A state court has jurisdiction of an action brought by an
assignee in bankruptcy to set aside, as made to defraud creditors,
conveyances made by the bankrupt before the bankruptcy.
When an assignee in bankruptcy resorts to a state court to set
aside a conveyance by the bankrupt as made to defraud creditors,
and no question is raised there as to his power under the acts of
Congress or as to the rights vested in him as assignee, the
judgment of the state court is subject to review here in the same
manner and to the same extent as
Page 129 U. S. 507
proceedings of a similar character by a creditor to set aside
conveyances in fraud of his rights by a debtor.
The decision of the state court in this case as to what should
be deemed a fraudulent conveyance and as to the application of the
evidence in reaching that decision presents no federal
question.
The case, as stated by the Court in its opinion, was as
follows:
This was a suit by an assignee in bankruptcy to set aside
certain conveyances of the bankrupt, and of others under his
direction, upon the ground that they were made to defraud his
creditors. It was commenced in one of the courts of Tennessee. The
facts upon which it is founded, briefly stated, are as follows:
In August, 1878, Robert McKenna, a resident of that state, one
of the defendants below, filed his petition in bankruptcy in the
District Court for the Western District of Tennessee, and was in
November, 1878, adjudged a bankrupt. In December following, Oscar
Woodbridge was appointed his assignee, and a deed of assignment was
made to him of the property and effects of the bankrupt.
In May, 1880, the assignee filed a bill in the Chancery Court of
Shelby county, Tennessee, against the bankrupt and his infant
daughter, Maud McKenna, to set aside, as fraudulent and void,
certain conveyances of about two hundred acres of land in that
county -- one executed by the bankrupt, Robert McKenna, dated
February 15, 1873, to Solomon Rose, for the alleged consideration
of $8,000; one executed by Rose on the same day for the like
consideration to Mrs. John Kirkup of Kentucky, a sister of McKenna,
and one executed by Mrs. Kirkup August 1, 1876, to Mrs. Anna
McKenna, wife of the bankrupt, and her three children, for the
alleged consideration of $5,000. Of these grantees, Maud McKenna
was the only one surviving when the bill was filed. Metcalf and
Walker were also made defendants because they claimed a lien upon
the premises which had been adjudged in their favor in another
suit. Woodbridge, the assignee, having died, the suit was revived
in the name of J. Lawrence Simpson, who had been appointed assignee
in place of the deceased. Afterwards
Page 129 U. S. 508
the defendant Robert McKenna filed an answer to the complaint
denying that the conveyances were fraudulent and void and alleging
that the object of them was to effect a settlement of the land upon
his wife and children, and that his financial condition at the time
was such as to render it legal and proper for him to do so, as he
had no debts. Robert McKenna having been appointed guardian of Maud
McKenna, an answer was filed by him, as such guardian, for her, in
which substantially the same matters of defense were set up. The
defendants Metcalf and Walker filed an answer and also a cross-bill
asserting their lien on the premises. Proofs were then taken, from
which it appeared that no money consideration ever passed between
the parties to the several conveyances mentioned; that Solomon
Rose, grantor to Mrs. Kirkup, never saw her, and did not remember
anything about the transaction, except that McKenna came to his
office, and asked him to go to the courthouse and make the
conveyance, and that the deed of Mrs. Kirkup, dated August 1, 1876,
was acknowledged July 18, 1878, one month before McKenna's
bankruptcy, and was not registered until January 15, 1879, six
months afterwards. The court held that the conveyances were
voluntary and fraudulent, and made to hinder, delay, and defraud
the creditors of the bankrupt McKenna, and further that the
conveyances were inoperative to create an estate in the wife and
children of McKenna as against the assignee in bankruptcy, the same
not having been filed for registration until after the adjudication
of the bankruptcy of McKenna. It was also held that the defendants
Metcalf and Walker were entitled to the lien asserted by them. A
decree was accordingly entered in favor of the complainant
adjudging that the title to the land was in him as assignee, and
that neither the defendant Robert McKenna nor Maud McKenna had any
title thereto, and ordering that the complainant recover the land
and possession thereof, and also in favor of the defendants Metcalf
and Walker for their lien on the land. On appeal to the supreme
court of the state, a decree was entered there, in substance and
almost in identical language, in effect affirming the decree
appealed from. To review this latter decree, the
Page 129 U. S. 509
case is brought here on writ of error by Robert and Maud
McKenna. The defendants in error now move to dismiss the writ on
the ground that this Court has no jurisdiction to review that
decree.
Page 129 U. S. 510
MR. JUSTICE FIELD delivered the opinion of the Court.
Section 709 of the Revised Statutes points out the cases in
which the judgment or decree of the highest court of a state in
which a decision could be had may be reviewed by the Supreme Court
of the United States. It provides for such review in three classes
of cases: first where is drawn in question the validity of a treaty
or statute of, or an authority exercised under, the United States,
and the decision is against its validity; second where is drawn in
question the validity of a statute of, or an authority exercised
under, any state on the ground of its being repugnant to the
Constitution, treaties, or laws of the United States and the
decision is in favor of its validity; third where any title, right,
privilege, or immunity is claimed under the Constitution or any
treaty or statute of, or commission held or authority exercised
under, the United States and the decision is against the title,
right, privilege, or immunity specially set up or claimed by either
party under such Constitution, treaty, statute, commission, or
authority.
In neither of the clauses mentioned is there any provision which
covers the present case. It is true, by § 4972 of the Revised
Statutes, the jurisdiction of the district courts of the United
States, as courts of bankruptcy, extends to all cases and
controversies arising between the bankrupt and any
Page 129 U. S. 511
creditor or creditors who may claim any debt or demand under the
bankruptcy, and to the collection of the assets of the bankrupt,
and indeed to all acts, matters, or things to be done under and in
virtue of the bankruptcy, until the final distribution and
settlement of his estate, and the close of the proceedings in
bankruptcy. Under these provisions, the assignee might undoubtedly
have brought suit to set aside the conveyances in question in the
District Court of the United States for the District. Had he done
so, this Court would have had jurisdiction to review its decree;
but he was not precluded from proceeding in the state court to set
aside the alleged fraudulent conveyances. And when he resorted to
that court, and no question was raised as to his power under the
acts of Congress or the rights vested in him as assignee, the
proceedings were governed, and the judgment of the court upon the
validity of the conveyances was subject to review in the same
manner and to the same extent as proceedings of a similar character
by a creditor to set aside conveyances in fraud of his rights by a
debtor.
Glenny v. Langdon, 98 U. S.
20, and
Trimble v. Woodhead, 102 U.
S. 647, were cases commenced in the circuit court of the
United States, and
Barton v. Geiler, 108 U.
S. 161, was commenced in a state court.
See also
Clark v. Ewing, 3 F. 83;
Olcott v. Maclean, 73 N.Y.
223, and
Goodrich v. Wilson, 119 Mass. 429. In the
proceedings in the state court, no decision was made against the
validity of any statute of, or authority exercised under, the
United States, or against any title, right, privilege, or immunity
claimed under the Constitution of the United States, or any statute
thereof. No question, indeed, arose under the action of the state
court which could bring its decision within the provisions of § 709
of the Revised Statutes.
The several cases to which our attention is called as being in
supposed conflict with this view have no bearing upon the questions
involved. In
O'Brien v. Weld, 92 U. S.
81, the question arose whether under the Bankrupt Act
the district court of the United States had authority to make the
order involved, and the decision of the highest state court was
against the authority, and that was held sufficient to sustain
Page 129 U. S. 512
the federal jurisdiction. In
Factors' Insurance Co. v.
Murphy, 111 U. S. 738, the
effect to be given to a sale of property under an order of the
district court in bankruptcy was in question, the authority of the
court to direct a sale free from encumbrances being denied.
Jenkins v. National Bank of Chicago, 127 U.
S. 484, involved a question as to the authority of the
assignee in bankruptcy to institute a suit touching any property,
or rights of property, vested in him after the expiration of two
years from the time when the cause of action accrued. The decision
of the state court as to what should be deemed a fraudulent
conveyance does not present any federal question, nor does the
application by the court of the evidence in reaching that decision
raise one.
We are of opinion, therefore, that this Court has no
jurisdiction to review the judgment of the Supreme Court of
Tennessee.
The writ of error must consequently be dismissed, and it is
so ordered.