Court Opinion

ID: 8793205
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:59:08.729894+00
Date Added: 2024-06-11T17:03:28.657175
License: Public Domain

BAKER, Circuit Judge
(after stating the facts as above). [1] Jurisdiction to review a summary order in bankruptcy proceedings is by original petition under section 24b. Mueller v. Nugent, 184 U. S. 1, 22 Sup. Ct. 269, 46 E. Ed. 405; In re Blum, 202 Fed. 883, 121 C. C. A. 241; Shea v. Lewis, 206 Fed. 877, 124 C. C. A. 537; In re Yorkville Coal Co. (C. C. A.) 211 Fed. 619.
[2] “There are two classes of cases arising under the act of 1898 and controlled by different principles. The first class is where there is a claim of adverse title to property of the bankrupt, based upon a transfer antedating the bankruptcy. The other class is where there is no claim; of adverse title based on any transfer prior to the bankruptcy, but where the property is in the physical possession of a third party, or of an agent.of the bankrupt, or of an officer of a bankrupt corporation, who refuses to deliver it to the trustee in bankruptcy. In the former class of cases a plenary suit must be brought, either at law or in equity, by the trustee, in which the adverse claim of title can be tried and adjudicated. In the latter class it is not necessary to bring a plenary suit, but the bankruptcy court may act summarily and may make an order in a summary proceeding for the delivery of the property to the trustee, without the formality of a formal litigation.” Babbitt v. Dutcher, 216 U. S. 102, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969.
As the claim of Benjamin Bros, was “based upon a transfer antedating the bankruptcy,” it belonged to the class requiring a plenary suit, unless the claim was merely “colorable.”
[3] The District Court may pursue the summary method to the point of ascertaining that the alleged adverse claim is substantial and not merely colorable. But substantiality appears as soon as the claimant, in response to the rule to show cause, presents his verified answer, which is unmet by the trustee, or which, if met by a replication, is *889supported by sworn testimony of facts which, if true, would show title.and possession antedating the petition in bankruptcy. A conclusion that the alleged adverse claim is a cover for the claimant’s possession as agent or bailee of the bankrupt cannot be permitted to he reached by the District Court’s, rejection of the sworn answer and testimony, and thereupon finding that the alleged adverse claim is fraudulent. That end can only he attained if it is the just conclusion of a due trial of a plenary suit. Cases supra.
The order is reversed, with the direction to dismiss the summary proceeding.