Davis v. Friedlander - 104 U.S. 570 (1881)
U.S. Supreme Court
Davis v. Friedlander, 104 U.S. 570 (1881)
Davis v. Friedlander
1. The assignment made to assignees in bankruptcy in proceedings which were brought more than four months after attachments, issued in a chancery suit pending in a state court, were levied upon the property of the bankrupt, does not divest the jurisdiction of that court to determine the priority of lien respectively claimed by the attaching creditors, or to administer the fund arising from the sale of the property.
2. His assignees in bankruptcy, if they enter their appearance in the suit, are bound by the decree, affirming the validity of the liens acquired by the levy of the writs, and directing the application of the proceeds of the sale to satisfy them. The assignees cannot thereafter set up in any other court their title to the property.
3. A., claiming that by a proceeding at law he had a prior lien, filed in the district court sitting in bankruptcy his bill against the other attaching creditors, the assignees in bankruptcy, and the purchasers of the property. He prayed that the sale under the writs sued out of the chancery court be set aside, that the property be delivered to and sold by the assignees, and that the proceeds be first applied to the satisfaction of his lien. Held that the bill would not lie.
Friedlander, Stich, & Co., sued Kaufman, their debtor, in the Law Court of Memphis, taking out an attachment, which was levied, Nov. 30, 1866, upon his real estate in that city. On different days in December, 1866, and January, 1867, Davis and other creditors sued him in the chancery court, each taking out an attachment, which was promptly levied on the same real
estate. On the 14th of July, 1868, he was adjudged a bankrupt upon his petition, filed the 30th of the preceding May -- more than a year after the levy of the last of the attachments. Cirode and Coronna were appointed his assignees in bankruptcy, and to them was made an assignment of his rights, property, and effects. On the 21st of November, 1868, they appeared in the suits in the chancery court -- then consolidated and about to be heard -- and, with their consent, and order was entered making them, in their capacity as his assignees, parties defendant. They had the benefit of any defense they might at any time have had, and assented that the hearing of the cases should proceed. On the 21st of December, 1868, a final decree was entered in the chancery court ascertaining the amount of his indebtedness to the respective complainants, and adjudging that the attached property be sold, free from any right or equity of redemption in him, or in any of the other defendants, and that the proceeds be applied in satisfaction of the debts due the attaching creditors -- the surplus, if any, to be paid to his assignees.
On the 1st of March, 1869, the day fixed for the sale of the attached property, by the master's advertisement, Friedlander, Stich, & Co. presented to the chancellor of the chancery court a petition asserting, in virtue of their prior attachment in the law court, a lien superior to that acquired by Davis and others, under their respective attachments in the chancery court, and praying that the sale, so far as it related to the property covered by their attachment, be postponed; that they be made parties to the consolidated equity suits; and that their priority of lien be established. He declined to order the postponement asked, but indorsed upon the petition that
"the sale will proceed, and the complainants to this bill may file this, or a petition, in the consolidated causes to establish their priority, if such exists, to the fund."
It does not appear that Friedlander, Stich, & Co. availed themselves of this right, or gave any further attention to, or had any further connection with, the chancery suits. The sale took place as advertised, Hill becoming the purchaser of a part of the property at the price of $2,500, while the remainder was struck off to Carter, Kirtland, & Co., attaching creditors, at the price of $12,520.
The bids were less, by nearly one-half, than the aggregate debts of the attaching creditors in the equity suits. No exceptions were filed to the report of sale. Hill complied with the terms of sale, and his purchase was confirmed. A decree was entered declaring that all the right, title, and interest of the parties, in and to the property purchased by Hill, be divested out of them, and vested in him. It does not appear, from the transcript, that Carter, Kirtland, & Co. complied with the terms of sale, or that any final action was taken by the court as to their purchase. In July, 1869, Friedlander, Stich, & Co. obtained judgment in the law court against Kaufman for the sum of $19,311.81, the amount of their claim, and also an order for the sale of the attached property, the same previously sold under the decree. But that order was suspended to await the consent of the court in bankruptcy to its execution, or until the further order of the law court.
The present suit was commenced on the 20th of August, 1870, by Friedlander, Stich, & Co. filing their petition in the district court sitting in bankruptcy. The attaching creditors in the suit in the chancery court, the purchasers at the sale of March 1, 1869, and the assignees in bankruptcy of Kaufman were made defendants. Its manifest object is to secure an adjudication, establishing the prior lien of Friedlander, Stich, & Co., as against the other attaching creditors, upon the real estate attached, alike, in the suits in the law and the chancery courts of Memphis. To that end, a decree is asked declaring the sales under the order of the latter court to be void, and placing the attached property in the possession of Kaufman's assigns, to be by them sold, under the order of the bankruptcy court, the proceeds of sale to be applied first to the satisfaction of the judgment of Friedlander, Stich, & Co., in the law court. The district court disregarding the sale made under the decree of the state court, gave those parties all the relief asked, and its decree was affirmed by the circuit court. Davis and the other creditors thereupon appealed.
Other facts are disclosed by the record, but in the view taken of the case by the court it is unnecessary to state them.