1. Upon an adjudication of bankruptcy, the title to and
constructive possession of land belonging to the bankrupt and
situate in another state vest in the trustee as of the date of the
filing of the petition;
Page 282 U. S. 735
jurisdiction to determine the validity and amount of a lien upon
the land, and to decree the method of it liquidation, cannot be
taken thereafter by a state court. P. 282 U. S.
2. When a suit to foreclose a mortgage on land was begun in a
local state court after the owner had been declared bankrupt in the
bankruptcy court in another state, and the trustee in bankruptcy,
made a party to the suit, removed it, upon the ground of diversity
of citizenship, to the federal court of the district in which it
was brought and set up the bankruptcy adjudication,
(1) A valid defense, since the state court was without
jurisdiction to proceed to foreclosure and sale, and the federal
court, upon removal, had no higher or different right than the
state court had had to interfere with the bankruptcy
administration. P. 282 U. S.
(2) The trustee did not, and could not, waive the lack of
jurisdiction in the state court by removing the case; because he
was powerless to surrender the exclusive jurisdiction of the court
of bankruptcy. P. 282 U. S.
District court reversed.
On certificate of a question of jurisdiction in a suit to
foreclose a mortgage on land owned by a bankrupt. The suit was
removed from a state court. This Court brought up the entire record
from the circuit court of appeals, 281 U.S. 703.
MR. JUSTICE ROBERTS delivered the opinion of the Court.
In this cause the circuit court of appeals certified the
"After the bankruptcy court has acquired jurisdiction of the
estate of the bankrupt and the referee therein has entered an order
requiring sale, by the trustee, of all of the property of the
bankrupt but before the trustee has taken any steps to sell land
(part of such estate) entirely
Page 282 U. S. 736
located in another judicial district, can a suit to foreclose a
valid mortgage thereon be commenced and an order of sale thereunder
be made over the objection of the trustee, by the court of the
This Court ordered that the entire record be sent up.
The question correctly states the issue tried in the district
court which entered the judgment from which the trustee
Henrietta E. Cunningham was adjudged bankrupt in the Northern
District of Texas. The estate embraces land situate in the Western
District of Arkansas. B. K. Isaacs was elected trustee. Thereafter,
appellee, the holder of a note secured by a mortgage on the said
land, instituted foreclosure proceedings in a state court of
Arkansas. It named the bankrupt and Isaacs, the trustee, as
defendants, recited the bankruptcy proceeding in the Texas
district, and that it had not filed its secured note as a claim
The bankrupt and the trustee specially appeared and petitioned
for removal of the cause to the United States district court for
the Western District of Arkansas. After removal, the trustee filed
an answer in which he set up, inter alia,
his right and
title as trustee, his lack of information as to the execution of
the note and mortgage, and the fact that the land had been
scheduled in the Texas district court as an asset of the bankrupt.
He further averred that, as trustee, he had taken and then held
peaceable possession of the land; that there was an equity in the
same above the mortgage debt; that a sale in foreclosure would
prejudice the rights of general creditors; that he required time
for investigation as to the most favorable method of sale; that
neither he nor the bankruptcy court had consented to the
foreclosure of the mortgage; that the bankruptcy court had entered
an order authorizing him to sell the land; that that court had
exclusive jurisdiction to ascertain the facts and administer the
property; that the federal district court in Arkansas
Page 282 U. S. 737
could proceed no further than to ascertain the interests of the
defendants, the validity of the mortgage lien, and the amount of
the debt. The answer prayed that, after these preliminary steps,
the court should refuse an order of sale, because of its want of
jurisdiction to enter one.
On motion of the plaintiff, the court struck out so much of the
answer as sought to delay judgment and sale, and entered, on the
pleadings, a decree of foreclosure and sale containing a proviso
that, if there should be any surplus of purchase money over the
amount of the judgment, interest, and costs, the same should be
paid to the trustee.
Upon adjudication, title to the bankrupt's property vests in the
trustee with actual or constructive possession, and is placed in
the custody of the bankruptcy court. Mueller v. Nugent,
184 U. S. 1
184 U. S. 14
title and right to possession of all property owned and possessed
by the bankrupt vests in the trustee as of the date of the filing
of the petition in bankruptcy, no matter whether situated within or
without the district in which the court sits. Robertson v.
Howard, 229 U. S. 254
229 U. S.
-260; Wells & Co. v. Sharp,
208 F. 393;
Galbraith v. Robson-Hilliard Grocery Co.,
216 F. 842. It
follows that the bankruptcy court has exclusive jurisdiction to
deal with the property of the bankrupt estate. It may order a sale
of real estate lying outside the district. Robertson v. Howard,
supra; In re Wilka,
131 F. 1004. When this jurisdiction has
attached, the court's possession cannot be affected by actions
brought in other courts. White v. Schloerb, 178 U.
; Murphy v. John Hofman Co., 211 U.
; Dayton v. Stanard, 241 U.
. This is but an application of the well
recognized rule that, when a court of competent jurisdiction takes
possession of property through its officers, this withdraws the
property from the jurisdiction of all other courts which, though of
concurrent jurisdiction, may not disturb that possession, and
Page 282 U. S. 738
that the court originally acquiring jurisdiction is competent to
hear and determine all questions respecting title, possession, and
control of the property. Murphy v. John Hofman Co., supra;
Wabash R. Co. v. Adelbert College, 208 U. S.
; Harkin v. Brundage, 276 U. S.
. Thus, while valid liens existing at the time of the
commencement of a bankruptcy proceeding are preserved, it is solely
within the power of a court of bankruptcy to ascertain their
validity and amount and to decree the method of their liquidation.
Ex party City Bank of New
3 How. 292; Houston v.
City Bank of New Orleans,
6 How. 486;
23 Wall. 128; In re Wilka, supra;
Nisbet v. Federal Title & Trust Co.,
229 F. 644. The
exercise of this function necessarily forbids interference with it
by foreclosure proceedings in other courts, which, save for the
bankruptcy proceeding, would be competent to that end. As mortgaged
property ordinarily lies within the district in which the
bankruptcy court sits, and the mortgagee can consequently be served
with its process, the procedure usually followed is for that court
to restrain the institution of foreclosure proceedings in any
Where the land
lies outside the limits of the district in which the bankruptcy
court sits, ancillary proceedings may be instituted in the district
court of the United States for the district in which the land is,
and an injunction against foreclosure issued by the court of
ancillary jurisdiction. In re Patterson Lumber Co.,
916; 247 F. 578. Compare Security Mortgage Co. v. Powers,
278 U. S. 149
Such injunctions are granted solely for the reason that the court
in which foreclosure proceedings are instituted is without
jurisdiction, after adjudication
Page 282 U. S. 739
of bankruptcy, to deal with the land or liens upon it save by
consent of the bankruptcy court. The appellant-trustee might have
instituted ancillary proceedings in the district court for the
Western District of Arkansas and there obtained an injunction to
restrain the appellee from foreclosing its mortgage. There is no
reason, however, why he should not have followed the course here
pursued, of pleading the adjudication in Texas in abatement of the
foreclosure proceeding. The state court in which the foreclosure
action was begun was without jurisdiction to pursue it. Upon
removal into the federal court upon the ground of diversity of
citizenship, the latter court had no higher or different right to
interfere with the bankruptcy administration than had the state
court. The answer of the trustee stated a valid defense, and it was
error to enter judgment against him on the pleadings.
Appellee asserts that, inasmuch as the appellant removed the
cause into the federal court, he waived any lack of jurisdiction in
that court and estopped himself to set up exclusive jurisdiction of
the bankruptcy court. There is no merit in this contention. The
jurisdiction in bankruptcy is made exclusive in the interest of the
due administration of the estate and the preservation of the rights
of both secured and unsecured creditors. This fact places it beyond
the power of the court's officers to oust it by surrender of
property which has come into its possession. Whitney v.
Wenman, 198 U. S. 539
In re Schermerhorn,
145 F. 341. Indeed, a court of
bankruptcy itself is powerless to surrender its control of the
administration of the estate. United States Fidelity & G.
Co. v. Bray, 225 U. S. 205
action of the trustee in removing the cause could not therefore
divest the Texas district court of its jurisdiction.
The judgment of the district court must be reversed, and the
cause remanded to that court for further proceedings in conformity
with this opinion.
* In re Pittelkow,
92 F. 901; In re Dana,
F. 529; In re Roger Brown & Co.,
196 F. 758; Pugh
219 F. 417, cert. denied,
238 U.S. 631;
Karasik v. People's Trust Co.,
241 F. 939; In re
252 F. 885; In re Locust Building Co.,
988; First Trust Co. v. Baylor,
1 F.2d 24; In re
Southern Florida Corp.,
16 F.2d 171; In re Gillette,
18 F.2d 687.