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CHAPTER II.

CREATION OF COURTS OF BANKRUPTCY AND THEIR JURIS

DICTION.

SEO. 2. That the courts of bankruptcy as herein before defined, viz, the district courts of the United States in the several States, the supreme court of the District of Columbia, the district courts of the several Territories, and the United States courts in the Indian Territory and the District of Alaska, are hereby made courts of bankruptcy, and are hereby invested, within their respective territorial limits as now established, or as they may be hereafter changed, 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 (1) adjudge persons bankrupt who have had their principal place of business, resided, or had their domicile within their respective territorial jurisdictions for the preceding six months, or the greater portion thereof, or who do not have their principal place of business, reside, or have their domicile within the United States, but have property within their jurisdictions, or who have been adjudged bankrupts by courts of competent jurisdiction without the United States and have property within their jurisdictions; (2) allow claims, disallow claims, reconsider allowed or disallowed claims, and allow or disallow them against bankrupt estates; (3) appoint receivers or the marshals, upon application of parties in interest, in case the courts shall find it absolutely necessary, for the preservation of estates, to take charge of the property of bankrupts after the filing of the petition and until it is dismissed or the trustee is qualified; (4) arraign, try, and punish bankrupts, officers, and other persons, and the agents,

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LAW OF BANKRUPTCY.

[§ 2.

officers, members of the board of directors or trustees, or
other similar controlling bodies, of corporations for viola-
tions of this Act, in accordance with the laws of proced-
ure of the United States now in force, or such as may
be hereafter enacted, regulating trials for the alleged viola-
tion of laws of the United States; (5) authorize the business
of bankrupts to be conducted for limited periods by receivers,
the marshals, or trustees, if necessary in the best interests of
the estates; (6) bring in and substitute additional persons or
parties in proceedings in bankruptcy when necessary for the
complete determination of a matter in controversy; (7) cause
the estates of bankrupts to be collected, reduced to money
and distributed, and determine controversies in relation
thereto, except as herein otherwise provided; (8) close es-
tates, whenever it appears that they have been fully admin-
istered, by approving the final accounts and discharging the
trustees, and reopen them whenever it appears they were
closed before being fully administered; (9) confirm or reject
compositions between debtors and their creditors, and set
aside compositions and reinstate the cases; (10) consider and
confirm, modify or overrule, or return, with instructions for
further proceedings, records and findings certified to them
by referees; (11) determine all claims of bankrupts to their
exemptions; (12) discharge or refuse to discharge bankrupts
and set aside discharges and reinstate the cases; (13) enforce
obedience by bankrupts, officers, and other persons to all law-
ful orders, by fine or imprisonment or fine and imprisonment;
(14) extradite bankrupts from their respective districts to
other districts; (15) make such orders, issue such process, and
enter such judgments in addition to those specifically pro-
vided for as may be necessary for the enforcement of the pro-
visions of this Act; (16) punish persons for contempts commit-
ted before referees; (17) pursuant to the recommendation of
creditors, or when they neglect to recommend the appoint-
ment of trustees, appoint trustees, and upon complaints of
creditors, remove trustees for cause upon hearings and after
notices to them; (18) tax costs, whenever they are allowed by

law, and render judgments therefor against the unsuccessful party, or the successful party for cause, or in part against each of the parties, and against estates, in proceedings in bankruptcy; and (19) transfer cases to other courts of bankruptcy.

Nothing in this section contained shall be construed to deprive a court of bankruptcy of any power it would possess were certain specific powers not herein enumerated.

[Act of 1867. SEC. 1. Be it enacted That the several District Courts of the United States be, and they hereby are, constituted courts of bankruptcy, and they shall have original jurisdiction in their respective districts in all matters and proceedings in bankruptcy, and they are hereby authorized to hear and adjudicate upon the same according to the provisions of this act. The said courts shall be always open for the transaction of business under this act, and the powers and jurisdiction hereby granted and conferred shall be exercised as well in vacation as in term time, and a judge sitting at chambers shall have the same powers and jurisdiction, including the power of keeping order and of punishing any contempt of his authority, as when sitting in Court. And the jurisdiction hereby conferred shall extend to all cases and controversies arising between the bankrupt and any creditor or creditors who shall claim any debt or demand under the bankruptcy; to the collection of all the assets of the bankrupt; to the ascertainment and liquidation of the liens and other specific claims thereon; to the adjustment of the various priorities and conflicting interests of all parties and to the marshalling and disposition of the different funds and assets, so as to secure the rights of all parties and due distribution of the assets among all the creditors; and to all acts, matters, and things to be done under and in virtue of, the bankruptcy, until the final distribution and settlement of the estate of the bankrupt, and the close of the proceedings in bankruptcy. The said courts shall have full authority to compel obedience to all orders and decrees passed by them in bankruptcy, by process of contempt and other remedial process, to the same extent that the circuit courts now have in any suit pending therein in equity. Said courts may sit, for the transaction of business in bankruptcy, at any place in the district, of which place and the time of holding court, they shall have given notice, as well as at the places designated by law for holding such courts.

SEC. 28. Preparatory to the final dividend, the assignee shall submit his account to the court and file the same, and at such time the court shall audit and pass the accounts of the assignee, and such assignee shall, if required by the court, be examined as to the truth of such account, and if found correct he shall thereby be discharged from all liability as assignee to any creditor of the bankrupt. SEC. 18. An assignee refusing or unreasonably neglecting to execute an instrument when lawfully required by the court, or disobeying a lawful order or decree of the court in the premises, may be punished as for a contempt of

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SEC. 49. And be it further enacted, That all the jurisdiction, power, and authority conferred upon and vested in the District Court of the United States by this act in cases in bankruptcy are hereby conferred upon and vested in the Supreme Court of the District of Columbia, and in and upon the supreme courts of the several Territories of the United States, when the bankrupt resides in the said District of Columbia or in either of the said Territories. And in those judicial districts which are not within any organized circuit of the United States, the power and jurisdiction of a circuit court in bankruptcy may be exercised by the district judge.]

(1) Courts of bankruptcy have jurisdiction to adjudge a partnership bankrupt, and, if it has jurisdiction of one of the partners, it may have of all and of the administration of the partnership and individual property. (Sec. 5, a and c.) And in the event petitions are filed against the same person or against different members of a partnership in different courts of bankruptcy, each of which has jurisdiction, the cases shall be transferred by order of the court relinquishing jurisdiction to and be consolidated by the court which can proceed with the greatest convenience to parties in interest. (Sec. 32.)

Court always open.-The district court, for the purposes of its bankruptcy jurisdiction, is always open. It has no separate terms. Its proceedings in any pending suit are, therefore, at all times open for reexamination upon application made in an appropriate form. Any order made in the progress of the cause may be subsequently set aside and vacated upon proper showing, provided rights have not become vested under it which will be disturbed by its vacation. (Sandusky v. First Nat. Bank, 12 N. B. R. 176; 23 Wall. 269.) In the exercise of its exclusive original jurisdiction it may act in administrative matters or matters of mere discretion as well in vacation as in term time, and a judge sitting at chambers in such matters has the same power and jurisdiotion as when sitting in court. (Shearman v. Bingham et al., 7 N. B. R.

General.— A judge who has been a depositor in an insolvent banking institution, but who has sold his claim, is not thereby disqualified from sitting in the matter, although the motive on the part of the purchaser of the claim may have been to remove the disqualification. (In re Sime & Co., 7 N. B. R. 407; 2 Sawy. 320; 5 Pac. Law Rep. 217; Fed. Cas. 12860.) Neither court nor register can be the general adviser of the assignees as to their acts. (In re Sturgeon, 1 N. B. R. 131; 2 Amer. Law T. Rep. Bankr. 7; Fed. Cas. 13564.)

Jurisdiction. The United States district court sitting in bankruptcy has full and complete jurisdiction to administer the estate of the bankrupt. (Allen & Co. v. Montgomery et al., 10 N. B. R. 503; In re Archenbrown, 11 N. B. R. 149; 7 Chi. Leg. News, 99; Fed. Cas. 504.) This jurisdiction extends to all acts, matters and things to be done under and in virtue of the bankruptcy until the final distribution and settlement of the estate of the bankrupt and the close of proceedings in bankruptcy (Bucknam v. Dunn et al., 16 N. B. R. 470; 2 Hask. 215; Fed. Cas. 2096); the commencement of proceedings in bankruptcy transferring at once to the district court the jurisdiction over the bankrupt, his estate, and all parties and questions connected therewith. (In re Carow, 4 N. B. R. 178; 41 How. Pr. 112; Fed. Cas. 2426.) Whenever the jurisdiction of the court is properly and in good faith invoked in the manner prescribed by law, the court is bound to assume and exercise that jurisdiction (In re Keiler et al., 18 N. B. R. 10; 7 Chi. Leg. News, 42; 9 West. Jur. 175; Fed. Cas. 7647), as it has no authority to exercise discretion in the entertainment of actions over which it is given jurisdiction, when properly applied to for the exercise thereof (Cook v. Waters et al., 9 N. B. R. 155); and when jurisdiction is taken it is superior and exclusive in all matters arising under the Bankrupt Act. (In re Barrow, 1 N. B. R. 125; 1 Amer. Law T. Rep. Bankr. 63; Fed. Cas. 1057.) A creditor attacking the jurisdiction need not first file formal proof of his debt, as this would import a recognition of the jurisdiction. He must, however, show that he is a creditor and that he has an interest to protect. (In re Boston H. & E. R. R. Co., 6 N. B. R. 209; 9 Blatchf. 101; 8 Amer. L. Rev. 582; Fed. Cas 1678.)

Where the court is without jurisdiction, no voluntary act of the defendant can give such jurisdiction, and the point can be raised even after the appearance and answer (Jobbins v. Montague, 6 N. B. R. 509; Fed. Cas. 7330); and where want of jurisdiction appeared on the petition, but respondents consented to the jurisdiction, the court took notice of the point on its own motion. (In re Hopkins v. Carpenter et al., 18 N. B. R. 339; Fed. Cas. 6686.) It has been held, however, that objection to the jurisdiction over the person of a party may be expressly waived, and the same thing may be done by implication, by means of any act indicating it to be the design of the person entitled to make it, not to insist upon it. (People ex rel. Jennys v. Brennan, 12 N. B. R. 567.) The bankrupt court has a right to determine the question as to fraud

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