In re Lady Bryan Mining Co. UNITED STATES DISTRICT COURT-NEVADA. An injunction was granted on an order to show cause before adjudications in bankruptcy had taken place, to restrain the sheriff and all other persons from selling the property of the alleged bankrupt, on a judgment obtained by default in a suit brought in the state court. The sheriff moved to dissolve the injunction on the following grounds : First, that said injunction is not addressed to any person, therefore does not include the sheriff and judgment creditor. Second, that the court has exceeded its just power, and cannot lawfully restrain the judgment creditor from selling the property in question, the judgment not being impeachable for fraud or as preference under the bankrupt act, the judgment having been docketed before the filing of the petition. Heid, first, when the injunction was served upon the sheriff and judgment creditor, it plainly apprised them of what they were restrained from doing, and the fact that they were not named in the order can make no substantial difference. Second, that neither the judgment nor the levy of execution divests the alleged bankrupt of his property, and he would be bound to include such estate in his inventory if adjudged a bankrupt; and further, that the bankruptcy court may, the exercise of a lawful jurisdiction, restrain by injunction the sale of property under an execution issued from a state court, even before the commencement of proceedings in bankruptcy. In re LADY BRYAN MINING CO.* W. T. Cummings, sheriff of Storey county, and Ely Johnson, moved to dissolve the injunction issued herein upon the following state of facts: On the twelfth day of August, eighteen hundred and seventy, said Ely Johnson commenced a suit in the first district court for Storey county, Nevada, against the Lady Bryan Mining Co., to recover the sum of about two thousand eight hundred dollars. Summons was duly served, and on the twenty-third of August, the defendant having failed to appear, judgment by default was entered against it, and docketed, and an execution thereon issued to the sheriff, who levied on the real property of the corporation and advertised it for sale. Subsequently, on the second day of September, eighteen hundred and seventy, Henry Donolly, a creditor of the corporation, filed his petition praying that it might be adjudged a bankrupt; and thereupon an order to show cause was made; and upon application therefor it was further ordered "that said Lady Bryan Mining Co., and all other per See 4 N. B. R. 36, 131. In re Lady Bryan Mining Co. sons be restrained in the meantime from making any disposition of said Lady Bryan Mining Co.'s property, not excepted from the operation of the bankrupt act, and from any interference therewith." This order was served September third on Johnson and the sheriff. The first ground upon which the motion to dissolve is based is that said injunction is not addressed to any person. Section forty gives this court power, upon making an order to show cause, to restrain by its injunction the debtor and any other person from transferring, disposing of, or interfering with the debtor's property-between the time of filing the petition and the hearing of the order to show cause. This order may be made without notice, and its office is to preserve the property of the debtor until the question of bankruptcy is determined. In the present case the injunction is in the form of an order, and is addressed to the Lady Bryan Mining Co. and all other persons who may attempt to transfer or interfere with the property of that company, and when served upon the sheriff and Johnson, as it was, it plainly apprised them of what they were restrained from doing. The fact that they were not named in the order can make no substantial difference. Any distinction between a writ of injunction and an order in the nature of one, has been disregarded in practice. Hilliard on Inj., 42; Erie R. R. Co. v. Cary, 26 Penn. 292. The second ground is that this court has exceeded its just power, and cannot lawfully restrain the judgment-creditor, or the sheriff, from selling the property under the execution issued out of the state court. Johnson having obtained a judgment, and it having been docketed before the filing of the petition in bankruptcy, the judgment, not being impeachable for fraud or as a preference, is a lien which this court must protect. But it is only a lien, for neither the judgment nor the levy of execution divests the bankrupt of its property in the estate levied upon, and it would be bound to include such estate in its inventory as part of the assets. In re Lady Bryan Mining Co. I am fully satisfied that this court may, in the exercise of a lawful jurisdiction, restrain by injunction the sale of property under an execution issued from a state court before the commencement of proceedings in bankruptcy, and that this may be done by restraining the judgment creditor or the officer about to make the sale, or both. Looking at the first section of the bankrupt act, it is difficult to imagine how a more unrestricted jurisdiction over matters in bankruptcy could have been granted. All the assets and all the parties in interest are to be brought before the court, priorities adjusted, liens ascertained and liquidated, and the different funds and assets marshalled and distributed. The grant of these powers carries with it the right to employ such process, mode of procedure and remedies, as are indispensable to make the grant effectual. In this case the real estate levied on is assets, and power to collect the assets is given. But this power is of no avail in this proceeding, unless the court can preserve the assets until the question of bankruptcy is determined. By section fourteen, the assignee has power under the direction and order of the court to sell encumbered property. Can it be doubted that the court may make this provision effectual? Section twenty gives the court power to direct a sale of property upon which a creditor has a lien, which can be wholly defeated if the position of the sheriff in this case is correct. The judgment creditor claims a lien upon the property under levy, but whether it is a valid lien or not, the law says the court of bankruptcy shall ascertain, and that if it is found valid it shall be liquidated in that court-provisions which would be rendered nugatory unless the sheriff can be restrained. There may, no doubt, be cases where no good could be accomplished by issuing an injunction, but this is not such a case. Johnson's debt does not exceed three thousand dollars, for which he has a judgment bearing ten per cent. interest. His lien embraces property valued at some twenty In re F. & A. Speyer. thousand dollars, and it appears that it would be most advantageously sold in one parcel at private sale. The only damage to the judgment creditor will be a little delay, while the general creditors may suffer a serious loss by the forced sale of this large amount of property to satisfy so small a debt. Motion denied.-September 30, 1870. UNITED STATES DISTRICT COURT-S. D. NEW YORK. A register may order bankrupts to hand over to his custodian funds in their hards. Disobedience to such an order adjudged a contempt, for which an attachment was issued from the court. In re F. & A. SPEYER. The above named bankrupts filed their petition to be declared bankrupts on the fourth day of January, eighteen hundred and seventy-one. In their schedules they set forth that the sum of one thousand three hundred and ten dollars and five cents in money was in their hands. The register in charge appointed Mr. LeRoy T. Gove custodian of the estate during the interim and until the assignee should be elected. The custodian thereupon demanded the said money of the bankrupts, and was informed by them that one of the bankrupts-having the money in his pocket-had been robbed of the same on the morning after filing the said petition. Whereupon the said custodian summoned the bankrupts before the register, and proceeded to examine them concerning the same. Upon this testimony so taken, the register made an order that said bankrupts hand over to the said custodian the said sum of one thousand three hundred and ten dollars and five cents within twenty-four hours after the service of said order on them. This order was duly served on the bankrupts; they failing to comply therewith, the said custodian moved the court before the district judge on notice to the bankrupts for an order that an attachment issue against them as for a contempt, for a disobedience to the order of the register. Whereupon the court referred the matter back to the register to In re F. & A. Speyer. take such testimony as the said bankrupts might offer by way of purging the alleged contempt. Testimony was then taken on the part of the plaintiffs, whereupon the register certified the case as follows :— I, the undersigned register in bankruptcy, to whom the matter of the alleged contempt in this case was referred by the order of this honorable court, bearing date the fourth day of February, eighteen hundred and seventy-one, and hereto annexed, do hereby certify and report to this honorable court, That I have been attended by the said bankrupt, Abraham Speyer, and his counsel, Dubois Smith, Esq., and that I have taken all the testimony offered by him under said order, to wit: The testimony of the said Abraham Speyer, and Frederick Speyer, together with further testimony, of the said LeRoy T. Gove, Esq., all of which is hereto annexed, and herewith returned to this honorable court. And I further certify that upon a careful examination of said testimony, I am unable to accept the statements of the said bankrupts, as affording the true reason why the said sum of one thousand three hundred and ten dollars and five cents was not paid over to the said custodian on his demand, nor was there anything in the manner of either of the said bankrupts, while under examination calculated to inspire confidence in their statements. I cannot entertain the slightest doubt that the loss of said money is a mere pretence on the part of the said Abraham Speyer. I therefore certify to this honorable court, that in my opinion the order of the court should be forthwith entered, committing the said Abraham Speyer to the county jail of the county of New York until he shall have paid over to the said custodian the said sum of one thousand three hundred and ten dollars and five cents, with interest thereon from the sixth day of January, eighteen hundred and seventyone, besides the costs of this proceeding, to be adjusted before the register in charge of the said case. BLATCHFORD, J.-Enter an order herein in accordance with the conclusions of the register. |