Chapman v. Brewer, 114 U.S. 158 (1885)
U.S. Supreme CourtChapman v. Brewer, 114 U.S. 158 (1885)
Chapman v. Brewer
Submitted March 19, 1885
Decided March 30, 1885
114 U.S. 158
Where, under the Bankruptcy Act of March 2, 1867, a proceeding in involuntary bankruptcy was commenced in the District Court of the United States for the Western District of Michigan before an attachment on land of the debtor, issued by a state court of Michigan, was levied on the land, the assignment in bankruptcy, though made after the attachment, related back and vested title to the land in the assignee as of the commencement of the proceeding, and where the attachment was levied within four months before the commencement of the proceeding, it was dissolved by the making of the assignment.
The proceeding in this case was held to have been commenced before the attachment was levied.
The district court which made the adjudication having had jurisdiction of the subject matter, and the bankrupt having voluntarily appeared, and the adjudication having been correct in form, it is conclusive of the fact decreed, and cannot be attacked collaterally in a suit brought by the assignee against a person claiming an adverse interest in property of the bankrupt.
The assignment in bankruptcy was made after a levy on the land under an execution on a judgment obtained in a suit in a state court of Michigan, brought after the proceeding in bankruptcy was commenced. Held that the assignee, being in possession of the land, could maintain a suit in equity in the Circuit Court of the United States for the Western District of Michigan to remove the cloud on his title, and that that court could, under the exception in Rev.Stat. § 720, restrain by injunction a sale under the levy and a further levy.
On the 10th of October, 1873, John Whittlesey, a creditor of Benjamin C. Hoyt and Enoch C. Hoyt, co-partners under the name of B.C. Hoyt & Son, filed a petition in bankruptcy in the District Court of the United States for the Western District of Michigan praying that the said two persons, "partners as aforesaid," might be declared bankrupts. The petition contained the prescribed allegations and set forth as the demand of the petitioner a promissory note made by the partnership in its firm name to his order. It alleged as one act of bankruptcy that the firm had "fraudulently stopped payment" of its commercial paper "within a period of fourteen days," omitting to add "and not resumed payment within said period." It alleged as a second act of bankruptcy that the firm had "suspended and not resumed payment" of its commercial paper "within a period of fourteen days."
Before anything was done on this petition except to file it, and on the 12th of January, 1874, Daniel Chapman procured to be issued by the Circuit Court of the County of Berrien in the State of Michigan, an attachment against the lands and personal property of the said persons, as such co-partners, for the sum of $4,895.44, in a suit brought by him in that court against them to recover a money demand, which attachment the sheriff on that day levied on certain real estate in that county. Enoch C. Hoyt died on the 25th of February, 1874. On the 5th of March, 1874, a petition, endorsed "amended petition," was filed by Whittlesey in the bankruptcy court, containing the same averments as the first petition, with the addition
of the words so omitted in the first petition. In the body of the petition there was no mention of its being an amended petition, nor did it allude to the first petition, or to the death of Enoch C. Hoyt, and its prayer was the same as that of the first petition. It was verified March 3, 1874.
On the 14th of April, 1874, an order was made in the suit in the state court entering the default of Benjamin C. Hoyt, for want of an appearance, on proof of personal service on him of the attachment and of the filing of the declaration, and on the 16th of April, 1874, an order was made on affidavit suggesting the death of Enoch C. Hoyt since the issuing of the attachment and ordering that the action proceed against the surviving defendant, Benjamin C. Hoyt. On the 2d of May, 1874, an order was made by the bankruptcy court, stated in it to be made on the appearance and consent of "solicitors for the alleged bankrupts," reciting that it had been shown that Enoch C. Hoyt had "departed this life since the commencement of the proceeding in said matter" and ordering that all proceedings should stand against Benjamin C. Hoyt, survivor of himself and Enoch C. Hoyt, and that they might be prosecuted against him with like effect as if Enoch C. Hoyt had not died, and that the individual property of Enoch C. Hoyt be surrendered by the marshal to his proper representatives. On the same day, Benjamin C. Hoyt filed a denial of bankruptcy, signed by his attorneys, as follows:
"And now the said Benjamin C. Hoyt appears and denies that he has committed the act of bankruptcy set forth in said petition, and avers that he should not be declared bankrupt for any cause in said petition alleged, and he demands that the same be inquired of by a jury."
On the 8th of May, 1874, in the suit in the state court, a judgment was rendered in favor of the plaintiff, against Benjamin C. Hoyt, for $4,930.15 and costs, and on the same day an execution was issued thereon under which, on that day, the sheriff levied on the same real estate which he had levied on under the attachment. On the 1st of June, 1874, an adjudication was made by the bankruptcy court in these words:
"Adjudication of Bankruptcy on Creditor's Petition"
"Western District of Michigan, ss."
"In the District Court of the United States for the"
"Western District of Michigan. In Bankruptcy."
"In the matter of Benjamin C. Hoyt, against whom a petition in bankruptcy was filed on the 19th day of October, A.D. 1873. At Grand Rapids, in said district, on the first day of June, A.D. 1874. Before Hon. Solomon L. Withey, District Judge."
"This matter came on to be heard at Grand Rapids in said court, the respondent having withdrawn his denial and demand for a jury and having, by his attorneys, Hughes, O'Brien & Smiley, consented thereto."
"And thereupon, and upon consideration of the proofs in said matter, it was found that the facts set forth in said petition were true, and it is therefore adjudged that Benjamin C. Hoyt became bankrupt, within the true intent and meaning of the act entitled 'An act to establish a uniform system of bankruptcy throughout the United States,' approved March 2, 1867, before the filing of the said petition, and he is therefore declared and adjudged a bankrupt accordingly. And it is further ordered that the said bankrupt shall, within five days after this order, make and deliver, or transmit by mail, postpaid, to the marshal, as messenger, a schedule of his creditors and inventory of his estate, in the form and verified in the manner required of the petitioning debtor by the said act."
"Witness the honorable Solomon L. Withey, Judge of the said district court, and the seal thereof at Grand Rapids in said district on the first day of June, A.D. 1874."
"[Seal] ISAAC H. PARRISH"
"Clerk of district court for said District"
In the certificate made by the Clerk of the District Court of the United States for the Western District of Michigan certifying the copies of the bankruptcy papers, he certifies
"that the foregoing is a true copy of the petition for adjudication
filed October 10, 1873, copy of amended petition, order continuing proceedings, denial of bankruptcy by B.C. Hoyt, and adjudication of bankruptcy, on file in the proceedings of said court in said entitled matter."
This is mentioned because in the adjudication, the petition is referred to as filed October 19, 1873.
On the 16th of December, 1873, an alias execution was issued in the suit in the state court which the sheriff on that day levied on real estate in Berrien County other than that before levied on by him. On the 1st of October, 1874, the register in bankruptcy executed to Joseph W. Brewer an assignment in these words:
"In the District Court of the United States for the"
"Western District of Michigan. In Bankruptcy."
"In the matter of Benjamin C. Hoyt, Bankrupt"
"Western District of Michigan, ss.:"
"Know all men by these presents that Joseph W. Brewer, of the Village of St. Joseph, in the County of Berrien and State of Michigan in said district, has been duly appointed assignee in said matter."
"Now therefore I, J. Davidson Burns, Register in Bankruptcy in said district, by virtue of the authority vested in me by the 14th section of an Act of Congress entitled 'An act to establish a uniform system of bankruptcy throughout the United States,' approved March 2, A.D. 1867, do hereby convey and assign to the said Joseph W. Brewer, assignee as aforesaid, all the estate, real and personal, of the said Benjamin C. Hoyt, bankrupt aforesaid, including all the property, of whatever kind, of which he was possessed or in which he was interested or entitled to have on the tenth day of October, A.D. 1873, with all his deeds, books, and papers relating thereto, excepting such property as is exempted from the operation of this assignment by the provisions of said fourteenth section of said act, to have and to hold all the foregoing premises, to the said Joseph W. Brewer, and his heirs forever, in trust nevertheless for the use and purposes, with the powers, and subject to the conditions and limitations, set forth in said act. "
"In witness thereof, I, the said register, have hereunto set my hand and caused the seal of said court to be affixed this first day of October, A.D. 1874."
"J. DAVIDSON BURNS"
"Register in Bankruptcy"
On the 27th of January, 1876, Brewer filed a bill in equity in the Circuit Court of the United States for the Western District of Michigan against Chapman (the judgment creditor) and the sheriff who had levied under the first execution, and the deputy sheriff who had levied under the second execution, setting forth the filing of the first petition in bankruptcy and its contents, averring
"that the usual order to show cause was thereupon made by said district court, and a certified copy thereof duly served on said Benjamin C. and Enoch C. Hoyt, who subsequently, and in due time, appeared in said bankruptcy matter,"
and alleging the death of Enoch C. Hoyt, the making of the order of March 2, 1874, the adjudication of bankruptcy, the appointment of and assignment to the assignee, the facts in regard to Chapman's judgment, executions, and levies, and threats by the officers to sell the real estate levied on. The bill makes no mention of the amended petition in bankruptcy or of the attachment. It states that the executions are outstanding; that the real estate so levied on was the separate property of Benjamin C. Hoyt at the date of filing the petition; that the plaintiff, as assignee, is the owner and in possession of all of it except certain specified lots, and that said levies constitute a cloud on his title and embarrass and hinder him in disposing of the property, and notices of the levies have been recorded in the office of the register of deeds of the county. The prayer of the bill is that the levies be decreed void as against the plaintiff, as assignee and the defendants be decreed to release to the plaintiff, as assignee, all their right and title and interest, acquired under the levies, in and to the real estate he is so in possession of, and, on their failure to do so, the decree be ordered to have the effect of said release, and he have leave to record the same in the office of said register of deeds, and the defendants be enjoined from selling or interfering
with the real estate the plaintiff is so in possession of. The bill also prays for such other and further relief as shall be equitable and just.
The answer denies the validity of the petition set forth in the bill and denies that Benjamin C. Hoyt was adjudicated a bankrupt on the footing of that petition or on any petition of which he had notice, and denies the validity of the adjudication. It sets up the attachment levy, and admits the existence of most of the material facts alleged in the bill, and that the property was the separate property of Benjamin C. Hoyt, but denies that the plaintiff is entitled to any equitable relief. A replication was filed, and proofs were taken, establishing the facts above set forth, and that Brewer had acted as assignee since October 3, 1874, and had had the management and custody and possession of the property, and paid taxes on it, since October 10, 1874, and that it was worth about $10,000.
The circuit court made a decree on April 15, 1880, adjudging that Benjamin C. Hoyt, "at the date of the filing of the petition in bankruptcy against him, namely, on the tenth day of October, 1873, was the owner in fee of the" lands described in the bill as those of which the plaintiff was in possession; that the plaintiff succeeded to the interest which said Hoyt had in those lands on the 10th of October, 1873, and was and is the owner in fee, and in the actual possession, of them; that each of said execution levies was and is a cloud on the title of the plaintiff as assignee to said lands, and was and is void as against him; that the defendants execute to the plaintiff a release of their interest in said lands under said levies, and, on their failure to do so, the decree should have all the force and effect of such release, and might be recorded in the office of the register of deeds of said county, and that an injunction issue, restraining the defendants from selling, disposing of, or interfering with said lands under said levies and from making any new or further levies on any of said lands under said judgment. An injunction to that effect was issued and served January 3, 1881. Chapman has appealed to this Court.