1. A proceeding under the Bankrupt Act in which by petition in
form the assignee sets forth articulately that A., B., C., &c.,
claim liens against the bankrupt's estate, the validity of each of
which liens he, the assignee, denies, and in which he prays that
the parties setting up the liens may be made parties, and be
required to answer, each of them, all his charges and allegations
as made, and be compelled, each of them, to set forth and state in
their respective answers the particulars and facts upon which their
respective claims are based, and than on final hearing, all
questions and rights of each and all the parties may be ascertained
and determined by the court, and that the petitioner be directed to
sell the estate and distribute the proceeds, and in which the
assignee prays that he may have such other and further relief in
the premises, and "may be further directed in his duties as the
nature of the case requires," in which proceeding the parties
asserting the liens answer in form and the assignee replies in
form, is a "case in equity" within the eighth section of the
Bankrupt Act, which gives an
appeal to the circuit court
in all cases in equity, and is not a case for the general
superintendence and jurisdiction by that court given in the second
section of the act, in cases where no provision for the supervision
of the circuit court is otherwise made.
2. The fact that a subpoena is not prayed for does not change
this view, the defendants voluntarily appearing.
3. If such a case be taken into the circuit court under this
general superintending jurisdiction given by the said second
section, it is wrongly
Page 90 U. S. 151
taken. No jurisdiction exists there so to review the case. And
no appeal lies to this Court from the action of the circuit court
made under such circumstances to hear and determine the merits.
4. Where a case has been so taken, and the decision reversing
the decree of the district court is in favor of the party taking
it, this Court will reverse the judgment or decree of the court
below and remand the suit with directions to dismiss it.
5. But in the present case, where, owing to the lapse of time,
the party who had the decision of the circuit court (reversing that
of the district court) against him would be prevented from having,
as matter of right, a review of the case by the circuit court on an
appeal properly taken under the eighth section, this Court thought
it fitting to suggest that perhaps, on a proper application, the
district court would grant a review of the decree that it had
rendered, which review, if granted, would lay the foundation, in
case of an adverse decision, as before upon the merits, for an
appeal in proper form to the circuit court.
By the Bankrupt Act it is thus in effect enacted:
"SECTION 1. That the several district courts be . . . courts of
bankruptcy, and shall have original jurisdiction in their
respective districts in all matters and proceedings in bankruptcy.
. . . And the jurisdiction shall extend to all cases and
controversies arising between the bankrupt and any creditor who
shall claim any debt or demand under the bankruptcy, to the
collection of all the assets of the bankrupt; to the ascertainment
and liquidation of the liens and other specific claims thereon; to
the adjustment of the various priorities and conflicting interests
of all parties; and to the marshaling and disposition of the
different funds and assets, so as to secure the rights of all
parties, and due distribution &c."
"SECTION 2. That the several circuit courts . . . 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
where special provision is otherwise made may, upon
bill, petition, or other proper process of any party
aggrieved hear and determine the case [as] a court of equity."
"The powers and jurisdiction hereby granted may be exercised
either by said court or by any justice thereof in term time or
vacation. "
Page 90 U. S. 152
"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 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."
"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 &c., 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; but no appeal shall be allowed unless
it is claimed and notice given &c., within ten days after the
entry of the decree or decision appealed from. No appeal shall be
allowed unless the appellant shall give bond in manner now required
by law."
"SECTION 9. That in cases arising under this act, no appeal or
writ of error shall be allowed in any case from the circuit court
to the Supreme Court of the United States unless the matter in
dispute in such case shall exceed $2,000."
In this state of statutory law, one Vandeveer having been
decreed a bankrupt in the District Court for the Northern District
of Ohio, a certain Stickney, his assignee, filed a petition against
him, Huss, Wilt, Paine, Adams, and two others, to determine whether
certain claims set up as liens upon the bankrupt's estate were
liens.
The petition set forth the decree of bankruptcy against
Vandeveer. It then alleged:
1st. That at the time thereof he owned a tract of land which he
had bought from Mrs. Adams, and that she set up a vendor's lien
upon it, which lien the assignee alleged had no existence.
2d. That another tract which he owned purported to be encumbered
by a mortgage to Paine to secure a note of $4000, but that no debt
was due to Paine, and that the mortgage had no legal validity as
against him the assignee.
Page 90 U. S. 153
3d. That he had given a note and mortgage to one Huss for $4000,
which note and mortgage were never delivered to Huss, but were
recorded by Vandeveer, at about the time of their execution,
without the solicitation or knowledge of Huss, and that they were
void.
4th. That the petitioner had been advised that one Wilt also
claimed some kind of lien upon the said lands, but how or by means
of what mortgage or otherwise the petitioner was not advised, but
denied that any such lien or liens were so held or existed in favor
of any person or persons whomsoever.
The petition prayed:
"That the parties above named, and each of the them may be made
parties defendant to this petition; that they and each of them be
required to answer all and singular the charges and allegations
aforesaid, and be also compelled to set forth and state in their
respective answers hereto, each, the particulars and facts upon
which any claim is made or based by such defendant or defendants;
and that, on the final hearing hereof, all questions and rights of
each and all the said parties may be ascertained and determined by
this court, and that, by the order and judgment of this court, the
petitioner be directed to sell the said lands and distribute the
proceeds accordingly."
"And that the petitioner may have such other and further relief
in the premises and may be further directed in his duties, as the
nature of the case requires."
The petition did not pray for subpoena or other process.
Mr. and Mrs. Adams, as also Paine, waived it, however, and
appeared. Wilt also appeared and answered.
Referring to the note and mortgage mentioned in the bill as
given to Huss, and admitting their execution and record, Wilt
alleged in his answer that he, Wilt, afterwards became surety for
Vandeveer, for $3,260, and that in consideration of such
suretyship, Vandeveer delivered the said note and mortgage to him,
and that he had paid over $2,000 on account of such suretyship.
The assignee replied, denying that Vandeveer delivered the
mortgage to Huss, and that Wilt had become surety, and
Page 90 U. S. 154
denying payment by him, and all debt to him by Vanderveer
&c.
Upon the hearing of these issues, the district court held that
the mortgage never took effect, and decreed accordingly in favor of
the assignee in bankruptcy.
Wilt thereupon filed his petition in the circuit court of the
district for a review and revision of this decree under the first
clause of the above-quoted section of the Bankrupt Law, which gives
to the circuit court a general superintendence and jurisdiction of
all cases arising under the act. [
Footnote 1] He set up the same case in the circuit court
which he had made in the district court, and prayed a reversal
&c.
Without answering this petition, the assignee filed a plea to
the jurisdiction of the court.
Upon the petition and plea the cause was heard, the petition
sustained, and relief decreed as prayed for -- that is to say, the
lien claimed by Wilt was decided to be a good one.
The assignee hereupon appealed to this Court as if thereto
authorized by the Act of Congress, allowing appeals in cases of
equity and maritime jurisdiction, [
Footnote 2] which act enacts that from
"all final decrees rendered in any circuit court in any cases of
equity or admiralty jurisdiction, an appeal, where the matter in
dispute, exclusive of costs, shall exceed the sum or value of
$2,000, shall be allowed to the Supreme Court of the United States,
and that upon such appeal a transcript of the libel, bill, answer,
depositions, and all other proceedings, of what sort whatsoever,
shall be transmitted to the said court."
The record in the case, as sent here, contained sufficient
extracts from the record to understand the case, but did not comply
literally with the act just quoted. This defect, however, was not
alluded to at the bar.
Page 90 U. S. 158
MR. JUSTICE CLIFFORD, having stated the case, delivered the
opinion of the Court.
Two principal objections are taken to the proceedings, as
tending to show that this Court has no jurisdiction to hear and
determine the case under the powers conferred by the Bankrupt
Act:
1st. Because the original pleading in the district court is a
suit in equity, commenced under the third clause of the second
section of the Bankrupt Act, which could only be removed into the
circuit court by appeal, as provided in the eighth section of that
act.
2d. Because an appeal will not lie from the circuit court to
this Court from the decree of the circuit court rendered in a
petition of review, filed under the supervisory jurisdiction
conferred upon the circuit courts by the first clause of the second
section of the said Bankrupt Act.
1. Concurrent jurisdiction with the circuit courts is
conferred
Page 90 U. S. 159
upon 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
assignee transferred to or vested in such assignee by virtue of the
fourteenth section of the act providing for such transfers.
Rights of property were claimed in these lands by the appellee,
and the suit in this case was commenced in the district court
contesting that claim, which is plainly a subject matter cognizable
under that provision; nor is it any argument against that theory
that the first pleading in the district court is, in form, a
petition, as suits at law and in equity, in many jurisdictions, are
commenced in that form of pleading. Beyond all doubt the petition
contains every requisite of a good bill in equity, whether the
pleading is tested by the statement of the cause of action, or by
the charging part of the bill, or by the prayer for relief, and if
it be suggested that it contains no prayer for process, the answer
to the objection is a plain one, to-wit, that three of the parties
respondent appeared and waived the issuing and service of process,
and that the appellee voluntarily appeared and filed an answer.
Nor is it any valid objection to that view that the circuit
court, under the supervisory clause of the second section, may in
certain cases proceed by bill, petition, or other proper process,
as the power conferred by that clause does not extend to any case
or question "otherwise provided for," by any special provision,
especially as it is clear that cases arising under the third clause
of that section, where the debt or damages claimed amount to more
than five hundred dollars, may be appealed from the district court
to the circuit court for the same district. [
Footnote 3]
Special provision, therefore, is made for the removal of such a
case into the circuit court, and inasmuch as the case is made the
subject of such special provision, it follows beyond
Page 90 U. S. 160
peradventure that it does not fall within the supervisory
jurisdiction conferred upon the circuit courts by the said first
clause of the second section.
2. Much discussion of the second question is unnecessary, as the
justices of this Court are unanimously of the opinion that the
question is settled in the negative by the prior decisions of this
Court. [
Footnote 4]
Even a slight examination of that case will be sufficient to
convince any inquirer that the question under consideration was
directly presented for decision in that case, and it is equally
certain, in the judgment of the Court, that it was expressly
decided without any qualification whatever. Attempts have since
been made to induce the Court to give its sanction to certain
alleged exceptions to the rule, but the Court has in every such
case refused to countenance any such theory. [
Footnote 5]
Controversies, in order that they may be cognizable in the
circuit or district court under the third clause of the second
section of that act, 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, no matter whether they are citizens
of the same state or not, as the jurisdiction is conferred by the
Bankrupt Act and depends upon the conditions therein
prescribed.
Final judgments and decrees in such cases rendered in the
circuit court, if the matter in dispute exceeds the sum or value of
two thousand dollars, may be removed into the Supreme Court for
reexamination, as provided in the twenty-second section of the
Judiciary Act. [
Footnote 6]
Such judgments and decrees, however, in order that they may be
reexaminable in this Court, must be final judgments
Page 90 U. S. 161
or decrees, rendered in term time, as contradistinguished from
mere interlocutory judgments or decrees or orders which may be
entered at chambers, or if entered in court are still subject to
revision before the final disposition of the cause.
Prior to the passage of the Bankrupt Act, the district courts
possessed no equity jurisdiction whatever, but it is undoubtedly
true that those courts do now possess concurrent jurisdiction with
the circuit courts in the cases specified in the third clause of
the second section of that act, and that final decrees rendered by
those courts in such cases, where the debt or damages claimed
amount to more than five hundred dollars, may be removed by appeal
into the circuit court for reexamination. Doubt upon that subject
cannot be entertained, and it is equally certain that a final
decree rendered in the circuit court in such a case, whether
originally brought there, or removed there by appeal from the
district court, may be removed by appeal into this Court for
reexamination, provided the appeal is perfected as required in the
acts of Congress allowing appeals in cases of equity and of
admiralty and maritime jurisdiction. [
Footnote 7] Nothing of the kind was done in this case, as
appears by the record.
Sufficient has already been remarked to show that the proceeding
to revise the decree of the district court was instituted and
prosecuted throughout under the first clause of the second section
of the Bankrupt Act, which confers upon the circuit courts merely a
supervisory power over the proceedings of the district courts in
bankruptcy, and which the circuit courts may exercise in term time
or vacation, and the provision is that the jurisdiction shall
extend to questions, as well as cases, arising under the Bankrupt
Act, except where provision is otherwise made. Special provision is
otherwise made for appeals in cases like the one before the Court,
and it necessarily follows that the case is not one falling within
the power conferred upon the circuit courts by the first clause of
the second section of that act.
Page 90 U. S. 162
Where both the circuit court and this Court are without
jurisdiction, it is in general irregular to make any order or
decree in the case, except to dismiss the suit, but that rule does
not apply to a case where the circuit court renders a judgment or
decree in favor of the party instituting the suit, but in such a
case the Court here will reverse the judgment or decree in the
court below, and remand the cause with directions to dismiss the
suit.
Unless the practice were as explained, great injustice would be
done in all cases where the judgment or decree is in favor of the
plaintiff or petitioner, as he would obtain the full benefit of a
judgment or decree rendered in his favor by a court which had no
jurisdiction to hear and determine the controversy. [
Footnote 8]
Want of jurisdiction to hear and determine the merits in such a
case does not show that this Court may not correct the erroneous
judgment or decree of the circuit court, but if the circuit court
is also without jurisdiction, this Court cannot direct a new trial
or a new hearing, as it may do in a case where the want of
jurisdiction in this Court is occasioned by a mistrial in the court
below, which has led to an erroneous removal of the cause from the
circuit court into this Court, as by appeal instead of a writ of
error, or by a writ of error, when it should have been by appeal.
[
Footnote 9]
Cases wrongly brought up, it may be admitted, should as a
general rule be dismissed by the appellate tribunal, but a
necessary exception exists to that rule where the consequence of a
decree of dismissal will be to give full effect to an irregular and
erroneous decree of the subordinate court in a case where the
decree is entered without jurisdiction, and in violation of any
legal or constitutional right. Rules of practice are established to
promote the ends of justice, and where it appears that a given rule
will have the opposite effect, appellate courts are inclined to
regard the case as one of an exceptional character. Such courts,
where there is no defect
Page 90 U. S. 163
in bringing up a cause, usually affirm or reverse the judgment
or decree of the subordinate court, but cases occasionally arise in
which the proceedings in the lower court are so irregular that a
mere affirmance or reversal upon the merits would work very great
injustice, and in such cases it is competent for the appellate
court to reverse the judgment or decree in question and to remand
the cause with such directions, if it be practicable, as will do
justice to both parties. Instances of the kind are numerous in the
decisions of this Court, nor is there much difficulty in
accomplishing the end in view in a case where the subordinate court
has jurisdiction of the subject matter, and the right to a new
appeal or writ of error is not barred by lapse of time. [
Footnote 10]
Difficulties of the kind frequently occur in cases of seizures,
as the district courts have often failed to distinguish between
seizures on land and seizures on navigable waters, sometimes trying
the latter as a common law action and sometimes trying the former
as an instance cause. Mistakes of the kind have also been made in
libels of information filed under the confiscation acts passed by
Congress. Errors of the kind, when they have seasonably come to the
knowledge of this Court, have uniformly been corrected as far as it
is in the power of this Court to afford a remedy. Serious
embarrassment often arises in such cases where it appears that the
subordinate court is also without jurisdiction, but that difficulty
does not prevent this Court from assuming jurisdiction on appeal
for the purpose of reversing the judgment or decree rendered in
such subordinate court in order to vacate the same when rendered or
passed without authority of law.
Where the court below has no jurisdiction of the case in any
form of proceeding, the regular course, if the judgment or decree
is for the defendant or respondent, is to direct the
Page 90 U. S. 164
cause to be dismissed, but if the judgment or decree is for the
plaintiff or petitioner, as in this case, the Court here will
reverse the judgment or decree and remand the cause with proper
directions, which in the case supposed must be to dismiss the writ,
libel, or petition, as the subordinate court cannot properly hear
and determine the matter in controversy. [
Footnote 11]
Viewed in the light of these suggestions, it is quite clear that
the decree of the circuit court rendered under the petition of
review, must be reversed, and inasmuch as the circuit court has no
jurisdiction of the subject matter in that form of proceeding, and
that it is now too late to take an appeal from the district court
to the circuit court, the cause must be remanded with directions to
dismiss the petition.
Unable to refer the appellee to any legal remedy as matter of
right, under the present pleadings it seems to be proper, in the
judgment of the whole Court, to suggest that it may be that the
district court will grant a review of the decree rendered in that
court, if a proper application is presented for that purpose, which
would lay the foundation, if it be granted, in case of an adverse
decision upon the merits of the case, for a regular appeal to the
circuit court.
Decree reversed without costs and the cause remanded with
directions to dismiss the petition for want of
jurisdiction.
[
Footnote 1]
See supra, pp.
90 U. S. 151-152.
[
Footnote 2]
2 Stat. at Large 244.
[
Footnote 3]
14 Stat. at Large 520.
[
Footnote 4]
Morgan v.
Thornhill, 11 Wall. 72.
[
Footnote 5]
Hall v. Allen,
12 Wall. 452;
Smith v.
Mason, 14 Wall. 419;
Marshall v.
Knox, 16 Wall. 556;
Knight v. Chency, 5
N.B.R, 309;
Insurance Co. v.
Comstock, 16 Wall. 258;
Coit v.
Robinson, 19 Wall. 274.
[
Footnote 6]
1 Stat. at Large 84.
[
Footnote 7]
2 Stat. at Large 244; 1
id. 84.
[
Footnote 8]
United States, Lyon v.
Huckabee, 16 Wall. 435.
[
Footnote 9]
Morris's
Cotton, 8 Wall. 512;
Mail
Company v. Flanders, 12 Wall. 135.
[
Footnote 10]
Barnes v.
Williams, 11 Wheat. 415;
Suydam
v. Williamson, 20 How. 441;
Carrington
v. Pratt, 18 How. 63;
Prentice v.
Zane, 8 How. 484;
Montgomery v.
Anderson, 21 How. 388;
Mordecai v.
Lindsay, 19 How. 200.
[
Footnote 11]
Insurance Company v. United
States, 6 Wall. 759;
Armstrong's
Foundry, 6 Wall. 769;
United
States v. Hart, 6 Wall. 770;
The
Caroline, 7 Cranch 500;
The
Sarah, 8 Wheat. 394.
