COURTNEY v. SHEA et al.; SAME v. WHALLEN, 225 F. 358

WARRINGTON, Circuit Judge (after stating the facts as above). Counsel do not concern themselves about the remedies adopted by the trustee to bring these cases into this court. Since each proceeding is

summary in character and object, we think each is a proceeding in bankruptcy, rcviewable under

section 24b, and not appealable as a coniroversv arising in haukruotcy proceedings under

section 24a. First Nat. Bank v. Title & Trust Co., 198 U. S. 280, 288, 291, 25 Sup. Ct. 693. 49 L. Ed. 1051; In re Goldstein, 216 Fed. 887, 888, 133 C. C. A. 91 (C. C. A. 7th Cir.); In re Farrell, 176 Fed. 505, 507-509, 100 C. C. A. 63 and citations (C. C. A. 6th Cir.); In re Rose Shoe Mfg. Co., 168 Fed. 39, 40, 93 C. C. A. 461 (C. C. A. 2d Cir.); In re Rathman, 183 Fed. 913, 929, 106 C. C. A. 253 (C. C. A. 8th Cir.). The two remedies adopted, the one to revise in matter of law and the other to appeal, are mutually exclusive (Barnes v. Pampel, 192 Fed. 525, 527, 113 C. C. A. 81 [C. C.

A. 6th Cir]; In re Martin, 201 Fed. 31, 37, 119 C. C. A. 363 [C. C. A. 6th Cir.]); and the appeals will be dismissed. The controlling question in each case is whether the trustee was entitled to

summary processes, or, stated in another way, whether he was required to proceed by plenary suits to recover the moneys and stocks in dispute. Every legitimate object oí

summary proceedings such as these is accomplished, and they should be dismissed, when it appears that the properly sought to he recovered is in possession of a third person and held under an adverse claim, which existed at the time the petition in bankruptcy was filed, and which, if supported by uncoutradicled testimony, would sustain a judgment in favor of the claimant, even though the claim might in the end prove to be fraudulent and voidable: but of course a merely frivolous claim, such as that of an agent or bailee holding in the interest of the bankrupt, should not be allowed to defeat

summary process. In re Yorkville Coal Co., 211 Fed. 619, 621, 128 C. C. A. 570 (C. C. A. 2d Cir.); In re Bacon, 210 Fed. 129, 134, 126 C. C. A. 643 (C. C. A. 2d Cir.); In re Goldstein, supra, at page 888 of 216 Fed.. 133 C. C. A. 91; In re Blum, 202 Fed. 883, 884, 121 C. C. A. 241 (C. C. A. 7th Cir.); Shea v. Lewis, 206 Fed. 877, 880, 881, 124 C. C. A. 537 (C. C. A. 8th Cir.); In re Rathman, supra, 183 Fed. at page 918 et seq., 106 C. C. A. 253; In re Cohn (D. C.) 98 Fed. 75, opinion by Judge Addison Brown; In re Green (D. C.) 108 Fed. 616, opinion by Judge McPherson.

It results that, where the adverse claim is of the character first pointed out, the trustee must resort to plenary suit, but that, where the adverse claim is of the character secondly pointed out, a

summary proceeding may he maintained. Babbitt v. Dutcher, 216 U. S. 102, 113, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969. 1. In her response to the petition of the trustee, Irene Shea in terms alleges that the court below and the referee had no jurisdiction of the proceeding brought against her; and we find nothing looking to a waiver of her rights in this behalf. The most that she did was to yield to compulsory process to appear and testify.

Further, one of the defenses set up by the respondents is that within a few weeks after their marriage, January, 1906, they entered into an agreement, concerning which the learned trial judge found; “It seeiits not to be disputed, and we therefore find it to be true, that shortly after the marriage of the respondents early in 1906, the bankrupt arranged with his wife to put most of his earnings in her hands, she to pay all bills, expenses, etc., of the family, and if she,, by judicious and economical management, saved anything out of the money, the amount thus saved was to become her property.” Mrs.

Shea testified in substance that the agreement had ever since / been observed and carried out. The referee made no allusion to this agreement or the testimony supporting it, either in his opinion or certificate. Between April, 19.13, and the following November, though prior to the bankruptcy, it appears that the bankrupt gave to his wife $3,970.38, which was deposited to her credit in the First National Bank of Louisville, and within the same period she checked out of this account $3,285.91, leaving a balance to her credit of $684.47 at the time the proceeding in bankruptcy was begun.

After the bankruptcy, and in November and December of that year, Mrs. Shea, according to her uncontradicted response, checked against this balance for necessary household and personal expenses to the amount of $449.93. This sum was withdrawn in part by checks running in favor, of third persons in payment of rent, supplies, etc., and the rest by checks for cash to herself, reducing the balance in bank to $234.54. This is the sum as to which the court affirmed the order of the referee.

In other words, this was the only money found to bé in possession of the wife at the commencement of the present proceeding—January 2, 1914. We are not concerned with this -sum, for the reason, pointed out in the statement, that no steps have been taken to review the partial affirmance. The trustee claims, however, both in his petition and in argument, that the wife should be required to pay over the entire balance of $684.47. This ignores the fights of the persons who received Mrs. Shea's checks before the trustee began his

summary proceeding. It is not suggested that those persons did not receive the checks, or the sums for which they were drawn.; and Mrs. Shea could no more be compelled by

summary process to pay over money she had so disposed of than the rights, of the persons who were in possession of it could be adjudicated in their absence. And- as to the portion withdrawn by Mrs. Shea in her own favor for the purposes stated, she further says in her response that the money was used before she knew any part of it would be claimed by the trustee, and this is not disputed. True,..she made a deposit of money during this period; but it cannot be presumed to be the same money she had checked out. The money paid to the building associations, it is true, was given to Mrs.

Shea by the bankrupt; but as early as August 30, 1911, she purchased from one Hite a passbook, No. 2604, representing 20 shares of stock in the Avery Building Association, and paid therefor $162; she paid further sums to the association on account óf these shares in 1911 and 1912, amounting to $38. On February 17, 1912, Mrs.

Shea purchased from one Ray a passbook, No. 1208, for 30 additional shares of the association before named, for $162, and subsequently during that year, and also between January 4 and November 1, 1913, she continued to make payments on account of such shares to the amount of $473, aggregating a total investment in the shares of that association of $837. Between January 25, 1911, and November 1, 1913, Mrs. Shea purchased shares of stock in the Portland Building & Loan Association, and made payments thereon in the ordinary way from time to time to the amount of $1,958.

The passbooks were all purchased and kept in her name. When the dates of these purchases of the passbooks in the two associations and of the payments made on account of the shares therein are considered, it is perfectly plain that the claims made by Mrs. Shea to the moneys used to pay for the shares, and to the shares themselves, are substantial; it is therefore vain to insist that her claims are but colorable.

Reliance is placed upon the nature of a suit which was brought in the name of a taxpayer on behalf of Jefferson county, Ky., against the bankrupt, and which resulted in a judgment against him and in the voluntary proceeding in bankruptcy; also upon

section 1907 of the Kentucky Statutes, which provides in substance that every gift made by a debtor “shall be void as to all of his then existing liabilities” ; but the enactment further provides that such gifts shall not be “void as to creditors whose debts or demands are thereafter contracted,” etc. It is enough to say of the contentions made in respect of these matters that they may be of weight in a plenary suit; but we hold that they cannot be employed in support of a

summary proceeding such as this. 2. It is not necessary to dwell upon the proceeding brought against Whallen. His response, which is in substance set out in the statement, is fairly sustained by his own testimony; and we do not discover anything in the record opposed to his version of the transaction. Both the referee and the District Judge held the response and the testimony in its support to be sufficient. The referee discharged the rule, and the court affirmed his order. The orders as made by the District Judge in both proceedings are affirmed, and the appeals therein are dismissed, with costs.