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that this was a controversy over which the circuit court had jurisdiction under the Act of 1867. The language of the court in substance was: "That this is a case of controversy between adverse claimants does not seem to be at all in doubt. A right of property is controverted, the complainant contending that the funds of the judgment recovered by the bankrupt against a third party belonged to the firm of which complainant's intestate was a partner. If the bankrupt and his assignee deny this, it is a controversy the determination of which is clearly embraced within the jurisdiction conferred upon the circuit courts by the second clause of section 2 of the original Bankrupt Act of 1867."

Under the present act see the case of In re Cohn (3 Am. B. R. 421), where a daughter of a bankrupt carried on a business claimed by the creditors to have been the business of the bankrupt in her own name and kept the bank account as her own, it was held that she was in the position of a third person not only claiming title but in possession and the question of alleged fraud between her and the bankrupt could not be inquired into in summary manner. (See also In re Russell, et al. 3 Am. B. R. 658; 41 C. C. A.; 101 Fed. 248.)

On the other hand as an illustration of the summary jurisdiction which is incidental to bankruptcy courts, the Supreme Court has decided in the case of White v. Schloerb, 4 Am. B. R. 178; 178 U. S. 542, that when at the date of adjudication in bankruptcy the goods are in the actual possession of the bankrupts as their property and the referee takes them into his possession they are in the custody of the District Court and when so held. in the custody of the District Court they have been seized by a writ of replevin by the State court the District Court may compel their return by summary proceedings. This is one of many cases holding that the court which first rightfully obtains jurisdiction over the res retains that jurisdiction to the end. (Compare In re Chambers, Calder & Co. 3 Am. B. R. 537; 98 Fed. 865; Southern Loan Co. v. Benbow, 3 Am. B. R. 9; 96 Fed. 514; Keegan v. King, 3 Am. B. R. 79; 96 Fed. 758.)

Jurisdiction of Circuit Court - Of State Courts in Other Matters. [Ch. IV.

Jurisdiction of Circuit Court.-It follows from what has been said above that under the Act of 1898, unlike the Act of 1867, the Circuit Court has no original jurisdiction in bankruptcy. What is here conferred is only such jurisdiction as such courts would have had between the bankrupt and the adverse claimant, which jurisdiction is conferred by the Act of March 3, 1887, amended August 13, 1888, contained in 25 U. S. Stat. 433 as follows:

"The circuit courts of the United States shall have original cognizance, concurrent with the courts of the several States, of all suits of a civil nature, at common law or in equity, where the matter in dispute exceeds, exclusive of interest and costs, the sum or value of two thousand dollars, and arising under the constitution or laws of the United States, or treaties made, or which shall be made, under their authority or in which controversy the United States are plaintiffs or petitioners, or in which there shall be a controversy between citizens of different States, in which the matter in dispute exceeds, exclusive of interest and costs, the sum of value aforesaid."

Jurisdiction of State Courts in Other Matters. Section 23b.-The effect of this section as it now stands is best given by quoting the head note in Bardes v. Bank, U. S. Supreme Court, May 28, 1900 (4 Am. B. R. 163; 178 U. S. 524) :

"Ist. The provisions of the second clause of section 23 of the Bankrupt Act of 1898 control and limit the jurisdiction of all courts, including the several District Courts of the United States, over suits brought by trustees in bankruptcy to recover or collect debts due from third parties, or to set aside transfers of property to third parties, alleged to be fraudulent as against creditors, including payments in money or property to preferred creditors.

"2nd. The District Court of the United States can, by the proposed defendant's consent, but not otherwise, entertain jurisdiction over suits brought by trustees in bankruptcy to set aside fraudulent transfers of money or property, made by the bankrupt to third parties before the institution of the proceedings in bankruptcy."

Until the effect of this decision has been changed by an act of Congress it will of course be absolutely controlling. It compels the trustee to go into the State court in all suits except where diverse citizenship of the parties allows him to go into the Circuit Court, and overrules the great majority of cases decided before

$ 23 ]

Jurisdiction of State Courts in Other Matters.

it. Among others it overrules the following cases in the Circuit Courts of Appeals, viz. Davis v. Bohle, 8th Circuit, 34 C. C. A 37; 92 Fed. 325; 1 Am. B. R. 412; (where the question is impliedly passed upon in holding that the District Court has jurisdiction of a suit or controversy between the creditors of a respondent in an involuntary petition and his common law assignee, as to which see, also, In re Gutwillig [2nd Circuit], 34 C. C. A. 377; 92 Fed. 337; 1 Am. B. R. 388, and Carriage Co. v. Stengel [6th Circuit], 37 C. C. A. 210; 95 Fed. 637; 2 Am. B. R. 383; in re Francis-Valentine Co. (9th Circuit), 36 C. C. A. 499; 94 Fed. 793; 2 Am. B. R. 522; in re Baudouine (2nd Circuit), 3 Am. B. R. 651; 101 Fed. 574; Wall v. Cox (4th Circuit), 101 Fed. 403; Hall v. Kincell and Perkins v. Markham (San Gabriel Co.) (9th Circuit), May, 1900, reported in 102 Fed. 310.)

The decisions of the various District Courts by a considerable majority also sustain their own jurisdiction, and are hence overruled by the Supreme Court in this respect. [See In re Brooks (D. C. Vt.), 91 Fed. 508; 2 Am. B. R. 531; in re Smith (D. C. Ind.), 92 Fed. 135, 139; I Am. B. R. 266; Robinson v. White (D. C.), 97 Fed. 33; 3 Am. B. R. 88; Carter v. Hobbs (D. C.), 92 Fed. 594; id. 94 Fed. 108; 2 Am. B. R. 224; Keegan v. King (D. C. Ind.), 96 Fed. 758; 3 Am. B. R. 79; in re Pittelkow (D. C. Wis.), 92 Fed. 901; 1 Am. B. R. 472; in re Kletchka (D. C. N. Y.), 92 Fed. 901; 1 Am. B. R. 479; in re Baudouine (D. C. N. Y.), 96 Fed. 536; 3 Am. B. R. 59; in re Kenney (D. C. N. Y.), 95 Fed. 427; 2 Am. B. R. 494; in re Nathan (D. C. Nev.), 92 Fed. 590; in re Fellerath (D. C. Ohio), 95 Fed. 121; 2 Am. B. R. 40; in re Booth (D. C. Ga.), 96 Fed. 943; 2 Am. B. R. 770; in re Kimball (D. C. Pa.), 97 Fed. 29; 3 Am. B. R. 161; Trust Co. v. Benbow (D. C. N. C.), 96 Fed. 514; 3 Am. B. R. 9; in re Fixen (D. C. Cal.), 96 Fed. 748; 2 Am. B. R. 822; in re Newberry (D. C. Mich.), 97 Fed. 24; 3 Am. B. R. 158; Murray v. Beale (D. C. Utah), 97 Fed. 567; 3 Am. B. R. 284; Lehman v. Crosby (D. C. N. Y.), 99 Fed. 543; 3 Am. B. R. 662; Louisville Trust Co. v. Marx (D. C. Ky.), 98 Fed. 456; 3 Am. B. R. 450; in re Hammond (D. C. Mass.), 98 Fed. 845; 3 Am. B. R. 466;

Jurisdiction of State Courts in Other Matters.

[Ch. IV. Shutts v. Bank (D. C. Ind.), 98 Fed. 705; 3 Am. B. R. 492; in re Woodbury (D. C. No. Dak.), 98 Fed. 833; 3 Am. B. R. 457; Norcross v. Nathan (D. C. Nev.), 99 Fed. 414; 3 Am. B. R. 613; Pepperdine v. Headley (D. C. Mo.), 98 Fed. 863; 3 Am. B. R. 455.]

These cases either directly or impliedly held that the District Court has jurisdiction to entertain such suits, though they differ widely as to the grounds. Some, like In re Woodbury, hold that the limitation in section 23b has reference only to venue; others, like Louisville Trust Co. v. Marx, that it is a limitation on the jurisdiction of the Circuit Courts alone, while others, of which In re Baudouine is a type, confine the jurisdiction of the District Court to suits by the trustee to set aside fraudulent transfers by the bankrupt-suits which they say the bankrupt could not himself have brought. All this reasoning is now swept away by the very comprehensive opinion of Mr. Justice Gray, in Bardes v. Bank (4 Am. B. R. 163; 178 U. S. 524).

On the other hand, early in the history of the Bankruptcy Act, the Circuit Court of Appeals of the Fifth Circuit, in April, 1899 (In re Abraham, 35 C. C. A. 592; 93 Fed. 767; 2 Am. B. R. 266), held that a trustee cannot by summary proceedings in the District Court recover from the bankrupt's general assignee property covered by the assignment, but must proceed in a State court, unless the Circuit Court is open by reason of diverse citizenship. [Following In re Abraham, and, in some cases, denying more broadly the jurisdiction of the District Court, are: In re Kelly (D. C. Tenn.), 91 Fed. 504; 1 Am. B. R. 306; in re Rockwood (D. C. Iowa), 91 Fed. 363; 1 Am. B. R. 272; in re Buntrock Clothing Co. (D. C. Iowa), 92 Fed. 886; 1 Am. B. R. 454; Hicks . Knost [D. C. Ohio], 94 Fed. 625; 2 Am. B. R. 153; Mitchell v. McClure (D. C. Pa.), 91 Fed. 621; 1 Am. B. R. 53; Burnett. Mercantile Co. (D. C. Ore.), 91 Fed. 365; 1 Am. B. R. 229; in re Franks (D. C. Ala.), 95 Fed. 635; 2 Am. B. R. 632; Perkins v. McCauley (D. C. Cal.), 98 Fed. 287: 3 Am. B. R. 445 Camp 2. Zellars (C. C. A. 5th Circuit), reported in note to Perkins v. McCauley, 3 Am. B. R. 445, and following In re

$ 24.] Jurisdiction of Circuit Courts over Crimes - Appellate Courts.

Abraham (Bernheimer v. Bryan).] These cases must be assumed to be affirmed by the Supreme Court, as indeed Hicks v. Knost and Mitchell v. McClure are specifically (4 Am. B. R. 178; 178 U. S. 539, 541). In re Abraham, sub nom, Bryan v. Bernheimer, is still on the calendar of the Supreme Court unargued.

(As to gaining jurisdiction, by consent, see In re Connolly [D. C. Pa.], 3 Am. B. R. 842, and Hicks v. Knost, 4 Am. B. R. 178; 178 U. S. 541.)

Jurisdiction of Circuit Court over Crimes. Section 23c.-The concurrent jurisdiction of the Circuit Court given over the crimes mentioned in the Act (see section 29) is in line with the general provision of the federal statute that the Circuit Court has exclusive criminal jurisdiction except where such jurisdiction is specifically given to the District Court. (See U. S. R. S. section 629.)

SEC. 24.

Jurisdiction of Appellate Courts.-a The Supreme Court of the United States, the circuit courts of appeals of the United States, and the supreme courts of the Territories, in vacation in chambers and during their respective terms, as now or as they may be hereafter held, are hereby invested with appellate jurisdiction of controversies arising in bankruptcy proceedings from the courts of bankruptcy from which they have appellate jurisdiction in other cases. The Supreme Court of the United States shall exercise a like jurisdiction from courts of bankruptcy not within any organized circuit of the United States and from the supreme court of the District of Columbia.

b The several circuit courts of appeal shall have jurisdiction in equity, either interlocutory or final, to superintend and revise in matter of law the proceedings of the several inferior courts of bankruptcy within their jurisdiction. Such power shall be exercised on due notice and petition by any party aggrieved.

Analogous Provisions of Former Acts.

As to appeals; R. S. section 4980; act of 1867, section 8. As to supervisory jurisdiction of circuit courts of appeal; R. S. section 4,986; act of 1867, section

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