Kenney v. Craven - 215 U.S. 125 (1909)
U.S. Supreme Court
Kenney v. Craven, 215 U.S. 125 (1909)
Kenney v. Craven
Argued November 12, 1909
Decided November 29, 1909
215 U.S. 125
The determination by a state court that a purchaser pendente lite from the trustee of a bankrupt is bound by the decree against the trustee in the action of which he has notice gives effect to such decree under
the principles of general law, and if, as in this case, it doe not involve passing on the nature and character of the rights of the parties arising from the transaction of purchase and sale, no federal question is involved.
Writ of error to review 196 Mass. 319 dismissed.
James Connor, a manufacturer of woolen cloth, operating two mills located in Holyoke, Massachusetts, sold to Michael Craven machinery contained in the mills, and evidenced the same by three bills of sale executed respectively on October 12, 1883, April 6, 1885, and March 10, 1891. On June 18, 1901, Connor was adjudicated a bankrupt, and in August following, Nathan B. Avery was appointed trustee. In the same month, Avery, as trustee, commenced a suit in equity in a state court of Massachusetts, and therein assailed the validity of the bills of sale to Craven, above referred to, and prayed that they might be set aside and the property decreed to belong to the estate of the bankrupt. While that suit was pending, and on September 18, 1901, Avery, trustee, sold to William J. Corbett, as part of the bankrupt estate, certain of the machinery situated in the mills already referred to. In 1905, Corbett brought this action against Craven to recover from him the value of the machinery so as aforesaid transferred to him by Avery, trustee, alleging that Craven had taken possession of and converted the property sued for to his own use. During the pendency of the action, the equity cause was decided, and, after the entry of the decree therein, an amended answer was filed in this action. Therein, in addition to a general denial, the decree in the equity suit in favor of Craven was specially pleaded in bar, and it was averred that the title and right of possession of the property in controversy in this action was in issue in said equity cause, and had been adjudicated by the decree to be in Craven. An auditor was appointed "to hear the parties, to examine their vouchers and evidence, to state the accounts, and make report thereof to the court." After the taking of evidence had been concluded, the auditor filed a lengthy report in which were embodied numerous findings of
fact. On the ultimate issues, the auditor found for the plaintiff. As regards the decree in the equity cause pleaded in bar, it was found that the title to the property alleged in this action to have been converted by the defendant, Craven, had not been the subject of litigation in the equity cause, and that the decree in that cause was not a bar to a recovery by the plaintiff. The case was then by the court committed to a jury, who found for the plaintiff, and assessed his damages at $4,696.01. The defendant, on exceptions, carried the cause to the Supreme Judicial Court of Massachusetts. There, the exceptions were sustained upon the sole ground that the decree in the suit in equity was a bar to the claim of plaintiff. 193 Mass. 30. Subsequently, in the trial court, the plaintiff was allowed to amend his declaration by adding thereto the following paragraph:
"And the plaintiff says that said goods and chattels were the property of one James Connor, who was adjudicated a bankrupt by the District Court of the United States for the District of Massachusetts, June 18, 1901; that, on August 3, 1901, Nathan P. Avery, of Holyoke, was duly appointed trustee in bankruptcy of the estate of said Connor; that, on August 6, 1901, the said Avery duly filed bond, and duly qualified as such trustee; that, on September 18, 1901, the said plaintiff acquired title to said goods and chattels by purchase from said Avery as trustee, aforesaid, the said Avery being duly authorized by said district court to make sale of said goods and chattels, and that the plaintiff in this action, relying upon such title, acquired as aforesaid from said Avery, specially sets up and claims that said title was acquired under an authority exercised under the United States, within the meaning of § 709 of the Revised Statutes of the United States."
A similar averment was also embodied in a reply filed at the same time to that part of the answer of defendant which sets up "a former judgment as a bar." Certain other matters were also stated in the replication in avoidance of the effect of the adjudication in the equity cause, but they need not be
particularly referred to, as no contention based upon them was pressed at bar or called to our attention in any form.
The action was again tried to a jury, who, by direction of the court, returned a verdict for the defendant. The cause was again heard on exceptions in the Supreme Judicial Court of Massachusetts, and, after consideration of the new matter contained in the replication to the answer, the exceptions were overruled. 196 Mass. 319. The trial court thereupon entered judgment on the verdict, and this writ of error was prosecuted.