Rutherford v. Hewey

Macomber, J. — The case of Cook agt. Whipple (55 N. Y, 150) decided that this court has jurisdiction in all actions, legal or eqmtable, brought by an assignee in bankruptcy to recover the estate of the bankrupt, or to determme rights to property claimed by him as such assignee, or in any way affecting the same, and that the jurisdiction conferred upon the Federal courts by section 1 of the bankrupt act was not exclusive. ¡Nor does the subsequent amendment of that section, passed June 22, 1874, affect the statute so as to impair the authority of that decision. The amendment consists only in adding the following clause to the section: “ Provided, that the court having charge of the estate of any bankrupt may direct that any of the legal assets or debts of the bankrupt, as contradistingmshed from equitable demands, shall, when such debt does not exceed five hundred dollars, be collected in the courts of the state where such bankrupt [236] resides, having jurisdiction of claims of such nature and amount.” Ho direction was given by the district court that this action should be brought in the state court, nor was such direction necessary. The amendment in no respect made the jurisdiction of the.Federal courts exclusive, when it was not exclusive when, the decision of Cook agt. Whiffle was rendered. It simply conferred upon those courts the power which they did not possess before its'passage of directing, of their own motion, that certain actions be prosecuted in the state courts. The supreme court of this state possesses general jurisdiction by the Constitution and the laws of all cases in law and in equity. In what manner or in what place a party acquires the legal rights which he proposes to enforce is quite immaterial so long as the jurisdiction of the court has not been denied, as it may be in a limited class of cases where the Federal Constitution and the Federal laws have made the jurisdiction of United States courts paramount and exclusive. To hold that the proviso above quoted affected the jurisdiction of this court would make jurisdiction of a state court dependent upon the will of a judge of the Federal court. The only other question which I deem of sufficient importance to advert to is whether an assignee in bankruptcy may be permitted to maintain an action for partition. The appointment of the plaintiff as assignee of David Dennis, and the transfer to him, clothed him with the title to all of the property of the bankrupt. He became the absolute • owner of the bankrupt’s estate, both real and personal, for the purposes of his trust. He became a tenant in common with the other part owners of the lands described in the complaint. It is trae it was not necessary for him to bring this action for the purpose of having his share set off to him, for by the bankrupt act, he was empowered to sell his interest while it was undivided. He was already possessed of it as effectively as the bankrupt himself was possessed of it before the adjudication in bankruptcy [237] and the assignee’s title was undisputed. Yet the court cannot properly say, as it seems to me, that the assignee was bound to proceed in that way. He may have believed, with reason, that a sale so made would not be so advantageous to Ms estate as an actual partition and a sale of the portion set off to him. In such .case the assignee has, in my judgment, the right, and it is his duty, to bring a suit for a partition of the lands. Section 5047 declares that “ the assignee shall have the like remedy to recover the estate, debts and effects in Ms own name, as the debtor might have done if the decree in bankruptcy had not been rendered and no assignment made.”. In Dubois agt. Cassidy (75 N. Y., 302) it was doubted whether a receiver appointed in proceedings supplementary to execution acquired such a title to real estate as to enable him to maintain an action of partition. But that suggestion rested upon the particular nature of the estate wMch such a receiver has. He is not clothed with the general title to the debtor’s property unless a transfer has been made to him by the debtor either voluntarily or by an order of the court. But an assignee in bankruptcy stands to the estate of the bankrupt as does an assignee under a voluntary and general assignment for the benefit of creditors to the estate of the assignor. He becomes the absolute owner of the entire estate for the purpose of distributing the same to all of the creditors ratably. In Van Arsdale agt. Drake (2 Barb., 600) it was held that an assignee under the state insolvent act could maintain an action for the partition of the debtor’s real estate. As to the point that the action is required to be brought within two years it is sufficient to say that the suit is not to recover property in dispute, or to wMch there is any adverse claim, but" it is brought for the purpose of getting it into a situation where it will bring the largest sum to the estate. A point is also made by the counsel Eor the defendants that the discharge of the bankrupt restored to him this property, but manifestly tMs position is wholly untenable. I must conclude that the plaintiff is entitled to the relief [238] demanded in the complaint, with costs chargeable upon the property or upon the fund in case a partition cannot be had and a sale is directed.