (2d)
59, 60.
Hobbs v. Franklin Jewelry Co. (1942, 5 Cir.), 131
Fed. (2d) 432.
—_— EAT RR TI SITIO MILNE NE EEL ORR FA REMEMBER RN GE
Sree
PRESS
12
V.
THE BANK HAD GONE INTO LIQUIDATION UNDER SECTION 11
OF ILLINOIS STATE BANKING ACT. THERE WAS NOT SUF-
FICIENT TO PAY CREDITORS IN FULL. THE $57,100.00 STOCK
LIABILITY OF GEORGE R. JOSLYN WAS FOR EQUAL AND
RATABLE SECURITY OF ALL BANK CREDITORS WHOSE
CLAIMS ACCRUED BETWEEN FEBRUARY 10 AND JUNE 25,
1932, WHILE HE WAS A STOCKHOLDER. THE REFEREE COR-
RECTLY HELD (Tr. 175-6) THAT A SINGLE CREDITOR OR
GROUP OF CREDITORS COULD NOT APPROPRIATE THE SE-
CURITY TO THE EXCLUSION OF THE OTHERS.
Zimmerman vy. Ziemer (1936), 363 Ill. 220, 1 N.
K. 2d 854.
Eames v. Doris (1882), 102 Ill. 350, 357.
Ili. R. S. 1951, Chap. 164, See. 11, page 254:
**S. 11. When any banking association, organized
under this Act shall have gone into liquidation under
the provisions of this section of the Act, the individual
liability of the shareholders * * * may be enforced
by any creditor of such association, by bill in equity,
in the nature of a creditor’s bill, brought by such
creditor on behalf of himself and all other creditors of
the association against the shareholders thereof, in
any court having jurisdiction in equity for the county
in which such bank * * * may have been located or
established.
‘‘The court in which such suit is instituted may ap-
point a receiver * * * for the purpose of collecting,
receiving, and disbursing the amounts due from the
stockholders on account of their ownership of the stock
of said bank.
‘‘The funds so collected, after the payment of the
costs and expenses of collection, including solicitors’
fees, shall be distributed according to law among the
creditors of said bank in such manner as the court
shall direct.’’
The attention of the court is respectfully called to the
analysis and conclusion of Referee Austin Hall (Tr. 179-
176).
IIT Gen SE RR ES I MINE SE SLIT HEM BORIS Et He PART
as
13
VI.
IF WE DISREGARD FOR PURPOSE OF ARGUMENT THE FACT
THAT GEORGE R. JOSLYN’S OBLIGATION WAS FOR THE
EQUAL AND PRO RATA SECURITY OF ALL DEBTS WHICH
ACCRUED AGAINST THE BANK BETWEEN FEBRUARY 10
AND JUNE 25, 1932, THEN HILLMER, ET AL., BY INSTITUT-
ING THE CREDITORS BILi ON JUNE 25, 1932, AND PROCUR-
ING AN ORDER APPOINTING A RECEIVER AND RESTRAIN-
ING OTHER CREDITORS FROM SUING, EFFECTED AN EQUIT-
ABLE ATTACHMENT ON THE $57,100.00 STOCK LIABILITY.
THIS EQUITABLE ATTACHMENT CONSTITUTED A PRIOR
LIEN UPON THE $57,100.00 STOCK LIABILITY IN FAVOR OF
BANK CREDITORS WHO CLAIM THROUGH SAID SUIT OVER
BANK CREDITORS CLAIMING OTHER THAN THROUGH SAID
SUIT.
A.
Hillmer, et al., Effected an Equitable Attachment on George
R. Joslyn’s $57,100.00 Liability in Favor of Bank Credi-
tors Claiming Through the Creditors’ Suit as Against
Other Creditors of Said Bank Claiming Said Funds Other
Than Through the Said Class Suit.
Thebus v. Smiley (1884), 110 Ill. 316 at 319-320.
Sanders v. Merchants State Bank (1932), 349 Ill.
O47 at 553-4; 182 N. E. 897.
B.
Having Effected an Equitable Attachment of the $57,100.00
Stock Liability More Than Four Months Before the Bank-
ruptcy, Hillmer, et al., as Representatives of the Class
Had a Prior Right to the $57,100.00 Over Other Bank
Creditors Claiming Said Fund Other Than Through Said
Creditors Class Suit.
Section Sixty-Seven (U. S. Code, Title 11, Chap. 7, See.
107) :
“67. Liens * * *. a. (1) Every lien against the
property of a person obtained by attachment, judg-
y w
a
14
ment, levy, or other legal or equitable process or pro-
ceedings within four months before the filing of a peti-
tion in bankruptcy * * * shall be deemed null and void
* * ® 99
Metcalf v. Barker (1902), 187 U. S. 165; 23 S. Ct.
67, 47 L. Ed. 122.
Straton v. New (1931), 283 U. S. 318; 51 S. Ct.
465, 75 L. Ed. 1060.
Emil v. Hanley (1943), 318 U. S. 515; 87 L. Ed.
«954.
Collier on Bankruptcy, Vol. I, Sec. 2.63, p. 297,
‘‘where attachments are made more than four months
before the filing of the petition, the subsequent prose-
cution of the claim to judgment and sale will not be
enjoined because the lien arises at the time of the
original attachment. A similar rule has been estab-
lished with respect to proceedings to enfore an equi-
table lien, such as the filing of a creditor’s bill usually
creates, effected prior to the four-month period.’’
CONCLUSION.
Every claim against the bankruptcy estate has been dis-
charged in full. The only remaining item is the spurious
claim of the attorneys for the Elks upon the two assign-
ments of alimony (Tr. 370). This claim has been adjudi-
cated to be grossly fraudulent by the courts of Illinois.
(Joslyn, Fisher Assignee, v. Joslyn, 337 Ill. App. 443, 86
N. E. 2d 367, appeal denied 341 Ill. App. XIV.) The ref-
eree correctly held (Tr. 154) that to keep the bankruptcy
open for the purpose of permitting the attorneys for the
Elks to harass the bankrupt with the assistance of the
bankruptcy trustee would be improper under the law. The
district judge correctly held that the bankruptcy should
not be kept open for the perpetuation of the gross abuse
of court process carried on by the attorneys for the Elks.
15
The court is respectfully referred to the findings in Joslyn,
Fisher assignee, v. Joslyn, 337 Tl. App. 443; 86 N. E. 2d
367, appeal denied 341 Ill. App. XIV, where the court
found that the prosecution of this bankruptcy proceeding
was inseparably connected with the divorce and a myriad
of other litigation instituted by the attorneys for the Elks
against George R. Joslyn. It is respectfully submitted
that the Petition for Certiorari should be denied.
Auvin Guen Hussarp,
Reese Hvusparp,
Dominick Varraveto, JR.,
Counsel for Respondent,
George R. Joslyn.
aN
16
APPENDIX.
Stockholders’ liability on bank stock has been abolished
in Illinois. Amendment of the Constitution was approved
by the voters at the last election.
Section 6 of Article XI of the Illinois Constitution now
reads:
‘*No stockholder of a banking corporation or insti-
tution shall be individually responsible or liable to its
creditors for the liabilities of such banking corpo-
ration or institution under any constitutional or statu-
tory provisions heretofore creating or declaring such
stockholder responsibility or liability, provided, how-
ever, that any rights of creditors existing at the date
of the adoption hereof shall not be impaired hereby,
provided that action to enforce such stockholder re-
sponsibility or liability with respect to any existing
bank liability which is payable on demand or for which’
a cause of action has already accrued shall be com-
menced within one year from the date of the adop-
tion hereof, and with respect to any other existing
bank liability shall be commenced within one year
from the time when the cause of action therefor first
hereafter accrues against such banking corporation or
institution, or could so accrue by demand. No law
creating or declaring any such stockholder responsi-
bility or liability shall be passed.
‘‘Adopted by the House, June 19, 1951, by a two-
thirds vote.
‘‘Concurred in by the Senate, as amended, June 27,
1951, by a two-thirds vote.’’ (Laws of Illinois, Sixty-
seventh Gen. Assembly 1951, page 2140).
%j
PERT A é Beat ESE BLE HONS see Bae eats UE No eI a PS ERRORS
DFC 10 1932
IN THE
Supreme Court of the United States
Ocroser Term, 1952.
No. 445
In THE MatTTerR oF
GEORGE R. JOSLYN,
BANKRUPT.
BENEVOLENT AND PROTECTIVE ORDER OF ELKS
OF THE UNITED STATES OF AMERICA,
Petitioner,
vs.
GEORGE R. JOSLYN, er au.,
Respondents.
ON PETITION OF THE BENEVOLENT AND PROTECTIV2 ORDER OF
ELKS OF THE UNITED STATES OF AMERICA FOR WRIT OF CER-
TIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
SEVENTH CIRCUIT.
BRIEF OF WADE FETZER, JR., ET AL.,
IN OPPOSITION.
Epwarp J. Merzporr,
231 South La Salle Street,
Chicago 4, Illinois,
Pro se and as A'torney for
Wade Fetzer, Jr., et al.
THE GUNTHORP. WARREN PRINTING COMPANY, CHICAGO
CANT AO
A ss Wiha acleee i cand nk 2s ee Ao a $ ROPES, 3 5
p INDEX.
OU: OO ie ss wkd eke aeek Kae eee hae dS os
ON iG ins a iis Mabe away Rew ew hee Wane tebe
FOUN iidccisccacevenseecesare st eek
BEEP PE SPENT EE CREE ESE EE ee
BEC EOEPCL Ee PE Os PO PE rep oe
I. The Decision Below Is Correct................
(a) The Superior Court Had Jurisdiction to En-
ter the Decree of July 18, 1951............
(b) The Contention That All of the Assets of
the Bankrupt Should Have Been Delivered
Into the Possession of the Trustee in Bank-
ruptcy Raises Only a Moot Question When
There Are No Creditors..................
II. There Is No Conflict of Decisions Involved Nor
Any Question of General Importance, Nor Any
Other Reason for This Court to Review the De-
ARES aeee ninety Sprrad waco Malls Hi.
ennai POS es Dus eh Sa eine ato e ee eit
CITATIONS.
Cases.
Babka Plastering Co. v. City State Bank, 264 Ill. App.
dct Sra a OVER i a eRe oo eK nee eee ee OA eS
Cohen v. North Ave. State Bank, 291 Ill. App. 558,
oS AR ee ere ret creer ae ae
ees ©, Wremree, Sk OLR, Bos csc cecancascrctioves
10
11
ii
Davis v. Friedlander, 104 U. S. 570.................. 6
Dimock v. Revere Copper Company, 117 U.S. 559.... 6,7
Se ec SNE, GE Wi Ms db cope wecesnescececss 6
Golden v. Cervenka, 278 Ill. 409, 116 N. E. 273....... 5, 8
Groves v. Farmers State Bank, 368 Ill. 35, 12 N. E.
SE Sea Sans eae eo ik ana wae how tiwe's SB ae eae 5
Hartford Life Ins. Co. v. Ibs, 237 U. S. 662.......... 6
Heine v. Degen, 362 Ill. 357, 199 N. E. 832............ 8
In re Innis (C. C. A. 7), 140 F. (2d) 479............. 7
Joslyn v. Joslyn, 337 Ill. App. 443, 86 N. E. (2d) 367. .10, 11
Leonard v. Bye, 361 Ill. 185, 196 N. E. 546............ 5
Lewis v. West Side Tr. and Sav. Bk., 376 Ill. 23, 32
ea eas auch ws de heen sk pia ses 8
Peeeeten W,. semmmem, SOs WU. . BOD... oc cece cascen 7
Munger, et al. v. Jacobson, 99 Ill. 349............... 8
pe ee ae) > ee 6,7
Sanders v. Merchants State Bank of Centralia, 349 II.
a ae Wik wd inva bees o 8
Smith, et al. v. Swormstedt, et al., 16 Howard 288.... 6
Supreme Tribe of Ben-Hur v. Cauble, 255 U S. 356... 6
United States v. Alaska S.S. Co., 253 U. S. 113....... 9
United States v. Hamburg-American Co., 239 U.S. 466 9
ee a Sere 7
Constitutions.
Constitution of Illinois, Article XI, section §......... 5, 8
Statutes.
Smith-Hurd Illinois Annotated Statutes, Ch. 164, sec.
ens eh rs ad nia Sere een gs wee 5, 8
IN THE
Supreme Court of the United States
Octroser Term, 1952.
No. 445.
In Tae MATTER OF
GEORGE R. JOSLYN,
BANKRUPT.
BENEVOLENT AND PROTECTIVE ORDER OF ELKS
OF THE UNITED STATES OF AMERICA,
Petitioner,
vs.
GEORGE R. JOSLYN, er at.,
Respondents.
ON PETITION OF THE BENEVOLENT AND PROTECTIVE ORDER OF
ELKS OF THE UNITED STATES OF AMERICA FOR WRIT OF CER-
TIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
SEVENTH CIRCUIT.
BRIEF OF WADE FETZER, JR., ET AL.,
IN OPPOSITION.
OPINION BELOW.
The opinion of the District Court (Tr. 365-371) is re-
ported in 102 F. Supp. 521. The opinion of the Circuit
Court of Appeals for the Seventh Circuit (Tr. 511-12) is
reported in 198 F. (2d) 673.
De st La ee oe ae
JURISDICTION.
The jurisdictional requirements are adequately set forth
in the petition.
QUESTIONS PRESENTED.
1. Whether the Superior Court of Cook County, IIli-
nois, had jurisdiction to enter the decree of July 18, 1951,
and if it did, whether that decree and its satisfaction ex-
tinguished the provable claims in bankrnuptey arising out
of the stockholder’s liability of the bankrupt.
2. Whether the District Court violated any provision
of the Bankruptcy Act by not reducing to its possession
administrable assets of the bankrupt’s estate when there
were no provable claims in bankruptcy.
STATEMENT.
Respondents, Wade Fetzer, Jr., Margaret Fetzer, Frank
D. Hurt, J. A. O. Preus, Charlotte M. Zander and Henry
G. Zander, Jr., as Trustees under the Will of Henry G.
Zander, deceased, Mutual Trust Life Insurance Company,
Raymond Olson and The First National Bank of Chicago,
as Eixecutors of the Estate of Edwin A. Olson, deceased,
Raymond Olson, O. D. Olson, O. D. Olson, Jr., Arthur E.
Kesler, Edwin Carson, Clara Carson, Olaf Olson, Ida M.
Olson, George E. Q. Johnson, Jr., as Executor of the Es-
tate of George E. Q. Johnson, deceased, EK. H. Neese, H. C.
Freeman, R. E. Freeman, A. R. Dahms, H. A. Von Oven
and G. A. Macklem, hereinafter referred to as the ‘‘inter-
venors,’’ were stockholders of the Chicago Bank of Com-
merce, an Illinois state bank (Tr. 189-202). The bank failed
on June 6, 1932, and a class action was instituted in the
Superior Court of Cook County, Illinois, by Hillmer, et al.,
on behalf of all creditors of the bank to enforce the lia-
QRS RPS RAI PLOT ET ALLER RE SE SRL RN PERE ESI
.
3
bility of the stockholders to the creditors as provided by
the statutes and Constitution of Illinois. George R. Jos-
lyn, one of the stockholders, was named as a defendant in
this class action and served with process. He pleaded his
discharge in bankruptcy (Tr. 354-356). Intervenors were
also defendants in the stockholders’ liability case.
There was erroneously collected from intervenors
amounts in excess of their true liability. These amounts
were distributed to the creditors of the bank, including
petitioner (Tr. 96, 146). Subseqnently, upon a class peti-
tion filed by intervenors and proceedings thereon a de-
cree was entered in the stockholders’ liability case adju-
dicating that intervenors and the class represented by
them were entitled to a refund in the amount of $145,636.56
by reason of their overpayments (Tr. 187-211). By that
time there were insufficient funds in the stockholders’ lia-
bility receivership estate to pay intervenors’ claim in full
(Tr. 212-218).
In the interim petitione> succeeded in opening the bank-
ruptey estate of George R. Joslyn because the bankrupt
had failed to schedule the correct parties and because cer-
tain beneficial interests of the bankrupt not subject to
the claims of the creditors under local law were held to be
assets administrable in bankruptcy (Tr. 372). At the time
of the reopening of the bankruptcy proceeding, however,
the petitioner obtained a restraining order in the bank-
ruptey court prohibiting anyone from proceeding against
the bankrupt on his stockholder’s liability (Tr. 98, 250).
Intervenors, precluded from seeking contribution di-
rectly from the bankrupt by reason of petitioner’s re-
straining order, sought to intervene in the bankruptcy case
to obtain contribution for the balance due them by way
of subrogation (Tr. 92-101). The trustee in bankruptcy,
who was nominated by petitioner (Tr. 105), opposed inter-
BGR TEGO PRE RE LOL ELE DELS OLE BLE TST NRE LE EER ORNL ES IGT
4
venors’ claim for contribution and asserted a counter-
claim for the benefit of all creditors of the bankrupt on
the ground that intervenors had already been fully re-
paid (Tr. 107-117). This counterclaim was rejected by
the referee to whom the matter had been referred (Tr.
177). The referee was unable to ascertain from the rece-
ord before him what creditors had provable claims against
the bankrupt by reason of the stockholders’ liability and
recommended that the parties proceed against the bank-
rupt in the stockholders’ liability case (Tr. 176-177). While
the matter was pending on consideration of the referee’s
report, the father of the bankrupt filed a petition in the
stockholders’ liability case offering to pay the bankrupt’s
liability in full if it were promptly adjudicated (Tr. 246-7).
This was done by the Superior Court decree of July 18,
1951 (Tr. 348-353).
The Superior Court decree of July 18, 1951, and its
satisfaction of record extinguished the claim against the
bankruptcy estate arising out of Joslyn’s stockholder’s
liability. There were no longer any creditors of the bank-
rupt, and the bankruptcy court refused to allew the trus-
tee in bankruptcy to seize assets of the bankrupt when
there were no provable claims against the bankrupt. As
a result of the payment by Joslyn’s father of his son’s
liability in the state court case enough funds were brought
into the state court receiver’s possession to enable him to
repay the balance due the overpaying stockholders. The
state court receiver was ordered to pay the balance due to
intervenors. Out of this latter payment the receiver was
directed to pay to intervenors’ attorneys, as fees, a portion
of their recovery, in accordance with prior orders. This
payment of attorneys’ fees was out of intervenors’ own
funds to their own attorneys for effecting recovery of their
overpayments (Tr. 260-267).
ARGUMENT.
Te
a
THE DECISION BELOW IS CORRECT.
(a)
The Superior Court Had Jurisdiction to Enter the
Decree of July 18, 1951.
The entire argument of the petitioner is bottomed on
the proposition that the state court decree of July 18,
1951, was a nullity. This proposition is false.
The stockholder’s liability of George R. Joslyn was
created by the Illinois Constitution and the Illinois Bank-
ing Act (Constitution of Illinois, Art. XT, see. 6; Smith-
Hurd Il. Anno. Stats. Ch. 163, sec. 11). The Illinois Bank-
ing Act provides that the liability may be enforced in a
class action. The state court proceeding was a class action
to enforce this liability. A class action is the proper means
of enforcing the constitutional and statutory liability of
_ stockholders of an Illinois state bank (S. H. A. Chap. 164,
sec. 11; Golden v. Cervenka, 278 Tl. 409, 435, 116 N. E.
273, 284; Babka Plastering Co. v. City State Bank, 264 Ill.
App. 142, 153-4, cert. denied, 266 Ill. App. XV). In such
a class action all of the parties constituting the class are
as much before the court as the named parties and are
equally bound by any order or decree entered in the suit
(Babka Plastering Co. v. City State Bank, 264 Ill. App.
142, 153, cert. denied, 266 Ill. App. XV; Groves v. Farmers
State Bank, 368 Ill. 35, 48, 12 N. E. (2d) 618, 624; Leonard
¥. Bye, 361 Ill. 185, 190, 196 N. E. 546, 548). Unless all
parties represented are deemed to be before the court it
Would be impossible to maintain representative suits under
‘ a tical cand 2 AEN Rea
— ltr eam acta ah
Eek ten -
SDE IRR Mey NETS i AR a Rhea
6
any circumstances (Supreme Tribe of Ben-Hur v. Cauble,
255 U. S. 356, 363-364; Smith, et al. v. Swormstedt, 16 How.
288, 302-3; Hartford Life Insurance Co. v. Ibs, 237 U.S.
662, 672-674). Petitioner, whose only claim against the
bankrupt arose from the fact that petitioner had a claim
against the Chicago Bank of Commerce at the time the
bank failed and, therefore, had a claim against Joslyn to
enforce his stockholder’s liability, was bound by all orders
and decrees in the state court suit.
The Superior Court had jurisdiction of the subject mat-
ter in the class suit brought by Hillmer. The Superior
Court also had jurisdiction over the person of George R.
Joslyn for George R. Joslyn appeared in the case and
filed an answer (Tr. 186, 354-356). Since the Superior
Court tad jurisdiction of the subject matter and of the
parties its decree of July 18, 1951, was valid and bind-
ing upon all the parties, notwithstanding the bankruptéy
of George R. Joslyn (Eyster v. Gaff, 91 U. S. 521, 524-526;
Davis v. Friedlander, 104 U. S. 570, 574; Dimock v. Revere
Copper Company, 117 U. 8. 559, 564-566).
Where a state court has jurisdiction of the subject mat-
ter and parties, as here, such jurisdiction is not divested
merely by maintenance of a bankruptcy proceeding to
which the defendant is a party (Peck v. Jenness, 7 How.
612; Connell v. Walker, 291 U.S. 1,5). In Eyster v. Gaff,
91 U. S. 521, 524, this court said:
‘‘Tt is a mistake to suppose the Bankrupt Law avoids
of its own force all judicial proceedings in the State
or other courts the instant one of the parties is ad-
judged a bankrupt. There is nothing in the act which
sanctions such a proposition.”’
A discharge in bankruptcy is neither a payment nor
an extinguishment of a debt. The discharge affects only
the remedy of the creditor. The obligation is not canceled
a,
7
(Zavelo v. Reeves, 227 U. S. 625, 629; Boynton v. Ball, 121
U. S. 457, 467).
When George R. Joslyn pleaded his discharge in bank-
ruptey in the state court case (Tr. 354-6) he raised this
bar. But the pleading of this defense did not deprive the
state court of jurisdiction over him on the issue as to his
stockholder’s liability. This step in the pleadings merely
prevented the state court from entering a judgment against
the bankrupt until the question of his discharge was de-
termined by the state court (Boynton v. Ball, 121 U. S.
457, 466-7). Thereafter the bankrupt was free to waive
the defense of discharge or renew the debt by a new prom-
ise. The intent to do either could be inferred by his silence
when his father offered to pay the liability if it were
promptly adjudicated (In re Dimock v. Revere Copper
Company, 117 U. S. 559, 566; In re Innis (C. C. A. 7), 140
F. (2d) 479, 481, cert. denied, 322 U. S. 736). The Superior
Court had jurisdiction to proceed with the adjudication
when the father presented his petition because the right
of Hillmer, et al. to prosecute their suit against George R.
Josiyn having once attached could not be taken away by °
proceedings in another court (Peck v. Jenness, 7 How. 612;
Metcalf v. Barker, 187 U. S. 165, 175).
The Superior Court decree of July 18, 1951, was not a
violation of the exclusive jurisdiction of the bankruptcy
court because the Superior Court decree did not adjudicate
a claim against the bankrupt’s estate. The stockholders’
liability of the bankrupt adjudicated under the decree of
July 18, 1951, was a personal liability. The bankrupt
waived his defense of discharge in bankruptey to this lia-
bility. When the stockholder’s liability was adjudicated by
the decree the liability merged in the decree and when the
decree was satisfied in open court tle decretal liability was
extinguished.
—_—_—e GSES LOIS Ne PRR LE RI OREN at NN ARS oF oe ROHR AS PYRO SR
8
The liability of the bankrupt to the creditors of the
Chicago Bank of Commerce arising out of the bankrupt’s
ownership of stock in the bank did not bear interest. The
liability was created by the Constitution and the Banking
Act of Illinois (Golden v. Cervenka, 278 Ill. 409, 418, 116
N. E. 273, 278). The maximum amount for which a stock-
holder of an Illinois State Bank may be held liable to the
creditors of the bank is fixed by the face amount of the
shares which he owns (Heine v. Degen, 362 Ill. 357, 199
N. E. 832; Sanders v. Merchants State Bank of Centraiia,
349 Ill. 547, 182 N. E. 897). The Illinois law does not allow
interest prior to a decree (Munger v. Jacobson, 99 Ill. 349,
354; Lewis v. West Side Trust and Savings Bank, 376 Ill.
23, 45-7, 32 N. E. (2d) 907, 918-919). It is only where equi-
table considerations are shown to warrant the imposition
of interest that interest may be allowed in addition to the
stockholder’s liability (Cohen v. North Avenue State Bank,
291 Ill. App. 558, 570-1, 10 N. E. (2d) 823, 827-828). The
Superior Court decree of July 18, 1951, was an adjudication
that no interest should be imposed.
The state court had jurisdiction of the subject matter
anc the parties. Petitioner and alli other creditors of the
bank were bound by their class representation in the Su-
perior Court. If petitioner believed itself improperly rep-
resented in that case, petitioner was at liberty to apply to
that court to make suggestions concerning the carriage and
conduct of that case (Cockburn v. Thompson, 16 Vesey Jr.
325, 33 Eng. Rep. 1005). Petitioner was also at liberty to
appeal from the decree of July 18, 1951, which petitioner
has done (pending in Illinois Appellate Court for the First
District as Docket No. 45722).
In the proceeding before the referee in bankruptcy the
referee found that neither petitioner nor the trustee in
bankruptcy had offered any evidence as to equitable con-
| RES Seite sear pe reeaaais
9
siderations warranting the imposition of interest in addi-
tion to the stockholder’s liability (Tr. 157).
The federal rule in bankruptcy relating to the accrual of
interest on claims is inapplicable. The stockholder’s lia-
bility of Joslyn was merged in the decree of July 18, 1951.
That decree was satisfied of record by the father’s pay-
ment (Tr. 376-7). Thereafter there was no basis for a
claim against the bankruptcy estate by creditors of the
Chicago Bank of Commerce because the bankrupt was no
longer liable to the creditors of that bank,
(b)
The Contention That All of the Assets of the Bankrupt
Should Have Been Delivered Into the Possession of the
Trustee in Bankruptcy Raises Only a Moot Question
When There Are No Creditors.
When the liability of the bankrupt to the creditors of
the Chicago Bank of Commerce was extinguished by the
father’s payment of his son ’s liability there were no credi-
tors with provable claims against the bankruptcy estate.
There were no other claims (Tr. 380). It would serve no
useful purpose to bring all of the assets of the bankrupt
into the possession of the trustee in bankruptcy. The issue
before the bankruptcy court had become moot except for
the payment of attorneys’ fees and their expenses. The
decree of the District Court providing for a fund of .
$50,000.00 was ample to take care of all attorneys’ fees
and disbursements in a controversy which itself involved
only $57,100.00. Courts do not perform autopsies on dead
issues (U. 8. v. Alaska S. S. Co., 253 U. 8. 113, 116; U. g.
v. Hamburg-American Co., 239 U.S. 466, 475).
10
I.
THERE IS NO CONFLICT OF DECISIONS INVOLVED, NOR ANY
QUESTION OF GENERAL IMPORTANCE, NOR ANY OTHER
REASON FOR THIS COURT TO REVIEW THE DECISION BE-
LOW.
No conflict of decision is presented by the petitioner.
Nor was there any departure by the court below from
the decisions of this court with regard to the exclusive
jurisdiction of a bankruptcy court over bankruptcy mat-
ters. The payment of the bankrupt’s stockholder’s liability
in the stockholders’ liability case by the father with the
father’s funds did not involve assets of the bankruptcy
estate. When that payment was made the liability was
extinguished. When the liability was extinguished there
could no longer be any claim against the bankrupt’s estate
arising out of that liability.
The facts involved in this case are peculiar (see Joslyn
v. Joslyn, 337 Ill. App. 443, 457, 86 N. E. (2d) 367, 374,
referred to in the opinion of the court below (Tr. 424)).
The case presents no question of general interest. If the
decision below were in error there is still no warrant for
its review by this court. The only effect of a reversal
would be to place in the hands of the trustee in bankruptcy
the bankrupt’s interest in certain trust estates to be used
for the payment of the bankrupt’s stockholder’s liability,
which has already been paid. The reversal would deprive
intervenors of their reimbursement while permitting pe-
titioner to retain the benefits of intervenors’ overpayment
and at the same time participate in the recovery of the
stockholders’ liability from the bankruptcy estate.
Petitioner complains of the fact that both courts below
emphasized the seemingly endless character of this litiga-
tion. Petitioner disclaims any responsibility for its length.
11
An examination of Joslyn v. Joslyn, 337 Ill. App. 443, 457,
86 N. E. (2d) 367, 374, will disclose the genesis of this
litigation and the desirability of its interment.
Conclusion.
For the foregoing reasons it is respectfully submitted
that this petition for certiorari be denied.
Respectfully submitted,
Epwarp J. Merzporr,
Pro se and as counsel for Wade
Fetzer, Jr., et al.
December, 1952.
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.