Harris v. Luxury Fruit Co.

Atkinson, J. 1. It appears from the record that Brown claims title to the land in controversy adversely to the Luxury Fruit Company, under a sale made by virtue of a power of sale in a mortgage given by it; that Harris was in 'actual possession, but claimed to hold under Brown. Thus, both title and possession were in issue. By the cross-bill the Luxury Fruit Company attacked, as fraudulent, a certain sale and deed purporting to bring about a transfer of title from that corporation to Brown. It alleged that Harris had previously obtained possession as its lessee. It prayed that a receiver be appointed to take charge of the land; that Harris and Brown be restrained and enjoined from selling it or in any way interfering with the title claimed by the corporation, or from changing its status; that the sale made by a creditor of the corporation, under a power of sale included in a mortgage or security deed, should be declared void, and the deed executed in pursuance thereof to Brown should be surrendered and canceled. In the alternative it prayed for an accounting with the creditor. It also prayed for an accounting with several defendants mentioned, and for general relief. It is clear that the litigation involved both title and possession. Ordinarily any disturbance of the possession of Harris and Brown by the Luxuiy Fruit Company, before its right thereto had been declared by the court, would be premature, go would it be if the receiver in a court of bankruptcy should assume to disturb the possession of Harris and Brown, who claimed adversely to the bankrupt. Section 70 of the bankruptcy act, by operation of law, vests title of the bankrupt in the trustee in bankruptcy, but does not purport to divest the title or right of possession of third persons holding adversely to the bankrupt. In other words, adjudication in bankruptcy will not operate automatically as a judgment in ejectment, ousting adverse claimants from the possession of land. The Federal bankruptcy law supersedes the State insolvency law in regard to the administration of insolvent estates. See 1 Remington [70] on. Bankruptcy, § 1602. But this refers particularly to the estate of the insolvent, and has no application to rights of others holding adversely to the insolvent. The State court was a court of competent jurisdiction, and the action was pending on the cross-bill when the Luxury Fruit Company was adjudicated a bankrupt. The State court, having taken full cognizance of the cause, was not divested of its jurisdiction on account of the concurrent jurisdiction conferred by the Federal bankruptcy laws. The remedy of the trustee in bankruptcy was, under section 11 of the bankruptcy act, to apply to the State court to be made a party in lieu of the Luxury-Fruit Company, to prosecute the rights asserted in the cross-bill. Eyster v. Gaff, 91 U. S. 521 (23 L. ed. 403); Merry v. Jones, 119 Ga. 643 (46 S. E. 861); Neill v. Barbaree, 135 Ga. 771 (70 S. E. 638). It follows from what has been said that the judge erred in ordering the State court receiver to turn over to the receiver in the court of bankruptcy the property sought to be recovered by the Luxury Fruit Company in the State court insolvency proceedings. 2. The court should have heard and determined the motions of Harris and Brown to revoke the ex parte order directing the receiver in the State -court to take charge of the property referred to in the cross-bill, but he did not do so; therefore the propriety of such order has never been passed upon by the trial judge, and the assignments of error on the court’s refusal to sustain the motion to vacate are not for decision. 3. On the call of the case in the Supreme Court a motion was made to dismiss the bill of exceptions, on the ground that no supersedeas or stay of judgment was taken, and that the State court receiver had relinquished his possession of the premises to the United States court receiver, and therefore the question raised in the writ of error became moot. The property which was delivered into the possession of the United States court receiver was realty, and until the plaintiffs in error reverse the judgment complained of they will not 'be in position to apply to a Federal court for a restoration of possession. It is to be presumed that upon it being made to appear to the bankruptcy court that the order placing the property in the possession of the receiver in the court of-bankruptcy was improperly granted, the latter court will direct its receiver to relinquish his possession to the State court receiver. Judgment reversed. All the Justices concir.