Louisville Trust Co. v. Marx

• Decision Date: 23 December 1899
• Citation: 98 F. 456
• Parties: LOUISVILLE TRUST CO. v. MARX et al.
• Court: U.S. District Court — District of Kentucky

98 F. 456

LOUISVILLE TRUST CO. v. MARX et al.

United States District Court, D. Kentucky.

December 23, 1899

Charles S. Grubbs, for complainant.

D. I Heyman, O. A. Wehle, and Kohn, Baird & Spindle, for defendants.

EVANS District Judge.

The complainant, the Louisville Trust Company, is the trustee in bankruptcy of the firm of L. Marx & Bro., who in January 1899, were adjudged by this court to be bankrupts. As such trustee it brought this suit in equity in this court to set aside certain alleged fraudulent preferences made by the bankrupts within four months before the adjudication.

Assuming that the bill of complaint states a cause of action under the bankrupt act, the defendants severally demur to it upon the sole ground that this court has no jurisdiction to hear and determine such a suit. This brings up, of course, the question which has been so widely discussed, as to the proper construction of section 23 of the act. The jurisdiction has been maintained in cases like the following: In re Sievers (D.C.) 91 F. 366; In re Smith (D.C.) 92 F. 135; Carter v. Hobbs (D.C.) 92 F. 594; In re Richard (D.C.) 94 F. 633; In re Newberry (D.C.) 97 F. 24; and Robinson v. White (D.C.) 97 F. 33,-- but has been denied in Heath v. Shaffer (D.C.) 93 F 647; Camp v. Zellars, 36 C.C.A. 501, 94 F. 799; Goodier v. Barnes (C.C.) 94 F. 798; Hicks v. Knost (D.C.) 94 F. 625; Burnett v. Mercantile Co. (D.C.) 91 F. 365; and Mitchell v. McClure (D.C.) 91 F. 621. The section about which there has been such marked difference of opinion is in this language, namely:

'Section 23. (a) The United States circuit courts shall have jurisdiction of all controversies at law and in equity, as distinguished from proceedings in bankruptcy, between trustees as such and adverse claimants concerning the property acquired or claimed by the trustees, in the same manner and to the same extent only as though bankruptcy proceedings had not been instituted and such controversies had been between the bankrupts and such adverse claimants. (b) 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. (c) The United States circuit courts shall have concurrent jurisdiction with the courts of bankruptcy, within their respective territorial limits, of the offenses enumerated in this act.'

Viewed in connection with the other provisions of the statute, it seems to me to be manifest that the language of the section refers alone to the jurisdiction of the circuit courts, except as to criminal matters, and to the 'suits' brought therein; and it is not altogether impossible that efforts at its construction have been made somewhat more difficult by the lettering of the clauses of the section. Clauses 'a' and 'c,' in express terms, except as to criminal offenses, relate to the circuit courts only; and the 'suits' referred to in clause 'b' should be limited to those 'suits' which may be brought as provided in the first clause. There is nothing in clause 'b' which makes it either necessary or appropriate to conclude that congress meant its language to have a wider scope, and certainly nothing to show that it was meant to include courts nowhere mentioned, or even remotely alluded to, either by name or designation, so far as civil actions are concerned. It does not seem to me that any rule governing the interpretation of statutes warrants the notion that anything in the general language of clause 'b' meant to enlarge the scope of what was otherwise evidently the purpose of the section as clearly indicated by clause 'a" and, unless the meaning of clause 'b' is greatly expanded beyond that of its associate clauses, this must be the construction. That clause of the section put in between clauses 'a' and 'c' must take color and meaning from them, and be limited by them. This would be the natural result, and seems to me certainly to have been the intention of congress. While the original jurisdiction of the circuit courts is thus provided for and limited, it is by no means said to be exclusive; and, when we go to other provisions of the act to ascertain the jurisdiction of this court, it will be found to be manifestly concurrent with that of the circuit courts, as far as the latter goes. It is mainly found in section 2, which, for the purposes of this opinion, reads as follows, namely:

'Sec. 2. That the courts of bankruptcy as hereinbefore defined, viz. the district courts of the United States, * * * are hereby made courts of bankruptcy, and are hereby invested within their respective territorial limits * * * and with such jurisdiction of law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings, * * * to (1) adjudge persons bankrupt * * *; (2) allow claims,' etc.: '(3) appoint receivers,' etc.; '(4) arraign, try and punish bankrupts,

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