Document: 382 U.S. 323 86 S.Ct. 467 15 L.Ed.2d 391 Louis KATCHEN, Petitioner,v.Hyman D. LANDY, Trustee in Bankruptcy, etc. No. 28. Argued Nov. 8, 1965. Decided Jan. 17, 1966. [Syllabus from pages 323-324 intentionally omitted] Fred M. Winner, Denver, Colo., for petitioner. George Creamer, respondent. Mr. Justice WHITE delivered the opinion of Court. 1 The disputed issue here is whether a bankruptcy court has summary jurisdiction to order surrender voidable preferences asserted and proved by trustee response claim filed creditor who received preferences. Court Appeals held that had such jurisdiction. 336 F.2d 535. We affirm. 2 corporate bankrupt began business on April 21, 1960, borrowed $50,000 two local banks. Petitioner, then an officer company, was accommodation maker notes After this case suffered disastrous fire, its funds collections were placed 'trust account' under sole control From account petitioner made payments one company which he payment other. Bankruptcy followed within four months these payments. Petitioner claims proceeding, rent due him his personal funds. responded with petition asserting trust fund banks demanding judgment amount along unpaid stock subscription owed corporation Petitioner's objection referee overruled, rendered both subscription. be allowed only when if satisfied. District sustained referee. A divided Appeals, sitting en banc, after reconsidering Inter-State National Bank Kansas City v. Luther, 221 (C.A.10th Cir. 1955), cert. dismissed Rule 60, 350 944, 76 297, 100 L.Ed. 823, adhered pronouncements case, affirmed but reversed did not seek review adverse decision granted certiorari creditor's because diversity views among Courts involved1 importance question administration laws. 380 971, 85 1328, 14 268. 3 crux dispute concerns mode procedure trying out preference issue. courts are expressly invested statute original conduct proceedings Act.2 These essentially equity, Local Loan Co. Hunt, 292 234, 240, 54 695, 697, 78 1230; Pepper Litton, 308 295, 304, 60 238, 244, 84 281, they characteristically proceed fashion deal assets administering. 'have adjudicate controversies relating property over have actual or constructive possession.' Thompson Magnolia Petroleum Co., 309 478, 481, 628, 630, 876; Cline Kaplan, 97, 98—99, 65 155, 156, 89 97; May Henderson, 268 111, 115—116, 45 456, 458, 69 870; Taubel-Scott-Kitzmiller Fox, 264 426, 432—434, 44 396, 398, 68 770. They also way 'matters administrative character, including questions between creditors, presented ordinary course bankrupt's estate.' Taylor Voss, 271 176, 181, 46 461, 463, 70 889; Fidelity & Guaranty Bray, 225 205, 218, 32 620, 625, 56 1055. This elementary law does dispute. 4 But points file proceeding holds substantial claim, so may deemed possession court, recover plenary action § Act, 11 U.S.C. 96 (1964 ed.), see Taubel-ScottKitzmiller 396; federal could demand jury trial, Schoenthal Irving Trust 287 92, 94—95, 53 50, 51, 77 185; Adams Champion, 294 231, 55 399, 400, 79 880; compare Buffum Peter Barceloux 289 227, 235—236, 539, 542, 1140. contends situation same files objects allowance demands preference. so, argues, Act confer surrendered because, it does, petitioner's rights Seventh Amendment Constitution violated. agree neither contention. 5 With respect statutory question, must conceded express terms claimants Congress often left exact scope undefined, elsewhere recognized absence congressional definition matter determined decisions consideration structure purpose as whole, well particular provisions brought question. 431 n. 7, 398. 6 When enacted general revisions laws 1898 1938, gave 'special attention subject making (the laws) inexpensive (their) administration.' H.R.Rep. 1228, 54th Cong., 1st Sess., p. 2; 1409, 75th S.Rep. 1916, 3d 2. Moreover, long chief 'to secure prompt effectual settlement estate all bankrupts limited period,' Ex parte Christy, How. 292, 312, 603, provision disposition, 'without regard usual modes trial attended some necessary delay,' means chosen effectuate purpose, Bailey Glover, 21 Wall. 342, 346, 22 636. See generally Wiswall Campbell, 93 347, 350—351, 23 923; United States 625. 7 It equally clear power 'allow,' 'disallow' 'reconsider' claims, 2, sub. a(2), 11, a(2) ed.),3 'basic estate,' Gardner State New Jersey, 329 565, 573, 67 467, 471, 91 504, exercised slower more expensive processes suit. 625; 350—351. allow disallow includes 'full inquire into validity any alleged debt obligation upon against based. essential performance duties imposed it.' Lesser Gray, 236 70, 74, 35 228, 59 471. enjoined examine present objections, 47, a(8), 75, a(8) ed.),4 '(w)hen objections made, court) duty bound pass them,' 'The whole process proof, allowance, distribution is, shortly speaking, adjudication interests claimed res,' id., at 574, 472, thus falls principle quoted above their possession. Further, itself directs '(o)bjections shall heard soon convenience best estates will permit,' 57, f, 93, f committee report indicates way,' 1674, 52d 20. 8 Section 57 contains another important directive around much turns. Subsection g forbids 'received acquired * void title' absent g, ed.).5 Unavoidably very presents can nor disallowed until adjudicated. like other part parcel court. plain import finds support policy expedition underlies necessity many Act. 9 There no contrary indication Acts 1800 1841 right tried repeated 1867 1898.6 19 current law, 19, 42 requires situations helpful case. true dealing voidability, confers concurrent state entertain suits recovery own applies 'where necessary' hence contemplates non-plenary proceedings.7 10 If anything, view summarily determined. k provides reconsideration previously been allowed, reconsidered rejected dividend paid it, court.8 Even predecessor section, provide recovered, 1898, 1, 30 Stat. 561, determine return dividend. Pirie Chicago Title 182 438, 455—456, 906, 913, 1171.9 So too, d, 96, d ed.),10 examination reasonableness amounts contemplation attorney services although provide. In re Wood 210 246, 28 621, 52 1046; Conrad, Rubin Pender, 703, 1327. far we discussing principles applicable where affirmative relief once established adjudicated preference, hardly doubted there passing necessarily any, ascertain claimant, should satisfied condition claim. Schwartz Levine Malin, Ins., 111 81 (C.A.2d 1940). Thus, dealt nothing remains normal rules res judicata collateral estoppel apply courts. Chicot County Drainage Baxter Bank, 371, 376 377, 317, 319—320, 329; Stoll Gottlieb, 305 165, 134, 83 104. More specifically, offers proof what judicially determined, 351; rejected, relitigated Sampsell ImperialPaper Corp., 313 215, 218—219, 61 904, 906—907, 1293; 229, uniformly applied hold court's resolution subsequent Inc., 1940); Giffin Vought, 175 186 1949); Ullman, Stern Krausse Coppard, 246 F. 124 (C.A.5th 1917); Breit Moore, 220 97 (C.A.9th 1915); Johnson Wilson, 118 557 1941); J. R. Palmenberg Sons, 935 1935), aff'd sub nom. Bronx Brass Foundry, Inc. 297 230, 451, 80 657. To require commence circumstances would meaningless gesture, equitable powers during disallowance claims. Compare 256, 1046 (determination attorney's fee suit excess), 703 (upholding turnover order). What said Alexander Hillman, 296 222, 204, 192, connection receivership counterclaim claimant here: 12 'By presenting respondents subjected themselves consequences attach appearance. 13 'Respondents' contention that, while invoking establish participate distribution, deny them misappropriated. behalf creditors stockholders, receivers reasonably insist before taking aught, required make restitution. That requirement harmony rule equity having parties them, decide matters decree complete relief.' U.S., 241—242, S.Ct., 210—211. Our therefore leads us conclude, hold, compel claim.11 number below, reached similar results.12 contends, however, reading violates trial. might entitled awaited trustee, arises triable equity. passed pursuant given Art. I, uniform bankruptcy, converts legal pro rata share res. 573—574, 471—472, disgorges already received. 242, 211, 192. As possession, 629; 156; 458; inherently 697; 244; determination objections. answering argument jury: 16 'But those use lose sight fundamental jury, considered absolute right, extend cases clearly shown belongs class, involved itself, complexity. 17 'So, incidental arise administering estate, ordinarily pure facts but, belonging proceedings, become acts exercises exclusive control. Thus damages investigated chancery methods.' 18 Barton Barbour, 104 (14 Otto) 126, 133—134, 26 672. characteristic Carter Lechty, 72 320 (C.A.8th 1934); Michigan Brewing 24 F.Supp. 430 (W.D.Mich.1938), aff'd, Conlon 101 1007 (C.A.6th 1939); Rude, 805 (D.C.D.Ky.1900); Christensen, 243 (D.C.N.D.Iowa 1900). 258, 626; 913. And makes difference, concerned, urges seeks relief. practical effect, denial less merely existence since effect action. accord otherwise remedies. Mitchell Robert DeMario Jewelry, 361 288, 291—292, 332, 334, 323; Porter Warner 328 395, 398—399, 66 1086, 1089, 90 1332; 204; McGowan Parish, 237 285, 296, 543, 548, 955. 20 final reliance doctrine Beacon Theatres, Westover, 359 500, 948, 988, Dairy Queen, Wood, 369 469, 82 894, 44, issues single 'only most imperative circumstances, flexible procedures Federal Rules cannot now anticipate, lost through prior claims." 472—473, 897. issues—whether and, amount—may either stay direct preserve Unquestionably give instruction 483—484, 630—631; a(7), a(7) lower procedure, B. Avery Sons Davis, 192 255 1951), denied, 342 945, 559; Triangle Electric Foutch, 40 353, 1930); Katchen Landy, 535, 543 1964) (Phillips, J., dissenting part). Nevertheless think rejected. At outset, note Queen doctrine, all, For, said, render unnecessary entitled. every interposed demanded suspended initiated, delay expense entail. Such result consistent purposes Theatres 509—510, 955—957. specific scheme contemplating without intervention jury. intended trustee's determined; say bring independent manner dismember prescribed. 243, 211. Both recognize resolve first even though results dispositive implement intent, objection; above, carries Affirmed. BLACK DOUGLAS dissent reasons stated Judge Phillips Appeals. 559, Avery, arose different transaction than Fifth Circuit fact articulated basis decision, preclude transaction. Gill Phillips, 337 258 (1964), rehearing, 340 318 1965). uncertain, least prevents unrelated Several upheld counterclaims arising permissive distinct transactions. Solar Mfg. 200 327 (C.A.3d 1952), denied Marine Midland York McGirl, 345 940, 73 831, 1366; Majestic Radio Television 227 152 (C.A.7th Dwyer Franklin, 995, 545, 860; Peters Lines, 275 919 1960). presently upholds relates declines involving set-off, lien, fraudulent transfer. F.2d, 537. a, provides: '(a) hereinbefore defined hereby created invested, respective territorial limits hereafter changed, enable exercise title *.' to: '(2) Allow reconsider estates.' trustees shall: '(8) proofs object improper.' '(g) preferences, liens, conveyances, transfers, assignments encumbrances, title, unless assignments, encumbrances.' language observed, concerned rather conditioned transactions reach entirely settled, Collier 57.19(3.2) (14th ed. 1964), here. history early traced Button 140 495 (D.C.D.Del.), Brown 149 48 1906). b, b '(b) Any avoided receiving benefited thereby agent acting reference thereto has, time transfer reasonable cause believe debtor insolvent. Where voidable, or, converted, value person converted property, except bona-fide purchaser lienor debtor's transferee fair equivalent value. For avoidance necessary, intervened jurisdiction.' subs. l provide: '(k) Claims reallowed according equities closed. '(l) Whenever part, paid, proportional thereof excess creditor. dividends.' Under stood, recoverable nevertheless ample ground argued compelling repayment constitute 'suit trustee' consent defendant 23, (presently codified, alterations material discussion, 46, ed.)) that: 'b Suits prosecuted bankrupt, whose being administered instituted, proposed defendant.' 552. 'suit' meaning provision. 906. reasoning our today decreed, 'consented' b. Rather, governed 'traditional invokes aid offering abide procedure. 351, 923.' 472. obviously intimate concerning relief, factual bases disposed '(d) shall, directly indirectly, filing him, pay money rendered, examined motion valid extent recovered benefit estate. *' 5, supra. cited supra, upholding grant related defenses particularly 327, 331, 831; 152, 156 545. Florance Kresge, 784 (C.A.4th 1938); Floro Realty Inv. Steem 128 338 1942).

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