Source: https://supreme.justia.com/cases/federal/us/492/33/case.html
Timestamp: 2017-01-19 21:22:23
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Matched Legal Cases: ['§ 548', '§ 1411', '§ 1330', '§ 1330', '§ 1330', '§ 384', '§ 1480', '§ 157', '§ 157', '§ 157', '§ 1411', '§ 548', '§ 548', '§ 1480', '§ 157', '§ 1411', '§ 1411', '§ 1411', '§ 8', '§ 157', '§ 8', '§ 8', '§ 157', '§ 532', '§ 59', '§ 548']

Granfinanciera, S.A. v. Nordberg (full text) :: 492 U.S. 33 (1989) :: Justia U.S. Supreme Court Center Log In
› Granfinanciera, S.A. v. Nordberg
Granfinanciera, S.A. v. Nordberg 492 U.S. 33 (1989)
U.S. Supreme CourtGranfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989)Granfinanciera, S.A. v. NordbergNo. 87-1716Argued January 9, 1989Decided June 23, 1989492 U.S. 33CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
1. This Court will not address respondent's contention that the judgment below should be affirmed as to petitioner Granfinanciera because it was a commercial instrumentality of the Colombian Government when it made its request for a jury trial, and was therefore not entitled to such a trial under the Seventh Amendment or applicable statutory provisions. This difficult question was neither raised below nor adequately briefed and argued here, and this is not an "exceptional case" as to which the Court will consider arguments not raised below. Moreover, petitioners' claim is uncontradicted that an affirmance on the ground respondent now urges would enlarge respondent's rights under the judgment below and decrease those of Granfinanciera. Pp. 492 U. S. 38-40. Page 492 U. S. 34
(b) A bankruptcy trustee's right to recover a fraudulent conveyance is more accurately characterized as a private, rather than a public, right. Although the plurality in Northern Pipeline Construction Co., supra, at 458 U. S. 71, noted that the restructuring of debtor-creditor relations in bankruptcy may well be a "public right," it also emphasized that state law causes of action for breach of contract are paradigmatic private rights, even when asserted by an insolvent corporation in the midst of Chapter 11 reorganization proceedings. Trustees' fraudulent conveyance actions Page 492 U. S. 35 are quintessentially common law suits that more nearly resemble state law contract claims by a bankrupt corporation to augment the bankruptcy estate than they do creditors' claims to a pro rata share of the bankruptcy res. This analysis is confirmed by Katchen v. Landy, 382 U. S. 323, 382 U. S. 327-328, which must be read to hold that a creditor's Seventh Amendment right to a jury trial on a bankruptcy trustee's preference claim depends upon whether the creditor submitted a claim against the estate. Since petitioners here have not filed such claims, respondent's suit is neither part of the claims adjudication process nor integral to the restructuring of debtor-creditor relations. Congress therefore cannot divest petitioners of their Seventh Amendment right merely by relabeling a preexisting, common law cause of action to which that right attaches and assigning it to a specialized court of equity, particularly where there is no evidence that Congress considered the constitutional implications of its designation of all fraudulent conveyance actions as core proceedings. Pp. 492 U. S. 55-61.
BRENNAN, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and MARSHALL, STEVENS, and KENNEDY, JJ., joined, and in Parts I, II, III, and V, of which SCALIA, J., joined. SCALIA, J., filed an opinion concurring in part and concurring in the judgment, post, p. 492 U. S. 65. WHITE, J., filed a dissenting opinion, post, p. 492 U. S. 71. BLACKMUN, J., filed a dissenting opinion, in which O'CONNOR, J., joined, post, p. 492 U. S. 91. Page 492 U. S. 36
The District Court referred the proceedings to the Bankruptcy Court. Over five months later, and shortly before the Colombian Government nationalized Granfinanciera, respondent Page 492 U. S. 37 served a summons on petitioners in Bogota, Colombia. In their answer to the complaint following Granfinanciera's nationalization, both petitioners requested a "trial by jury on all issues so triable." App. 7. The Bankruptcy Judge denied petitioners' request for a jury trial, deeming a suit to recover a fraudulent transfer "a core action that originally, under the English common law, as I understand it, was a nonjury issue." App. to Pet. for Cert. 34. Following a bench trial, the court dismissed with prejudice respondent's actual fraud claim, but entered judgment for respondent on the constructive fraud claim in the amount of $1,500,000 against Granfinanciera and $180,000 against Medex. Id. at 24-30. The District Court affirmed without discussing petitioners' claim that they were entitled to a jury trial. Id. at 18-23.
The Court of Appeals for the Eleventh Circuit also affirmed. 835 F.2d 1341 (1988). The court found that petitioners lacked a statutory right to a jury trial, because the constructive fraud provision under which suit was brought -- 11 U.S.C. § 548(a)(2) (1982 ed., Supp. V) -- contains no mention of a right to a jury trial, and 28 U.S.C. § 1411 (1982 ed., Supp. V) "affords jury trials only in personal injury or wrongful death suits." 835 F.2d at 1348. The Court of Appeals further ruled that the Seventh Amendment supplied no right to a jury trial, because actions to recover fraudulent conveyances are equitable in nature, even when a plaintiff seeks only monetary relief, id. at 1348-1349, and because "bankruptcy itself is equitable in nature, and thus bankruptcy proceedings are inherently equitable." Id. at 1349. The court read our opinion in Katchen v. Landy, 382 U. S. 323 (1966), to say that "Congress may convert a creditor's legal right into an equitable claim and displace any seventh amendment right to trial by jury," and held that Congress had done so by designating fraudulent conveyance actions "core proceedings" triable by bankruptcy judges sitting without juries. 835 F.2d at 1349. Page 492 U. S. 38
Washington v. Yakima Indian Nation, 439 U. S. 463, Page 492 U. S. 39 476, n. 20 (1979), provided that an affirmance on the alternative ground would neither expand nor contract the rights of either party established by the judgment below. See, e.g., Blum v. Bacon, 457 U. S. 132, 457 U. S. 137, n. 5 (1982); United States v. New York Telephone Co., 434 U. S. 159, 434 U. S. 166, n. 8 (1977). Respondent's present defense of the judgment, however, is not one he advanced below. [Footnote 2] Although "we could consider grounds supporting [the] judgment different from those on which the Court of Appeals rested its decision," "where the ground presented here has not been raised below, we exercise this authority only in exceptional cases.'" Heckler v. Campbell, 461 U. S. 458, 461 U. S. 468-469, n. 12 (1983), quoting McGoldrick v. Compagnie Generale Transatlantique, 309 U. S. 430, 309 U. S. 434 (1940).
This is not such an exceptional case. Not only do we lack guidance from the District Court or the Court of Appeals on this issue, but difficult questions remain whether a jury trial is available to a foreign state upon request under 28 U.S.C. § 1330 and, if not, under what circumstances a business enterprise that has since become an arm of a foreign state may be entitled to a jury trial. Compare Gould, Inc. v. Pechiney Page 492 U. S. 40 Ugine Kuhlmann, 853 F.2d 445, 450 (CA6 1988) (jurisdiction under 28 U.S.C. § 1330 determined by party's status when act complained of occurred); Morgan Guaranty Trust Co. of N.Y. v. Republic of Palau, 639 F.Supp. 706, 712-716 (SDNY 1986) (status at time complaint was filed is decisive for § 1330 jurisdiction), with Callejo v. Bancomer, S. A., 764 F.2d 1101, 1106-1107 (CA5 1985) (FSIA applies even though bank was nationalized after suit was filed); Wolf v. Banco Nacional de Mexico, S. A., 739 F.2d 1458, 1460 (CA9 1984) (same), cert. denied, 469 U.S. 1108 (1985). Moreover, petitioners alleged in their reply brief, without contradiction by respondent at oral argument, that affirmance on the ground that respondent now urges would "unquestionably enlarge the respondent's rights under the circuit court's decision and concomitantly decrease those of the petitioner" by "open[ing] up new areas of discovery in aid of execution" and by allowing respondent, for the first time, to recover any judgment he wins against Granfinanciera from Colombia's central banking institutions, and possibly those of other Colombian governmental instrumentalities. Reply Brief for Petitioners 19. Whatever the merits of these claims, their plausibility, coupled with respondent's failure to offer rebuttal, furnishes an additional reason not to consider respondent's novel argument in support of the judgment at this late stage in the litigation. We therefore leave for another day the questions respondent's argument raises under the FSIA.
Petitioners rest their claim to a jury trial on the Seventh Amendment alone. [Footnote 3] The Seventh Amendment provides: "In Page 492 U. S. 41 Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved. . . ."
Parsons v. Bedford, 3 Pet. 433, 28 U. S. 447 (1830). Although "the thrust of the Page 492 U. S. 42 Amendment was to preserve the right to jury trial as it existed in 1791," the Seventh Amendment also applies to actions brought to enforce statutory rights that are analogous to common law causes of action ordinarily decided in English law courts in the late 18th century, as opposed to those customarily heard by courts of equity or admiralty. Curtis v. Loether, 415 U. S. 189, 415 U. S. 193 (1974).
Tull v. United States, 481 U. S. 412, 481 U. S. 417-418 (1987) (citations omitted). The second stage of this analysis is more important than the first. Id. at 481 U. S. 421. If, on balance, these two factors indicate that a party is entitled to a jury trial under the Seventh Amendment, we must decide whether Congress may assign and has assigned resolution of the relevant claim to a non-Article III adjudicative body that does not use a jury as factfinder. [Footnote 4] Page 492 U. S. 43
Respondent does not challenge this proposition or even contend that actions to recover fraudulent conveyances or preferential transfers were more than occasionally tried in courts of equity. He asserts only that courts of equity had concurrent jurisdiction with courts of law over fraudulent conveyance actions. Brief for Respondent 37-38. While respondent's assertion that courts of equity sometimes provided relief in fraudulent conveyance actions is true, however, it hardly suffices to undermine petitioners' submission that the present action for monetary relief would not have sounded in equity 200 years ago in England. In Parsons v. Bedford, supra, at 28 U. S. 447 (emphasis added), we contrasted suits at law with "those where equitable rights alone were recognized" in holding that the Seventh Amendment right to a jury Page 492 U. S. 44 trial applies to all but the latter actions. Respondent adduces no authority to buttress the claim that suits to recover an allegedly fraudulent transfer of money, of the sort that he has brought, were typically, or indeed ever, entertained by English courts of equity when the Seventh Amendment was adopted. In fact, prior decisions of this Court, see, e.g., Buzard v. Houston, 119 U. S. 347, 119 U. S. 352-353 (1886), and scholarly authority compel the contrary conclusion:
The two cases respondent discusses confirm this account of English practice. Ex parte Scudamore, 3 Ves. jun. 85, 30 Eng.Rep. 907 (Ch. 1796), involved the debtor's assignment of his share of a law partnership's receivables to repay a debt shortly before the debtor was declared bankrupt. Other creditors petitioned chancery for an order directing the debtor's law partner to hand over for general distribution among creditors the debtor's current and future shares of the partnership's receivables, which he held in trust for the assignee. The Chancellor refused to do so, finding the proposal inequitable. Instead, he directed the creditors to bring an action at law against the assignee if they thought themselves entitled Page 492 U. S. 45 to relief. Although this case demonstrates that fraudulent conveyance actions could be brought in equity, it does not show that suits to recover a definite sum of money would be decided by a court of equity when a petitioner did not seek distinctively equitable remedies. The creditors in Ex parte Scudamore asked the Chancellor to provide injunctive relief by ordering the debtor's former law partner to convey to them the debtor's share of the partnership's receivables that came into his possession in the future, along with receivables he then held in trust for the debtor. To the extent that they asked the court to order relinquishment of a specific preferential transfer, rather than ongoing equitable relief, the Chancellor dismissed their suit and noted that the proper means of recovery would be an action at law against the transferee. Respondent's own cause of action is of precisely that sort.
id. at 445-446, 30 Eng.Rep., at 1242, is not supported by reference to any cases that sought the recovery of a fixed sum of money without the need for an accounting or Page 492 U. S. 46 other equitable relief. Nor has respondent repaired this deficit. [Footnote 5] We therefore conclude that respondent would have had to bring his action to recover an alleged fraudulent conveyance Page 492 U. S. 47 of a determinate sum of money at law in 18th-century England, and that a court of equity would not have adjudicated it. [Footnote 6]
"[i]n cases of fraud or mistake, as under any other head of chancery jurisdiction, a court of the United States will not sustain a bill in equity to obtain only a decree for the payment of money by way of Page 492 U. S. 48 damages, when the like amount can be recovered at law in an action sounding in tort or for money had and received."
Indeed, in our view, Schoenthal v. Irving Trust Co., 287 U. S. 92 (1932), removes all doubt that respondent's cause of action should be characterized as legal, rather than as equitable. In Schoenthal, the trustee in bankruptcy sued in equity to recover alleged preferential payments, claiming that it had no adequate remedy at law. As in this case, the recipients of the payments apparently did not file claims against the bankruptcy estate. The Court held that the suit had to proceed at law instead, because the long-settled rule that suits in equity will not be sustained where a complete remedy exists at law, then codified at 28 U.S.C. § 384, "serves to guard the right of trial by jury preserved by the Seventh Amendment, and to that end it should be liberally construed." 287 U.S. at 287 U. S. 94. The Court found that the trustee's suit -- indistinguishable from respondent's suit in all relevant respects -- could not go forward in equity because an adequate remedy Page 492 U. S. 49 was available at law. There, as here, "[t]he preferences sued for were money payments of ascertained and definite amounts," and "[t]he bill discloses no facts that call for an accounting or other equitable relief." Id. at 287 U. S. 95. Respondent's fraudulent conveyance action plainly seeks relief traditionally provided by law courts or on the law side of courts having both legal and equitable dockets. [Footnote 7] Unless Congress may and has permissibly withdrawn jurisdiction over that action by courts of law and assigned it exclusively to non-Article III tribunals sitting without juries, the Seventh Amendment guarantees petitioners a jury trial upon request.
Prior to passage of the Bankruptcy Reform Act of 1978, Pub.L. 95-598, 92 Stat. 2549 (1978 Act), "[s]uits to recover preferences constitute[d] no part of the proceedings in bankruptcy." Page 492 U. S. 50 Schoenthal v. Irving Trust Co., supra, at 287 U. S. 94-95. Although related to bankruptcy proceedings, fraudulent conveyance and preference actions brought by a trustee in bankruptcy were deemed separate, plenary suits to which the Seventh Amendment applied. While the 1978 Act brought those actions within the jurisdiction of the bankruptcy courts, it preserved parties' rights to trial by jury as they existed prior to the effective date of the 1978 Act. 28 U.S.C. § 1480(a) (repealed). The 1984 Amendments, however, designated fraudulent conveyance actions "core proceedings," 28 U.S.C. § 157(b)(2)(H) (1982 ed., Supp. V), which bankruptcy judges may adjudicate and in which they may issue final judgments,§ 157(b)(1), if a district court has referred the matter to them, § 157(a). We are not obliged to decide today whether bankruptcy courts may conduct jury trials in fraudulent conveyance suits brought by a trustee against a person who has not entered a claim against the estate, either in the rare procedural posture of this case, see supra at 492 U. S. 41, n. 3, or under the current statutory scheme, see 28 U.S.C. § 1411 (1982 ed., Supp. V). Nor need we decide whether, if Congress has authorized bankruptcy courts to hold jury trials in such actions, that authorization comports with Article III when non-Article III judges preside over the actions subject to review in, or withdrawal by, the district courts. We also need not consider whether jury trials conducted by a bankruptcy court would satisfy the Seventh Amendment's command that
given that district courts may presently set aside clearly erroneous factual findings by bankruptcy courts. Bkrtcy.Rule 8013. The sole issue before us is whether the Seventh Amendment confers on petitioners a right to a jury trial in the face of Congress' decision to allow a non-Article III tribunal to adjudicate the claims against them. Page 492 U. S. 51
Id. at 430 U. S. 450, n. 7, quoting Crowell v. Benson, 285 U. S. 22, 285 U. S. 51 (1932). Congress may devise novel causes of action involving public rights free from the strictures of the Seventh Amendment if it assigns their adjudication to tribunals without statutory authority to employ juries as factfinders. [Footnote 9] But it lacks the power to strip parties Page 492 U. S. 52 contesting matters of private right of their constitutional right to a trial by jury. As we recognized in Atlas Roofing, to hold otherwise would be to permit Congress to eviscerate the Seventh Amendment's guarantee by assigning to administrative agencies or courts of equity all causes of action not grounded in state law, whether they originate in a newly fashioned regulatory scheme or possess a long line of common law forebears. 430 U.S. at 430 U. S. 457-458. The Constitution nowhere grants Congress such puissant authority. "[L]egal claims are not magically converted into equitable issues by their presentation to a court of equity," Ross v. Bernhard, 396 U. S. 531, 396 U. S. 538 (1970), nor can Congress conjure away the Seventh Amendment by mandating that traditional legal claims be brought there or taken to an administrative tribunal.
In certain situations, of course, Congress may fashion causes of action that are closely analogous to common law claims and place them beyond the ambit of the Seventh Amendment by assigning their resolution to a forum in which jury trials are unavailable. See, e.g., Atlas Roofing, supra, at 430 U. S. 450-461 (workplace safety regulations); Block v. Hirsh, 256 U. S. 135, 256 U. S. 158 (1921) (temporary emergency regulation of rental real estate). See also Pernell v. Southall Realty, 416 U.S. at 416 U. S. 382-383 (discussing cases); Murray's Lessee v. Hoboken Land and Improvement Co., 18 How. 272, 59 U. S. 284 (1856) (Congress "may or may not bring within the cognizance of the courts of the United States, as it may deem proper," matters involving public rights). Congress' power to do so is limited, however, just as its power to place adjudicative authority in non-Article III tribunals is circumscribed. See Thomas v. Page 492 U. S. 53 Union Carbide Agricultural Products Co., 473 U. S. 568, 473 U. S. 589, 473 U. S. 593-594 (1985); id. at 473 U. S. 598-600 (BRENNAN, J., concurring in judgment); Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U. S. 50, 458 U. S. 73-76 (1982) (opinion of BRENNAN, J.); id. at 458 U. S. 91 (REHNQUIST, J., concurring in judgment). Unless a legal cause of action involves "public rights," Congress may not deprive parties litigating over such a right of the Seventh Amendment's guarantee to a jury trial.
In Atlas Roofing, supra, at 430 U. S. 458, we noted that Congress may effectively supplant a common law cause of action carrying with it a right to a jury trial with a statutory cause of action shorn of a jury trial right if that statutory cause of action inheres, in or lies against, the Federal Government in its sovereign capacity. Our case law makes plain, however, that the class of "public rights" whose adjudication Congress may assign to administrative agencies or courts of equity sitting without juries is more expansive than Atlas Roofing's discussion suggests. Indeed, our decisions point to the conclusion that, if a statutory cause of action is legal in nature, the question whether the Seventh Amendment permits Congress to assign its adjudication to a tribunal that does not employ juries as factfinders requires the same answer as the question whether Article III allows Congress to assign adjudication of that cause of action to a non-Article III tribunal: For if a statutory cause of action, such as respondent's right to recover a fraudulent conveyance under 11 U.S.C. § 548(a)(2), is not a "public right" for Article III purposes, then Congress may not assign its adjudication to a specialized non-Article III court lacking "the essential attributes of the judicial power." Crowell v. Benson, supra, at 285 U. S. 51. And if the action must be tried under the auspices of an Article III court, then the Seventh Amendment affords the parties a right to a jury trial whenever the cause of action is legal in nature. Conversely, if Congress may assign the adjudication of a statutory cause of action to a non-Article III tribunal, then the Page 492 U. S. 54 Seventh Amendment poses no independent bar to the adjudication of that action by a nonjury factfinder. See, e.g., Atlas Roofing, supra, at 458 U. S. 453-455, 458 U. S. 460; Pernell v. Southall Realty, supra, at 416 U. S. 383; Block v. Hirsh, supra, at 256 U. S. 158. In addition to our Seventh Amendment precedents, we therefore rely on our decisions exploring the restrictions Article III places on Congress' choice of adjudicative bodies to resolve disputes over statutory rights to determine whether petitioners are entitled to a jury trial.
Id. at 473 U. S. 593-594. See id. at 473 U. S. 600 (BRENNAN, J., concurring in judgment) (challenged provision involves public rights because "the dispute arises in the context of a federal regulatory scheme that virtually occupies the field"). If a statutory right is not closely intertwined with a federal regulatory program Congress has power to enact, and if that right neither belongs to nor exists against the Federal Government, Page 492 U. S. 55 then it must be adjudicated by an Article III court. [Footnote 10] If the right is legal in nature, then it carries with it the Seventh Amendment's guarantee of a jury trial.
Although the issue admits of some debate, a bankruptcy trustee's right to recover a fraudulent conveyance under 11 U.S.C. § 548(a)(2) seems to us more accurately characterized as a private, rather than a public, right as we have used those terms in our Article III decisions. In Northern Pipeline Construction Co., 458 U.S. at 458 U. S. 71, the plurality noted Page 492 U. S. 56 that the restructuring of debtor-creditor relations in bankruptcy "may well be a public right.'" [Footnote 11] But the plurality also emphasized that state law causes of action for breach of contract or warranty are paradigmatic private rights, even when asserted by an insolvent corporation in the midst of Chapter 11 reorganization proceedings. The plurality further said that "matters from their nature subject to `a suit at common law or in equity or admiralty'" lie at the "protected core" of Article III judicial power, id. at 458 U. S. 71, n. 25; see id. at 458 U. S. 90 (REHNQUIST, J., concurring in judgment) -- a point we reaffirmed in Thomas, supra, at 473 U. S. 587. There can be little doubt that fraudulent conveyance actions by bankruptcy trustees -- suits which, we said in Schoenthal v. Irving Trust Co., 287 U.S. at 287 U. S. 94-95 (citation omitted), "constitute no part of the proceedings in bankruptcy, but concern controversies arising out of it" -- are quintessentially suits at common law that more nearly resemble state law contract claims brought by a bankrupt corporation to augment the bankruptcy estate than they do creditors' hierarchically ordered claims to a pro rata share of the bankruptcy res. See Gibson 1022-1025. They therefore appear matters of private, rather than public, right. [Footnote 12] Page 492 U. S. 57
Our decision in Katchen v. Landy, 382 U. S. 323 (1966), under the Seventh Amendment, rather than Article III, confirms this analysis. Petitioner, an officer of a bankrupt corporation, made payments from corporate funds within four months of bankruptcy on corporate notes on which he was an accommodation maker. When petitioner later filed claims against the bankruptcy estate, the trustee counterclaimed, arguing that the payments petitioner made constituted voidable preferences because they reduced his potential personal liability on the notes. We held that the bankruptcy court had jurisdiction to order petitioner to surrender the preferences, and that it could rule on the trustee's claim without according petitioner a jury trial. Our holding did not depend, however, on the fact that "[bankruptcy] courts are essentially courts of equity" because "they characteristically proceed in summary fashion to deal with the assets of the bankrupt they are administering." Id. at 382 U. S. 327. Notwithstanding the fact that bankruptcy courts "characteristically" supervised summary proceedings, they were statutorily invested with jurisdiction at law as well, and could also oversee plenary proceedings. See Atlas Roofing, 430 U.S. at 430 U. S. 454, n. 11 (Katchen rested "on the ground that a bankruptcy court, exercising its summary jurisdiction, was a specialized court of equity") (emphasis added); Pepper v. Litton, 308 U. S. 295, 308 U. S. 304 (1939) ("[F]or many purposes, courts of bankruptcy are essentially courts of equity'") (emphasis added). Our decision turned, rather, on the bankruptcy court's having "actual or constructive possession" of the bankruptcy estate, 382 U.S. at 382 U. S. 327, and its power and obligation to consider objections by the trustee in deciding whether to allow claims against the estate. Id. at 382 U. S. 329-331. Citing Schoenthal v. Irving Trust Co., supra, approvingly, we expressly stated that, if petitioner had not submitted a claim to the bankruptcy court, the trustee could have recovered the preference only by a plenary action, and that petitioner would have Page 492 U. S. 58 been entitled to a jury trial if the trustee had brought a plenary action in federal court. See 382 U.S. at 382 U. S. 327-328. We could not have made plainer that our holding in Schoenthal retained its vitality:
Unlike JUSTICE WHITE, see post at 492 U. S. 72-75, 492 U. S. 78, we do not view the Court's conclusion in Katchen as resting on an accident of statutory history. We read Schoenthal and Katchen as holding that, under the Seventh Amendment, a creditor's right to a jury trial on a bankruptcy trustee's preference claim depends upon whether the creditor has submitted a claim against the estate, not upon Congress' precise definition of the "bankruptcy estate" or upon whether Congress chanced to deny jury trials to creditors who have not filed claims and who are sued by a trustee to recover an alleged preference. Because petitioners here, like the petitioner in Schoenthal, have not filed claims against the estate, respondent's fraudulent conveyance action does not arise "as part of the process of allowance and disallowance of claims." Nor is that action integral to the restructuring of debtor-creditor relations. Congress therefore cannot divest petitioners of Page 492 U. S. 59 their Seventh Amendment right to a trial by jury. Katchen thus supports the result we reach today; it certainly does not compel its opposite. [Footnote 14] Page 492 U. S. 60
The 1978 Act abolished the statutory distinction between plenary and summary bankruptcy proceedings, on which the Court relied in Schoenthal and Katchen. Although the 1978 Act preserved parties' rights to jury trials as they existed prior to the day it took effect, 28 U.S.C. § 1480(a) (repealed), in the 1984 Amendments, Congress drew a new distinction between "core" and "non-core" proceedings, and classified fraudulent conveyance actions as core proceedings triable by bankruptcy judges. 28 U.S.C. § 157(b)(2)(H) (1982 ed., Supp. V). Whether 28 U.S.C. § 1411 (1982 ed., Supp. V) purports to abolish jury trial rights in what were formerly plenary actions is unclear, and at any rate is not a question we need decide here. See supra at 492 U. S. 40-41, n. 3. The decisive point is that in neither the 1978 Act nor the 1984 Amendments did Congress "creat[e] a new cause of action, and remedies therefor, unknown to the common law," because traditional rights and remedies were inadequate to cope with a manifest public problem. Atlas Roofing, 430 U.S. at 430 U. S. 461. Rather, Congress simply reclassified a preexisting, common law cause of action that was not integrally related to the reformation of debtor-creditor relations [Footnote 15] and Page 492 U. S. 61 that apparently did not suffer from any grave deficiencies. This purely taxonomic change cannot alter our Seventh Amendment analysis. Congress cannot eliminate a party's Seventh Amendment right to a jury trial merely by relabeling the cause of action to which it attaches and placing exclusive jurisdiction in an administrative agency or a specialized court of equity. See Gibson 1022-1025.
Nor can Congress' assignment be justified on the ground that jury trials of fraudulent conveyance actions would "go far to dismantle the statutory scheme," Atlas Roofing, 430 U.S. at 430 U. S. 454, n. 11, or that bankruptcy proceedings have been placed in "an administrative forum with which the jury would be incompatible." Id. at 430 U. S. 450. To be sure, we owe some deference to Congress' judgment after it has given careful consideration to the constitutionality of a legislative provision. See Northern Pipeline Construction Co., 458 U.S. at 458 U. S. 61 (opinion of BRENNAN, J.). But respondent has adduced no evidence that Congress considered the constitutional implications of its designation of all fraudulent conveyance actions as core proceedings. Nor can it seriously be argued that permitting jury trials in fraudulent conveyance actions brought by a trustee against a person who has not entered a claim against the estate would "go far to dismantle the statutory scheme," as we used that phrase in Atlas Roofing, when our opinion in that case, following Schoenthal, plainly assumed that such claims carried with them a right to a jury trial. [Footnote 16] In addition, one cannot easily say that "the Page 492 U. S. 62 jury would be incompatible" with bankruptcy proceedings, in view of Congress' express provision for jury trials in certain actions arising out of bankruptcy litigation. See 28 U.S.C. § 1411 (1982 ed., Supp. V); Gibson 1024-1025; Warner, Katchen Up in Bankruptcy: The New Jury Trial Right, 63 Am.Bankr.L.J. 1, 48 (1989) (hereinafter Warner). And JUSTICE WHITE'S claim that juries may serve usefully as checks only on the decisions of judges who enjoy life tenure, see Page 492 U. S. 63 post at 492 U. S. 82-83, overlooks the extent to which judges who are appointed for fixed terms may be beholden to Congress or Executive officials, and thus ignores the potential for juries to exercise beneficial restraint on their decisions.
It may be that providing jury trials in some fraudulent conveyance actions -- if not in this particular case, because respondent's suit was commenced after the Bankruptcy Court approved the debtor's plan of reorganization -- would impede swift resolution of bankruptcy proceedings and increase the expense of Chapter 11 reorganizations. [Footnote 17] But "these considerations are insufficient to overcome the clear command of the Seventh Amendment." Curtis v. Loether, 415 U.S. at 415 U. S. 198. See also Bowsher v. Synar, 478 U. S. 714, 478 U. S. 736 (1986) ("[T]he fact that a given law or procedure is efficient, convenient, and useful in facilitating functions of government, standing alone, will not save it if it is contrary to the Constitution'"), quoting INS v. Chadha, 462 U. S. 919, 462 U. S. 944 (1983); Pernell v. Southall Realty, 416 U.S. at 416 U. S. 383-384 (discounting arguments that jury trials would be unduly burdensome, and rejecting "the notion that there is some necessary Page 492 U. S. 64 inconsistency between the desire for speedy justice and the right to jury trial"). [Footnote 18]
We do not decide today whether the current jury trial provision -- 28 U.S.C. § 1411 (1982 ed., Supp. V) -- permits bankruptcy courts to conduct jury trials in fraudulent conveyance actions like the one respondent initiated. Nor do we express any view as to whether the Seventh Amendment or Article III allows jury trials in such actions to be held before non-Article III bankruptcy judges subject to the oversight provided by the district courts pursuant to the 1984 Amendments. We leave those issues for future decisions. [Footnote 19] We do hold, however, that whatever the answers to these questions, the Seventh Amendment entitles petitioners to the jury trial they requested. Accordingly, the judgment of Page 492 U. S. 65 the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.
This quite distinct inquiry into whether Congress has permissibly entrusted the resolution of certain disputes to an administrative agency or specialized court of equity, and whether jury trials would impair the functioning of the legislative scheme, appears to be what the Court contemplated when, in Ross v. Bernhard, 396 U. S. 531, 396 U. S. 538, n. 10 (1970), it identified "the practical abilities and limitations of juries" as an additional factor to be consulted in determining whether the Seventh Amendment confers a jury trial right. See Tull v. United States, 481 U.S. at 481 U. S. 418, n. 4; Atlas Roofing Co. v. Occupational Safety and Health Review Comm'n, 430 U. S. 442, 430 U. S. 454-455 (1977). We consider this issue in 484 U. S. infra. Contrary to JUSTICE WHITE's contention, see post at 484 U. S. 79-80, we do not declare that the Seventh Amendment provides a right to a jury trial on all legal, rather than equitable, claims. If a claim that is legal in nature asserts a "public right," as we define that term in 484 U. S. then the Seventh Amendment does not entitle the parties to a jury trial if Congress assigns its adjudication to an administrative agency or specialized court of equity. See infra at 484 U. S. 51-53. The Seventh Amendment protects a litigant's right to a jury trial only if a cause of action is legal in nature and it involves a matter of "private right."
That statement, however, must be read in context. First, we referred explicitly only to Congress' power, where disputes concern private rights, to provide administrative factfinding instead of jury trials in admiralty cases. Civil causes of action in admiralty, however, are not suits at common law for Seventh Amendment purposes, and thus no constitutional right to a jury trial attaches. Waring v. Clarke, 5 How. 441, 46 U. S. 460 (1847). Second, our statement should not be taken to mean that Congress may assign at least the initial factfinding in all cases involving controversies entirely between private parties to administrative agencies or other tribunals not involving juries, so long as they are established as adjuncts to Article III courts. If that were so, Congress could render the Seventh Amendment a nullity. Rather, that statement, citing Crowell v. Benson, 285 U.S. at 285 U. S. 51-65, means only that in some cases involving "private rights" as that term was defined in Crowell and used in Atlas Roofing -- namely, as encompassing all disputes to which the Federal Government is not a party in its sovereign capacity -- may Congress dispense with juries as factfinders through its choice of an adjudicative forum. Those cases in which Congress may decline to provide jury trials are ones involving statutory rights that are integral parts of a public regulatory scheme and whose adjudication Congress has assigned to an administrative agency or specialized court of equity. Whatever terminological distinctions Atlas Roofing may have suggested, we now refer to those rights as "public," rather than "private."
"* * * *" "Respondents' contention means that, while invoking the court's jurisdiction to establish their right to participate in the distribution, they may deny its power to require them to account for what they misappropriated. In behalf of creditors and stockholders, the receivers reasonably may insist that, before taking aught, respondents may, by the receivership court, be required to make restitution. That requirement is in harmony with the rule generally followed by courts of equity that, having jurisdiction of the parties to controversies brought before them, they will decide all matters in dispute and decree complete relief."
I join all but Part IV of the Court's opinion. I make that exception because I do not agree with the premise of its discussion: that "the Federal Government need not be a party for a case to revolve around public rights.'" Ante at 492 U. S. 54, quoting Thomas v. Union Carbide Agricultural Products Co., 473 U. S. 568, 473 U. S. 586 (1985). In my view, a matter of "public rights," whose adjudication Congress may assign to tribunals lacking the essential characteristics of Article III courts, "must, at a minimum, arise `between the government and others.'" Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U. S. 50, 458 U. S. 69 (1982) (plurality opinion), quoting Ex parte Bakelite Corp., 279 U. S. 438, 279 U. S. 451 (1929). Until quite recently, this has also been the consistent view of the Court. See id. at 458 U. S. 69, n. 23 ("[T]he presence of the United States as a proper party . . . is a necessary but not sufficient means of distinguishing `private rights' from `public rights'"); Atlas Roofing Co. v. Occupational Safety and Health Review Comm'n, 430 U. S. 442, 430 U. S. 450 (1977) (public rights cases are "cases in which the Government sues in its sovereign capacity to enforce public rights created by statutes"); id. at 430 U. S. 457 (noting "distinction between cases of private right and those which arise between the Government and persons subject to its authority"); id. at 430 U. S. 458 (situations involving "public rights" are those "where the Government is involved in its sovereign capacity under an otherwise valid statute creating enforceable public rights"); Crowell v. Benson, 285 U. S. 22, 285 U. S. 50-51 (1932) (public rights are "those which arise between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments"); Page 492 U. S. 66 Ex parte Bakelite Corp., 279 U.S. at 279 U. S. 451 (public rights are those "arising between the government and others, which from their nature do not require judicial determination and yet are susceptible of it"); Murray's Lessee v. Hoboken Land & Improvement Co., 18 How. 272, 59 U. S. 283 (1856) (plaintiff's argument that a controversy susceptible of judicial determination must be a "judicial controversy" heard in an Article III court "leaves out of view the fact that the United States is a party").
In Murray's Lessee, supra, however, we recognized a category of "public rights" whose adjudication, though a judicial act, Congress may assign to tribunals lacking the essential characteristics of Article III courts. That case involved the Act of May 15, 1820, 3 Stat. 592, which established a summary procedure for obtaining from collectors of federal revenue funds that they owed to the Treasury. Under that procedure, after a federal auditor made the determination that the funds were due, a "distress warrant" would be issued by the Solicitor of the Treasury, authorizing a United States marshal to seize and sell the personal property of the collector, and to convey his real property, in satisfaction of the debt. The United States' lien upon the real property would be effective upon the marshal's filing of the distress warrant in the district court of the district where the property was located. The debtor could, however, bring a challenge to the distress warrant in any United States district court, in which judicial challenge "every fact upon which the legality of the extra-judicial remedy depends may be drawn in[to] question," Page 492 U. S. 67 18 How. at 59 U. S. 284. Murray's Lessee involved a dispute over title to lands that had been owned by a former collector of customs whom the Treasury auditor had adjudged to be deficient in his remittances. The defendant had purchased the land in the marshal's sale pursuant to a duly issued distress warrant (which had apparently not been contested by the collector in any district court proceeding). The plaintiff, who had acquired the same land pursuant to the execution of a judgment against the collector, which execution occurred before the marshal's sale, but after the marshal's filing of the distress warrant to establish the lien, brought an action for ejectment to try title. He argued, inter alia, that the process by which the defendant had obtained title violated Article III because adjudication of the collector's indebtedness to the United States was inherently a judicial act, and could not lawfully have been performed by a Treasury auditor, but only by an Article III court. We rejected this contention by observing that although "the auditing of the accounts of a receiver of public moneys may be, in an enlarged sense, a judicial act," id. at 59 U. S. 280, the English and American traditions established that it did not, without consent of Congress, give rise to a judicial "controversy" within the meaning of Article III.
"cannot Page 492 U. S. 68 be made responsible in a judicial tribunal for obeying the lawful command of the government; and the government itself, which gave the command, cannot be sued without its own consent,"
It is clear that what we meant by public rights were not rights important to the public, or rights created by the public, but rights of the public -- that is, rights pertaining to claims brought by or against the United States. For central to our reasoning was the device of waiver of sovereign immunity, as a means of converting a subject which, though its resolution involved a "judicial act," could not be brought before the courts, into the stuff of an Article III "judicial controversy." Waiver of sovereign immunity can only be implicated, of course, in suits where the Government is a party. We understood this from the time the doctrine of public rights was born, in 1856, until two Terms ago, saying as recently as 1982 that the suits to which it applies "must at a minimum arise between the government and others,'" Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U.S. at 458 U. S. 69, quoting Ex parte Bakelite Corp., 279 Page 492 U. S. 69 U.S. at 279 U. S. 451. See also, in addition to the cases cited supra at 492 U. S. 65-66, Williams v. United States, 289 U. S. 553, 289 U. S. 581 (1933) (noting sovereign immunity origins of legislative courts); Ex parte Bakelite, supra, at 279 U. S. 453-454 (same). Cf. McElrath v. United States, 102 U. S. 426, 102 U. S. 440 (1880).
There was, in my view, no constitutional basis for that decision. It did not purport to be faithful to the origins of the public rights doctrine in Murray's Lessee, nor did it replace the careful analysis of that case with some other reasoning that identifies a discrete category of "judicial acts" which, at the time the Constitution was adopted, were not thought to implicate a "judicial controversy." The lines sought to be established by the Constitution did not matter. "Pragmatic understanding" was all that counted -- in a case-by-case evaluation of whether the danger of "encroaching" on the "judicial Page 492 U. S. 70 powers" (a phrase now drained of constant content) is too much. The Term after Thomas, in Commodity Futures Trading Comm'n v. Schor, 478 U. S. 833 (1986), we reconfirmed our error, embracing the analysis of Thomas and describing at greater length the new Article III standard it established, which seems to me no standard at all:
I would return to the longstanding principle that the public rights doctrine requires, at a minimum, that the United States be a party to the adjudication. On that basis, I concur in the Court's conclusion in Part IV of its opinion that Page 492 U. S. 71 the Article III concomitant of a jury trial could not be eliminated here. Since I join the remainder of the Court's opinion, I concur in its judgment as well.
Before I explore the Court's approach to analyzing the issues presented in this case, I first take up the question of the Page 492 U. S. 72 precedent that the Court most directly disregards today, Katchen v. Landy, 382 U. S. 323 (1966). Though the Court professes not to overrule this decision, and curiously, to be acting in reliance on it, see ante at 492 U. S. 57-59, there is simply no way to reconcile our decision in Katchen with what the Court holds today.
In order to escape the force of Katchen's holding, the Court exploits the circumstances under which that decision was made. Most notably, at the time Katchen was decided, the Bankruptcy Act then in force (the 1898 Act) did not include actions to set aside voidable preferences among those proceedings covered by the Act. Thus, the clause of our opinion in Katchen, supra, at 382 U. S. 336, on which the Court today puts so Page 492 U. S. 73 much weight --
see ante at 492 U. S. 58 -- is therefore a relic of history. The same is true of the decision in Schoenthal Page 492 U. S. 74 v. Irving Trust Co., 287 U. S. 92, 287 U. S. 94-95 (1932), which, in holding that "[s]uits to recover preferences constitute no part of the proceedings in bankruptcy," merely reflected the then-existing statutory scheme.
Katchen, 382 U.S. at 382 U. S. 337 (quoting Barton v. Barbour, 104 U. S. 126, 104 U. S. 133-134 (1881)). The same is true here, and it counsels affirmance under our holding in Katchen. Page 492 U. S. 75
Perhaps in this respect the Court means something more akin to its later restatement of its position; namely, that the 1984 Amendments simply "reclassified a preexisting, common law cause of action that was not integrally related to the reformation of debtor-creditor relations." Ante at 492 U. S. 60. The Court further indicates that it will pay little heed to the congressional inclusion of avoidance and recovery proceedings in core bankruptcy jurisdiction, since that choice was not made "because [Congress found that] traditional rights and remedies were inadequate to cope with a manifest public problem." [Footnote 2/4] Ante at 492 U. S. 60. This misguided view of the congressional Page 492 U. S. 76 enactment is the crux of the problem with the Court's approach.
How does the Court determine that an action to recover fraudulently conveyed property is not "integrally related" to the essence of bankruptcy proceedings? Certainly not by reference to a current statutory definition of the core of bankruptcy Page 492 U. S. 77 proceedings -- enacted by Congress under its plenary constitutional power, see U.S. Const., Art. I, § 8, cl. 4, to establish bankruptcy laws. As discussed in the preceding paragraph, this vision of what is "integrally related" to the resolution of creditor-debtor conflicts includes the sort of action before us today. See 28 U.S.C. § 157(b)(2)(H) (1982 ed., Supp. V). Nor does the Court find support for its contrary understanding in petitioners' submission, which concedes that the action in question here is brought to "recover monies that are properly part of the debtor's estate and should be ratably distributed among creditors," and that fraudulent transfers put at risk "the basic policy of nondiscriminatory distribution that underlies the bankruptcy law." Brief for Petitioners 12. This, too, seems to belie the Court's view that actions to set aside fraudulent conveyances are not "integrally related" to reforming creditor-debtor relations.
Nor is the Court's conclusion about the nature of actions to recover fraudulently transferred property supportable either by reference to the state of American bankruptcy law prior to adoption of the 1978 Code or by reference to the pre-1791 practice in the English courts. If the Court draws its conclusions based on the fact that these actions were not considered to be part of bankruptcy proceedings under the 1800 or 1898 Bankruptcy Acts (or, more generally, under federal bankruptcy statutes predating the 1978 Code), it has treated the power given Congress in Art. I, § 8, cl. 4, as if it were a disposable battery, good for a limited period only -- once the power in it has been consumed by use, it is to be discarded and considered to have no future value. The power of Congress under this Clause is plainly not so limited: merely because Congress once had a scheme where actions such as this one were solely heard in plenary proceedings in Article III courts -- where the Seventh Amendment attached -- does not impugn the legality of every other possible arrangement. See also 492 U. S. infra. Page 492 U. S. 78
Even if the question before us were one of first impression, however, and we did not have the decision in Katchen to guide us, I would dissent from the Court's decision. Under our cases, the determination whether the Seventh Amendment guarantees a jury trial on petitioners' claims must turn Page 492 U. S. 79 on two questions: first, in what forum will those claims be heard; and second, what is the nature of those claims. A weighing of both of these factors must point toward application of the Seventh Amendment before that guarantee will attach. [Footnote 2/5]
Atlas Roofing Co. v. Occupational Safety and Health Review Comm'n, 430 U. S. 442, 430 U. S. 460-461 (1977). Perhaps like Katchen, Atlas Roofing is no longer good law after today's decision. A further examination of the issue before us reveals, though, that it is the Page 492 U. S. 80 Court's decision today, and not our prior rulings, that is in error.
Curtis v. Loether, 415 Page 492 U. S. 81 U.S. 189, 415 U. S. 195 (1974). Atlas Roofing, Curtis, and countless other cases have recognized that Congress has the power to "entrust enforcement of statutory rights to [a] . . . specialized court of equity free from the strictures of the Seventh Amendment." Curtis, supra, at 415 U. S. 195. Prior cases emphatically hold that bankruptcy courts are such specialized courts of equity. Indeed, we have stated that "bankruptcy courts are inherently proceedings in equity." Katchen v. Landy, 382 U.S. at 382 U. S. 336; see also Local Loan Co. v. Hunt, 292 U. S. 234, 292 U. S. 240 (1934).
The Court's decision also substantially cuts back on Congress' power to assign selected causes of action to specialized forums and tribunals (such as bankruptcy courts), by holding Page 492 U. S. 82 that these forums will have to employ juries when hearing claims like the one before us today -- a requirement that subverts in large part Congress' decision to create such forums in the first place. Past decisions have accorded Congress far more discretion in making these assignments. Thus, Block v. Hirsh, 256 U. S. 135, 256 U. S. 158 (1921), found that a Seventh Amendment "objection amount[ed] to little" when Congress assigned what was, in essence, a common law action for ejectment to a specialized administrative tribunal. We reiterated the vitality of Block v. Hirsh as recently as our decision in Pernell v. Southall Realty, supra, at 416 U. S. 383, and the principle was reaffirmed in several cases between these two decisions. See n. 10, infra. In Pernell, referring to Block v. Hirsh, we stated that
"We have kept the civil jury . . . as a check on the federal judge whose life tenure makes [him] suspect [under] Page 492 U. S. 83 . . . the Populist traditions of this country. The function of the civil jury is to diffuse the otherwise autocratic power and authority of the judge."
Curtis, supra, at 415 U. S. 195; see also Atlas Roofing Co. v. Occupational Safety and Health Review Comm'n, 430 U.S. at 430 U. S. 454, n. 11. I fear that the Court's decision today will have the desultory effect we feared when Curtis was decided. Page 492 U. S. 84
Hobbs v. Hull, 1 Cox 445, 445-446, 29 Eng.Rep. 1242 (1788). Rarely has a more plain statement of the prevailing English practice at the time of ratification of the Seventh Amendment been discovered than this one; this alone should be enough to make respondent's case. Yet instead of accepting the pronouncement of the equity court about its own jurisdiction, this Court assumes the role of High Court of Historical Review, questioning the soundness of Hobbs' decision because it was issued without adequate supporting citations. Ante at 492 U. S. 45-46. A similar criticism is levied against another case from the same period, Ex parte Scudamore, 3 Ves. jun. 85, Page 492 U. S. 85 30 Eng.Rep. 907 (Ch.1796), which, as even the Court concedes, "demonstrates that fraudulent conveyance actions could be brought in equity." Ante at 492 U. S. 45.
Trying to read the ambiguous history concerning fraudulent conveyance actions in equity -- a task which the Court finds simple today -- has perplexed jurists in each era, who have come to conflicting decisions each time that the question has found relevance. Even in Schoenthal's time, and under Page 492 U. S. 86 the statutory regime applicable when that case was decided, many courts reviewing the same historical sources considered by us today had concluded that actions such as this one sounded in equity. See Schoenthal v. Irving Trust Co., 287 U.S. at 287 U. S. 96, n. 3; Note, 42 Yale L.J. 450, 450-452 (1933). In more recent times, an impressive collection of courts have come to a similar conclusion, finding that actions to avoid fraudulent conveyances were historically considered equitable in nature. [Footnote 2/8]
In sum, I do not think that a fair reading of the history -- our understanding of which is inevitably obscured by the passage of time and the irretrievable loss of subtleties in interpretation -- clearly proves or disproves that respondent's action would have sounded in equity in England in 1791. [Footnote 2/9] Page 492 U. S. 87
With the historical evidence thus in equipoise -- and with the nature of the relief sought here not dispositive either, see n. 8, supra -- we should not hesitate to defer to Congress' exercise of its power under the express constitutional grant found in Art. I, § 8, cl. 4, authorizing Congress "[t]o establish . . . uniform Laws on the subject of Bankruptcies." Congress has exercised that power, defining actions such as the one before us to be among the "core" of bankruptcy proceedings, triable in a bankruptcy court before a bankruptcy judge and without a jury. I would defer to these decisions.
Ante at 492 U. S. 61. See also ante at 492 U. S. 61-62, n. 16. This statement is remarkable, for it should not be assumed that Congress, in enacting 28 U.S.C. § 157(b)(2)(H) (1982 ed., Supp. V), ignored its constitutional implications. [Footnote 2/10] The Court Page 492 U. S. 88 does not say from where it draws its requirement that the Congress must provide us with some indication that it considered the constitutional dimensions of its decision before acting, as a prerequisite for obtaining our deference to those enactments. [Footnote 2/11]
"The fundamental and radically progressive nature of [congressional] extensions [in the scope of bankruptcy laws] becomes apparent upon their mere statement. . . . Taken altogether, they demonstrate in a very striking way the capacity of the bankruptcy clause to meet new conditions as they have been disclosed as a result of the tremendous growth of business and development of Page 492 U. S. 89 human activities from 1800 to the present day. And these acts, far-reaching though they may be, have not gone beyond the limit of congressional power, but rather have constituted extensions into a field whose boundaries may not yet be fully revealed."
Indeed, the Court calls into question the longstanding assumption of our cases and the bankruptcy courts that the equitable proceedings of those courts, adjudicating creditor-debtor disputes, are adjudications concerning "public rights." See Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U. S. 50, 458 U. S. 71 (1982); id. at 458 U. S. 91 (REHNQUIST, J., concurring in judgment); id. at 458 U. S. 92 (Burger, C.J., dissenting); id. at 458 U. S. 108-118 (WHITE, J., dissenting). The list of lower court opinions that have reasoned from this assumption is so lengthy that I cannot reasonably include it in the text; a mere sampling fills the margin. [Footnote 2/12] Yet today the Court calls Page 492 U. S. 90 all of this into doubt merely because these cases have been subjected to "substantial scholarly criticism." Ante at 492 U. S. 56, n. 11. [Footnote 2/13] If no part of bankruptcy proceedings involve the adjudication of public rights, as the Court implies today, then all bankruptcy proceedings are saved from the strictures of the Seventh Amendment only to the extent that such proceedings are the descendents of earlier analogues heard in equity in 18th-century England. Because, as almost every historian has observed, this period was marked by a far more restrictive notion of equitable jurisdiction in bankruptcies, see, e.g., Warren, supra, at 3-5, the Court's decision today may threaten the efficacy of bankruptcy courts as they are now constituted. I see no reason to use the Seventh Amendment as a tool to achieve this dubious result.
Because I find the Court's decision at odds with our precedent, and peculiarly eager to embark on an unclear Page 492 U. S. 91 course in Seventh Amendment jurisprudence, I respectfully dissent. [Footnote 2/14]
Such cases decided since Northern Pipeline, from the Court of Appeals alone, include In re Harbour, 840 F.2d at 1177-1178; In re Wood, 825 F.2d 90, 95-98 (CA5 1987); In re Mankin, 823 F.2d 1296, 1307-1308 (CA9 1987), cert. denied sub nom. Munn v. Duck, 485 U.S. 1006 (1988); In re Arnold Print Works, 815 F.2d 165, 168-170 (CA1 1987); Briden v. Foley, 776 F.2d 379, 381 (CA1 1985); and In re Kaiser, 722 F.2d 1574, 1580, and n. 2 (CA2 1983). Many more such cases are found in the reports of the decisions of the district courts and the bankruptcy courts.
In this case, the historical inquiry is made difficult by the fact that, before the Federal Rules of Civil Procedure unified law and equity, parties might have been drawn to the equity side of the court because they needed its procedural tools and interim remedies: discovery, accounting, the power to clear title, and the like. In light of the frequency with which these tools were likely needed in fraud cases of any kind, it is no surprise that, as JUSTICE WHITE points out, fraudulent conveyance actions, even if cognizable at law, often would be found on the equity docket. See generally O. Bump, Conveyances Made by Debtors to Defraud Creditors § 532 (4th ed. 1896); F. Wait, Fraudulent Conveyances and Creditors' Bills §§ 59-60 (1884); W. Roberts, Voluntary and Fraudulent Page 492 U. S. 92 Conveyances 525-526 (3d Am. ed. 1845). This procedural dimension of the choice between law and equity lends a tentative quality to any lessons we may draw from history.
Having identified the tribunal to which Congress has assigned respondent's fraudulent conveyance claim as equitable in nature, the question remains whether the assignment is one Congress may constitutionally make. Under Atlas Roofing, that question turns on whether the claim involves a "public right." Id. at 430 U. S. 455. When Congress was faced with the task of divining the import of our fragmented decision in Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458 U. S. 50 (1982), it gambled and predicted that a statutory right which is an integral part of a pervasive regulatory Page 492 U. S. 93 scheme may qualify as a "public right." Compare H.R.Rep. No. 98-9, pt. 1, pp. 6, 13 (1983) (House Report), with S.Rep. No. 98-55, pp. 32-40 (1983) (Senate Report); see Thomas v. Union Carbide Agricultural Products Co., 473 U. S. 568, 473 U. S. 586, 473 U. S. 594 (1985); see also id. at 473 U. S. 599 (BRENNAN, J., concurring in judgment) ("[A] bankruptcy adjudication, though technically a dispute among private parties, may well be properly characterized as a matter of public rights"). Doing its best to observe the constraints of Northern Pipeline while at the same time preserving as much as it could of the policy goals of the major program of bankruptcy reform the decision in Northern Pipeline dismantled, see House Report, at 7, Senate Report, at 6-7, Congress struck a compromise. It identified those proceedings which it viewed as integral to the bankruptcy scheme as "core" (doing its best to exclude "Marathon-type State law cases"), and assigned them to a specialized equitable tribunal. Id. at 2.
Although causes of action to recover fraudulent conveyances exist outside the federal bankruptcy laws, the problems created by fraudulent conveyances are of particular significance Page 492 U. S. 94 to the bankruptcy process. Indeed, for this reason, the Bankruptcy Code long has included substantive legislation regarding fraudulent conveyances and preferences. And the cause of action respondent brought in this case arises under federal law. See 11 U.S.C. §§ 548(a)(2) and 550(a). This substantive legislation is not a jurisdictional artifice. It reflects, instead, Congress' longstanding view that fraudulent conveyances and preferences on the eve of bankruptcy are common methods through which debtors and creditors act to undermine one of the central goals of the bankruptcy process: the fair distribution of assets among creditors. Congress' conclusion that the proper functioning of the bankruptcy system requires that expert judges handle these claims, and that the claims be given higher priority than they would receive on a crowded district court's civil jury docket (see Senate Report, at 3; House Report, at 7-8), is entitled to our respect.
In sum, it must be acknowledged that Congress has legislated treacherously close to the constitutional line by denying a jury trial in a fraudulent conveyance action in which the defendant has no claim against the estate. Nonetheless, given the significant federal interests involved, and the importance of permitting Congress at long last to fashion a modern bankruptcy system which places the basic rudiments of the bankruptcy process in the hands of an expert equitable tribunal, I cannot say that Congress has crossed the constitutional line on the facts of this case. By holding otherwise, the Court Page 492 U. S. 95 today throws Congress into still another round of bankruptcy court reform, without compelling reason. There was no need for us to rock the boat in this case. Accordingly, I dissent.