Where defendant files a formal appearance and simultaneously
files an exception to the jurisdiction, the two papers should be
considered together, and as such cannot be regarded as a consent to
submit to the jurisdiction in a case where consent is
necessary.
An objection that the exception and demurrer did not comply with
Rule 31 owing to failure to make affidavit that they were not
interposed for delay, if not raised in the court below or assigned
as error, cannot be raised in this Court.
The district court has not 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
Bankruptcy Act as amended by the Act of February 5, 1903, c. 487, §
8, 32 Stat. 797.
This Court will assume that all the amendments to different
parts of the same act of Congress passed at the same time were
intended not to conflict, but to be in accord as provisions for
different situations.
The facts, which involve the construction of §§ 23a and 23b of
the Bankruptcy Act and the jurisdiction of the district court of
the United States thereunder, are stated in the opinion.
MR. JUSTICE McKENNA delivered the opinion of the Court.
Page 226 U. S. 385
The case is here on a question of jurisdiction. Appellant
brought suit in the district court November 3, 1909, as trustee of
one Edward Douglas Leche, to set aside a sale of lands made by
Leche to appellee, A. Wilbert's Sons Shingle & Lumber Company,
herein called the shingle and lumber company, and to account for
the rents thereof or the proceeds of the land that may have been
sold, and to otherwise render a full account to appellant of the
transactions with Leche, individually or otherwise.
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 argument 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 F. 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
Page 226 U. S. 386
of counsel of which we must first dispose. It was contended in
the court below that the appellees, by entering a formal
appearance, waived their right to object to the jurisdiction. But
they at the same time filed an exception to the jurisdiction, and
the district court decided that the two papers should be considered
together, and, so considering them, held that they could not be
regarded as a consent on the part of the defendants to submit
themselves to the jurisdiction of the court. The ruling is not
assigned as error. It is urged further that neither the exception
nor the demurrer complied with the thirty-first equity rule, in
that the appellees, did not make affidavit that they were not
interposed for delay. It is sufficient to answer that the objection
was not made in the court below, and is not assigned as error on
this appeal. We therefore pass to the consideration of the question
certified.
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, has 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 Iberville, 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 to 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.
Page 226 U. S. 387
The Bankruptcy Act is very comprehensive of the whole subject of
bankruptcy. It creates courts of bankruptcy and is full in its
provisions for the collection and preservation of the estate of the
bankrupt through trustees appointed by creditors, who are given
power to bring suits to recover the property of the bankrupt which
has been conveyed by him in fraud of his creditors, or to give a
preference to any of them, the purpose of the act being to secure
an equality of distribution of the assets of the bankrupt among his
creditors.
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 § 60, subdivision b, and § 67
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.
Howarden 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.
Page 226 U. S. 388
What, then, is the effect of the amendment? Section 60 defines
what shall constitute a preference, with provisions for preventing
or defeating them. Section 67 is concerned with liens, their
extent, limitation, and regulation. By subdivision b of § 60, it is
provided that a conveyance of property by the bankrupt within four
months before the filing of a petition in bankruptcy, or after the
filing or before adjudication, for the purpose of giving preference
to a creditor, shall be voidable by the trustee, and he may recover
the property or its value from the creditor. Subdivision e of § 67
relates to conveyances made by the bankrupt within four months
prior to filing the petition, with the intention and purpose to
hinder, delay, or defraud his creditors. It is provided that such
conveyance shall be null and void except as to purchasers in good
faith and for a present fair consideration. The property so
conveyed is declared to be part of the assets of the bankrupt's
estate, and it is made the duty of the trustee to recover and
reclaim the same by legal proceedings or otherwise for the benefit
of the creditors. It is also provided that conveyances and
transfers void as against creditors by the laws of the state,
territory, or district in which the property is situated shall be
deemed null and void against the creditors of the bankrupt, and to
be recovered by the trustee. By an amendment of 1903 (32 Stat.
800), it was provided that, for the purpose of such recovery, any
court of bankruptcy and any state court which would have had
jurisdiction if bankruptcy had not intervened shall have concurrent
jurisdiction. The present suit does not fall within either of the
sections or either of the subdivisions. The conveyance sought to be
set aside was not given as a preference within the meaning of the
law, nor was it, assuming it to have been fraudulent, made within
four months of the filing of the petition in bankruptcy. The same
limitation of time would apply even if the transfer of the property
or any of the transactions connected with
Page 226 U. S. 389
it might be regarded, in some of their aspects, as giving a
preference, as counsel suggest that they might be so regarded.
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:
"And for the purpose of such recovery, and 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, c. 487. 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, 153 F. 945, approving and following
Gregory v.
Atkinson, 127 F. 185. 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
Page 226 U. S. 390
under § 60, subdivision b, and § 67, subdivision e." These
special exceptions exclude any other. And this is the view of the
respective sections and their relation expressed in
Skewis v.
Barthell, 152 F. 534;
Palmer v. Roginsky, 175 F. 883;
Parker v. Sherman, 195 F. 648.
Contra: Hurley v.
Devlin, 149 F. 268.
Judgment affirmed.