Under the express authority of the bankruptcy act, ancillary jurisdiction may be exercised in any district other than the one in which the main proceedings are being had in aid of a receiver or trustee appointed in any bankruptcy proceedings.
A court of any district having jurisdiction and a receiver or trustee being appointed, it may be very important that some action be taken in another district for the preservation of assets in that other district. Accordingly ancillary proceedings are authorized by the bankruptcy act.
The court of bankruptcy has power to enter any order or entertain any proceeding necessary to carry into execution the provisions and meaning of the bankruptcy act.
The bankruptcy act of 1898 sets out in section 2 thereof an enumeration in detail of the powers of the bankruptcy court, adding that "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."35 By the particular enumeration of powers, the extent of the courts jurisdiction is made clear, and the enumeration is to be taken as a broadening of its general power rather than a narrowing thereof.
34. Bankr. Act, SEC. 2 (1).
35. Sec. 2 (20)
The bankruptcy court has jurisdiction to recover assets of the estate, held by or in the possession of third persons. If they are not adversely held, the court may recover them in summary proceedings, but if adversely held there must be a suit to recover them.
The bankruptcy law gives the court of bankruptcy jurisdiction to recover assets belonging to the bankrupt estate. The trustee may also sue in other courts, as we shall discover, to recover assets adversely held, and therefore the jurisdiction is concurrent to this extent. Under the act as originally enacted, there was no power to entertain a suit by the trustee for the recovery of property without the consent of the defendant to the jurisdiction.36 This was subsequently remedied by amendment, and now the act provides that a trustee in bankruptcy may sue in the District Court to set aside a preference to a creditor,37 to enforce liens which should be preserved for the benefit of the estate ;38 and to avoid any transfer by the bankrupt of his property which any creditor of such bankrupt might have avoided, or recover the value thereof. Otherwise, "Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt whose estate is being administered by such trustee, might have brought or prosecuted them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant."39
36. Bardes v. Bank, 178 U. S. 524.
37. B. A. 1898, SEC. 60b (as amended 1903 and 1910), Collett v. Adams, 249 U. S. 545.
38. Ibid., SEC. 67c
39. Ibid., SEC. 23b.
A trustee in bankruptcy may bring a plenary proceeding in a state court to recover property adversely held whenever the bankrupt, had not such proceedings intervened, would have had a right to sue in such courts, and may bring any suit in a state court which he could bring in the District Court of the United States.
The trustee may sue to recover assets in any state court in practically every case where he might sue in a District Court, and may also sue in such state court whenever the bankrupt, had bankruptcy proceedings not intervened, might have sued in such state court.40
40. Ibid., SEC. 7oe; Stellwegen v. Clum, 245 U. S. 605 at 614.
The District Court of the United States may entertain proceedings of a summary character to recover assets which are not adversely held. Property is adversely held whenever the possession thereof has been acquired prior to the institution of proceedings in bankruptcy.
If property is adversely held, there must be a plenary suit, either in the District Court or elsewhere, to recover it. But if not adversely held, then summary proceedings may be entertained by the District Court. In other words if property alleged to belong to the bankrupt
estate, is in the adverse possession of another, the trustee must start the usual suit at law to obtain possession of it, with the regular pleadings, the summons, the time to answer, and the trial. But if not adversely held, the court may order its possession taken by marshal, receiver or trustee and the right to it summarily disposed of in a hearing before it brought up on motion.41
It therefore becomes important to determine when property is adversely held and when not adversely held. And in answer to that it may be said generally that property is adversely held, whenever the claimant has possession prior to the institution of the proceedings in bankruptcy. But if possession is afterwards obtained, then the property is not adversely held.42
The Bankruptcy Act provides for review of proceedings by the Circuit Court of Appeals and the Supreme Court. This review may be by appeal in certain cases, by petition to revise matters of law in certain cases and upon a certificate from a Supreme Court Justice where he believes that a determination of the question is essential to uniform construction.
Chapter 4 of the Bankruptcy Act, contains provisions as to the jurisdiction of the Appellate Courts. A reference to that chapter and particularly to sections 24 and 25 will disclose the nature of the appellate jurisdiction. It will be seen that the methods of taking a case up for review are of three sorts (1) By appeal; (2) By petition for revision and (3) By certificate of importance. In the petition to revise, which goes to the Circuit Court of Appeals, there is only the right to review questions of law. Any question as to fact must be taken up by appeal.43
41. In re Rathman, (C. C. A. 8th Cir.) 183 Fed. 913; Babbitt v. Ducher, 216 U. S. 102; Stone-Ordean-Wells Co. v. Mark, (C. C. A. 8th Cir.) 227 Fed. 975.
42. In re Rathman, supra; Stone-Ordean-Wells Co, supra; Weidhorn v. Levy, 253 U. S. 268.
The referee in bankruptcy has a jurisdiction somewhat analogous to that of a master in chancery. His powers are quite broad, but are subject to revision by the judge. The act details his powers.
The referee in bankruptcy is an officer to whom the cases are referred. Such referee has immediate charge of all the details of administration. His powers are, however, at all times subject to review by the judge, to whom his rulings may be certified when the party adversely affected is not contented to abide by the referee's decision. The referee has power to adjudicate debtors bankrupt, dismiss petitions, examine witnesses, declare dividends, examine schedules and order amendments thereof, give notices to creditors, and generally to attend to the detail of administration.44
A referee has no jurisdiction until there has been a reference to him.45
He is appointed by the judge for a period of two years.
43. Hall v. Reynolds, (C. C. A. 8th Cir.) 224 Fed. 103.
44. B. A. 1898, Secs. 34, 35.
45. Weidhorn v. Levy, 253 U. S. 268. (He has no power except by order of reference and his judicial functions are subject to review by the court.)