In re Weidhorn
| Decision Date | 28 May 1918 |
| Docket Number | 1302. |
| Citation | 253 F. 28 |
| Parties | In re WEIDHORN. Petition of LEVY. |
| Court | U.S. Court of Appeals — First Circuit |
Lee M Friedman, of Boston, Mass., and Albert S. Woodman, of Portland, Me. (Swift, Friedman & Atherton, of Boston, Mass on the brief), for petitioner.
William M. Blatt, of Boston, Mass., for respondent.
Before DODGE, BINGHAM, and JOHNSON, Circuit Judges.
The order or decree of the District Court, which this petition seeks to revise, directed the vacation of a decree made by the referee upon a bill in equity, filed and answered before him, and sustained by him after hearing the merits of the case as in plenary proceedings before the court, and it directed the dismissal of the bill on the ground that the referee had been without jurisdiction so to entertain or hear it.
1. We are asked to dismiss the petition to revise on the ground that it is not a petition within section 24b of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 553 (Comp St. 1916, Sec. 9608)). It is contended that the question raised as to the referee's jurisdiction can be brought before us only by appeal under section 24a.
The bill in equity, filed by the trustee in bankruptcy of the estate under administration, sought to avoid two conveyances by the bankrupt to his brother, on the alleged ground that they had been made with intent to hinder, delay, or defraud his creditors. The referee held the conveyances void, and ordered the defendant to account for or restore the property transferred.
The defendant's petition for review of the referee's decree by the District Court alleged only that the above findings and conclusions were not justified by the evidence. It did not allege that the referee had acted without jurisdiction. The referee's certificate to the District Judge, however, recited that the defendant had contended 'that the referee, sitting as a court of bankruptcy, has no jurisdiction,' and that he had ruled to the contrary. The District Judge dealt only with the question of jurisdiction, undertaking no consideration of the merits of the controversy passed upon by the referee.
The trustee's present petition to this court, while it asks reversal of the decree of dismissal, and for affirmance of the decree entered by the referee, raises before us only the question of the referee's jurisdiction. If he had jurisdiction, his result on the merits remains to be reviewed by the District Court.
Since the petition before us thus presents only the preliminary question of the referee's jurisdiction to proceed on the bill before him, we think it raises rather a question of procedure, under section 24b, than a 'controversy arising in bankruptcy proceedings,' within the meaning of section 24a. Such 'controversies' arise over steps in bankruptcy proceedings which the court or referee has jurisdiction to take or refuse to take. When the referee's jurisdiction to investigate the merits of a controversy like this in summary proceedings is attacked, the question is properly raised before the Appellate Court by petition to revise an order of the District Court sustaining such jurisdiction. Schweer v. Brown, 195 U.S. 171, 25 Sup.Ct. 15, 49 L.Ed. 144; Shea v. Lewis, 206 F. 877, 124 C.C.A. 537; Gibbon v. Goldsmith, 222 F. 826, 138 C.C.A. 252. We see no sufficient reason to doubt that the question raised by a denial of the referee's jurisdiction to investigate the merits of such a controversy under the forms of a plenary suit may be equally well raised by petition to revise. The question is one of law only. That a result on the merits, had there been jurisdiction, could have been reviewed here only on appeal, does not prove that we are without power to determine the question of jurisdiction under such a petition as this.
2. The case had been referred generally, under section 22 of the Bankruptcy Act (Comp. St. 1916, Sec. 9606), and according to General Order XII. The reference was not for any special or limited purpose. According to clause 1 of said general order, 'all the proceedings except such as are required by the act or by these general orders to be had before the judge,' were thereafter to be had before the referee, and according to clause 2 of said order the referee was thereafter to perform the duties which he was 'empowered by this act to perform' in the matters arising in the case referred to him. We are unable to agree with the learned District Judge that 'all the proceedings, ' in clause 1, must be taken to mean only such proceedings of the bankruptcy courts as have been distinguished from controversies arising in bankruptcy proceedings for the purposes of section 24. We think the order requires a broader construction, in view of all its provisions, and of other provisions applicable, found in the act.
Nothing either in the act or in the general orders expressly requires the proceedings upon a bill filed by a trustee like this, whereof 'any court of bankruptcy' has jurisdiction under section 70e (Comp. St. 1916, Sec. 9654), to be had before the judge. On the contrary, section 38(4), being Comp. St. 1916, Sec. 9622, invests the referee with jurisdiction, 'subject always to a review by the judge,' 'to perform such part of the duties (with express exceptions not here applicable) as are by this act conferred on courts of bankruptcy and as shall be prescribed by rules or orders * * * except as herein otherwise provided.'
Neither in the act nor the rules nor the orders referred to are any provisions found which exclude such cases from the general operation of this section. The jurisdiction given by section 70e, over such a proceeding, is in equity, as affording a remedy more adequate and complete than can be had at law. Wall v. Cox, 101 F. 403, 41 C.C.A. 408; Pond v. New York, etc., Bank (D.C.) 124 F. 992; Davis v. Gates (D.C.) 235 F. 192, 195. There are certain injunctions which only the judge can order (Gen. Order XII, 3); but no such injunction was sought by the bill which the trustee filed.
Section 42a of the act (Comp. St. 1916, Sec. 9626) provides for the keeping of records of proceedings in cases before the referee corresponding to those kept in equity cases before the federal courts. Section 42c makes the records so kept part of the records of the court, when certified and transmitted by the referee as there required. By General Order III, process summons, and subpoenas, under the court's seal and signed by the clerk, are to be furnished referees upon application therefor. In view of these provisions, we are not prepared to agree with the District Judge that to affirm the referee's jurisdiction in cases like this would amount to creating a new court having concurrent equity...
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