Morgan v. Thornhill - 78 U.S. 65 (1870)
U.S. Supreme Court
Morgan v. Thornhill, 78 U.S. 11 Wall. 65 65 (1870)
Morgan v. Thornhill
78 U.S. (11 Wall.) 65
No appeal lies to this Court from a decree of the circuit court of the United States exercising the supervisory jurisdiction conferred upon it by the second section of the Bankrupt Act of 2d March, 1867.
"An act to establish a uniform system of bankruptcy throughout the United States," approved March 2, 1867, [Footnote 1] and which gives to the district courts exclusive original jurisdiction in matters of bankruptcy, authorizes them to declare corporations bankrupt upon certain proceedings had.
By the 2d section of the act, it is enacted:
"That the several circuit courts of the United States within and for the districts where the proceedings in bankruptcy shall be pending shall have a general superintendence and jurisdiction of all cases and questions arising under this act, and except when special provision is otherwise made, may upon bill, petition, or other process of any party aggrieved, hear and determine the case as a court of equity. The powers and duties hereby granted may be exercised either by said court or by any justice thereof, in term time or in vacation. "
By the 8th section of the act, it is further provided:
"That appeals may be taken from the district court to the circuit courts in all cases in equity, and writs of error may be allowed to said circuit courts in cases at law, under the jurisdiction created by this act, when the debt or damages claimed amount to more than $500, and any supposed creditor may appeal whose claim is wholly or in part rejected, or an assignee who is dissatisfied with the allowance of a claim may appeal from the decision of the district court to circuit court."
And by the 9th:
"That in cases arising under this act, no appeal or writ of error shall be allowed in any case from the circuit courts to the Supreme Court of the United States unless the matter in dispute exceeds $2,000."
Under this bankrupt act, the District Court at New Orleans on the 11th of January, 1870, on the petition of one Thornhill, a creditor, decreed the Bank of Louisiana to be bankrupt. The charter of the bank had previously to this date been declared, on proceedings in one of the state courts, forfeited under a statute of the state and its affairs had been placed in the hands of one Morgan and others, as commissioners, to liquidate them. These commissioners were in possession of the property of the bank. The decree of the district court in bankruptcy superseded the action under the state law, ordering as it did "that the parties holding any of the property of the said bank, surrender the same to the proper officers of this Court," and being followed up soon afterwards (June, 1870) by injunctions against the commissioners to refrain and desist from making any transfer or disposition of any part of the assets of the bank, or any payment out of them, and from all litigation or compromise about them.
Hereupon Morgan and the other commissioners filed their petition (no appeal being in any way taken in the matter) in the Circuit Court for the District of Louisiana. In this they "represent" what had been done in the district court, and having set all this forth, proceed:
"Now your petitioners, in their said capacities of commissioners of the Bank of Louisiana, respectfully represent that they are aggrieved, and the creditors of said bank are also aggrieved and injured by the proceedings, orders, and judgment rendered in said cases, and believe the same to be erroneous and contrary to law; that the issuing and continuance of said injunctions has been, since the month of June last, and still is, working great injury to the creditors of said bank; that petitioners are prohibited thereby from defending or prosecuting the many suits now pending in which the said bank is a party, or to appear and protect its interests in any litigation now pending in which the said bank is interested, or to institute such legal proceedings as are necessary to interrupt prescription on claims held by them as commissioners; that the judgment rendered in said suit is erroneous."
The petition concluded with this prayer:
"And your petitioners pray that the orders made in said cause be suspended in their operation and legal effect, and that the superintending and revising jurisdiction conferred upon this Court in such cases by the act of Congress entitled 'An act to establish a uniform system of bankruptcy throughout the United States,' approved March 2, 1867, may be exercised by your honor, and that the said orders be examined, and, if found not to be warranted by law, set aside or rescinded, and that your petitioners be allowed to proceed with the execution of the trusts conferred upon them by law."
The Circuit Judge, at chambers, affirmed the action in the district court, holding that the act of the State of Louisiana was suspended by the Bankrupt Act, and that the proceedings in the state court, under whose judgment the charter of the bank was dissolved and the commissioners appointed, were void for want of jurisdiction.
An appeal was afterwards granted by one of the justices of this Court, and the bond approved, and supersedeas directed to be issued, the appeal having been prayed and the bond approved within the ten days from the rendition of the decree.