In re J. W. Zeigler Co.
In re J. W. Zeigler Co.
Opinion of the Court
The motion is for an attachment in contempt against Nathan C. Herz, as receiver of the J. W. Zeigler Company, Incorporated, under a state court appointment. It is not directed against him as an individual, and this distinction must be constantly kept in mind while seeking a correct answer to the motion. ■ The order of this court was that its receiver “should take charge of and hold” the estate of the alleged bankrupt corporation. The federal receiver was appointed very shortly prior to a previously arranged and advertised sale of the bulk of the corporation’s estate. He now reports that on May 24th (the day of the sale under the state court order) he personally informed Mr. Herz, as state receiver, of our order, and that said Herz, “with full knowledge and notice thereof, refused to obey said order and refused to deliver possession of the alleged bankrupt’s estate, and later in the day sold a greater portion of said estate.” The order under which our receiver acted might have been made more explicit, definite, and comprehensive, but, if Mr. Herz had no other excuse than the form of the order, his answer would be lame and impotent. He knew what the order meant, and deliberately prevented its execution under advice of counsel. When the federal receiver brought home to the state receiver full knowledge of our order, it was the plain duty of Mr. Herz to turn over at once to our receiver all property belonging to the alleged bankrupt which was in his possession, unless he was holding it under an honest adverse claim. The counsel who advised him assert, and seem to believe, that his position as state receiver was a stronger one than if he had merely been holding the same as an individual with honestly entertained adverse rights. They insist that he would have been in contempt of the state court, if he had surrendered the property without first obtaining the permission of the court so to do.
There is, however, ixi the case a grave question of comity which may perhaps go deeper than a simple rule of etiquette. In ordinary cases the state and federal courts exercising jurisdiction over the same territory are as a matter of theox-y foreign to each other. This creates
The argument of counsel is that, when our order was disclosed to Mr. Herz as state receiver, his sanction for retaining possession was stronger than if he had been holding it in his private capacity under an adverse claim which he honestly entertained. They insist that his obligation to his own court constrained him to hold on. He was advised by counsel to hold on. Immediate action was imperative. There was no time to ask his court what to do. His refusal to deliver was in no sense a personal disrespect of this court. All this is true and is entitled to weight in reaching a final conclusion. If he had gone to his own court for advice, and had been told to retain possession, a different situation would be presented. On the 24th of May the affair had not ripened to a point where an antagonistic position was asserted by the state court. At the critical moment Mr. Herz as receiver remained true to the Caesar whom he knew best, and probably supposed to be all powerful.
I trust that I have made it plain that from my view of the law he was badly advised by counsel. And it may be that the state court would, if the pinch had come, have followed their advice, but, as the case stands, the state court was not called upon to cross the bridge, and it is immaterial at this juncture whether it would, if occasion had served, have crossed it or not. The counsel who gave the bad advice are not before me, and, even if they were, I should be constrained to let them go scot-free, because the Supreme Court, the fountain from which I am bound to drink my inspiration, has intimated that to punish
If the day shall ever come when it is clear to me that a state court, after reasonable assurances of good will and friendship on the part of the federal court, shall in a matter of bankruptcy undertake to exert and maintain its independent authority and control over property which under the Constitution and law belongs without doubt to the federal court, I shall deem it my duty under my oath of office to uphold with all the force within my control the supremacy of the federal power. In view of the particular facts now before me, I am constrained to say that I do not deem it my duty to punish Mr. Herz, as state receiver, acting as he did, under advice which he doubtless had faith in, but which to my mind was unusually wrong.
The motion for an attachment in contempt is for the reasons aboye imperfectly set forth denied.
Reference
- Full Case Name
- In re J. W. ZEIGLER CO., Inc.
- Status
- Published