This is аn appeal .from an order entered in reorganization proceedings under Chapter X of the Bankruptcy Act, 11 U.S. C.A. § 501 et seq., overruling a motion of Phil Magidson to vacate and set aside (1) an order staying certain proceedings in the Circuit Court of the City of St. Louis, Missouri, and (2) granting leave to Jerome F. Duggan, trustee of the debtor corporation, to file a dependent suit in the federal district court. The appellant contends that the order was erroneоusly entered. This court has jurisdiction of the appeal by virtue of 28 U.S.C.A. § 1292(1).
Statement.
On December 27, 1943, the Christopher Engineering Company filed its petition for corporate reorganization under Chapter X of the Bankruptcy, Act, which was approved, and the appellee Duggan, was appointed trustee on February 8, 1944. On June 1, 1945, Hascal Schneider and Max Schneider, doing business as Seco-Lite Manufacturing Company, instituted an action in the Circuit Court of the City of St. Louis for a declaratory judgment against the appellant Magidson. That suit involved the ascertainment and distribution of the profits, if any, derived from a joint enterprise between the Schneiders and Magidson, undertaken about July 15, 1943, at which time Magidson was an employee of the debtor. Magidson filed an answer and counterclaim in the declaratory judgment action and a motion to appoint a receiver to take charge of the alleged earnings of the adventure. On stipulаtion of the parties to the action and in lieu of the appointment of a receiver, the Schneiders deposited $90,000.00 in the registry of the state court which sum represented substantially all of the undistributed profits of the adventure. On November 8, 1946, the trustee applied for and secured leave from the court presiding over the reorganization to apply for intervention in the state court action, claiming that the debtor became subrogated to Magidson’s rights as against the Schneiders because Magidson’s profits in the Schneider-Magidson enterprise accrued from Magidson’s employment by the debtor and belonged in equity to the debtor. The trustee applied to the state court for leave to intervene, which application Magidson opposed, and after a hearing in the state court, December 11, 1946, the court denied the trustee’s petition. The trustee then filed a petition for a writ of mandamus to the Supreme Court of Missouri with the result that the lower court’s ruling was reversed and the trustee allowed to intervene. State ex rel. Duggan v. Kirkwood, Judge, Mo.Sup.,
“That а proper order be issued staying [the] proceedings in the Circuit Court and impounding the said deposit [$90,000] in said Court, pending the further orders of this Court, and, in good time, for an order for the delivery of said fund and the disposition thereof.”
And:
“That the Court first hear and determine the title of the plaintiff [trustee] to said profits as against the claim of defendant Phil Magidson thereto and, in the event the title of plaintiff thereto is confirmed and no voluntary settlement, as between plaintiff and said сo-partners [the Schneiders], satisfactory to the Court under the Bankruptcy Act is effected that the Court in good time take and state an account of the amount due plaintiff from said defendants as subrogee and render judgment accordingly, against the said defendants and the security or fund aforesaid.”
There was no opposition to the trustee’s motion by either Magidson or the Schneiders. The trial court thereupon ordered the dependent suit receivеd and filed, process for the defendants was issued, and pending further order, the court temporarily stayed the state court proceedings and issued an order to show cause on March 22, 1949. Magidson appeared on that date, filed a written return and moved the court to set aside the stay order and to recall the leave granted permitting the dependent action, urging among other things that the court exceeded its jurisdiction. A full hearing was had and on April 12, 1949, Magidson’s motion was overruled, the stay order was made absolute and the dependent action was allowed to remain pending. Magidson now appeals from the order overruling his motion.
Opinion.
(1) We believe the trial court did not exceed its jurisdiction in granting leave to the trustee of the debtor to file a dependent complaint in the federal court or in staying the proceedings in the state court. Appellant, in his reply brief, insists that the dispute between himself and the Schneiders in the state court is not ancillary to the reorganization proceedings, that the principal parties to the dispute in the state court are not parties to the reorganization proceedings, and that the trial court therefore clearly abused its discretion and exceeded its jurisdiction in taking the action it did. We think, however, that Section 2, sub. a(7) of the Bankruptcy Act, 11 U.S. C.A. § 11, sub. a(7) and the recent decision in the case of Williams v. Austrian,
Indeed, the court was unanimous on the question of plenary jurisdiction of the reorganization court, but the two dissenting Justices concluded that Sec. 23 was eliminated not to confer plenary jurisdiction on all District Courts, but merely to make certain that Chapter X would not be construed to limit the jurisdiction of thе “home” court. See Justice Frankfurter’s dissenting opinion, 331 U.S. pages 678-679, 67 S. Ct. page 1461, where he stated: “To remove doubt as to this effect of § 23, namely its possible limitation upon the power of the reorganization trustee to sue in his home court, is the full purpose and scope of its elimination from Chapter X. It was not to give the reorganization trustee roving authority for plenary suits in all federal courts that § 23 was made inapplicable. * * * Section 23 was eliminated, thеn, to make clear that when in § 115 of the Act of 1938 Congress [11 U.S.C.A. § 515], gave to the reorganization court equity powers like those which had been conferred in § 77B, sub. a [11 U.S.C.A. § 207, sub. a], it authorized the trustee-receiver to bring plenary suits in his home court. * * * i>
That as an adjunct to its plenary jurisdiction, the trial court had the power to enjoin the state court proceedings there can be no serious doubt. Sec. 2 sub. a(15), 11 U.S.C.A. § 11, sub. a(15) of the Act itself provides:
“The courts of the United States hereinbefоre defined as courts of bankruptcy * * * are hereby invested * * * with such jurisdiction at law and in equity £q_
“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 title: Provided, however, that an injunction to restrain a court may be issued by the judge only;”.
Also in Chapter X of the Act, 11 U.S. C.A. § 515, there is the provision: “Upon the approval of a petition, the court shаll have and may, in addition to the jurisdiction, powers, and duties hereinabove and elsewhere in this chapter conferred and imposed upon it, exercise all the powers, not inconsistent with the provisions of this chapter, which a court of the United States would have if it had appointed a receiver in equity of the property of the debtor on the ground of insolvency or inability to meet its debts as they mature.”
And see Continental Illinois National Bank & Trust Co. v. Chicago, Rock Island and Pacific R. Co.,
Appellant contends, however, that the сontroversy presented in the state court is not ancillary to the reorganization proceedings. But Section 2, sub. a (7) of the Act, the Austrian case, and the circumstances involved in the state court dispute refute this contention.
Section 2, sub. a(7) of the Act, 11 U.S. C.A. § 11, sub. a(7) reads:
“The courts of the United States hereinbefore defined as courts of bankruptcy * * * are hereby invested * * * with such jurisdiction at law and in equity * * * to—
“Cause the estates of bankrupts to be collected, rеduced to money and distributed, and determine controversies in relation thereto, except as herein otherwise provided, * * *
The present dispute between the appellant Magidson and the Schneiders is clearly a “controversy in relation” to the reorganization proceedings since the trustee’s asserted claim to equitable ownership of the fund involved in the suit in the state court, if proven, would very substantially increase the debtor’s estate аnd thereby directly affect the reorganization. It must be remembered that the trustee’s interest in the dispute between Magidson and the Schneiders springs from the trustee’s allegation that he is the equitable and rightful owner of the moneys deposited by the *478 Schneiders and as such ought to be entitled to recover and receive it for the estate.
In the Austrian case, the court pointed out, 331 U.S. page 656, 67 S.Ct. page 1450,
We hold that the trial court committed no abuse of discretion and had complete jurisdiction of the dependent suit filed by the trustee against Magidson and the Schneiders.
We now turn to the other contentions for appellant. (2) Appellant insists that the trustee’s complaint filed in the trial court, on its face and in the absence of any positive evidence outside the complaint, affords no “basis” for the granting of a stay by the trial court and that the court accordingly abused its discretion and acted' improvidently in issuing the temporary stay. Appellant contends that no pleadings or affidavits were before the court when it heard and granted the trustee’s oral motion for a temporary stay and leave to file the dependent suit. And that, further, the allegations in the complaint were insufficient to make out a case establishing the necessity for an absolute stay order.
When the oral application of the trustee for a temporary stay was granted, appellant did not appear or contest the granting of it although he had notice. The trial court’s order to show cause afforded appellant additional and ample opportunity to be heard on all the merits involving both the stay and the dependent complaint. And in the proceedings to show cause, the complaint, duly filed, was before the court, and a full hearing was had on the merits. Nor did the court abuse its discretion in determining that the complaint afforded a basis for the stay order. The allegations of the trustee, if shown to be true in a hearing on the merits, which of course are not before this court, showed on their face that continuation of the proceedings in the state court might well hinder the trustee in expeditious collection of assets of the debtor. The state court proceedings had already involved long delay and longer delays were threatened. See Zeleznik v. Grand Riviera Theater Co., 6 Cir.,
(3) Appellant also asserts that “the District Court erred in not finding the facts specially and stating separately its conclusions of law and its failure to do so was contrary to and in violation of Rule 52(a) of the Federal Rules of Civil Procedure [28 U.S.C.A.].” The record shows that the appeal was taken from a ruling on a motion made by appellant and in disposing of it and in entering its order, the court treated it as a ruling on a motion. Rule 52(a), supra, provides: “ * * * Findings of fact and conclusions of law. are
*479
unnecessary on decisions of motions under Rules 12 or 56 or any other motion except as provided in Rule 41(b).” The considerations on which the court ruled are sufficiently clear from the record and pleadings, and although the situation was presented where the court might have made findings of fact, there was no real necessity for doing so. Cf. Baltimore & Ohio R. Co. v. Chicago River & Indiana R. Co., 7 Cir.,
(4) Appellant alsо urges that the trial court erred in not requiring a bond or other security in compliance with provisions of Rule 65(c), Federal Rules of Civil Procedure, which provides: “Security. No restraining order or preliminary injunction shall issue except upon the giving of security by the applicant, in such sum as the court deems proper, for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained. No suсh security shall be required of the United States or of an officer or agency thereof.” The temporary and permanent injunctions issued by the trial court in the instant case were to aid and preserve the court’s jurisdiction over the subject matter involved and as such were not limited by Rule 65(c), supra. Swift v. Black Panther Oil & Gas Co., 8 Cir.,
(5) Appellant further asserts that since the state court first assumed jurisdiction over the dispute between the Schneiders and himself that the trial court excеeded its jurisdiction in issuing the stay orders and permitting the trustee to file the dependent suit; that the rules of comity ■between federal and state tribunals were disregarded and that the forum where the trustee’s claim was to be tried was settled in the state court by permission of the trial court itself. But the controversy at bar grows out of a reorganization proceeding under Chapter X, supra, and the rules of comity must be applied accordingly. There can be no doubt that thе courts in reorganization proceedings under Chapter X have by virtue of the Act of 1938, as interpreted in the Austrian case, a much wider control over the collection of estates of debtors in reorganization than had ordinary bankruptcy courts. As stated in Warder v. Brady, 4 Cir.,
And cf. In re Maier Brewing Co., D.C.,
*480 We hold that in the instant case the rules of comity pertaining to federal and state tribunals were in no way disregarded or violated by the trial court and that it committed no error in that respect by staying the proceedings in the state court and receiving the dependent complaint filed by the trustee.
We find no error in the order appealed from and it is accordingly
Affirmed.
Notes
. Sec. 23, 11 U.S.C.A. § 46,
a. The United States district courts shall have jurisdiction of all controversies at law and in equity, as distinguished from proceedings under this title, between receivers and trustees as such and adverse claimants, concerning the property acquired or claimed by the receivеrs or trustees, in the same manner and to the same extent as though such proceedings had not been instituted and such controversies had been between the bankrupts and such adverse claimants.
b. Suits by the receiver and the trustee shall be brought or prosecuted only in the courts where the bankrupt might have brought or prosecuted them if proceedings under this title had not been instituted, unless by consent of the defendant, except as provided in sections 96, 107, and 110 of this title. As amended May 27, 1926, c. 406, Sec. 8, 44 Stat. 604; June 22, 1938, c. 575, Sec. 1, 52 Stat. 854.