1. After the filing of a petition in bankruptcy against
corporation in the federal district court, a state court is without
jurisdiction to make an order fixing the compensation of a receiver
and his attorney theretofore appointed by it. P.
293 U. S.
472.
2. In respect of sums thus erroneously awarded to and retained
by the receiver and his attorney, they are not "adverse" claimants,
and the bankruptcy court has authority to compel them to turn over
the same by summary proceeding and order. P.
293 U. S.
473.
71 F.2d 157 affirmed.
Page 293 U. S. 471
Certiorari to review a judgment affirming a judgment of the
District Court, sitting in bankruptcy, which affirmed an order of
the referee granting the trustee's application for a turnover
order.
MR. JUSTICE SUTHERLAND delivered the opinion of the Court.
These cases, depending upon the same facts, present the same
question. On January 10, 1931, in an insolvency proceeding, Taylor
was appointed by a state chancery court in Arkansas receiver of the
Parks Dry Goods Company, and Duty as his attorney. On February
11th, a month later, a petition in bankruptcy against the
corporation was filed in the federal District Court having
jurisdiction. Two days later, the corporation was adjudicated a
bankrupt. On the same day, the chancery court allowed Taylor
compensation as receiver in the sum of $1,500, and Duty
compensation as attorney in the sum of $500. The receiver turned
over the estate to the trustee with the exception of these sums,
which petitioners refused to deliver. The trustee applied for a
summary order upon petitioners, directing them to turn over to him
the sums thus withheld. The referee granted the trustee's
application, which the District Court sitting in bankruptcy,
affirmed, and this, in turn, was affirmed upon appeal by the
Circuit Court of Appeals. 71 F.2d 157. Upon these facts, the
question presented is whether the bankruptcy court had authority to
compel the turnover by summary proceeding and order, or whether
petitioners
Page 293 U. S. 472
were adverse claimants so that a plenary action was
required.
Upon adjudication in bankruptcy, an the property of the bankrupt
rests in the trustee as of the date of the filing of the petition.
Upon such filing, the jurisdiction of the bankruptcy court becomes
paramount and exclusive, and thereafter that court's possession and
control of the estate cannot be affected by proceedings in other
courts, whether state or federal.
Gross v. Irving Trust
Co., 289 U. S. 342,
289 U. S. 344;
Acme Harvester Co. v. Beekman Lumber Co., 222 U.
S. 300,
222 U. S. 307;
In re Diamond's Estate, 259 F. 70, 73. This applies while
the possession is constructive as well as when it becomes actual.
Mueller v. Nugent, 184 U. S. 1,
184 U. S. 14;
Taubel-Scott-Kitzmiller Co. v. Fox, 264 U.
S. 426,
264 U. S.
432-433;
Orinoco Iron Co. v. Metzel, 230 F. 40,
44-45, and cases cited.
The status of a receiver is unlike, for example, that of an
assignee for the benefit of creditors. The receiver is an officer
of the court which appoints him.
Stuart v. Boulware,
133 U. S. 78,
133 U. S. 81.
The property in his hands is not, in a legal sense, in his
possession. It is in the possession of the court, whose appointee
he is, by him as its officer.
Thompson v. Phenix Ins. Co.,
136 U. S. 287,
136 U. S. 297;
Fosdick v. Schall, 99 U. S. 235,
99 U. S. 251.
In the present case, with the supervening bankruptcy, the
possession of the state court came to an end, and that of the
bankruptcy court immediately attached. This result was binding upon
the state court, and equally binding upon the receiver as custodian
for that court. Before the petition in bankruptcy was filed, the
receiver's compensation as well as that of his counsel were matters
wholly within the control of the state court.
Stuart v.
Boulware, supra at pp.
133 U. S. 81-82;
High on Receivers, 4th ed., ยง 781. But, with the
Page 293 U. S. 473
filing of the petition in bankruptcy, the power of the state
court in that respect ceased, and its order fixing the compensation
of the receiver and his counsel was a nullity because made without
jurisdiction, such jurisdiction then having passed to the
bankruptcy court.
Gross v. Irving Trust Co., supra.
Since the order of the state court was the sole foundation for
their claims, and that was void, petitioners had no more right to
the sums subtracted or to be subtracted from the estate than they
had to the remainder of the estate. That estate, including such
sums, was still in
custodia legis -- only the possession
had passed automatically from the state court to the bankruptcy
court. Thereafter, the estate in its entirety was held by the
receiver as a mere repository for the bankruptcy court, and
therefore not adversely, and petitioners, in respect of that part
of it erroneously awarded as compensation, were in no sense adverse
claimants. Their claims were colorable only, and subject to the
summary power of the bankruptcy court.
In re Watts &
Sachs, 190 U. S. 1,
190 U. S. 27;
In re Diamond's Estate, supra at p. 74;
Moore v.
Scott, 55 F.2d 863;
Bank of Andrews v. Gudger, 212 F.
49;
In re Crosby Stores, Inc., 61 F.2d 812, 814.
cases dealing with assignments, like
Louisville Trust Co. v.
Comingor, 184 U. S. 18, cited
by petitioners, in no way militate against this conclusion. The
situation presented in each of those cases substantially differs
from that presented here.
See May v. Henderson,
268 U. S. 111,
268 U. S.
115-116;
In re Louis Neuburger, Inc., 233 F.
701,
aff'd, 240 F. 947. Moreover, the status of a receiver
and that of an assignee, as already sufficiently appears, is
essentially different.
Judgment affirmed.
* Together with No. 262,
Duty v. Sternberg, Trustee in
Bankruptcy, certiorari to the Circuit Court of Appeals for the
Eighth Circuit.