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CROSBY v. SPEAR.

[98 Me. 542, 57 Atl. 881.]

JURISDICTION, When Exclusive.-When a court, state or national, once takes into its possession a specified thing, no court, except one having a supervising control or superior jurisdiction in the premises, has the right to interfere with and change that posses sion. (p. 424.)

BANKRUPTCY, Replevin for Property in the Possession of the Assignee. An action of replevin cannot be maintained in a state court against an assignee in bankruptcy who has taken and holds possession of property as such assignee and claims it to be a part of the estate of the bankrupt. (p. 425.)

George W. Heselton and A. M. Goddard, for the plaintiff. Orville D. Baker, for the defendant.

543 POWERS, J. The sole question raised by the report is whether these two actions of replevin can be maintained in the state court.

F. Elbridge Drake of Gardiner, remaining partner of F. E. Drake & Co., filed his voluntary petition in bankruptcy May 21st, and was duly adjudged bankrupt by the United States district court of Maine on May 26, 1900. The defendant was thereupon appointed and qualified as trustee of the individual and partnership estate of the bankrupt, and took possession of the store fixtures constituting the property replevied, claiming title to them as trustee. These fixtures were in the bankrupt's possession at the time of the adjudication and were included by him in his schedules as a part of the partnership estate, and he also there stated that he understood they would be claimed by the plaintiff. July 3, 1900, the plaintiff sued out these two writs of replevin, and under them the property in controversy was taken from the possession of the trustee in bankruptcy and delivered to the plaintiff.

It is familiar doctrine that when a court, state or federal, has once taken into its jurisdiction a specific thing, no court, except one having a supervisory control or superior jurisdiction in the premises, has a right to interfere with and change that possession. This principle is fully illustrated and ably vindicated by Mr. Justice Matthews in Covell v. Heyman, 111 U. S. 176, Sup. Ct. Rep. 355, cited and relied upon in White v. Schloerb, 178 U. S. 512, 20 Sup. Ct. Rep. 1007, and is necessary to prevent unseemly and vexatious collision between the state and federal courts. It applies as well to property held by the state as

by the United States courts "excepting those cases wherein the latter exercise jurisdiction for the purpose of enforcing the supremacy of the constitution and laws of the United States."

544 We are unable to distinguish this case from White v. Schloerb, 178 U. S. 542, 20 Sup. Ct. Rep. 1007. It was there held, “after an adjudication in bankruptcy, an action of replevin in a state court cannot be commenced and maintained against the bankrupt to recover property in the possession of and claimed by the bankrupt at the time of that adjudication, and in the possession of the referee in bankruptcy at the time when the action of replevin is begun."

There the property was in the possession of the referee, here it was in the possession of the trustee. The latter was as much the officer and agent of the district court as the former. It matters not what particular officer of the court is holding the property or what may be his title. He holds it as the agent of the court whose representative he is. His possession is its possession. It brings it within the jurisdiction of that court, and from that jurisdiction it cannot be taken by any process issuing out of this court. An adverse claimant may bring suit in the state court and try the title to the property; but after the jurisdiction of the bankruptcy court has once attached he cannot take the property in specie out of the possession of that court or of any of its agents: Truda v. Osgood, 71 N. H. 185, 51 Atl. 633; Weeks v. Fowler, 71 N. H. 221, 51 Atl. 624.

The filing of the petition in bankruptcy is a caveat to all the world and in effect an attachment and injunction, and on adjudication and qualification of the trustee, the bankrupt's property is placed in the custody of the bankruptcy court: International Bank v. Sherman, 101 U. S. 403; Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. Rep. 269.

The decision here reached is not based upon any express provision of the bankrupt act of 1898 conferring exclusive jurisdiction upon the United States court in actions relating to the estate of the bankrupt. On the contrary, it is conceded that this court has concurrent jurisdiction of all questions of title to property derived through the bankruptcy proceedings. A party claiming the same may prosecute any remedy, to which he is entitled, that does not involve a withdrawal of the property from the custody of the officer and of the jurisdiction of the court, in any court, state or federal, having jurisdiction of the parties and the subject matter. The objection 545 to these actions of replevin is that, after the bankruptcy court has taken the property into its possession, they change the judicial custody of the

property and aim to transfer its actual possession to a new court and a new jurisdiction.

We are aware that the supreme court of New Jersey in a recent case, Cook v. Scovel, 68 N. J. L. 484, 53 Atl. 682, have held that the state courts have jurisdiction of an action of replevin brought against a trustee in bankruptcy who claims that the goods in controversy belonged to the bankrupt. No reference is made in the opinion to White v. Schloerb, 178 U. S. 542, 20 Sup. Ct. Rep. 1007, above mentioned, and the only case citel in support of the decision is Claflin v. Houseman, 93 U. S. 130, where an assignee in bankruptcy brought suit in a state court under the thirty-fifth section of the bankrupt act of 1867, to recover the amount collected by the defendant on a judgment against the bankrupts recovered within four months before the commencement of the proceedings in bankruptcy. It was there held that where neither by express enactment nor necessary implication exclusive jurisdiction is given to the federal courts, the state courts having competent jurisdiction in other respects may be resorted to for the enforcement of rights acquired under the laws of the United States. The question of the transfer from one jurisdiction to another of property in custodia legis was neither involved nor discussed, and we cannot regard Claflin v. Houseman, 93 U. S. 130, as opposed to the doctrine of White v. Schloerb, 178 U. S. 542, 20 Sup. Ct. Rep. 1007, or Covell v. Heyman, 111 U. S. 176, 4 Sup. Ct. Rep. 355.

Our conclusion is, that the property replevied from the trustee was at the time in his possession as an officer and agent of the bankruptcy court, and therefore within its custody and exclusive jurisdiction; and that it could not be taken out of its jurisdiction by any process issuing from a state court.

In accordance with the stipulation of the parties the entry in both cases must be, plaintiff nonsuit. Judgment for return of the property.

In Case of a Conflict of Jurisdiction between two courts of concurrent jurisdiction, the one which first acquires cognizance of a controversy is entitled to retain it to the exclusion of the other to the end of the litigation: Spiller v. Wells, 96 Va. 598, 70 Am. St. Rep. 878, 32 S. E. 46 Reisner v. Gulf etc. Rv. Co., 89 Tex. 656, 59 Am. St. Rep. 54, 36 S. W. 53; monographic note to Plume etc. Mfg. Co. v. Caldwell, 29 Am. St. Rep. 310-318.

If an Estate in Bankruptcy is being administered by a federal court, no other court can interfere and wrest from it the possession and jurisdiction first obtained, or any part thereof: Turrentine v. Blackwood, 125 Ala. 436, 82 Am. St. Kep. 254, 28 South. 95. See, in this connection, State v. Superior Court, 28 Wash. 35, 92 Am. St. Rep. 826, 68 Pac. 170.

CASES

IN THE

COURT OF APPEALS

OF

MARYLAND.

SPUCK v. LOGAN & UHL.
[97 Md. 152, 54 Atl. 989.]

FRAUDULENT CONVEYANCE.-If There is a Running Account between buyer and seller, the buyer making payments from time to time, but having a debit balance continuously against him, the seller is a subsisting creditor in respect to fraudulent conveyances by the buyer. (p. 430.)

FRAUDULENT CONVEYANCE-Subsequent Creditors.-If a conveyance is merely colorable, and a secret trust and confidence exists for the benefit of the grantor, it is subject to attack by subsequent as well as prior creditors. (p. 431.)

FRAUDULENT CONVEYANCE.-A Conveyance Intended to Defraud One Creditor may be avoided by another standing in like relation. (p. 431.)

FRAUDULENT CONVEYANCE Judgment, Claims not Reduced to. The fact that a creditor has not reduced his claim to judgment does not prevent a conveyance from being fraudulent as to him, but only affects his remedy; when he establishes his claim by judgment, his right to attack the conveyance relates to the time of the transfer, in the absence of intervening rights. (p. 432.)

FRAUDULENT CONVEYANCE-Purging by Paying Consideration. If there is fraud in fact on the part of both grantor and grantee, the conveyance is not validated by the grantee subsequently paying full consideration. (p. 433.)

Robert H. Smith, for the appellants.

S. S. Field, for the appellees.

153 BOYD, J. This is an appeal from a decree declaring certain deeds 154 fraudulent and void as against the appellees, who are creditors of Christian Spuck, and directing a sale of

(427)

the property mentioned therein. On the eleventh day of January, 1898, Spuck and wife conveyed two ground rents in the city of Baltimore to Solomon Haas, and on April 30th of that year Haas and wife conveyed them to William Deehring, one of the appellants, in pursuance of the original arrangement made between them when deed of January 11th was made. Each of those deeds recites a consideration of $850, but it was admitted that no consideration was in fact paid at the time of the execution or delivery of either of them, and it is conclusively shown by the testimony that the transfers were made to prevent one Charles H. Snack from recovering against Spuck on any judgment he might obtain in a suit for damages, instituted on March 1, 1898. Deehring, Haas and Spuck admit that such was the object of the deeds and that no consideration was in fact paid. Snack, who had been in the employ of Spuck, claimed he was injured by reason of the latter negligently allowing the machine which Snack was operating to become in an unsafe, dangerous and unsuitable condition, which he claims resulted in the loss of his arm, and he claimed $10,000 damages in the declaration filed by him. That suit was never tried and is still pending in one of the courts of Baltimore City. On October 3, 1899, Deehring loaned Spuck $400, for which he took his note, payable one year after date, and on October 3, 1900, a new note was given payable twelve months after date. Deehring owned a leasehold interest in one of the lots and he agreed with Spuck in December, 1900, to purchase the two ground rents for $850-$450 in cash and the cancellation of the $100 note. The cash was paid and the note surrendered, and there seems to be no doubt about the price named being a fair estimate of the value of the property. Deehring and wife, and Spuck and wife then conveyed the two lots to J. W. Oast, by deed dated December 19, 1900, in which the consideration recited was $5 and the same day Oast conveyed them to Deehring and his wife155 the same consideration being mentioned in that deed. Mr. Strohmeyer, who drew these deeds, testified that: "While examining the title, I discovered that there had never been a lease executed for the ground rent which was intended to be conveyed to Mr. Deehring, and for the purpose of wiping out any flaw by putting the property in fee in Mr. Deehring I suggested that Mr. and Mrs. Spuck and Mr. and Mrs. Deehring convey to Mr. Oast, by which deed all the interest of all the parties was conveyed to Mr. Oast and then a deed by Mr. Oast to Mr. and Mrs. Deehring." He also said that the orig

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