Home Ins. v. Gunther

RUDKIN, Circuit Judge (after stating the facts as above). At the threshold of the qase the plaintiffs in error challenged the jurisdiction of the court below by demurrer, and our conclusion on that question is decisive of the case. It is mistake to assume that the mere filing of a petition in bankruptcy draws all litigation over the estate of the bankrupt into the federal courts. As said by the Supreme Court in the recent case of Taubel-Scott-Kitzmiller Co. v. Fox, 44 Sup. Ct. 396, 68 L. Ed. —, decided April 7, 1924. “By the act of 1S98, as originally enacted, the power of the bankruptcy court to adjudicate, without consent, controversies concerning the title, arising under either section 67e, or section 60b, or section 70e, was confined to property of which it had possession." Again: “Wherever the bankruptcy court had possession, it could, under the act of 189S as originally enacted, and can now, determine in a summary proceeding controversies involving substantial adverse claims of title under subdivision ‘e’ of section 67, under subdivision ‘b’ of section 60, and under subdivision ‘e’ of section 70. But in no case where it lacked possession, could the bankruptcy court, under the law as originally enacted, nor can it now (without *596 consent), adjudicate in a summary proceeding the validity of a substantial adverse claim. In the absence of possession, there was under the Bankruptcy Act of'1898, as originally passed, no jurisdiction, without consent, to adjudicate the controversy even by a plenary suit. The Act of February 5, 1803. c. 487, § 8, 32 Stat. 797 , 798, 800, together with the Act of June 25, 1910, c. 412, § 7, 36 Stat. 838 , 840 (Comp. St. § 9307), conferred upon the bankruptcy court jurisdiction, under certain circumstances, against the adverse claimant, in a plenary suit under section 60, subdivision ‘b,’ section 67, subdivision ‘e,’ and section 70, subdivision ‘e.’ But no amendment has conferred upon the bankruptcy court jurisdiction, even in a plenary suit, of proceedings under subdivision ‘f’ of section 67.” See, also, Bardes v. Hawarden Bank, 178 U. S. 524 , 20 Sup. Ct. 1000, 44 L. Ed. 1175 . The controversy in that case was between a trustee in bankruptcy and a judgment creditor claiming a lien by virtue of an execution levy, ■ and the court held that the bankruptcy court had no jurisdiction over the controversy in a summary proceeding, or otherwise. Here there was no diversity of citizenship, there was no res in the possession of the bankruptcy court, and the action was not brought under any of the subdivisions of the Bankruptcy Act to which reference has been made. The court below was therefore without jurisdiction, and the action should have been dismissed upon that ground, and for that reason. Reversed accordingly.