In re Perl , 28 F.2d 1002 ( 1928 )

GIBSON, District Judge.

On September 13,1928, an involuntary petition in bankruptcy was filed in the above-entitled ease. On the same day the petitioning creditors filed a petition wherein they declared that the alleged bankrupt, on July 16, 1928, had caused and permitted one Eugene J. Schwartz to confess judgment for $2,800 against him in the court of common pleas of Allegheny county, Pa., upon which an execution was issued on August 27,1928, out of said court, and by virtue of said writ a levy had been made upon the merchandise and fixtures of the alleged bankrupt, and a sale thereof made to said Eugene J. Schwartz on September 7, 1928, for the sum of $900.

The petitioners declared, among other things, that the confession of judgment and issuance of execution were conceived by the alleged bankrupt and Eugene J. Schwartz in collusion for the purpose of placing the assets of the alleged bankrupt beyond the reach of petitioners and other creditors. Petitioning creditors further represented that the proceeds of the said sheriff’s sale were still in the possession of the sheriff, and prayed that the sheriff be enjoined and restrained from paying the same bver to the plaintiff in said writ in order to avoid a preference in favor of the said execution creditor.

This court, acting upon said petition, issued a temporary restraining order upon the plaintiff in said execution, Eugene J. Schwartz, wherein he was enjoined from collecting or receiving from the sheriff the amount obtained by means of the sheriff’s sale. The temporary restraining order fixed a day for hearing upon the petition. Upon that day counsel for the execution plaintiff appeared and moved the court to vacate and dismiss the restraining order on the ground that the court had no jurisdiction to issue the same.

In support of his motion, counsel cited Taubel, etc., Co. v. Fox, 264 U. S. 426, 44 S. Ct. 396, 68 L. Ed. 770. An examination of that ease, however, makes it clear that the facts before the court in that case and the question to be decided were not the same facts, nor the same' question before this court in the instant matter. In that case the trustee in bankruptcy sought, by a summary proceeding before the referee, to have the lien on the execution declared void, and to obtain possession of the property. The referee ordered that the judgment creditor show cause before him why this should not be done. The judgment creditor challenged the jurisdiction of the court to make that order, and the Supreme Court held that the bankruptcy court had no jurisdiction to obtain the fund by the summary procedure adopted. But in the present ease no attempt has been made by this court to obtain the fund in the hands of the sheriff, but simply to maintain the status quo while the conflicting claims of the execution creditor and the trustee in bankruptcy are being determined. This court has jurisdiction to make such an order. Clarke v. Larremore, 188 U. S. 486, 23 S. Ct. 363, 47 L. Ed. 555. The distribution of the fund will ultimately be made by the state court.

The motion to dismiss the temporary restraining order will be denied, and the injunction continued.

Order of Court.

And now, to wit, September 26, 1928, after hearing, upon consideration thereof, it is ordered, adjudged, and decreed that the temporary restraining order issued by this court on September Í3, 1928, whereby Eugene J. Schwartz, plaintiff in the writ of fi. fa. No. 666, October term, 1928, court of common pleas of Allegheny county, Pa., his agents and attorneys, were jointly and severally enjoined and restrained from collecting or receiving the purchase money realized by the sheriff of Allegheny county, Pa., at the sheriff’s sale of the personal property of the alleged bankrupt within named on September 7, 1928, or any part thereof, be, and the same hereby is, continued, pending the determination of the matters and things charged in the involuntary petition in bankruptcy against Isadore Perl filed in this court.