Document: 331 U.S. 642 67 S.Ct. 1443 91 L.Ed. 1718 WILLIAMS et al.v.AUSTRIAN al. No. 850. Argued April 10, 11, 1947. Decided June 16, Mr. Milton Pollack, of New York City, for petitioners. Carl J. Austrian, respondents. [Argument Counsel from page 643 intentionally omitted] Chief Justice VINSON delivered the opinion Court. 1 Section 2, sub. a, Bankruptcy Act1 confers upon all bankruptcy courts 'such jurisdiction at law and in equity as will enable them to exercise original proceedings under this Act * (7) Cause estates bankrupts be collected, reduced money distributed, determine controversies relation thereto, except herein otherwise provided. *' The exception has reference § 23, b, which requires that 'Suits by receiver trustee shall brought or prosecuted only where bankrupt might have if had not been instituted, unless consent defendant, provided sections 60, 70 Act.'2 Congress, however, Chandler 1938 declared inapplicability 23 reorganization Chapter X; it is significance action federal case turns.3 2 Respondents were appointed trustees Central States Electric Corporation, a Virginia Corporation District Court United Eastern Virginia. Following an investigation 1674 Act, respondents authorized institute suit against petitioners, who are past present officers directors debtor others having connection therewith. This was then filed petitioners Southern York, alleging conspiracy misappropriate corporate assets asking accounting other relief. There no allegation diversity rested 'the Constitution (Article I, 8, Clause 4, Article III, 2), Congress relating Bankruptcies (U.S.Code Title 11 U.S.C.A.), provisions 24(1), (19) Judicial Code (28 U.S.C.A. 41 (1, 19)). 3 dismissed lack jurisdiction;5 but Circuit Appeals reversed, holding since governing 'except' clause a(7) refers, suspended X proceedings, hear plenary could general language 2. Other alleged grounds considered. Cir., 1946, 159 F.2d 67. 4 1. Petitioners construe 'proceedings Act,' within jurisdictional grant contained confined, extending matters proper summary disposition,6 interpret suspension cases, without providing substitute therefor, removing affirmative suits, rather than aimed expanding jurisdiction.7 But these views rest, main, what we think erroneous appraisal history §§ 23. 5 substantially idenical with 1867,8 Babbitt v. Dutcher, 1910, 216 102, 107, 30 372, 374, 54 402, 17 Ann.Cas. 969; cases dealing while recognizing certain suits assignees should proceed plenary, summary, fashion, held gave both ways.9 And although aspects proceeding handled court adjudication had, conferred assigneees adverse claimants debtors bankrupt.10 6 Lathrop Drake, 1875, 516, 414, viewed district manner and, think, contrary statements later made Bardes Hawarden Bank, 1900, 178 524, 20 1000, 44 1175, Schumacher Beeler, 1934, 293 367, 55 230, 79 433, rely, considered over rest 1867 Act.11 7 1898 repeated broad Act. given *.'12 a(7), granting collect estate bankrupt, appended words 'except provided.' 23,13 which, applicable courts, that, instituted. In sharp contrast practice Act,14 interest litigants witnesses, deliberately directed state most trustee's suits.15 8 Some lower immediately did apply recover transfers bankrupt's property relying upheld courts.16 supra, checked trend full scope Suits fraudulent transfers, like tried courts. It unnecessary explore 2; whatever there made, interpretation would required result reached. any event, construction standing alone regard influence being confined great extent reading indicated, cannot agree. 9 Congressional reaction almost immediate. Wishing allow resort recovering preferences, 1903 created exceptions favor 67, e;17 doubly cautious, also inserted 60 b e clauses giving those sections.18 explained time House judiciary committee probably ample basis remove doubt e, amended.19 10 Where 70, involved, rule continued applied required, adversely held20 choses belonging estate.21 Left disposition controversy related possession constructive asserting truly claim.22 From its inception seemingly mitigating rigors requirements imposed. A trustee, 'unless proposed defendant,' bring sued. Subsequent some even independent ground must present.23 conflict resolved supra. exercised powers confer conditioned defendant's consent24 consent, required. turned meaning remarks offered concerning based similar 12 Beeler decision, case, does direct conclusion absence jurisdiction; because limitations excluded 2.25 Cases construing latter presence overriding prohibitions s persuasive situation where, first time, inoperative. 13 To accept petitioner's produce consequences affording peculiar explanations express elimination cases. For one thing, destroyed trustee;26 another, depend citizenship debtor. formal change obvious value, former puts greater limitation placed receivership, 77B, ordinary court, discernible trends law. 14 reports debates do elaborate decision eliminate 23,27 hearings reveal several National Conference desired eliminate, migt expressly deleted.28 However, occurred process developing workable technique context. While receivership dependent jurisdiction, regardless debtor,29 nonrailroad corporations part scheme, believed quarters traditional effect though 'powers' court.30 commentators, thinking 77B provide less efficient procedure inapplicable regarded suits.31 settled when committees considering bill became 1938, such background obviously raises inference desire restrict, expand, 15 restricting access harmony contemporaneously written into defining anew position functions trustee. appointment disinterested mandatory appropriate cases,32 his qualifications prescribed,33 him devolved eliminating abuses previous schemes.34 duty prepare plan,35 investigative duties36 contemplated discovery wrongs done management, insured 'prosecution causes action' 'add reorganization.'37 These 'of paramount importance revision 77B,'38 hardly indicative restrict choice forum litigate suits. On more accord purposes pivotal placed39 intended establish usual lacking. 16 entire foregoing considerations. sense longer limited easily comprehends type suit; so hold directly effectivelysubserves desires revealed plain policy has, enactment 1898, restriction theretofore strong preference courts.40 Since objects 2,41 suit, charges misappropriation debtor.42 'This seems logical derived fact application X.'43 3. alternative argue 11544 include may conferred. would, confine effects 115 petition approved. We need pass on contentions; for, assuming jurisdictional45 extends primary still That section, supports conistent wit h aims section itself carved out narrow pending thereby left unchanged Limited familiar went further eliminated entirely proceedings. Because countrywide ramifications reorganization, foreign jurisdictions Allowing situation, true run nationwide cases.46 receive recognition interpreted allowing appointing courts.47 18 4. Our is, course, extended beyond contaned br oad borrowed 1867. acknowledged embodiment exclude many same meaningful perfecting chapter distinctive special reorganization. Cf. Continental Illinois Nat. Bank & Trust Co. Chicago Rock Island P.R. Co., 1935, 294 648, 676, 595, 606, 1110. negation long-standing consistent hedged judge-made principles aims. document specific actions fashion order Court's attention statutory purpose. failure fanfare consequent expansion invites our advisability taken. drives limit lead falling short complete effectuation scheme. With suspended, 19 5. insist consequences, they term undesirable, flow decision. said, example, automatically deprived whether suggested follow leave consideration presenting issues affirmed. 21 Affirmed. 22 FRANKFURTER, whom JACKSON joins, dissenting. surface appears merely raising technical questions jurisdiction. answers far-reaching import. They involve distribution judicial power between State thus concern federal-state relations generally. More immediately, inasmuch allowable business controversy, bears quality work particular. 24 makes shift prevailed half century. Such break nor drawn disclosed policies. contrary, I believe reached repelled every relevant materials determined. 25 granted claims owing whose administered bankruptcy, wholly local devoid aspect give creditor bankruptcy. another enactments Reconstruction period influences toward flood-tide. As recession tendency withdrew solely involved asserted behalf court. By tenuous implication now concludes through enlarged law, neither terms thelegislatio n, context, legislative history, considerations heretofore suggested, call construction, structure legislation, interpretation, congruity finding meaning, larger system, support different statute. large assumptions indirection manifested design reversed prevailing limiting preserving balance courts; deviated principle federalism especially respected recent times, according arising trial departed fifty years uniformly continues established leaving interfere effective use rise X. 26 facts dispute. voluntary respondents, trustees, damages fraud mismanagement. found want Second Circuit. affirms holds personam exists. 27 No authorize suit. See 233, 433. Nor entertain specifically limits few enumerated (of one), defendant consents. finds, making opened necessary consider affiliations turn examine predecessor, three enactments—the 1867, 1938—are interrelated legislation. role properly assessed textual reading, ascertaining Acts. context 28 understand import far relevant, bear repetition reflected expansionist after Civil War. Statute statute previously tribunals, statutes. circuit concurrent 'by assignee person claiming interest' n esta te. March Stat. 517, 518. provision construed 414. Bradley, characteristic clarity, distinguished 'jurisdiction (and) due him.' 517. read worth noting Bradley well-known exponent expansive See, e.g., dissenting Murdock City Memphis, Wall. 590, 639, 429. 29 together sources, led overburdening their dockets, inevitably dockets Court, various movements considerable measure fall Congress. Not take account underlying factors acts interstices enactments. explicitly reveals important emphasis taken place thirty disposal receded. movement curtailment overburdened judiciary. new showed recession. amendment repealed 7, 1878, 99, twenty Accordingly, modification existing system. scheme administration none. Its framers, drew history. heavily comparison predecessor attitude regarding withdrawal essentially litigation 31 direction duly came here construction. Speaking unanimous Gray pointed marked structural differences 1; concurrently 'suits equity, claimant.' took discarded Plenary either very 32 enactment. First Hawarden, 1005, 1175. reaffirmed thirty-four speaking Hughes. 33 drastic difference two Acts inert expressed outlook, transfer litigation. accent enforcement national t ribunals.' matter put quite plainly Bradley. 'The undoubtedly resorted collection debts; presumed embarrassments encountered way prompt fair justice. uniform system character, ought capable execution dependence possible arise.' 518, 34 outlook 'properly called,' 533, 1004, precisely opposite. 'national tribunals.' Concern economy convenience witnesses' determination intrinsically 'local state.' 538, 1006, again referred purpose reconsideration legislation Emphasis ready accessibility afforded inconvenience often entailed bringing suitors particularly Western States. earlier treated controlling factor, indicated guiding deciding doubtful Shoshone Mining Company Rutter, 177 505, 511, 513, 726, 728, 729, 864, cited 35 6. told misconstrued opinions Hughes were, view, products misreading faulty analysis 1898. Indeed, foundation below argument bar claim rejected compunction because, all, expression dicta. Whether discussion whole find particular constitutes dicta, sense, nice legal dialectics. rationally problem calling comprehensively view strength comes contemporaneous scrutiny. justices extensive experience commercial pretty late day suggest weighty constructions wrong.1 driven undertaking. source extent, serve never there. 36 7. reexamine covered me, supererogation. content myself observations pertinent entirety. features organic discrete parts. cast light each illumine whole. comprehensive Sections combination, line bankruptcy' '(suits) equity.' before us sue (This, includes sitting citizenship. Erie R. Tompkins, 304 64, 58 817, 82 1188, 114 A.L.R. 1487; Guaranty 326 65 1464, 89 2079, 160 1231.) Howsoever existed itself, entirety whereas can opposing party setting expand pro tanto eliminated. 37 differentiation whim technicality. easy discern object 'may well determined, part, State, witnesses.' 1175; saw good reason infringing really chose rules jury relieve overworked 38 8. touching interplay justice lost force time. recognize validity. generally, require preparing Judiciary Committee Representatives introduced Chandler, ofbusiness underlay restrictive ever applicable: 39 'In Taubel-Scott-Kitzmiller Fox, 264 426 (44 396, 68 770), Brandeis obiter adjudicate rights actually constructively, third person; yet power, 40 prior Law show withheld, fear flooding volume motive stronger today (1936) wise enlarge time; receivers so-called 'debtor proceedings." (Analysis H.R. 12889, 74th Cong., 2d Sess., Print p. 134.) touch asserted. Yet implied country. If so, see escape it. Consideration destructive consequence postponed us. 'bankruptcy proceedings'2 explicit invoked—how evaporate 'matters vested exclusive States'? Rev.Stat. 711, Code, 256, U.S.C. 371, 371. shifting attribution concept sure, conclusive much Federal exclusiveness formally 711 Revised Statutes 1874. During coexisted requirement occasion arise applying excluding aware carefully side. Claflin Houseman, 93 130, 133, 833, Wilson Goodrich, 154 640, 1186, 111. Intrinsically, question presses proceedings' holds, how cease 'exclusive' States?3 Only forced disharmony avoid grievous equally 9. finds reversal contraction juisdiction began end era, culminating Gully 299 109, 57 96, 81 furnished momentum radical historic initiated 1487. concluding, withdraws resolves ambiguity 102 interpolating creates difficulties future. One naturally expect innovation vital resulting stated intricate exegesis. suppose indication least awareness found. Diligence counsel unearthed remotest hint own fruitless. nothing X, terms, antecedents, advocacy, gives respect intimation play facilities reorganizations. easier methods recovery procedure. draws possessed trustees. called roundabout inference. unlike extension claimed, additional designed. 42 spun largely disregarding long practical seen, decisions ruled grant, little importance, jurisdiction.4 us, add head throw open although, clear purpose, assessment literature subject perfectly reasonable explanation lightly attribute affecting indirect mention desirability thousands pages hearings, debates, bills leadingup 43 10. adequate amply accounts it, using springboard unforeseen make appear drafts House. amendments Senate spokesman, John Gerdes. His statement amendment.5 noted Gerdes intimated needed freedom, indicate plan seemed warrant result. sought reenforce appeal article elucidating passage. Gerdes, Corporate Reorganizations: Changes Effected Reorganization 52 Harv.L.Rev. 1, 21. 45 Appeals, Gerdes' he them. Nowhere suggestion undisclosed convenient forum. He concerned provisions, one, deemed used 'inconsistent' 'not applicable' interchangeably. inconsistent impair inconsistency arisen thoroughly familiar, fully explains why desirable 46 this. 77B(a) receiverships. arose citizenship, home White Ewing, 36, 1018, bar, view. specialists precluded Compare Reorganizations, 1478, Finletter, Principles Reorganization, 186—87; re Standard Gas 119 658; Tilton Model Taxi Corp., 112 86; Prima 98 952. 47 namely roving authority inapplicable. danger deprive implicit Conference. enforced, departure upsetting vestige anybody up refers jurisdiction,' wrote, 'has ancillary main available, involves $3,000 citizenship.' 21.6 ws eliminat ed, then, 77B(a), trustee-receiver witness Bill, Weinstein, pp. 63—64, 193—94. xxx. 48 hand, language, factor justifies indirection, comment discussion, changed years, expanded already tended contract; upset demands litigated practice, 'to 49 11. overturns guided devised attributes big distribution, glimmer legislatve doing so. Important shifts product something fit absentmindedness. natural long-established transferred wanted knew 50 When not, feeders Courts unexpressed swell attributed isolation class Any advantage balanced disadvantages taking away rooted advantages absorption mindful single Increase te reflects truism, keep mind, increase quantity affects work.7 51 clearly withheld dockets. clarity—more particularly, argumentation—resolution doubts takes series acts, burdens discharge functions. instance, American Security Columbia, 224 491, 553, 56 856, Phillips States, 312 246, 250, 251, 61 480, 483, 85 800. seem afield workings 840, generally revised Bnkruptcy ct 544, amended, seq. form set text 'in proceedings,' instead '(in) Act.' 1938. provides follows: 'Jurisdiction Courts.—a. claimants, acquired claimed instituted claimants. 'b. originally enacted, abolished 1911 289 1167, 431 note. Formal 1926, 664. containing superseded 77B. provides: chapters VII, inclusive, shall, insofar chapter, chapter: Provided, subdivisions 57, subdivision f entered directing proceeded pursuant inclusive. application, 'bankrupts' relate 'debtors', chapter.' Holders, etc., Kent, 1944, 143 684. motion dismiss limitations; proceed, denied, factual irst requi red determination. 'Proceedings chapter,' 101 similarly construed. According conferring 70. left, could, creditors debt demand bankruptcy; *.' Sherman Bingham, 1872, Fed.Cas. 1270, 12,762; Goodall Tuttle, 579, 5,533. appearing recognized. Marshall Knox, 551, 481; Smith Mason, 1871, 419, 748. references 12,762, unreserved approval. passage general. respective districts branches afterwards specified; resulting, classes mentioned. Each conferred; extend limitation. exclusion prevent exercising growing conne cted identical trench pending. Proceedings aid principal bankrupt. them, arise. satisfactorily discussed member circuit, Shearman No.12,762, N.B.R. 490; concur expressed, bankruptcy.' invested 'with cause 1905, 198 280, 289, 693, 695, 1051; Bryan Bernheimer, 1901, 181 188, 189, 194, 557, 559, 814; 535, provided: defendant.' 'A (trustee's property) act unprecedented among acts.' Hammond, D.C.1899, F. 845, 853. S. 1035, eventually House, ecommended striking enacting substituting committee's bill. version, Cong.Rec. 1781 (1898), survived debate conference reviewing preliminary debate, chairman explained: try parties interfered with. misfortune defendant. 'Under last incident settlement conducted expense majority people interested principals, attorneys. justice.' Cong.Rec.1785 (1898). Woodbury, D.C.1900, 833; 845; Louisville Marx, D.C. 1899, 456. 798, 799. Id. 799, likewise amended oversight correspondingly extended. omission corrected 840. H.Rep.No.511, 61st Sess. (1910). 'Section 9: Under fraudulently preferentially transferred. (Iowa), (20 1175), (sub.) deny save centers amounts denial justice, calendars behindhand; while, come crippled degree. (See Ward (Mass.) (104 985), A.B.R. 215; Mueller Nugent (6 Cir.) 105 581; latter, recently Supreme Court.) gneral dema nd return Were (sub. a) simply excepts operation can, property, referring brought. doubt, adding sections, e.' H.Rep.No.1698, 57th 1st (1902). (Italics added.) Substantially floor Representative George W. Ray, committee. 6941, 6942 note, second ranking drafted note 15, Ray committee, finally serious resolved. Harris 382, S.Ct 296, 528. Kelly Gill, 1917, 245 116, 38, 62 185; Roman, 1928, 556; Lynch Bronson, D.C.1910, 605. Whitney Wenman, 539, 778, 1157; Nugent, 1902, 184 269, 405; Schloerb, 542, 1007, 1183. 'But lacked possession, validity substantial claim. passed, suit.' 1924, 426, 434, 399, 770. Matthew Coppin, 1929, 100, 101; Stiefel 14th Street Broadway Realty 1931, 1041, 1043; Coyle Duncan SpanglerCoal D.C.1923, 288 897, 901; Operators' Piano Wisconsin 1922, 283 904, 906; De Friece Bryant, 1916, 232 236; McEldowney Card, C.C.1911, 193 475, 479. Contra: Schumacher, 71 831; Toledo Fence Post Lyons, 1923, 290 637, 645. virtue constitutional bankruptcies, withhold prescribe conditions Exercising prescribed 23b condition sued trustee.' 234, decided notes 10—11, recognized held. Later 'cause 23-b prohibits (with applicable) prosecuting, intervened.' Kelley 119, 185. 'There words, provided." 1908, 139, 140. Lowenstein Reikes, 481, 485 (dissenting opinion), Ross, Jurisdiction Trustees Bankruptcy, Iowa L.Rev. 565 (1935), 24, 1940, 86, consent. report said 102: amplifies applicability Chapters VII applicable, S.Rep.No.1916, 75th 3d (1938). agreed Senate, accepted 83 8697, 9103, 9107, 9110 recommendation Hearings Subcommittee Judiciary, 8046, 77 explain reasons 'Chapter self-sufficient. All therefore applicable. nature permit 64 act, fixed priority payment claims. deals unsecured claims, affected reorganizations—where secured dealt with—would confusion. apply, propose priorities adopt existence enumeration subsections doubt. enumerate 57(h), 57(n), 70(f). X.' representative Association Bar listed 'have procedure.' 37. spokesman fr Philadelphia Plan amending deal concealed assets. 26. 1895, 67; Riehle Margolies, 279 218, 223, 310, 312, 73 669. 185—87 (1937). Reorganizations 1465 (1936). squarely faced Matter Sportwear Am.B.R. (N.S.) 456 evident Thomas Winslow, D.C.1935, F.Supp. 839. Note, 797 156. major substantive additions 156 158. defects reorganizations remedy analyzed S.Rep.No.2084, 1—3 167(6) 169. 167 qualification— '(1) judge direct, forthwith investigate conduct, liabilities, financial debtor, continuance thereof, formulation plan, thereon judge; '(2) may, witnesses them; '(3) ascertained pertaining fraud, misconduct, mismanagement irregularities, available estate.' Ibid. 'These difficult overemphasize *. Investors 'focal point' reorganization.' H.Rep.No.1409, consideration, preserve, distinctly Bush Elliott, 1906, 202 477, 479, 668, 670, 1114. 14—15, 1(10) defines "Courts Territories possessions hereafter Columbia'; 969. a(20) 552, designed 'controversies equity,' bankruptcy,' 'proceedings' denoted instances proper, precise exemplifies variety ways employed authorizes claim' 'any proceeding, otherwise.' speak plenary. refer all. Significant too Act' relief chapters, including Collier 673 (14th ed. 1947). 'Upon approval petition, addition powers, duties hereinabove elsewhere imposed insolvency inability meet debts mature.' non-jurisdictional. 1941, 658, 662; 952, 958. Thompson Terminal Shares, 1939, 104 treatment 77. jurisdictional. Cuyahoga Finance 1943, 136 18; Warder Brady, 89, 93, 94. thought Clarke Fitch, CCH Bankr.Law Ser. 53,805 (1942); 88. Bovay H. M. Byllesby 1937, 88 990; Tacoma Oriental S.S. 1936, 86 363; (1942). 45, reach personal service venue difficulties. establishing, 115, just domiciliary 1480, 1513—14, 1525—26 observation JusticeBrandeis c arries weight. 185, elsewhere, operated grant. What significant when, dress problem, joined said: 'Only compelling rejection accepted, overturning reaching instance.' Maynard 273, 277, 390, 391, 75 1028. substituted Note s23 explicitly. (3). rendering matter. resolving best closes doors consenting minor compared opening wide door barred consciousness subcommittee 77: Another amendment, Heuston, representing Special excludes epressly ex cluded (k), receiverships, priorities, etc.' Committee, meager ambiguous. Conflicting arguments variant meanings susceptible serves worthy cites clarification inapplicable, 1513—14. works pressure, excessive business, study reflection indispensable judgment bound suffer. Before head, close acquaintance Taft warning 'is growth country, swamped burden, will, haste, high have. . .' Taft, Attacks Legal Procedure (1916) Ky.L.J. 18. known, leadership February 13, 1925, 936, passed manageable cutting off sources. total number petitions certiorari index business. 1927 Term, Term during 1925 operative, 587. 1946 9, 1947, 1,144 enlargement attempts review here. likely heavy, say mickle muckle.

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