1. Where, under the 41st section of the Bankrupt Act of 1867, a
trial by jury is had in the district court in a case of application
for involuntary bankruptcy, and exceptions are taken in the
ordinary and proper way, to the rulings of the court on the subject
of evidence and to its charge to the jury, it writ of error lies
from the circuit court when the debt or damages claimed amount to
more than $500; and if that court dismiss or declines to hear the
matter, a mandamus will lie to compel it to proceed to final
judgment.
Page 83 U. S. 259
2. In this case, where the court had dismissed the case because
it supposed it had no jurisdiction, a writ of error was dismissed
as not a proper remedy, and an intimation given to the court below
to reinstate the case and proceed to hear the questions presented
by the bill of exceptions.
The Bankrupt Act of 1867, which by its terms applies to all
moneyed, business, or commercial corporations as well as to
individuals, gives to the district courts of the United States
original jurisdiction in all matters and proceedings in bankruptcy.
It enacts by its:
"SECTION 2. 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 proper process, of any party
aggrieved, hear and determine the case as
in a court of
equity."
"Said circuit courts shall also have concurrent jurisdiction
with the district courts of the same district, 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 said bankrupt transferable to or vested in such
assignee."
A subsequent section, the 41st, after referring to the return
day of the summons to the alleged bankrupt, enacts:
"That on such return day or adjourned day . . . the court shall
proceed summarily to hear the allegations of the petitioner and
debtor, and may adjourn the proceedings from time to time on good
cause shown,
and shall, if the debtor on the same day so demand
in writing, order a trial by jury at the first term of the court at
which a jury shall be in attendance, to ascertain the facts of such
alleged bankruptcy, and if upon such hearing or trial the
debtor proves to the satisfaction of the court, or the jury (as the
case may be), that the
facts set forth in the petition are
not true, or that the debtor has paid and satisfied all liens upon
his property (in case the existence of such liens were the sole
ground
Page 83 U. S. 260
of the proceeding), the proceeding shall be dismissed and the
respondent shall recover his costs."
The act further provides, by sections 8 and 9, as follows:
"SECTION 8. That appeals may be taken from the district to the
circuit courts in all cases in equity, and writs of error may be
allowed to said circuit courts from said district 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
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 the circuit court from the same
district; but no appeal shall be allowed in any case from the
district to the circuit court unless it is claimed and notice given
thereof to the clerk of the district court to be entered with the
record of the proceedings, and also to the assignee or creditor, as
the case may be, or to the defeated party in equity within ten days
after the entry of the decree or decision appealed from."
"
The appeal shall be entered at the term of the circuit
court which shall be first held within and for the district next
after the expiration of ten days from the time of claiming the
same. But if the appellant in writing waives his appeal before any
decision thereon, proceedings may be had in the district court as
if no appeal had been taken, and no appeal shall be allowed unless
the appellant at the time of claiming the same shall give bond in
the manner now required by law in cases of such appeals."
"
No writ of error shall be allowed unless the party
claiming it shall comply with the statutes regulating the granting
of such writs."
"SECTION 9. 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 in
such case shall exceed $2000."
These enactments being in force, certain persons presented a
petition in the district court for the Northern District of
Illinois, setting forth, in conformity with formal requirements of
the act, that the Knickerbocker Insurance Company of Chicago owed
debts to an amount exceeding $300,
Page 83 U. S. 261
and that their respective demands exceeded $250, and had made
fraudulent preferences. Among these persons were Allen &
Mackey, who set forth that the company was indebted to them in the
sum of $2,500 under a policy of insurance and had made fraudulent
preferences. They prayed, along with other creditors, that the
company might be decreed bankrupt.
The company denied the allegations both of debt and acts of
bankruptcy, and demanded in writing a trial by jury. On the trial,
which was had in regular common law way of a trial by jury, the
company excepted to the admission of several items of evidence
which the court, against its objection, had received, and also to
the charge of the court. Verdict and judgment having been given
against the company, the cause was removed by writ of error to the
circuit court for the district. The company assigned errors there
in a formal way, but when the case came on to be heard, the circuit
court, without any consideration or examination of the exceptions
taken or errors assigned, dismissed it for want of jurisdiction.
Thereupon the company took a writ of error to this Court.
Page 83 U. S. 264
MR. JUSTICE CLIFFORD delivered the opinion of the Court.
Moneyed, business, and commercial corporations, are as much
within the provisions of the Bankrupt Act as unincorporated
individuals or associations, and all the provisions of the act
forbidding preferences and fraudulent conveyances are as applicable
to such debtors, if insolvent, as to any other insolvent debtors
falling within those provisions, and the same acts which render
individual debtors liable to be adjudged bankrupts on the petition
of their creditors, if committed by such a corporation which is
insolvent, will warrant the creditors of the same to institute
proceedings for that
Page 83 U. S. 265
purpose against such debtors, and to claim that they be adjudged
bankrupts for the same reasons.
On the fifth of January, 1872, certain creditors of the
Knickerbocker Insurance Company presented their petition to the
district court for the Northern District of Illinois, representing
that the company owed debts to an amount exceeding three hundred
dollars, and that their respective demands against the company
exceeded two hundred and fifty dollars, and that the company within
six months next before the filing of the petition, being then and
there insolvent or in contemplation of insolvency, made sundry
payments of money to certain of their creditors in satisfaction of
their claims with a view to give a preference to such creditors
having such claims, and well knowing that the said company was
insolvent. They also represented that the said company within the
said six months, being then and there bankrupt or in contemplation
of bankruptcy, made divers payments of money, sales, conveyances,
and assignments of property, mortgages, and other effects to
various persons within the district, with intent and for the
purpose of giving such persons a fraudulent preference over other
creditors of the company, and for the purpose of preventing the
assets of the company from being administered under the Bankrupt
Act. Based on these representations the prayer of the petition is
that the company may be declared a bankrupt, and that a warrant may
issue to take possession of the estate of the company. On the
return day for hearing, the petition, the corporation respondents
appeared and denied that they had committed the acts of bankruptcy
set forth in the petition, and demanded in writing a trial by jury
pursuant to the provision in such case made and provided. [
Footnote 1] Subsequently other
creditors were permitted to appear as petitioners, and the
pleadings having been concluded the parties went to trial, and the
jury, under the instructions of the court, found the respondents
guilty
Page 83 U. S. 266
as alleged in the petition. Exceptions were duly filed by the
respondents to the rulings and instructions of the court, and they
sued out a writ of error and removed the cause into the circuit
court for the same district. Suffice it to say, in respect to the
exceptions, that they embrace not only material rulings and the
instructions of the court given to the jury, but also the decisions
of the court in refusing to instruct the jury as requested by the
respondents. Errors were duly assigned by the respondents in the
circuit court, but the circuit court dismissed the writ of error
for want of jurisdiction, holding that a writ of error will not lie
in such a case to remove the record from the district court into
the circuit court for reexamination. Jurisdiction, it was insisted
by the respondents, did exist in the circuit court to reexamine
such a case under a writ of error to the district court which
rendered the judgment, and they sued out a writ of error to the
circuit court and removed the cause into this Court.
Writs of error may be allowed from the circuit courts to the
district courts in cases at law, and appeals may be taken from the
district courts to the circuit courts in certain cases, under the
jurisdiction created by the Bankrupt Act, when the debt or damages
claimed amount to more than $500, but the provision is that no
appeal shall be allowed from the district to the circuit court
unless it is claimed and the required notices are given within ten
days after the entry of the decree or decision from which the
appeal is taken, and that no writ of error shall be allowed unless
the party claiming it shall comply with the statutes regulating the
granting of such writs. Applicants for an appeal must give bond as
required under the act "to amend the judicial system," and the
party claiming a writ of error must also give good and sufficient
security to prosecute the writ to effect, and must comply with the
regulations contained in the Judiciary Act as to the service of the
writ and the required notice to the adverse party.
Taken literally, the ten days' limitation does not extend to
Page 83 U. S. 267
writs of error, but the better opinion is, in view of the fact
that writs of error and appeals are associated together in the
first clause of the section, that the word appeal at the
commencement of the second clause means the same as review or
revision, and that it was intended to include the writ of error as
well as appeal, as the whole section seems to contemplate a more
expeditious disposition of the cause in the appellate court than
that prescribed in the Judiciary Act or the act to amend the
judiciary system. [
Footnote
2]
Grant all that, and still it is insisted that a writ of error
from the circuit court to the district court will not lie in a case
like the present, as neither the process nor proceeding is in form
an action at law or a suit in equity, which must be admitted,
confining the admission strictly to the matter of form. Even when
so confined it may be doubtful whether the admission ought not to
be further qualified, as the first pleading of the moving party is
quite as analogous to the writ and declaration at common law as the
petition now employed as a substitute for the common law
declaration in more than half of the state courts, and which, under
the recent act to further the administration of justice, may be
employed in the federal courts. [
Footnote 3]
Support to that view is also derived from the first pleading of
the respondents, which is in substance and effect the same as the
first pleading of the claimant in an information based upon a
seizure on land, where it is required that the case shall be tried
by jury, unless the right is waived by the consent of the
claimant.
Power and jurisdiction in all matters and proceedings in
bankruptcy are conferred upon the district courts, but the
forty-first section of the Bankrupt Act expressly provides that the
court shall, if the debtor, on the return day, or day of hearing,
"so demand in writing," order a trial by jury, at the first term of
the court at which a jury shall be in attendance, to ascertain the
alleged fact of such alleged
Page 83 U. S. 268
bankruptcy. Regulations are also enacted as to the matters open
to inquiry and the course of the trial, as follows: that if, upon
such hearing or trial, the debtor proves to the satisfaction of the
court, "when the hearing is summary, or of the jury, if one is
demanded," that the facts set forth in the petition are not true,
or that he, the debtor, has paid and satisfied all liens upon his
property, in case the existence of such liens is the sole ground of
the petition, the proceedings shall be dismissed and the respondent
shall recover costs. [
Footnote
4]
Such a provision is certainly entitled to a reasonable
construction, and it seems plain, when it is read in the light of
the principles of the Constitution and of analogous enactments, and
when tested by the general rules of law applicable in controversies
involving the right of trial by jury, that the process, pleadings,
and proceedings must be regarded as governed and controlled by the
rules and regulations prescribed in the trial of civil actions at
common law. Congress, it must be assumed, in conceding to the
debtor the right to demand a trial of the issue by a jury, intended
to confer a right of some value, which would be converted into a
mockery if the judge presiding over the trial may exclude by his
rulings all the evidence which the debtor offers to disprove the
charges set forth in the petition, and he, the debtor, be left
without any power to resort to an appellate tribunal to correct the
errors committed by the bankrupt court.
Cases of the kind, when tried by a jury, if the circuit court
has any jurisdiction upon the subject, must be removed into that
court by a writ of error, as when tried by a jury the case is
excluded from the special jurisdiction conferred in the first
clause of the second section of the act 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
Page 83 U. S. 269
part of the section. [
Footnote
5] Decrees in equity rendered in the district court, it may be
admitted, might be revised in the circuit court in a summary way if
Congress should so provide by law, but it is clear that judgments
in actions at law rendered in that court, if founded upon the
verdict of a jury, can never be revised in the circuit court in
that way, as the Constitution provides that "no fact tried by a
jury shall be otherwise reexamined in any court of the United
States than according to the rule of the common law." Two modes
only were known to the common law to reexamine such facts, to-wit,
the granting of a new trial by the court where the issue was tried
or to which the record was returnable or, secondly, by the award of
a
venire facias de novo by an appellate court for some
error of law which intervened in the proceedings. [
Footnote 6] All suits which are not of equity
or admiralty jurisdiction, whatever may be the peculiar form which
they may assume to settle legal rights, are embraced in that
provision. It means not merely suits which the common law
recognized among its settled proceedings, but all suits in which
legal rights are to be determined in that mode, in
contradistinction to equitable rights and to cases of admiralty and
maritime jurisdiction, and it does not refer to the particular form
of procedure which may be adopted. [
Footnote 7]
Apply these rules to the case before the court and it is clear
beyond doubt that the circuit court erred in dismissing the writ of
error for the want of jurisdiction, as it was the right of the
excepting party to have the questions, if duly presented in the
bill of exceptions, reexamined by the circuit court, which leaves
nothing further open for decision except the question what
disposition shall be made of the case and what direction, if any,
shall be given to the subordinate court.
Appellate courts under such circumstances do not determine the
questions presented in the bill of exceptions filed
Page 83 U. S. 270
in the district court, as those questions have not been
reexamined in the circuit court, and this Court is not inclined to
reexamine any such questions coming up from the district court
until they have first been passed upon by the circuit court.
Consequently the question whether a writ of error will lie from
this Court to the circuit court to reexamine the rulings of the
circuit court in a case removed into that court from the district
court, in such a case as the one under consideration, does not
arise, as the record shows that the circuit court never passed upon
the questions as to the correctness or incorrectness of the rulings
of the district court.
Repeated decisions of this Court have established the rule that
this Court has power to issue a mandamus, in the exercise of its
appellate jurisdiction, and that the writ will lie in a proper case
to direct a subordinate federal court to decide a pending cause.
[
Footnote 8] Power to issue the
writ of mandamus to the circuit courts is exercised by this Court
to compel the circuit court to proceed to a final judgment or
decree in a cause, in order that this Court may exercise the
jurisdiction of review given by law; and in the case of
Ex
Parte Bradstreet, [
Footnote
9] this Court decided, Marshall, C.J., giving the opinion of
the court, that every party has a right to the judgment of this
Court in a suit brought by him in one of the inferior courts of the
United States, provided the matter in dispute exceeds the sum or
value of two thousand dollars, and that the court in such case will
issue the writ to a circuit court or a district court exercising
circuit court powers, in a case where the subordinate court had
improperly dismissed the case, requiring the court to reinstate the
case and to proceed to try and adjudge the issues between the
parties.
Examined, as the case must be, in the light of these
authorities, it is quite clear that the respondents, had they
petitioned this Court for a mandamus, instead of suing out a writ
of error, would be entitled to a remedy in someone of
Page 83 U. S. 271
the forms in which a remedy is granted in such a case, but it is
not doubted that the present decision will be in practice equally
effectual to that end, as it is entirely competent for the circuit
court, under the circumstances, to grant a rehearing and reinstate
the case, and to proceed and decide the questions presented in the
bill of exceptions.
Mandamus being the proper remedy, error will not lie. [
Footnote 10]
Writ of error dismissed for want of jurisdiction.
[
Footnote 1]
14 Stat. at Large 537.
[
Footnote 2]
14 Stat. at Large 520;
Morgan v.
Thornhill, 11 Wall. 75; 1 Stat. at Large 85; 2
id. 244.
[
Footnote 3]
17 Stat. at Large 196.
[
Footnote 4]
14 Stat. at Large 537.
[
Footnote 5]
Morgan v.
Thornhill, 11 Wall. 79.
[
Footnote 6]
2 Story on the Constitution (3d ed.), 584;
Parsons v.
Bedford, 3 Pet. 448;
Knight v. Cheney, 5
N.B.R. 317.
[
Footnote 7]
United States v. Wonson, 1 Gallison 20.
[
Footnote 8]
Marbury v.
Madison, 1 Cranch 175;
Kendall v. United
States, 12 Pet. 622.
[
Footnote 9]
32 U. S. 7 Pet.
647.
[
Footnote 10]
Ayres v.
Carver, 17 How. 591.
