U.S. Supreme Court
Marshall v. Knox, 83 U.S. 16 Wall. 551 551 (1872)
Marshall v. Knox
83 U.S. (16 Wall.) 551
1. The district court sitting in bankruptcy has no jurisdiction to proceed by rule to take goods seized, before any act of bankruptcy by the lessees, for rent due by them in Louisiana, under "a writ of provisional seizure" -- and then in the hands of the sheriff, and held by him as a pledge for the payment of rent due -- out of his hands, and to deliver them to the assignee in bankruptcy to be disposed of under the orders of the bankrupt court; neither the sheriff nor the lessor having been parties to the proceedings in bankruptcy nor served with process to make them such.
2. The circuit court may under the second section of the Bankrupt Act entertain on bill as an original proceeding, a case thus involving a question of adverse interest in goods so seized.
3. Under the Civil Code of Louisiana, a lessor has a right to seize, for rent in arrears, goods on the premises, and until he is paid his rent, retain them as against an assignee in bankruptcy subsequently occurring.
4. In such a case where the goods have been taken out of his hands and given to the assignee in bankruptcy by an order of the district court acting summarily and without jurisdiction, and sold by such assignee, the circuit court, having got possession of the case by bill filed by the lessor, to be regarded as one in an original proceeding, will proceed and decide the whole controversy.
5. And it will give the lessor the full value of the goods sold clear of all expenses, whether the assignee obtained that value or not (limited, of course, by the amount of rent which he is entitled to have paid to him), and also to all the taxable costs to which he has been put by the litigation. chanroblesvirtualawlibrary
Damages beyond this refused as hardly due in the particular case, and at any rate more properly to be claimed in a proceeding at law.
Marshall was the owner of a plantation in the Parish of Avoyelles, in Louisiana, and on the 7th of February, 1867, leased it to Nathan Smith and Henry Fuller for three years, from January 1, 1867, at $3,000 a year, payable in two equal payments. At the end of the first year the tenants were in arrear $1,400, and on the 4th of January, 1868, Marshall commenced an action therefor in the district court of the parish, and applied for and obtained a writ of provisional seizure (as it is called), being the usual process by which a lessor takes possession of his lessee's property found on the premises, for the purpose of enforcing his lien thereon. This writ was served by the sheriff on the 6th of January, 1868, by serving a copy on the lessees, and by a seizure of their property on the land, consisting of mules, wagons, farming implements, and stock, grain, furniture &c., appraised at $1,744.
On the 15th of January, 1868, Smith, one of the lessees, filed in the District Court of the United States for Louisiana a petition to be declared a bankrupt, and was declared such accordingly; and on the 12th of February, 1868, the defendants were appointed his assignees. The controversy in this case arose from the proceedings undertaken by the assignees to take the property aforesaid out of the hands of the sheriff, and to dispose of it under the orders of the bankrupt court. They first obtained from the court a rule upon the lessor and the sheriff to show cause why they should not deliver up the property to the assignees, alleging that various creditors of the bankrupt claimed a privilege on the property, and that it was necessary for a proper adjustment of all claims, privileges, and liens, that the possession should be surrendered to the assignees, to be subject to the bankrupt court. The lessor contested this rule, stated his own rights and proceedings, and claimed possession of the property chanroblesvirtualawlibrary
through the sheriff, for the purpose of selling the same to raise the amount of his rent. The rule, however, was made absolute, without, so far as appeared, any other proof on the subject. The lessor appealed, but the district judge would not allow the appeal, and there was no justice of this Court at that time (April, 1868) assigned to that circuit to whom application could be made. The lessor thereupon filed a bill, the present bill, in the court below for an injunction to prohibit the assignees from proceeding under the said order of the bankrupt court, and from taking possession of the property, and for a decree that they be directed to pursue any residuary interest of the bankrupt in the lessor's suit in the district court of the parish, and not molest him in detaining and subjecting the property to the payment of his rent, and for further relief. Failing to obtain a preliminary injunction, and the property being taken and sold by the assignees, the lessor filed a supplemental bill, complaining of the illegality of the proceedings, asking for a review of the same, and for an account and damages. The bill and supplemental bill set out the lease, the provisional seizure, the proceedings in the bankrupt court, and the acts of the assignees; and complained that the lessor was injured by a sacrifice of the property; and stated that before filing the original bill he had offered the assignees a bond, with sufficient sureties, to protect any persons claiming any superior liens to his on the property, if any such there were, which, however, he denied.
The defendants, in their answer, alleged that the lessees had a counterclaim for repairs and permanent improvements, and that a number of hands employed on the plantation had a privilege for their wages superior to that of the lessor; but no proof of these facts was offered in the case.
The principal allegations of the complainant were proved, and the defendants on their part adduced proof to show that they had acted in good faith under the orders of the bankrupt court, and that they had sold the property fairly, and held the proceeds for distribution, according to the rights of the parties in due course of the bankruptcy proceedings. chanroblesvirtualawlibrary
On hearing, the bill was dismissed for want of jurisdiction, and Marshall, the lessor and complainant, appealed.
Three questions now came before this Court:
1st. Was this decree dismissing the bill for want of jurisdiction rightly made? Ought not the court below contrariwise, to have entertained the case and decided it on its merits?
2d. Supposing that it ought to have done so, how stood the case on the merits? and
3d. If these were with the complainant, what relief ought he to have?