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. "
Page 78 U. S. 66
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decree of the district court in bankruptcy superseded the action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:
Page 78 U. S. 67
"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.
Page 78 U. S. 72
MR. JUSTICE CLIFFORD delivered the opinion of the Court.
Exclusive original jurisdiction, in all matters and proceedings
in bankruptcy, is conferred by the acts of Congress upon the
district courts, but in case of a vacancy in the office of a
district judge, or in case the district judge shall, from sickness,
absence, or other disability, be unable to act, the circuit judge
may make all necessary rules and orders preparatory to the final
hearing, and cause the same to be entered or issued, as the case
may require, by the clerk of the district court. [
Footnote 2]
Certain occurrences, during the late civil war, so crippled the
resources of the Bank of Louisiana that the directors became unable
to comply with the requisitions of their charter. Proceedings were
accordingly instituted by the attorney-general of the state, under
the act "to provide for the liquidation of banks," in the proper
court of the state, to forfeit the charter of the bank, and on the
twentieth of May, 1868, a decree was entered in the case that the
charter of the bank be declared forfeited, and that its affairs be
liquidated according to law.
Pursuant to that decree the appellants were appointed
commissioners for that purpose, and the record shows that they
accepted the trust, that they took the required oaths, that they
gave the necessary bonds, that they entered upon the discharge of
their duties, and that they continued to administer the affairs of
the bank until the twentieth of May of the following year, when the
appellees, or the first three named, filed a petition in the
district court for that district,
Page 78 U. S. 73
praying that the bank and the said commissioners, in their
character as such, might be declared a bankrupt, and that a warrant
might issue to take possession of the estate of the bank in the
hands of the commissioners.
They represented in their petition that the bank and the
commissioners had each, within six months preceding the date of the
petition, committed an act of bankruptcy, that the corporation had
for a long time suspended payment of its commercial paper, and that
the commissioners had, within the same period, made certain
payments, and transferred certain assets of the bank in payment of
its debts, with intent to give a preference to certain creditors of
the bank. Special reference to the supplemental petition is
unnecessary, as the representations of the petition are
substantially the same, and the two were heard together in the
court below.
Three several injunctions were granted in the case by the
district judge sitting in bankruptcy, and on the eleventh of
January, 1870, the district court entered a decree that the bank
was a bankrupt. Within ten days from the date of the decree a
petition for a review of those orders and decrees was filed by the
commissioners in the circuit court, under the second section of the
Bankrupt Act, and the circuit court having first heard the parties,
on the second of March, 1870, entered a decree affirming the orders
and decrees of the district court. Application was immediately made
by the commissioners for an appeal to this Court, which was refused
by the circuit judge, but it was ultimately granted by one of the
associate justices of this Court, more than ten days, however,
subsequent to the date of the decree of the circuit court.
Seasonable application for the appeal having been made and a
sufficient bond tendered, the appellants contended, and still
contend, that the appeal as subsequently allowed operated as a
supersedeas from the date of the first application. Different
views, however, were entertained by the district judge, and on the
twenty-ninth of March, 1870, he passed an order directing the
marshal to resume possession
Page 78 U. S. 74
of all such portion of the assets of the bank as he had
surrendered to the commissioners.
Dissatisfied with that order the commissioners applied to the
associate justice of this Court assigned to that circuit to vacate
that order and to enforce the supersedeas supposed to have been
created by the appeal as allowed in pursuance of the last
application. His opinion was that the appeal, as allowed, related
back to the date of the original application for the same to the
circuit judge, and that it operated as a supersedeas, the same as
it would have done if it had been granted within ten days from the
date of the decree dismissing the petition for a review and
affirming the decree adjudging the corporation a bankrupt.
Influenced by those views he made a decree that all the orders
in the cause subsequent to the twenty-first of January, 1870,
should be vacated and annulled, leaving the injunction of that date
granted by the circuit judge in full force. Certain other orders,
nevertheless, were subsequently made by the district judge; as, for
example, he passed an order for the appointment of receivers, and
another giving the appointees authority to pay rents, expenses, and
charges incurred by them out of the funds of the bank. Special
objection is made by the appellants to those orders as forbidden by
the supersedeas, but the main purpose of the appeal when taken was
to reverse the decree of the circuit court affirming the decree of
the district court, and dismissing their petition praying for a
reversal of that decree.
Since the appeal was entered the appellees have filed a motion
to dismiss the same, upon the ground that no appeal lies to this
Court from a decree of the circuit court rendered in the exercise
of the special jurisdiction conferred upon that court by the first
clause of the second section of the Bankrupt Act. [
Footnote 3]
Circuit courts have a general superintendence and jurisdiction,
by virtue of that clause, of all cases and questions arising under
that act, within and for the districts where the
Page 78 U. S. 75
proceedings in bankruptcy are pending, and the provision is,
that those courts may, upon bill, petition, or other proper
process, of any party aggrieved, except when special provision is
otherwise made, hear and determine the case (as) in a court of
equity, but the next clause of the same section provides that the
powers and jurisdiction thereby granted may be exercised either by
said court or by any justice thereof, in term time or vacation, and
neither of the two clauses makes any provision for an appeal in any
such case to this Court, whether the case or question presented or
involved in the bill, petition, or other proper process is
submitted to the court or to a justice thereof, or whether the case
or question is heard or determined in vacation or in term time.
Apart from those two provisions the third clause of the section
provides that circuit courts
shall also have concurrent
jurisdiction with the district courts of
all suits at law or in
equity which may or shall be brought by
the assignee
in bankruptcy against any person claiming an adverse interest, or
by
such person against
such assignee touching any
property or rights of property of such bankrupt transferable to or
vested in such assignee.
Controversies, in order that they may be cognizable under that
clause of the section, either in the circuit or district court,
must have respect to some property or rights of property of the
bankrupt transferable to or vested in such assignee, and the suit,
whether it be a suit at law or in equity, must be in the name of
one of the two parties described in that clause and against the
other. All three of those conditions must concur to give the
jurisdiction, but where they all concur the party suing may, at his
election, commence his suit either in the circuit or district
court, and if in the latter, it is clear that the case, when it has
proceeded to final judgment or decree, may be removed into the
circuit court for reexamination by writ of error, if it was an
action at law, or by appeal if it was a suit in equity, provided
the debt or damage claimed amounts to more than five hundred
dollars, and the writ of error is seasonably sued
Page 78 U. S. 76
out and the plaintiff in error complies "with the statutes
regulating the granting of such suits," or the appeal is claimed
and the required notices are given within ten days from the
judgment or decree. [
Footnote
4]
Such a suit, however, by or against such assignee, or by or
against any person claiming an adverse interest in any such
property or rights of property, cannot be maintained in any court
whatsoever unless the same shall be brought within two years from
the time the cause of action, for or against such assignee,
accrued; which shows very satisfactorily that the jurisdiction
conferred by the third clause is other and different from the
special jurisdiction and superintendence described in the first
clause of the section.
Where such a suit, between such parties, touching such subject
matter, proceeds in a circuit court to a final judgment or decree,
and the debt or damage claimed or the matter in dispute exceeds the
sum or value of two thousand dollars, exclusive of costs, no doubt
is entertained that the judgment or decree may be removed into this
Court for reexamination by writ of error, if the judgment was
rendered in a civil action, or by appeal if the decree was entered
in a suit in equity, as in other similar cases falling within the
appellate jurisdiction of this Court. [
Footnote 5]
Creditors whose claims are wholly or in part rejected may appeal
from the decision of the district court to the circuit court of the
same district, if the appeal is claimed and the required notices
are given within ten days from the entry of the decree or decision,
but the appellant in such a case is required to file in the clerk's
office a statement in writing of his claim, setting forth the same
substantially as in a declaration for the same cause of action at
law, and the assignee is required to plead or answer thereto in
like manner, and like proceedings shall thereupon be had as in an
action at law, except that no execution shall be awarded against
the assignee for the amount of the debt found due to the
creditor.
Page 78 U. S. 77
Assignees, also, who are dissatisfied with the allowance of a
claim preferred by a creditor, may also appeal from the decision of
the district court to the circuit Court of the same district at any
time within ten days from the entry of the decree or decision, but
it is certain that neither the creditor nor the assignee can appeal
to this Court from the decree of the circuit court in such a case,
as the express enactment is that the final judgment of the court
shall be conclusive and that the list of debts shall, if necessary,
be altered to conform thereto.
Confirmation of that view is also derived from the succeeding
clause in the twenty-fourth section of the act, which provides that
the prevailing party shall be entitled to costs, and that the
costs, if they are recovered against the assignee, shall be allowed
out of the estate of the bankrupt. [
Footnote 6]
Authority is also given to any creditor opposing the discharge
of a bankrupt to file a specification in writing of the grounds of
his opposition, and the court in such case may,
in its
discretion, order any question of fact so presented to be
tried at a stated session of the district court; and the better
opinion perhaps is that the trial contemplated by the section, if
ordered, is a trial by jury. [
Footnote 7]
Debts contracted by a debtor and provable under the Bankrupt
Act, if the same amount to two hundred and fifty dollars, authorize
the creditor or creditors to file a petition praying that the
debtor may be adjudged a bankrupt, and the fortieth section of the
same act provides that, upon the filing of the petition, if it
appears that sufficient grounds exist therefor, the court shall
direct the entry of an order requiring the debtor to appear and
show cause, at a court of bankruptcy to be holden at a time
specified in the order, why the prayer of the petition should not
be granted. Prior to the return day of the order it is required
that notice shall be given to the debtor, and the provision is that
the court shall, if the debtor so demand on the same day, order a
trial
Page 78 U. S. 78
by jury, at the first term of the court at which a jury shall be
in attendance, to ascertain the fact of such alleged bankruptcy.
[
Footnote 8]
Appellate jurisdiction, in its strictest sense, as exercised
under the Judiciary Act, is certainly conferred upon the circuit
courts in four classes of cases by the express words of the
Bankrupt Act, without any resort to construction:
(1) By appeal from the final decree of the district courts in
suits in equity commenced and prosecuted in the district courts by
virtue of the jurisdiction created by the third clause of the
second section of the act.
(2) By writs of error sued out to the district court in civil
actions finally decided by the district courts, in the exercise of
jurisdiction created by the same clause of that section.
(3) By appeal from the decisions of the district courts
rejecting wholly or in part the claim of a creditor, as provided in
the eighth section of the act.
(4) By appeal from the decisions of the district courts allowing
such a claim when the same is opposed by the assignee.
Appeals from the district courts to the circuit courts are not
allowed in any case unless the appeal is claimed and notice given
thereof to the clerk of the district court, to be entered in the
record of the proceedings, and also to the assignee, creditor, or
the proper party in equity, within ten days from the date of the
decision or decree, nor unless the appellant, at the time of
claiming the same, also gives bond in the manner required by law in
case of such an appeal from a subordinate to an appellate
tribunal.
Whether a writ of error will lie from the circuit court to the
district court where the debtor opposes the petition that he may be
adjudged a bankrupt, and the question whether he has committed an
act of bankruptcy is tried by a jury, as provided in the
forty-first section of the act, is not a question involved in the
case before the court. Nor is the question presented in the case
whether a writ of error will lie from the circuit court to the
district court where an issue
Page 78 U. S. 79
of fact is framed, as provided in the thirty-first section of
the act, and the same is tried by a jury at a stated session of the
district court.
Suffice it to say at this time that such cases, when tried by a
jury, if the circuit court has any jurisdiction upon the subject,
must be removed into the circuit court by a writ of error, as they,
when tried by a jury, are excluded from the special jurisdiction
conferred in the first clause of the section, by the very words of
the clause. Where "special provision is otherwise made" the case is
excluded from the general superintendence and jurisdiction of the
circuit court by the exception introduced, as a parenthesis, into
the body of that part of the section.
Special provision is made in such cases, within the meaning of
that exception, when the case is tried by a jury, and there is not
a word in the act having the slightest tendency to show that
Congress intended that a fact found by a jury in a district court
should be reexamined in a summary way by the circuit court, and it
is not pretended that a party may appeal and be entitled to a
second trial by jury, unless the first verdict is set aside for
error of law. Such cases may be tried by the district court without
a jury, and in that event no doubt is entertained that the case is
within the supervisory jurisdiction of the circuit court.
Due notice was given to the bank of the petition filed in the
circuit court that the corporation should be adjudged a bankrupt,
and the commissioners, as the legal representatives of the bank,
appeared and made defense, but they did not demand in writing, or
otherwise, a trial by jury, and the case was heard and determined
by the court. Subsequent to the decree adjudging the bank a
bankrupt, the commissioners presented a petition to the circuit
judge, praying for a reversal of that decree, by virtue of the
special jurisdiction conferred upon the circuit court in the first
clause of the second section of the Bankrupt Act, and the petition
was heard at chambers, and a decree was entered dismissing the
petition, and affirming the decree of the district court.
Page 78 U. S. 80
Independent of the Bankrupt Act the district courts possess no
equity jurisdiction whatever, as the previous legislation of
Congress conferred no such authority upon those courts since the
prior Bankrupt Act was repealed. [
Footnote 9] Whatever jurisdiction, therefore, they possess
in that behalf is wholly derived from the Bankrupt Act now in
force.
Undoubtedly the jurisdiction conferred by the third clause of
the second section is of the same character as that conferred upon
the circuit courts by the eleventh section of the Judiciary Act,
and it follows that final judgments in civil actions and final
decrees in suits in equity rendered in such cases, where the sum or
value exceeds two thousand dollars, exclusive of costs, may be
reexamined in this Court when properly removed here by writ of
error or appeal, as required by existing laws.
Concurrent jurisdiction with the district courts of all suits at
law or in equity are the words of that clause, showing conclusively
that the jurisdiction intended to be conferred is the regular
jurisdiction between party and party, as described in the Judiciary
Act and the third article of the Constitution.
Cases arising under that clause, where the amount is sufficient,
are plainly within the ninth section of the Bankrupt Act, and as
such may be removed here for reexamination, but the revision
contemplated by the first clause is evidently of a special and
summary character, substantially the same as that given in the
prior Bankrupt Act, as sufficiently appears from the words "general
superintendence," preceding and qualifying the word "jurisdiction,"
and more clearly from the fact that the jurisdiction extends to
mere questions as contradistinguished from judgments or decrees as
well as to cases, showing that it includes the latter as well as
the former, and that the jurisdiction may be exercised in chambers
as well as in court, and in vacation as well as in term time.
Much stress was laid, in argument in support of the theory that
an appeal will lie to this Court from a decision of the circuit
court rendered under the first clause of the second
Page 78 U. S. 81
section, upon the fact that the case or question, as therein
provided, may be heard and determined in a court of equity, as the
phrase reads in the printed volume of the Statutes at Large, but
that phrase, even if correctly printed, must be read and considered
in connection with the succeeding clause, and when so read and
considered it is plain that the meaning is the same as it would be
if it read "as a court of equity," or "as in a court of equity;"
that it merely prescribes the rule of decision by which the court
is to be governed, and that it is entirely consistent with the
subsequent clause before referred to, which provides that the case
or question may be heard and determined by a justice of the court
as well as by the court, and in vacation as well as in term time,
which is palpably inconsistent with the theory that Congress
intended that an appeal from the decision of any case or question
under the first clause should be allowed to this Court.
But the phrase "hear and determine the case in a court of
equity," as printed in the fourteenth volume of the Statutes at
Large, is erroneously transcribed from the act of Congress as it
passed the two Houses and was approved by the President. Correctly
transcribed it reads "hear and determine the case as in a court of
equity," which shows, without any resort to construction, that all
Congress intended by the phrase was, to prescribe the rule of
decision, whether it was made in court or at chambers or in term
time or vacation.
Decrees in equity, in order that they may be reexamined in this
Court, must be final decrees rendered in term time, as
contradistinguished from mere interlocutory decrees or orders which
may be entered at chambers, or, if entered in court, are still
subject to revision at the final hearing.
Adopt the theory of the appellees and the proceedings in
bankruptcy might be protracted indefinitely, as every question
arising in the courts may be transferred first to the circuit court
and then to this Court, which would tend very largely to defeat all
the beneficent purposes of the Bankrupt Act. For these reasons the
appeal is
Dismissed for want of jurisdiction.
[
Footnote 1]
14 Stat. at Large 518.
[
Footnote 2]
14 Stat. at Large 517; 16
id. 174.
[
Footnote 3]
14 Stat. at Large 518.
[
Footnote 4]
14 Stat. at Large 520.
[
Footnote 5]
14 Stat. at Large 521; 1
id. 84.
[
Footnote 6]
14 Stat. at Large 528.
[
Footnote 7]
14 Stat. at Large 532;
Gordon v. Scott, 2 B.R. 28;
In re Eidom, 3
id. 39;
In re Lawson, 2
id. 125.
[
Footnote 8]
14 Stat. at Large 537.
[
Footnote 9]
Ex Parte
Christy, 3 How. 311.