In re Bluestone Bros.

DAYTON, District Judge (after stating the facts as above). The very interesting question of to what extent a bankrupt court has jurisdiction and power, after sale confirmed under its orders, to protect the title of property in the purchaser at such sale, was presented by this bill, and to determine this question was the purpose of granting the injunction herein. It is no longer an open question in this (Fourth) circuit that the jurisdiction of the federal courts in bankruptcy is essentially exclusive, and that a District Court, as a court of bankruptcy, has power to stay proceedings of a state court, seeking to take away from its trustee either the property itself or to impose a lien upon it. New River Coal Land Co. v. Ruffner Bros., 165 Fed. 881, 91 C. C. A. 559. But some doubt arises as to whether such jurisdiction could extend to the protection of the property after it has been sold and delivered to the purchaser. This question it becomes wholly unnecessary to decide in this case. It is only necessary to say that, in any event, the • defendant, Devault, could only be staj'ed in his right to assert claim in a state court to the property under two conditions of things: First, in case there was conflicting claim to the property between himself and the bankrupt, which claim he had asserted in the bankruptcy court, and it had been there determined, or, being made a party to the proceeding, he had refused or failed there to assert his right, being called upon so to do; second, had by his fraudulent conduct at the time of sale, either by direct representation or by silent acquiescence, secured or allowed plaintiff to buy his goods, mingled with those of the bankrupts, as goods of the bankrupt properly to be sold. The evidence in my judgment wholly refutes the contention that either of these contingencies arose in this case. It is substantially undisputed that the articles claimed by Devault belonged to him, and that bankrupts could and did make no claim to them whatever. The original lease filed, whereby Devault leased the storeroom to Blue-stone Bros., specified that these specific articles were leased in connec [55] tion, and upon the same conditions, with the room. The trustee, therefore, had no interest in these specific articles, and the bankrupt court could take no jurisdiction over them. It was not Devault’s duty to intervene and prove his right in the bankruptcy cause, for the simple reason that neither the bankrupts themselves nor the trustee made any claim, to them. The schedules filed by the bankrupts show this, so far as they are concerned. Nor was there any fraudulent conduct on the part of Devault, at the time of the sale, that would estop him from disputing plaintiff’s title under purchase there made. On the contrary, it is clear that his agent notified the trustee’s agents, making the sale, that he claimed these items of property, and furnished or offered to furnish the list of them, and that the auctioneer, if he did not actually reserve them from sale, did announce publicly that there was doubt or dispute as to their ownership, and that he was only selling such right to and interest therein as the bankrupts had, if any. If plaintiff was not present to hear this announcement when the sale began, but subsequently came in and purchased under misapprehension that he was buying “everything in the storeroom,” it was his misfortune, but not Devault’s fault. The injunction must be dissolved, and the bill dismissed.