In re Sucesores de José Hernaiz & Co.

HamiltoN, Judge, delivered tbe following opinion: This is a bankruptcy suit wbicb bas been upon the files of this court for several years. The motion alleges that by a decree of this court, October 25, 1907 [3 Porto Pico Ped. Rep. 202], petitioner was declared to be a general partner of the firm of Sucesores de José Hernaiz & Company, and the petitioner took certain proceedings before the referee, which were reviewed by this court on February 9, 1909. That the creditors .appealed from the order of February 9, 1909, to the Supreme Court of the United States, which, on December 4, 1911 [222 U. S. 114, 56 L. ed. 118, 32 Sup. Ct. Rep. 67], dismissed the appeal. That thereupon the creditors moved for a review of the former orders, and, on August 6, 1912, this was granted, and the petitioner Munsuri declared to be a general partner of the bankrupt firm, that his purchase of the claims of creditors is invalid, and that he must pay the claims of the creditors .in full out of his individual property. That petitioner, although never [203] adjudged a bankrupt, bas been deprived of tbe use of bis individual property, wbieb has been administered for tbe benefit of tbe creditors. That on January 2, 1913, tbe petitioner took an appeal from tbe final decree to the Supreme Court of tbe United States, where tbe proceeding is now pending. Tbe petitioner alleges that bis property in -the bands of the trustee is worth much more than tbe claims of tbe creditors, and be prays for an order releasing the property from this administration, upon condition that be file a bond or other security sufficient in amount, to be approved by the court, to insure tbe ultimate payment of tbe claims in dispute; and petitioner consents to tbe making of an order whereby proper entries may be made in tbe registry of property so as to prevent alienation or encumbrance by tbe petitioner. It appears to tbe could that tbe cause in its entirety was removed to tbe Supreme Court by the appeal of tbe present petitioner himself, and that tbe perfection of tbe appeal with supersedeas deprived this court of jurisdiction of tbe question now presented. Part of tbe ground for appeal was tbe refusal of this court to do at first what is now requested. Tbe corpus of the property still remains in tbe possession of this court for tbe purpose of administration, but tbe court can make no order changing tbe control of tbe property. It bas been held by tbe Supreme Court that “while tbe eoirrt below may make tbe necessary orders to preserve tbe fund, and direct its receiver to that extent, it cannot place tbe money beyond tbe control of any decree that may be made here [that is, in tbe Supreme Court], for that would be to defeat our jurisdiction.” Goddard v. Ordway, 94 U. S. 672, 24 L. ed. 237. That, it is true, was a proceeding in equity, but it was tbe [204] administration of a trust, just as the possession of the trustee in bankruptcy is for the administration of a trust. Tbe proceedings in bankruptcy are, to a large extent, modelled upon those in equity. Even when upon.an appeal an order was made, designed to increase the funds in the hands of a receiver, the Supreme Court denied the right of the lower court to act. The right of the lower court is confined to the preservation of the property in litigation. Grant v. Phœnix Mut. Ins. Co. 121 U. S. 118, 30 L. ed. 909, 7 Sup. Ct. Rep. 849. 2. We may apply in bankruptcy the rule, which obtains in equity, that the property is a fund in court to abide the event of the litigation. Wiswall v. Sampson, 14 How. 52, 14 L. ed. 322. Moreover, as the proceedings in bankruptcy follow certain statutory rules as to nomination of trustee, the only way the petition could be granted would be by substituting the petitioner for the trustee. This would violate the general rule as to the nomination of trustee by the creditors, and not by the court, and produce the result that there would be two different kinds of trustees in one case. This would be improper, and would certainly change the’parties upon whom the decree of the Supreme Court should act. It appears, therefore, to the court, that it would be transcending its power, pending an appeal to the Supreme Court, for the district court now to change the possession of the property. On the showing of the petition, there is' a great hardship upon the petitioner; but this is denied by the creditors, and cannot be tried in a collateral proceeding at present. The petition is accordingly denied.