Milner v. Meek/Opinion of the Court

The validity of the first objection to this appeal depends upon whether the proceeding in the District Court is to be treated as a suit in equity or as part of the suit in bankruptcy. If the former, the appeal lies; but if the latter, it does not.

The pleading filed by the assignee was appropriate in form for a petition in the bankrupt suit, but it was equally good in substance as a bill in equity. It contained a complete statement of a cause of action cognizable in equity, and a sufficient prayer for relief. There was no formal prayer for a subpoena, but process was issued and served. All the parties interested appeared, and presented their respective claims by answers, or answers and cross-petitions, with appropriate prayers for relief.

In Stickney v. Wilt, 23 Wall. 150, the petition was in all its essential features like the one in this case. It was filed by an assignee in bankruptcy against lien creditors, entitled as of the bankrupt suit, and addressed to the dis rict judge. Like that in the present case, it contained no formal prayer for subpoena; but there was a prayer for relief, much like the one here.

The several lien claimants appeared, and presented their respective claims by answer. The District Court having directed a sale of the property free of an incumbrance set up by Wilt, he filed in the Circuit Court a petition for review under its supervisory jurisdiction. The Circuit Court reversed the order of the District Court, and sent the case back, with instructions to allow the claim of Wilt, and proceed accordingly. From this action of the Circuit Court the assignee took an appeal to this court, where it was decided that, notwithstanding the form of the petition filed in the District Court, it contained all the essential ingredients of a bill in equity; and, as the subject-matter of the action was one cognizable by the District Court, under that provision of the bankrupt law which gives it jurisdiction of suits at law and in equity in respect to the property of the bankrupt, that court must be presumed, in the absence of any thing appearing to the contrary, to have acted under that jurisdiction when it granted the relief complained of. For this reason, we held that the remedy of Wilt was by appeal to the Circuit Court, and not by petition for review under the supervisory jurisdiction; and that the action of the Circuit Court was irregular and of no effect, because of a want of power to proceed in that way in such a case. As, however, what the court did do was under an assumed supervisory jurisdiction, we did not dismiss the appeal, but sent the case back, with instructions to the Circuit Court to dismiss the petition for review for want of jurisdiction, and suggesting to the District Court the propriety of entertaining a bill of review in equity to correct the errors in the original decree, if any were found to exist.

That case seems to us to be decisive of this, which is clearly one of equitable jurisdiction. The parties expressly waived all errors of form, and asked the court to proceed to a final hearing of all the questions in which they were interested. The court did proceed, and did enter a decree, from which an appeal was allowed and taken to the Circuit Court. In the Circuit Court the parties again stipulated that the court might proceed as upon an appeal, with the understanding, however, that the appeal should be turned into a petition for review in case it appeared to be necessary. It is evident, therefore, that the case in the courts below was not only in substance a suit in equity, but that both the parties and the court treated it as such, and acted accordingly. The proceeding is full of irregularities; but these have all been waived, and both courts below were asked to hear and decide the case upon its merits, without regard to mere form.

We are clearly of the opinion that, under the practice as finally established in this court in furtherance of justice, the case was properly brought here by the appeal.

As to the second objection, it is sufficient to say that the appeal was allowed in open court during the term at which the decree was rendered. No citation was, therefore, necessary. Brockett v. Brockett, 2 How. 241. Milner alone appealed; but his appeal brings up so much of the case and such of the parties as are necessary for the determination of his rights.

The motion to dismiss the appeal is, therefore, denied, and we are brought to a consideration of the case upon its merits. This presents only questions of fact. It is unnecessary to recapitulate the testimony; but, after a careful examination of the whole record, we are satisfied that the conveyance executed by the bankrupt to Milner, Nov. 17, 1870, was void as against creditors, but that the mortgage of the 19th of January, 1872, was executed for a good and valuable consideration, and without fraud, and that it constitutes a valid and subsisting lien upon the property mortgaged as of the date of its record, to secure the payment of such an amount § may appear to be due upon the indebtedness and liability secured thereby.

The decree of the Circuit Court, in so far as it affirms the decree of the District Court declaring the mortgage in favor of Milner fraudulent and void, will be reversed, and the cause remanded to the Circuit Court, with instructions to reverse the decree of the District Court rejecting the lien of that mortgage, and to remand the cause to the District Court with instructions to establish that lien, and to proceed further with the cause as law and justice may seem to require; and it is

So ordered.