The Federal Reporter with Key-Number Annotations, Volume 272: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States and the Court of Appeals in the District of Columbia, June-August, 1921. Page: 129
xx, 1023 p. ; 23 cm.View a full description of this legislative document.
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DEY V. BRENACK STEVEDORING CO. lU
(272 F)
ant, which is under foreclosure, but the validity of which is disputed,
and which is in litigation, has also moved to set aside the order ap-
pointing the receivers and to vacate the stay.
The first objection raised is that the defendant is a corporation or-
ganized under the laws of the state of New York, and that, while
complainant is a citizen of the state of New Jersey, the claim upon
which he bases his right to bring action has been assigned to him by
a resident of the state of New York. This objection is not now
pressed, as it does not apply to the pending action, in which the com-
plainant alleges that he is a citizen of the state of New Jersey, and
that his claim is for goods sold and delivered by him to defendant.
[1] It is next claimed that there is collusion between the parties.
But it appears from the papers submitted that more than 50 creditors
have signed a request, addressed to the court, that the receivership
and the stay be continued. Only the creditors who have or claim to
have liens on the real estate have suggested that collusion exists. These
liens, assuming they are valid, aggregate approximately $102,200. The
property involved is assessed by the city of New York at $205,000,
and has been recently appraised at $165,000 by a conservative and
reliable appraiser. The receiver submits proof that negotiations are
now in progress with several prospective buyers, for the sale of de-
fendant's property at a price sufficient to pay all creditors in full. The
defendant is aiding the complainant, but that does not indicate any
collusive attempt to defraud its creditors. Indeed, it is commendable
that a defendant in an action of this character should co-operate with
complainant in an endeavor to secure an equitable distribution of its
property.
[2J The moving parties insist that the state courts in the foreclosure
proceedings have acquired jurisdiction of the property covered by the
mortgages. I am entirely satisfied, and with this conclusion the re-
ceiver states his concurrence, that this court has no power to issue
a permanent injunction against tie foreclosure of these mortgages.
The right to dispose of property which is the subject-matter of liti-
gation, as between the state and federal courts, was discussed at length
in the case of Central District Printing & Telegraph Co. v. Farmers'
& Producers' National Bank, etc., 255 Fed. 59, 166 C. C. A. 387. The
court is of the opinion that under the authority of the Central District
Printing & Telegraph Co. Case, supra, and authorities therein cited,
this court is without power to stay the foreclosure of the mortgage.
A similar situation' in bankruptcy was presented in Re Schmidt (D.
C.) 224 Fed. 814. There the court observed, "The petitioner's remedy
is in the state court," and I am constrained to hold that in the case at
bar the receiver must apply to the state court 'for relief, and must
invoke the equity powers of that tribunal to obtain a temporary stay
of the sale, to permit the receiver to negotiate a sale of the property at
a fair price, if possible, in order that the general creditors may not
suffer. Permission to make such application is hereby granted.
In all other actions pending against the defendant in the state courts,
the receiver is hiereby given leave to apply to such courts for permis-
272 F.-9
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The Federal Reporter with Key-Number Annotations, Volume 272: Cases Argued and Determined in the Circuit Courts of Appeals and District Courts of the United States and the Court of Appeals in the District of Columbia, June-August, 1921., legislative document, 1921; Saint Paul, Minnesota. (https://digital.library.unt.edu/ark:/67531/metadc38843/m1/151/: accessed April 24, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.