Wood v. A. Wilbert's Sons Shingle & Lumber Co.

delivered the opinion of the court.

Appellees on the third of December, 1909, filed an exception to the jurisdiction of the court, alleging as cause thereof that they were domiciled in the Parish of Iberville and that the court was without jurisdiction over their persons and over the subject-matter of the litigation. A demurrer to like effect was filed on the tenth of December and stated that it was “by way of amendment to the form of demurrer filed herein on December 3, 1909.”

The demurrer was sustained. The court said: “From the oral arguments and brief filed it is evident the trustee brings his action under the provisions of section 70, subdivision e, of the bankruptcy act, and the bill does not disclose any'cause of action under either section 60, subdivision b, or section 67, subdivision e, and therefore, by virtue of the authority of Hull v. Burr, 153 Federal, 945, this court has no jurisdiction to entertain the suit except by the consent of the defendants.” The bill was dismissed without prejudice to complainant.

The certificate of the judge recites that the sole question decided by him and certified to this court was whether or not the District Court “has jurisdiction in behalf of the trustee in bankruptcy to recover assets of the bankrupt from a third person under a revocatory action allowed under the law of Louisiana, of an insolvent, without the consent of the defendant, under the Bankrupt Act as amended in 1903.”

There are some minor questions presented by the brief

The bill charges with much circumstantial detail, which it is not possible to briefly state or analyze, that the' lumber and shingle company and its president, Frederic Wilbert, had entered into a conspiracy with the bankrupt and certain other parties by which, on June 6, 1906, the shingle and lumber company acquired title to certain plantations belonging to the bankrupt situated in the Parish of Iber-ville, Louisiana. The purpose of the conspiracy, it is charged, was to conceal from his creditors the bankrupt’s assets and property and to protect them from the pursuit of his creditors, with the understanding that when he got his discharge in bankruptcy the property was to be transferred to him. It was prayed that the sale be set aside and the defendants be decreed to convey the lands to complainant in trust for the creditors of the bankrupt. Without further detail of the bill we shall assume for the purpose of the consideration of the question that it states facts sufficient to constitute a ground of relief if the court have jurisdiction.

Section 23a gives jurisdiction of such suits to the Circuit Courts of the United States which involve controversies at law or in equity, as distinguished from proceedings in bankruptcy, “in the same manner and to the same extent only as though bankruptcy proceedings had not been instituted and such controversies had been between the bankrupts” and the “adverse claimants.” By subdivision b of § 23 it is provided that suits by the trustee shall only be brought or prosecuted where the bankrupt might have brought or prosecuted them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant; “except suits for the recovery of property under section sixty, subdivision b, and section sixty-seven, subdivision e.” The words in italics were added as amendment by act of February 5, 1903, c. 487, § 8, 32 Stat. 797 . Upon them the question in the case turns. Prior to the amendment, and passing on § 23 as originally enacted, this court decided in Bardes v. Hawarden Bank, 178 U. S. 524 , that that section controlled and limited the jurisdiction of all courts over suits brought by trustees to collect debts due from third parties, or to set aside transfers of property to third parties alleged to be fraudulent against creditors, and that the District Courts of the United States could, by the proposed defendant’s consent, but not otherwise, entertain jurisdiction of such suits. Harris, Trustee, v. First National Bank of Mt. Pleasant, 216 U. S. 382 .

Subdivision e of § 70 is invoked as sustaining the jurisdiction of the District Court. That subdivision provides that the trustee may avoid any transfer made by the bankrupt of his property which any creditor might have avoided and may recover it unless the purchaser was a bona fide holder for value prior to the date of adjudication. This was the provision of the section as originally enacted. In 1903 these words were added: “For the purpose of such recovery, any court of bankruptcy as hereinbefore defined, and any state court which would have had jurisdiction if bankruptcy had not intervened, shall have concurrent jurisdiction.” 32 Stat. 800 . The language of the amendment seems to have no limitation except that the transfer must be one which any creditor could avoid, and, giving it such generality, the question occurs, can it be reconciled with § 23, subdivisions a and b? The amendment was a part of the same act and passed at the same time that the amendment to subdivision b of § 23 was, and we must assume that they were intended not to conflict but to be in accord as provisions for different situations. In other words, that it was the intention that each should have its proper application distinct from and harmonious with that of the other. Such application is observed by distinguishing between jurisdiction over the subject-matter and jurisdiction over the person, as pointed out by the Circuit Court of Appeals for the Fifth Circuit in Hull v. Burr, supra, approving and following Gregory v. Atkinson, 127 Fed. Rep. 183 . In other words, the respective sections and their subdivisions confer jurisdiction on the designated courts so far as it is dependent upon the character of the suits, but when the condition expressed in subdivision b of § 23 exists the consent of the defendant determines the court, except when the suit is “for the recovery of property

Judgment affirmed.