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McRae v. Dodt

Supreme Court of Arizona

October 11, 1937

WILLIAM McRAE, Petitioner, Appellant,
v.
B. H. DODT, Receiver, Appellee

APPEAL from an order of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Order affirmed.

Mr. A. S. Gibbons, Mr. Richard F. Harless, and Mr. William McRae, for Appellant.

Messrs. Baker & Whitney and Mr. Lawrence L. Howe, for Appellee.

OPINION

Page 445

[50 Ariz. 337] LOCKWOOD, J.

This is an appeal by William McRae, hereinafter called petitioner, from a judgment of the superior court of Maricopa county, denying him compensation for certain services which it is alleged he performed as trustee in bankruptcy for Security Building & Loan Association, a corporation, hereinafter called the company. The petition alleges substantially the following facts:

On the 29th day of September, 1932, the company was adjudicated a bankrupt corporation in the United States District Court for the District of Arizona, and the matter was sent to the referee in bankruptcy. On the 25th day of October, at a meeting of the creditors regularly called and held in Phoenix, petitioner was duly chosen as trustee in bankruptcy and immediately qualified thereafter, and from such date until about the 2d day of March, 1934, had in his possession, subject [50 Ariz. 338] to the orders of the United States District Court, pursuant to such appointment as trustee in bankruptcy, the assets, books, records, and files of the company. During such period, acting under the orders of the United States District Court aforesaid, he continued to hold, manage, preserve, and protect such assets, performing various and sundry services which are more fully set forth in his petition. An allowance was made to him by the bankruptcy court, on account of his fee for services as trustee, of $600, which was duly paid, but petitioner claims that a reasonable fee for the services rendered by him would be the sum of $2,600, and he, therefore, petitions that the superior court allow and pay to him the further amount of $2,000 for his services as trustee in the bankruptcy proceeding.

Were wo to confine ourselves to the allegations of the petition alone, the first question which would occur to us is why a trustee in bankruptcy, acting under and by authority of the federal District Court, should appeal to a superior court of the state of Arizona for payment of his fees for services rendered under the direction of the federal court. On a careful reading of the petition, however, it appears that somehow and for some purpose the United States Circuit Court of Appeals rendered a judgment which, for some reason not set forth in the petition, terminated petitioner's services, and that in some manner B. H. Dodt became the receiver of the company estate under the jurisdiction of the superior court of Maricopa county, the precise manner not appearing in the petition. The receiver, however, in his objections to the allowance requested by petitioner, alleges certain facts which, to some degree at least, clear up the situation. From these objections, we may perhaps conclude that it was that the adjudication of bankruptcy made by the District, Court was null, void, and of no effect, and that, therefore, there was no authority in said District Court to appoint the petitioner as trustee and that he was not entitled to any fees under a void appointment.

Page 446

The further objection was made that petitioner was never bound by nor subject to the orders of the superior court, but was appointed by the federal District Court, and rendered all his services under the jurisdiction of that court, and that, therefore, the superior court had no jurisdiction to allow him fees. It was also claimed that he had asked for fees in the federal court, and the federal court refused to allow him any compensation on the ground his appointment was null and void.

[50 Ariz. 339] There was reference made in both the petition and the objections to some kind of an appeal from the District Court to the United States Circuit Court of Appeals for the Ninth Circuit and the judgment rendered therein. We think state courts should take judicial notice of the formal judgments of the Circuit Court of Appeals when the same are duly made public, and we therefore assume that such judgment was considered by the superior court in making its ruling. The judgment and opinion referred to appears in the case of Security Building & Loan Assn. v. Spurlock, 65 F.2d 768. From the opinion it appears that the following facts existed: A petition for an involuntary adjudication of bankruptcy of the company was filed in the District Court of Arizona on the 5th of January, 1932. This petition alleged that the company was a building and loan association. On February 13, 1932, an amendment of the federal Bankruptcy Act went into effect which, in substance, stated that building and loan associations were not subject to the act (11 U.S.C.A. § 22).A motion was thereafter made to dismiss the petition in bankruptcy on the ground that it alleged the company was a building and loan association and, if such were the fact, it [50 Ariz. 340] was not subject to the act. The trial court announced that the petition would be dismissed unless it was amended within ten days. An amendment was filed by certain creditors, alleging the company was not a building and loan association, and, upon the trial of the issue, the court sustained this allegation. If the finding of the court was correct, the company was subject to the Bankruptcy Act and the court had the jurisdiction to adjudge it a bankrupt. An appeal was taken to the Circuit Court of Appeals of the Ninth Circuit, and that court, after reviewing all the facts, held that the company was a building and loan association and, therefore, not subject to the Bankruptcy Act, and that the order of the District Court adjudging it to be a bankrupt and assuming jurisdiction over its affairs was erroneous. The District Court, we naturally assume in pursuance of said judgment, thereafter surrendered jurisdiction over the company to the superior court of Maricopa county, where a receiver, B. H. Dodt, took possession and charge of the company affairs.

The question before the superior court on the petition herein therefore was, May a state court, under whose jurisdiction a receiver is in charge of a corporation, make an allowance of fees to one who performed services as a trustee in bankruptcy, appointed by and acting solely under the jurisdiction of the federal court in bankruptcy proceedings, when it is finally determined by the federal court that it had no jurisdiction of the bankruptcy proceeding, on the ground that the alleged bankrupt was not subject to the Bankruptcy Act?

It would seem that a mere statement of the facts of this controversy would carry with it the answer to the question. The usual rule is that any person who claims compensation for services performed, [50 Ariz. 341] under the direction and by authority of a court, must make application to that court for his compensation, and not to some other court which, acting under a different government, had never ordered nor controlled the services. The theory upon which petitioner apparently proceeds is that, where a conflict arises between two courts of concurrent jurisdiction and a receiver appointed by one court acquires jurisdiction of the res, if such jurisdiction is improperly interfered with by a court acting under another jurisdiction, which also appoints a receiver who performs services in the preservation of the estate, if the property be eventually returned to the first court, the receiver appointed by the second has a right to compensation for his services in the preservation of the estate, which should be paid out of the estate of the insolvent. In support of this proposition we have been ...


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