Opinion · Supreme Court of the United States
Louisville Trust Co. v. Comingor
Louisville Tr. Co. v. Comingor, 184 U.S. 18 (1902)
- Type
- Opinion
- Court
- Supreme Court of the United States
- Jurisdiction
- Federal
- Date
- 1902-01-27
- Topic
- general
Mr. Chief Justice Fuller, after making the above statement, delivered the opinion of the court. The Circuit Court of Appeals was called on to review the orders of the referee as confirmed by the District Judge, by hjhich Comingor was required to pay over the sums of $3398.90 and $3200, respectively, and the recommendation that he be dealt with for not complying therewith. On the face of his responses, from first to last, it appeared that Comingor insisted that the $3200 had been paid by him to his counsel while they were acting for him, before the bankruptcy proceedings were commenced, for professional services rendered to him as assignee; and that he had retained and expended the $3398.90 as his commissions as assignee in reliance on the belief that he was entitled to that amount on final settlement. He thus asserted a claim to each of these sums adversely to the bankrupt, and as outstanding when the petition in bankruptcy was filed, and these claims were in fact passe .1 upon by the referee and the District Judge as being adverse.
Citator
UpLaw has not yet analyzed Louisville Trust Co. v. Comingor. The absence of a flag is not a finding that it is good law.
- Cited by
- 218 opinions
Headnotes
- Bankruptcy Law — Jurisdiction Where an assignee for the benefit of creditors asserts an adverse claim to funds in his possession that existed at the time the bankruptcy petition was filed, the bankruptcy court may not adjudicate that claim on summary process; the claim must be resolved through a plenary suit, and where the District Court's jurisdiction is not consented to, the state court is the proper forum for disposing of the dispute. 184 U.S. at 28-29
- Bankruptcy Law — Jurisdiction The bare fact that an assignee is named as a defendant to a petition in bankruptcy does not make him a party to the bankruptcy proceedings for all purposes, and creditors may not, by the device of joining him to the petition for adjudication, deprive him of his right to have his claims adjudicated by the proper court in the customary mode of proceeding. 184 U.S. at 29-30
- Bankruptcy Law — Jurisdiction Participation in summary proceedings before a referee does not amount to voluntary consent to the exercise of summary jurisdiction where the claimant pleads his adverse claim from the outset, appears in obedience to peremptory orders rather than voluntarily, and formally protests the exercise of jurisdiction before the final order is entered. 184 U.S. at 32-33
- Bankruptcy Law — Summary Proceedings — Nature of Remedy A purely summary proceeding in bankruptcy in which the merits are determined without a plenary suit, where the claimant is not entitled to revision by appeal or writ of error and cannot demand a trial by jury as of right, and where the amount found due is enforceable by commitment rather than execution, does not afford the usual processes of the law to which a party claiming property of which he was in possession is entitled. 184 U.S. at 30-31
LOUISVILLE TRUST CO.v. COMINGOR,184 U.S. 18(1902)
22 S.Ct. 293
LOUISVILLE TRUST COMPANYv. COMINGOR.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SIXTH CIRCUIT.
No. 309.
Submitted April 29, 1901.
Decided January 27, 1902.
DECEMBER 5, 1898, Simonson, Whiteson and Company, the firm
consisting of three partners, made an assignment to Leonard
Comingor for the benefit of their creditors, under the statutes
of Kentucky in that behalf, and a few days thereafter Comingor
brought suit involving the administration and settlement of the
estate in the Circuit Court of Jefferson County.
The state statute provided, among other things, that the
assignee should give bond with good security to be approved by
the county judge, conditioned for the faithful discharge of his
duties as assignee, and to be recorded in the county clerk's
office; that the assignee should be at all times subject to the
orders and supervision of the county court, or the judge thereof
in vacation, except as thereinafter provided; for the final
discharge of the assignee on due notice; and that the assignee or
any creditor or creditors representing one fourth of the
liabilities might bring suit in the Circuit Court for the
settlement of the estate, whereupon the jurisdiction of the
county court should cease, and the Circuit Court should have all
the power and authority to administer and settle up the assigned
estate conferred on the county court, in addition to its power
and authority as a chancery court. Kentucky Statutes, 1899, p.
202, c. 7.
Certain creditors filed a petition in the Circuit Court of the
United States for the District of Kentucky in bankruptcy, on
February 14, 1899, against the firm, to which its members
tendered a plea and answer. The ground on which the petition was
based was that Simonson, Whiteson and Company had within four
months of the filing of the petition made a general
Page 20
assignment under the statutes of Kentucky for the benefit of
creditors to Comingor. The court adjudicated them bankrupts,
92 F. 904, and one of them prosecuted an appeal to the
Circuit Court of Appeals for the Sixth Circuit, which, July 5,
1899, reversed the judgment with directions to take further
proceedings. 95 F. 948.
On September 20, 1899, adjudication was again awarded, and on
a second appeal was affirmed February 12, 1900.
100 F. 426.
Comingor was made a defendant to the petition in bankruptcy as
assignee, but no relief was prayed as against him, and he moved
the court to dismiss the petition as to him for want of
jurisdiction, and also, without waiving the motion, tendered an
answer but the motion was not acted on, nor was his answer filed.
April 1, 1899, an injunction was granted against Simonson,
Whiteson Company, and Comingor, from taking any steps affecting
the bankrupts' estate, and especially in the action in the
Jefferson Circuit Court.
May 17, 1900, the case was referred to a referee, who, on May
28, without notice entered an order that Comingor file with him
an itemized and detailed statement, showing his receipts and
disbursements of the money and other assets belonging to the
estates of Simonson, Whiteson and Company and its members. This
Comingor did, the statement showing that he had received
$92,865.77; that he had disbursed $19,876.73; that he had paid
his counsel $3200; that he had drawn as commissioner, $3300; that
he had paid over to the receiver of the state court $59,623.61;
and that he had on hand $6766.53. This sum of $6766.53 was
subsequently paid the trustee in bankruptcy.
June 20, 1900, the referee on his own motion entered an order
appointing the Louisville Trust Company, receiver, and directing
it to apply to the Jefferson Circuit Court for an order directing
the receiver of that court to pay over the entire fund in court,
in Comingor's action there; but providing that the Trust Company
should not appear in the Jefferson Circuit Court as a party to
that action, nor receive any less sum than
Page 21
the whole fund in that court. Application was accordingly made by
the Trust Company, but the Jefferson Circuit Court declined to
entertain the motion to withdraw the funds, because the Trust
Company was not a party to the action and had no standing in
court, but the circuit judge suggested that when the Trust
Company filed its petition asserting its claim to the fund, as
provided by section 29 of the Code of Kentucky, the court would
then be authorized to entertain such motions and make such orders
in its behalf as might be necessary and proper.
The Trust Company appears to have been appointed trustee by
the referee June 30, 1900, its bond as such trustee being then
approved.
On the same day the referee entered an order that the Trust
Company file a petition to be made a party to the suit in the
Jefferson circuit court, and thereupon such petition was filed by
it as trustee, stating among other things that the officers of
the court had been paid in full and had no claims on the fund in
court, and that the fund, to wit, $46,305.03, belonged to the
creditors of the bankrupt concern and that nobody else had any
interest therein, neither officers, attorneys nor anybody else,
and praying that the court be directed to make the Trust Company
a defendant, and that its petition be taken as an answer, and
that the receiver of the said Circuit Court pay to petitioner the
said sum of $46,305.03, and "for all further and proper relief."
The Jefferson Circuit Court thereupon entered an order making the
Trust Company a party defendant, and directing that it be allowed
to withdraw from the fund in court the sum of $46,305.03.
June 20, the referee, on his own motion, entered an order
requiring Comingor and his counsel to appear and show cause three
days thereafter why they should not pay over to the receiver the
amount of the commissions and fees.
June 23, Comingor responded as to the sum of $3398.90 that he
had retained the same on account of his commissions as assignee
before any bankruptcy proceedings were had, and that he relied on
the fact that he would be entitled to more than that sum on the
final settlement; that for services rendered to
Page 22
the estate he believed this court would allow at least said
amount; that he was a person of no means; and had used said money
from time to time, relying on the fact that it belonged to him,
and he had none of it left; and that he was unable to pay said
money into court, as he had no money or property of any kind.
The referee held the response insufficient, and made the rule
absolute. The order to show cause made on the attorneys does not
appear to have been pursued, but June 28, 1900, another order was
made on Comingor to show cause why he should not be required to
pay to the receiver the sums of money paid to them, amounting to
$3200 in all.
June 30, 1900, Comingor responded that he had paid the $3200
to his attorneys for services rendered him as his counsel while
acting as the assignee before any proceedings in bankruptcy were
taken. He further alleged that he had no money or means of any
kind with which to pay, and referred to his former response and
made it a part thereof, and insisted that he ought not to be
compelled to pay the amount claimed.
The referee adjudged this response insufficient, and made the
rule absolute.
Comingor then prayed for a review by the District Court in
bankruptcy of the orders adjudging his responses insufficient,
and ordering him to pay to the receiver the sums of $3398.90 and
$3200 respectively.
The referee reported his findings to be that Comingor was
entitled to no compensation whatever, and that he had no legal
right to pay attorney's fees when no allowance had been made by
the state court therefor, and that in contemplation of law he
must be deemed to have the funds in his possession.
The District Judge referred the matter back to the referee
July 16, 1900, to take testimony as to the character and value of
Comingor's services and those of his counsel. The referee
proceeded to do this, pending which, on November 10, Comingor
tendered an amended response before the referee, setting forth
that, as was shown by the pleadings, records and evidence in the
case and the entire proceedings had, neither that court nor the
referee in bankruptcy had any jurisdiction, either of the
Page 23
respondent or the matter involved, to make any such orders or
require respondent to answer thereto, because the records showed
that all the transactions in reference to the two sums of money
took place before the petition in bankruptcy was filed, and that
neither that court nor the referee in bankruptcy could proceed
against respondent as attempted by order or rule to pay over or
by summary process. He prayed that the rule be discharged and the
orders to pay be set aside. This amended response the referee
declined to entertain, and it was again tendered in the District
Court on the filing of the referee's report.
December 11, 1900, the referee reported the evidence and his
conclusions thereon, that neither Comingor nor his attorneys had
rendered any services of value to the estate, and that their
services had in fact been injurious to the creditors, but that
the fees paid to the attorneys were usual and reasonable
according to the scale of compensation allowed for such services
by the state court in Louisville.
The District Judge confirmed the report of the referee, and as
to the objection of want of jurisdiction, held that it could not
be entertained by the court for the reason that, by long
acquiescence in that mode of procedure, respondent must be
regarded as having consented thereto. Thereupon an order was
entered dismissing the petition for review, and adjudging that
Comingor pay to the Trust Company, as trustee, the said sums of
$3398.90 and $3200, on or before February 16, 1901, to all of
which Comingor excepted, and filed his petition for review in the
Circuit Court of Appeals for the Sixth Circuit. That court
entered an order staying proceedings in the District Court, and
thereafter on hearing reversed the decree of the District Court
affirming the orders of the referee requiring Comingor to pay to
the trustee the sums aforesaid, with directions to set aside its
order and decree, and the orders of the referee directing
Comingor to pay the trustee in bankruptcy the moneys mentioned in
said orders. 107 F. 898.
Certiorari from this court was then granted.181 U.S. 620.
On the face of his responses, from first to last, it appeared that Comingor insisted that the $3200 had been paid by him to his counsel while they were acting for him, before the bankruptcy proceedings were commenced, for professional services rendered to him as assignee; and that he had retained and expended the $3398.90 as his commissions as assignee in reliance on the belief that he was entitled to that amount on final settlement. He thus asserted a claim to each of these sums adversely to the bankrupt, and as outstanding when the petition in bankruptcy was filed, and these claims were in fact passed upon by the referee and the District Judge as being adverse. This brought the controversy within the ruling inBardesv.Bank,178 U.S. 524, and the questions attempted to be litigated before the referee and in the District Court as to the allowance of the two amounts could only be raised in the District Court by consent, and then only by plenary suit. If the jurisdiction of the District Court was not consented to, then the state court, under the circumstances of this case, was the proper forum, and the matters in dispute were to be disposed of there.
The District Court held that Comingor had voluntarily accepted its jurisdiction, and that he had also consented that the court might proceed against him summarily. As the Circuit Court of Appeals said, speaking through Severens, J., "It was upon the ground of the petitioner's implied consent to the mode adopted that the District Judge justified it."
So far as this view rested on the contention that as ComingorPage 25was joined with the bankrupts in the petition for adjudication, he therefore continued to be subject to the orders of the court without other process, we agree with the Circuit Court of Appeals that it cannot be sustained. As we understand the record, the petition in bankruptcy set up no cause of action and prayed no special relief against Comingor, and he was apparently made a defendant because adjudication would put an end to further action by him as assignee. Clearly, as the Circuit Court of Appeals points out, it would be inadmissible to permit creditors to deprive an assignee of his right to have his claims adjudicated by the proper court and in the customary mode of proceeding, by the device of making him a party to the petition for an adjudication and so attempting to bring him into the case for all purposes. Nor in this matter was any petition by the trustee, or by any other person, filed against Comingor to recover these sums, and the orders were entered by the referee on the record as it stood, so that there was no pretence whatever of a plenary suit in that court, in form or in substance.
The proceeding was purely summary. The determination of the merits on the facts was not open to revision by appeal or writ of error under the bankrupt law. If Comingor had been entitled to a trial by jury, he could not have obtained it as of right. The collection of the amounts found due would be enforcible not by execution but by commitment.
"We think that it could not have been the intention of Congress thus to deprive parties claiming property, of which they were in possession, of the usual processes of the law in defence of their rights."Marshallv.Knox, 16 Wall. 556;Smithv.Mason, 14 Wall. 419.
The question is whether the District Court had jurisdiction to finally adjudicate the merits in this proceeding.
We have just held inMuellerv.Nugent, ante, 1, that the District Court has power to ascertain whether in the particular instance the claim asserted is an adverse claim existing at the time the petition was filed. And according to the conclusion reached the court will retain jurisdiction or decline to adjudicate the merits. Jurisdiction as to the subject matter may bePage 26limited in various ways, as to civil and criminal cases; cases at common law or in equity or in admiralty; probate cases, or cases under special statutes; to particular classes of persons; to proceedings in particular modes; and so on. In many cases jurisdiction may depend on the ascertainment of facts involving the merits, and in that sense the court exercises jurisdiction in disposing of the preliminary inquiry, although the result may be that it finds that it cannot go farther. And where in a case like that before us, the court erroneously retains jurisdiction to adjudicate the merits, its action can be corrected on review.
We are of opinion that even if Comingor could have consented to be pursued in this manner, he did not so consent. He was ruled to show cause, and the cause he showed defeated jurisdiction over the subject matter, that is jurisdiction to proceed summarily. He did not come in voluntarily, but in obedience to peremptory orders, and although he participated in the proceedings before the referee, he had pleaded his claims in the outset, and he made his formal protest to the exercise of jurisdiction before the final order was entered. He had been restrained from settling his accounts in the state court in the action pending there, and the District Court, instead of dissolving the injunction, declining jurisdiction, and leaving the litigation to the state court, either in due course, or by plenary suit, adjudicated the merits and entered a peremptory order that he should pay over, disobedience of which order was punishable by commitment. We think that in this there was error, and that the Circuit Court of Appeals was right in its decree of reversal.Decree affirmed.
MR. JUSTICE HARLAN dissented.Page 27