Sargent v. Helton/Opinion of the Court

Section 720 of the Revised Statutes of the United States provides 'that the writ of injunction shall not be granted by any court of the United States to stay proceedings in any court of a state, except in cases where such injunction may be authorized by any law relating to proceedings in bankruptcy.'

The sole purpose of the bill in this case was to restrain the execution of an order of the circuit court for the county of Escambia, a court of the state of Alabama; and no relief which, upon the averments of the bill, this court could grant, would be effectual without the writ of injunction prayed for. The circuit court of the United States was therefore deprived of power, by the section just quoted, to protect the rights of the plaintiff, unless the writ of injunction was authorized by the law relating to proceedings in bankruptcy. Haines v. Carpenter, 91 U.S. 254; Dial v. Reynolds, 96 U.S. 340. In a timely suit brought by the assignee in bankruptcy, there is no doubt that upon a proper showing the circuit court might have enjoined proceedings in the attachment suits in the state court. This is the express ruling in Chapman v. Brewer, 114 U.S. 158; S.C.. 5 Sup. Ct. Rep. 799. But the plaintiff in this case is not the assignee in bankruptcy. Sullivan, the transferee of Sargent, the vendee at the bankruptcy sale, was the real plaintiff, and the only party who, at the final hearing, asked for the injunction. The question, therefore, is, does any law relating to proceedings in bankruptcy authorize an injunction, at the instance of a purchaser of property at a bankruptcy sale, or his vendee, to stay proceedings in a state court? There is no act of congress expressly authorizing a circuit court of the United States to restrain by injunction, even at the suit of an assignee in bankruptcy, proceedings in a state court. The case of Chapman v. Brewer, ubi supra, was a bill in equity filed by an assignee in bankruptcy to enjoin the defendant from selling the property of the bankrupt upon execution issued out of the state court. The jurisdiction to issue the writ in that case was placed by the court upon section 5024 of the Revised Statutes, which authorized the district court, sitting in bankruptcy, when a petition involuntary bankruptcy had been filed, to restrain by injunction all persons from interfering with the debtor's property, and upon section 4979, which gives the circuit court concurrent jurisdiction with the district courts, of all suits at law or in equity brought by an assignee in bankruptcy against any person claiming an adverse interest in any property transferable to or vested in him. The court, in the case cited, said: 'It must be held that congress, in authorizing a suit in equity in a case like the present, has, in order to make the other relief granted completely effective, authorized an injunction as necessarily incidental and consequent to prevent further proceedings under the levies already made, and new levies under the judgment.' The case makes it clear that the injunction to stay proceedings in a state court is only allowed by the statute for a the purpose of aiding the assignee in bankruptcy to dischange his duty, and of protecting the property of the bankrupt estate for the equitable distribution among the creditors. But there is no act of congress from which can be inferred authority to a court of the United States to issue an injunction to restrain proceedings of a state court at the instance of a purchaser at a bankruptcy sale, or of his vendee.

The right of the assignee in bankruptcy, by section 5057 of the Revised Statutes, to maintain any suit touching any property or rights of property transferable to or vested in him against any person claiming an adverse interest, is cut off by section 5057 of the Revised Statutes by the lapse of two years from the time the cause of action accrued. But the contention of the plaintiff in this case is that the bankruptcy act, without limitation of time, allows a purchaser at a bankruptcy sale, or his vendee, to sue out a writ of injunction from a federal court to restrain proceedings in a state court, while it denies that right to all other persons, except the assignee in bankruptcy, and allows it to him only for two years after his cause of action has accrued. The argument against the jurisdiction in this case is clear. The suit was not brought until long after the lands in controversy had been sold and conveyed by the assignee, and the purchaser had been put in possession. Neither the assignee nor the creditors of the bankrupt estate had any further interest in or concern with them. They had been fully administered, the purchase money had been paid to the assignee, and the lands no longer formed any part of the assets of the bankrupt estate, and no proceedings in the bankruptcy court could have any reference to them. There is, therefore, no law relating to proceedings in bankruptcy which authorizes the injunction prayed for. The case of Dietzsch v. Huidekoper, 103 U.S. 494, cited by counsel for plaintiff, merely decided that a court of the United States could enforce its own judgment in a replevin suit removed from a state court, by enjoining the defeated party from proceeding on the replevin bond in the court from which the cause had been removed, the condition of the bond having been satisfied by the judgment of the federal court in favor of the obligor. The court further held that the bill filed for the purpose of restraining the defendant was merely ancillary to the replevin suit; its object being to secure to the defendant therein the fruits of his judgment. The authority cited does not tend to sustain the jurisdiction of the court in this case. Decree affirmed.