98 F. 705 | D. Ind. | 1899
This is a suit by the complainant, as trustee of the estate of Ernest II. Keibaum, a bankrupt, against the defendant, for the recovery of the amount of two payments alleged to have been made to it in fraud of the bankruptcy act. It
Counsel for the defendant earnestly contends that the court possesses no jurisdiction to entertain a controversy at law or in equity for the recovery of any indebtedness by an adversary suit against a person who is a stranger to the bankruptcy proceeding. The defendant is not a party to the bankruptcy proceeding. The bankrupt, the trustee, and the creditors of the bankrupt include all who are, strictly speaking, parties to the bankruptcy proceeding. This court has held that it possesses jurisdiction to entertain a suit to recover property by adversary proceedings wherever-a right of action is conferred on a trustee in bankruptcy for the recovery of property transferred or,incumbered in fraud of creditors (Carter v. Hobbs, 92 Fed. 594); and it might dispose of the demurrer on the authority of that case. The insistence of counsel, however, justifies some further consideration of the question of jurisdiction. It is certainly true that the court has no jurisdiction unless it is conferred by the provisions of chapter 2, § 2, of the bankruptcy act. This section provides that: “The district courts are hereby made courts of bankruptcy and are hereby vested * ⅛ * with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings in vacation, in chambers and during their respective terms as they are now or may be hereafter held,” to accomplish the purposes specified in the 19 subdivisions of the section which follow. The section expressly invests the district courts with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings to “cause the estate of bankrupts to be collected, reduced to money, and distributed, and determine controversies in relation thereto, except as herein otherwise provided.” Manifestly, the controversies referred to cannot be those
Some of the United States, in determining the jurisdiction confer: i ;⅜1, the present bankruptcy act, have applied to it the decisions '.>cíer the act of 1867, and have held, in effect, that section 2 only nifers jurisdiction upon the district courts to entertain baukrn, cj proceedings simply, as distinguished from actions at law and ⅞⅞!⅛(⅜ ½ equity. They have apparently assumed that the juris-dictio'«a| provisions of the two acts are substantially the same. After ap attentive consideration of the two acts, I find myself unable >o i¡concur in this conclusion. In my opinion, the jurisdictional provi, hens of the present act are to be interpreted from the language employed by giving it its plain and ordinary meaning, with a view to effectuate, rather than to defeat or embarrass, the purposes sought to be accomplished by its enactment. The two acts are the same only ⅛ -the parts constituting district courts courts of bankruptcy, while in1, other respects they employ different language. The present act invents the district courts, as courts of bankruptcy, with such original')jurisdiction at law and in equity as will enable them to exercise' jurisdiction in bankruptcy proceedings to do 19 different
What- effect, then, by way of limitation, has the 'exception at the end of subdivision 7 of section 2? The exception mu$t, of necessity, refer to some other part or parts of the act providing for the determination of controversies relating to the estates of bankrupts. The act discloses three methods of determining controversies in relation to such estates, other than by a suit in the district cour$. Section 23 gives the circuit courts of the United States jurisdiction of certain “controversies at law and in equity, as distinguished from proceedings in bankruptcy between trustees and adverse claimants.” Section 26 provides that “the trustee may submit to arbitration any controversies arising in the settlement of the estate”; and\ section 27 also provides that the trustee “may compromise any controversies arising in the administration of the estate.” In opposition to' these views, it is claimed, and some courts have held, that I the exception is intended as a limitation on the jurisdiction conferred by subdivision 7 of section 2, and that such limitation is found ?in subdivision “b” of section 23, which is construed as a provision mat all adversary suits brought by a trustee must be brought in ⅛ state court, except such as may be brought in the circuit courts! of the United States. In the case of Carter v. Hobbs, supra, such ¡contention is shown to be indefensible; and, in addition to what is there said, there are other considerations which show that a construction of subdivision “b” which would wholly deny to district courts juris