by Israel Lesser individually and a ground "After making these transfers, and after "Various creditors of the bankrupts im[167]mediately commenced actions of replevin to recover portions of the goods in the hands of the sheriff. Their claims were conflicting with each other and with those of the confessed judgment creditors, and in an action brought in the supreme court of New York by the receivers an order was made restraining the sale by the sheriff under the executions, directing a sale by receivers (Mr. Moses and Mr. Franklin being also appointed such receivers in that action), and that the latter should hold the proceeds of the sale subject to the claims of all parties, such claims to be determined in that action. Pursuant to this order, the goods were sold, and the receivers so appointed now hold the proceeds thereof. This order was made November 23, 1896. The action is still pending, undetermined. "On the 22d day of October, 1896, and the 29th day of October, 1896, Metcalf Brothers & Co. procured judgments in the supreme court of the state of New York against the Lessers for $930.21 and $2,547.80 respectively, upon which executions were issued and returned unsatisfied. judgments of Metcalf Brothers & Co. on October 22d and 29th, 1896. "All parties except the receivers appealed from this judgment to the appellate division of the supreme court of New York; that court affirmed the judgment of the trial court as to the fraud, but reversed it in so far as it granted relief in favor of the receivers. It directed the payment by the receivers to Metcalf Brothers & Co. of the amount of their judgments out of the money in the receivers' hands, and. since Metcalf Brothers & Co. were to be so paid, it reversed the judgments in their favor against Adler, one of the transferees of the accounts. Upon the ground that there was no proof of fraud, it also reversed it against the transferee of the real estate. "This decision was embodied in an instrument made the 30th day of December, 1898, entitled an 'order,' but which, after reciting the necessary facts, 'ordered and adjudged' that the judgment of the trial term be modified as stated, and also 'ordered and adjudged' that the transfers in question, except the transfer of the real estate, were fraudulent and void as to Metcalf Brothers & Co.; that the receivers be, and they were thereby, directed to pay to Metcalf Brothers & Co. the amount of their judgments, with costs, and that final judgment should be entered in accordance therewith. This instrument was filed in the of. fice of the clerk of the appellate division of the supreme court of New York, and was the only paper signed by that court or kept in its records. A certified copy of it was transmitted to the clerk of the supreme court, upon which, after the costs had been taxed, a final judgment was entered by the latter clerk on the 31st day of January, 1899, following in all essential respects its verbiage. The delay in the entry of final judgment was caused by various motions before the appellate division for reargument. "On the 17th day of December, 1896, Metcalf Brothers & Co. commenced a judgment creditors' action in the supreme court of the state of New York, which came to trial on the 17th day of December, 1897, and as a result of which the transfers to which reference has been made and the proceedings for the appointment of the receivers were adjudged fraudulent and void as to them. "From the judgment of the appellate diThe court, however, set aside the transfers vision in the action brought by Metcalf of the copartnership property, not only in Brothers & Co. all parties except Lilianfavor of Metcalf Brothers & Co., but also thal, the transferee of the real estate, apin favor of the receivers. It set aside the pealed to the court of appeals of the state of New York. That court affirmed the transfer of the real estate in favor of Metcalf Brothers & Co. alone. Judgment was of Metcalf Brothers & Co., and also restored judgment of the appellate division in favor entered on this decision April 6, 1898. to them the rights awarded them by the "This judgment determined that the pro-judgment of the trial court, of which they ceeds of the sale of the tangible property had been deprived by the appellate division. then in the hands of the receivers and the The final result of the litigation was that outstanding accounts or their proceeds in the transfers in question were declared the hands of the transferees (to be account- fraudulent and set aside in favor of Meted for under the judgment to the receivers) calf Brothers & Co. only; that as to all were to be administered by the receivers for other persons they were (until impeached the benefit of all the creditors of the co- in a proper action) valid; that the receivers partnership equally, including Metcalf were directed to pay out of the funds in Brothers & Co., while the real estate trans-their hands to Metcalf Brothers & Co. the [68]ferred became subject to the lien of the amount of their judgments, and that those "On the 12th day of May, 1899, Lesser Brothers filed in the district court of the United States for the southern district of New York a petition to be adjudged bankrupts, and they were adjudicated bankrupts on that day. Subsequently, and *on the 7th[169] day of June, 1899, Benjamin Barker, Esq., was appointed their trustee in bankruptcy. creditors could also procred for the collec-| tion of their judgments, if necessary, against the transferees of the accounts and real estate. merely, was it perfected by a judgment ob "The decision of the court of appeals was "5. If the lien acquired by the commencement of the creditors' action was inchoate merely, was the judgment in the creditors' action, whenever obtained, one which is avoided by any of the provisions of the act[171] of Congress of July 1, 1898, known as the bankruptcy act!" "Subsequently Metcalf Brothers & Co. presented a petition to this court to superintend and revise in matter of law the said proceedings of the district court. "Questions Certified. "Upon the facts above set forth, the questions of law concerning which this court desires the instruction of the Supreme Court for its proper decision are: "1. Had the district court of the United States for the southern district of New York jurisdiction to make the injunction order in question? "2. If said court had jurisdiction to restrain Metcalf Brothers & Co. from receiving the fund in question, could such jurisdiction be exercised by summary proceedings? "3. Did Metcalf Brothers & Co. by the commencement of their creditors' action ac quire a lien on the property of the bankrupts superior to the title of the trustee thereto ? "4. If the lien acquired by the commencement of the creditors' action was inchoate Ibid.; Smith v. Mason, 14 Wall. 419, 20 L. ed. 748; Marshall v. Knox, 16 Wall. 551, 21 L. ed. 481. Irrespective of the statutory want of jurisdiction of the district court and of the petitioner's right to be sued in a plenary suit, the court had no jurisdiction because the litigation is in and under the control of the state court. Peck v. Jenness, 7 How. 612, 12 L. ed. Covell v. Heyman, 111 U. S. 176, 28 L. ed. The courts maintained this position on the of 1841. Clarke v. Rist, 3 McLean, 494, Fed. Cas. And under the act of 1867. Johnson v. Bishop, Woolw. 324, Fed. Cas. Similar decisions have been made under Re Gerdes, 102 Fed. 318; Re Kavanaugh, 99 Fed. 928; Re Russell, 41 C. C. A. 323, 101 Fed. 248; Frazier v. Southern Loan & T. Co. 40 C. C. A. 76, 99 Fed. 707; Pickens v. Dent, 45 C. C. A. 522, 106 Fed. 653. The lien is acquired by the commencement Miller v. Sherry, 2 Wall. 237, 17 L. ed. The Federal courts have announced the 187 U. S. same doctrine under the former bankrupt acts. Ex parte General Assignee, 1 N. Y. Legal Obs. 131, Fed. Cas. No. 5,305; Clarke v. Rist, 3 McLean, 494, Fed. Cas. No. 2,861; Johnson v. Rogers, 15 Nat. Bankr. Reg. 1, Fed. Cas. No. 7,408; Kimberling v. Hartly, 1 McCrary, 136, 1 Fed. 571; Sedgwick v. Menck, 6 Blatchf. 156, 1 Nat. Bankr. Reg. 675, Fed. Cas. No. 12,616. Various state courts have passed upon the question of the superior lien of a creditors' bill, and have uniformly followed the rule as it has been heretofore established. Doyle v. Health, 22 R. I. 213, 47 Atl. 213; Taylor v. Taylor, 59 N. J. Eq. 86, 45 Atl. 440; Iselin v. Goldstein, 35 Misc. 489, 71 N. Y. Supp. 1069. The decisions of the courts of New York have been uniformly in support of the petitioners' position. Storm v. Waddell, 2 Sandf. Ch. 494; Lynch v. Johnson, 48 N. Y. 27; First Nat. Bank v. Shuler, 153 N. Y. 163, 47 N. E. 262; Roberts v. Albany & W. S. R. Co. 25 Barb. 662; Jeffres v. Cochrane, 47 Barb. 557; Utica Ins. Co. v. Power, 3 Paige, 365; Macy v. Jordan, 2 Denio, 570; M'Dermutt v. Strong, 4 Johns. Ch. 687; Smith v.4 Edw. Ch. 653; Mandeville v. Campbell, 45 App. Div. 512, 61 N. Y. Supp. 443. The lien is property, and its existence does not depend upon a subsequent judgment. Haebler v. Myers, 132 Ñ. Y. 363, 15 L. R. A. 588, 30 N. E. 963; Kittredge v. Warren, 14 N. H. 509; Haughton v. Eustis, 5 Law Rep. 505, Fed. Cas. No. 6, 224. The trustee represents simply the bankrupts, and can take no rights which they did not have. Yeatman v. New Orleans Sav. Inst. 95 U. S. 765, 24 L. ed. 589; Stewart v. Platt, 101 U. S. 731, 25 L. ed. 816. The lien on equitable assets, acquired by the commencement of a judgment creditors' action, is not extinguished by the death of the judgment debtor, but survives against his equitable assets in the hands of his administrator. Brown v. Nichols, 42 N. Y. 26; First Nat. Bank v. Shuler, 153 N. Y. 163, 47 N. E. 262; Reynolds v. Etna L. Ins. Co. 160 N. Y. 635, 55 N. E. 305. A receivership in a creditors' action affecting equitable assets is unnecessary; it is a convenience merely, and adds nothing to the creditors' security. Kitchen v. Lowery, 127 N. Y. 53, 27 N. E. 357; Re Clover, 8 App. Div. 556, 40 N. Y. Supp. 886, Affirmed in 154 N. Y. 443, 48 N. E. 892. Messrs. Otto T. Hess and M'Cready Sykes argued the cause and filed a brief for respondent: The only lien against equitable assets, acquired by a judgment creditor by the mere filing of a bill in equity, is a right to priority of payment in case he obtains his judg ment in equity. A creditors' bill is strikingly like the judgment note in use in some jurisdictions. And yet a judgment entered on such a note within four months of bankruptcy has been held to be void under the bankruptcy act. Re Richards, 37 C. C. A. 634, 96 Fed. 935. In a judgment creditors' action, the creditor can in no possible way complete his lien except by a judgment, and such a judgment is nullified and rendered unavailable by the bankruptcy act. Ex parte Waddell, 1 N. Y. Legal Obs. 53, Fed. Cas. No. 17,027. The judgment creditor's rights obtained by filing his bill are nothing more, at the most, than a lis pendens as to the property sought to be reached. This lis pendens operates only on the choses in action and the equitable assets of the debtor; it does not attach to property which is in its nature subject to execution. And this is true, although it may not be, as a matter of fact. possible to reach it by execution. First Nat. Bank v. Shuler, 153 N. Y. 163, 47 N. E. 262. The court had jurisdiction to make the order. Re Wallace, Deady, 433, 2 Nat. Bankr. Reg. 134, Fed. Cas. No. 17,094; White v. Schloerb, 178 U. S. 542, 44 L. ed. 1183, 20 Sup. Ct. Rep. 1007; Bryan v. Bernheimer, 181 U. S. 188, 45 L. ed. 814, 21 Sup. Ct. Rep. 557; Ke McCartney, 109 Fed. 621. Even the New York state courts, whose decisions are relied upon to maintain the theory that filing a creditors' bill gives a plenary lien, have intimated that it might be better to confine the rule to cases of a receivership. Stewart v. Isidor, 5 Abb. Pr. N. S. 68. Mr. Chief Justice Fuller delivered the opinion of the court: Metcalf Brothers & Company, judgment creditors of Lesser Brothers, commenced their creditors' suit in the supreme court The case of New York December 17, 1896. came to trial December 17, 1897, and decree was rendered April 6, 1898. 22 Misc. 664, 50 N. Y. Supp. 1060. On appeal the appellate division affirmed the judgment of the trial court in part, and reversed it in part, and directed the payment by the receivers to Metcalf Brothers & Company of the amount of their judgments out of the money in the receivers' hands. 35 App. Div. 596, 55 N. Y. Supp. 179. This decree or judg ment was embodied in an order dated De cember 30, 1898, but the clerk of the supreme court appears not to have entered it until January 31, 1899. The decision of the court of appeals (161 N. Y. 587, 56 N. E. 67) was made February 6, 1900, and the remittitur was received and filed in the court below March 12, 1900. 1. 1898. May 12, 1899, Lesser Brothers The bankruptcy law was approved July filed their petition in bankruptcy and were adjudicated bankrupts, and Barker was appointed trustee June 7, 1899. March 8, 1900, the bankrupts' trustee procured from the district court an order entitled in the bankruptcy proceedings requiring Metcalf Brothers & Company to show cause on March 13 why a writ of injunction should not issue enjoining them from taking any further proceedings under any judgment in ler v. Sherry, the commencement of the suit their creditors' action, and so enjoining amounts to an equitable levy (2 Wall. 249, them in the interim, which injunction, after 17 L. ed. 830), or, in the language of Mr. argument on the merits, was continued. No Justice Matthews, in Freedman's Sav. & T. question arises here in respect of real es Co. v. Earle: "It is the execution first betate, and on the case stated in the certifi-gun to be executed, unless otherwise regu cate the property affected was equitable as-lated by statute, which is entitled to priorisets. There had been tangible personal ty. 72]property, subject to levy and sale under ex- of equitable execution, is the beginning of ecution, but this had been previously sold executing it." 110 U. S. 717, 28 L. ed. 304, by an order of the supreme court of New 4 Sup. Ct. Rep. 230. And the right to pay. York, and the proceeds were held by receiv- ment out of the fund so vested cannot be affected by a subsequent transfer by the debtor (M'Dermutt v. Strong, 4 Johns. Ch. 687), or taken away by a subsequent dis ers. The filing of the bill, in cases U. S. 699, 32 L. ed. 1083, 9 Sup. Ct. Rep. 725; Doe v. Childress, 21 Wall. 642, 22 L ed. 549; Eyster v. Gaff, 91 U. S. 521, 23 L ed. 403; Peck v. Jenness, 7 How. 612, 12 L ed. 841. Kittredge v. Warren, 14 N. H. 509, was relied on as to the effect of attachments on mesne process in New Hampshire, in Peck v. Jenness. And it may be remarked that Chief Justice Parker's vigorous discussion in that case of the point that the attachment lien was not contingent on a subsequent judgment is a fortiori applicable in cases where the prior establishment of the creditor's claim is the foundation of the creditor's suit. The general rule is that the filing of a judgment creditors' bill and service of process creates a lien in equity on the judg-charge in bankruptcy. Hill v. Harding, 130 ment debtor's equitable assets. Miller v. Sherry, 2 Wall. 237, 17 L. ed. 827; Freedman's Sav. & T. Co. v. Earle, 110 U. S. 710, 28 L. ed. 301, 4 Sup. Ct. Rep. 226. And such is the rule in New York. Storm v. Waddell, 2 Sandf. Ch. 494; Lynch v. Johnson, 48 N. Y. 27; First Nat. Bank v. Shuler, 153 N. Y. 163, 47 N. E. 262. This was conceded by the district court, but the court held that the lien so created was "contingent upon the recovery of a valid judgment, and liable to be defeated by anything that defeats the judgment, or the right of the complainants to appropriate the fund;" that "such a contingent or equitable lien, it is evident, cannot be superior to the judgment on which it depends to make it effecGranting that possession of the power "to tual, but must stand or fall with the judg- establish uniform laws on the subject of ment itself;" and "8 67f, therefore, in de- bankruptcies" enables Congress to displace claring that a judgment recovered within these well-settled principles and to devest four months 'shall be deemed null and void,' rights so acquired, we do not think that etc., necessarily prevents the complainants Congress has attempted to do so. from acquiring any benefit from the lien, or Section 67f provides: "That all levies, the fund attached, except through the trus-judgments, attachments, or other liens, ob tee in bankruptcy pro rata with other cred-tained through legal proceedings against itors," it being also held that, although the person who is insolvent, at any time within judgment at special term was rendered more in bankruptcy against him, shall be deemed four months prior to the filing of a petition than four months before the filing of the null and void in case he is adjudged a bankpetition, yet that the judgment of the appel-rupt, and the property affected by the levy, late division, as affirmed by the court of ap judgment, attachment, or other lien shall be peals, was within the four months. 100 Fed. 433. Assuming that the judgment at special term is to be disregarded, and that the judgment of the appellate division was entered within the four months, it will be perceived that if the views of the district court were correct, the third question propounded should be answered in the negative, while if incorrect, that question should be an swered in the affirmative. deemed wholly discharged and released Doubtless the lien created by a judgment creditor's bill is contingent in the sense that it might possibly be defeated by the event of the suit, but in itself, and so long In our opinion the conclusion to be drawn as it exists, it is a charge, a specific lien, from this language is that it is the lien creon the assets, not subject to being devested ated by a levy, or a judgment, or an attachsave by payment of the judgment sought to ment, or otherwise, that is invalidated, and be collected. that where the lien is obtained more than [173] *The subject was fully discussed, and the four months prior to the filing of the petieffect of bankruptcy proceedings considered, tion, it is not only not to be deemed to be by Vice Chancellor Sandford in Storm v. null and void on adjudication, but its validiWaddell, which has been so repeatedly rec- ty is recognized. When it is obtained withognized with approval as to have become a in four months the property is discharged leading case. therefrom, but not otherwise. A judgment As Mr. Justice Swayne remarked, in Milor decree in enforcement of an otherwise valid pre-existing lien is not the judgment | right of a plaintiff to prosecute his suit in denounced by the statute, which is plainly it, have once attached, that right cannot be confined to judgments creating liens. If this were not so the date of the acquisition of a lien by attachment or creditor's bill would be entirely immaterial. Moreover, other provisions of the act render it unreasonable to impute the intention to annul all judgments recovered within four months. By 63a, fixed liabilities evidenced by judgments absolutely owing at the time of the filing of the petition, or founded upon provable debts reduced to judgments after the filing of the petition and before the consideration of application for discharge, may be proved and allowed, while under 17 judgments in actions of fraud are not released by a discharge, and other parts of the act would be wholly unnecessary if67f must be taken literally. arrested or taken away by proceedings in Many of the district courts have reached and announced a similar conclusion (Re Blair, 108 Fed. 529; Re Beaver Coal Co. 110 Fed. 630; Re Kavanaugh, 99 Fed. 928; Re Pease, 4 Am. Bankr. Rep. 547); as have also the supreme court of Rhode Island and the chancery court of New Jersey in wellconsidered decisions. Doyle v. Heath, 22 R. 1. 213, 47 Atl. 213; Taylor ▼. Taylor, 59 N. J. Eq. 86, 45 Atl. 440. And see Wakeman White v. Schloerb, 178 U. S. 542, 44 L. v. Throckmorton, 74 Conn. 616, 51 Atl. 554. ed. 1183, 20 Sup. Ct. Rep. 1007, proceeded As under §§ 70a, e, and § 67e, the trustee on the familiar doctrine that property in is vested with the bankrupt's title as of the the custody of a court of the United States [175]date of the adjudication, and *subrogated to cannot be taken out of that custody by any the rights of creditors, the foregoing consid-process from a state court, and the jurisdic erations require an affirmative answer to tion of the district court sitting in bankthe third question, but in answering the ruptcy by summary proceedings to mainfirst question some further observations tain such custody was upheld. Mr. Justice must be made. This creditors' action was commenced December 17, 1896, more than eighteen months before the passage of the bankruptcy act, and was prosecuted with exemplary diligence to final and complete success in the judgment of the court of appeals. At this point the bankruptcy court intervened and on summary proceedings enjoined Metcalf Brothers & Company from receiving the fruits of their victory. The state courts had jurisdiction over the parties and the subject-matter, and possession of the property. And it is well settled that where property is in the actual possession of the court this draws to it the right to decide upon conflicting claims to its ultimate possession and control. In Peck v. Jenness, 7 How. 612, 12 L. ed. 841, the district court had decided that the lien of an attachment issued out of a court of New Hampshire was defeasible and invalid as against an assignee in bankruptcy. But this court held that this was not so, and that the district court had no supervisory power over the state courts, and Mr. Justice Grier said: "It is a doctrine of law too long established to require a citation of authorities, that, where a court has jurisdiction, it has a right to decide every question which occurs in the cause, and whether its decision be correct or otherwise, its judgment, till reversed, is regarded as binding in every other court; and that, where the jurisdiction of a court, and the Gray, speaking for the court, said: "By $ 720 of the Revised Statutes, U. S. Comp. Stat. 1901, p. 581, 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.' Among the powers specifically conferred upon the court of bankruptcy by § 2 of the bankrupt act of 1898 are to (15) make such orders, issue such process, and enter such judgments, in addition to those specifically provided for, as may be necessary for the enforcement of the provisions of this act.' 30 Stat. at L. 546, chap. 541, U. S. Comp. Stat. 1901, p. 3418. And by clause 3 of the twelfth general order in bankruptcy, applications to the court of bankruptcy 'for an injunction to stay proceedings of a court or officer of the United States, or of a state, shall be heard and decided by the judge; but he may refer such an application, or any specified issue arising thereon, to the referee to ascertain and report the facts.' 172 U. S. 657, 43 L. ed. 1191, 18 Sup. Ct. Rep. VI. Not going beyond what the decision of the case before us requires, we are of opinion that the judge of the court of bankruptcy was authorized to compel persons, who had forcibly and unlawfully seized and taken out of the judicial custody of that court property which had lawfully come into its possession as part of the bank |