1. An order of the District Court denying a petition which prays
dismissal of a proceeding to reorganize a corporation under § 77B
of the Bankruptcy Act, and incidentally for the recall of an
injunction restraining creditors in that proceeding, is not
appealable to the Circuit Court of Appeals as of right, but only by
leave of that court. Bankruptcy Act, §§ 77B(k), 24, and 25. P.
297 U. S.
2. An order of the District Court confirming a plan of
reorganization under § 77B of the Bankruptcy Act is not appealable
to the Circuit Court of Appeals as of right, but only by leave of
that court. P. 297 U. S.
77 F.2d 1004, 78 F.2d 1018, affirmed.
Certiorari, 296 U.S. 565, to review orders of the Circuit Court
of Appeals dismissing two appeals, and an order denying a petition
to appeal, from orders of the District Court in reorganization
proceedings under § 77B of the Bankruptcy Act.
Page 297 U. S. 161
MR. JUSTICE STONE delivered the opinion of the Court.
Certiorari was granted in these cases as companion cases to
St. Louis Can Co. v. General American Life Insurance Co.,
77 F.2d 598, in which certiorari was granted on the same day, to
resolve questions as to the mode of appeal from certain orders
entered by a District Court in the course of a reorganization
proceeding under § 77B of the Bankruptcy Act, 48 Stat. 912, 11
U.S.C. 207. The writ in St. Louis Can Co. v. General American
Life Insurance Co.
was later dismissed by this Court on
stipulation of the parties, 296 U.S. 660.
On February 4, 1935, an involuntary petition was filed in the
District Court for Northern Illinois for reorganization of a
corporate debtor. The debtor filed an answer admitting the
essential allegations of the petition, and the District Court found
that the petition was filed in good faith, and ordered that it
stand approved, and that creditors be restrained from asserting
claims against the property of the debtor. After this order was
entered, the petitioner here filed a petition in the reorganization
proceeding setting up that she owned some of the mortgage bonds to
which the property of the debtor was subject; that, subsequent to
the petition for reorganization, but before it was approved, she
had brought suit in the state courts against the debtor and others
for an accounting, charging fraud in the issue and sale of the
bonds and a fraudulent scheme to bring about a reorganization of
the debtor to the detriment of the bondholders and to the advantage
of the defendants in the suit. She prayed that the petition for
Page 297 U. S. 162
dismissed for want of good faith and of jurisdiction in the
District Court, and that the injunction be dissolved. The District
Court entered an order March 20, 1935, denying the petition. From
this order it allowed an appeal to the Court of Appeals for the
Seventh Circuit, which dismissed the appeal without opinion. 77
F.2d 1004. The correctness of this ruling is presented in No.
Meanwhile, the District Court proceeded with hearings, in which
petitioner took no part, on a proposed plan of reorganization. The
plan, after certain modifications, was ultimately approved by 94
percent of the bondholders of one class and 95 percent of another,
and, with further changes directed by the court, was confirmed by
order entered May 20, 1935. The Court of Appeals dismissed without
opinion petitioner's appeal from this order, allowed by the
District Court. 78 F.2d 1018. And it denied petitioner's
application for leave to appeal from the same order, on the ground
that petitioner, who alone sought leave to appeal, had not objected
to the plan in the bankruptcy court, and so was not in a position
to challenge the plan on her own behalf or on that of bondholders
who had objected. The correctness of these rulings of the Court of
Appeals is presented in No. 376.
1. The question in No. 375 is whether the order of the District
Court denying the application to dismiss the proceeding brought
under § 77B and to dissolve the injunction generally restraining
creditors is, for purposes of appeal, the equivalent of "a judgment
adjudging or refusing to adjudge the defendant a bankrupt," which,
by § 25a of the Bankruptcy Act, 44 Stat. 665; 48 Stat. 926, 11
U.S.C. § 48(a), is appealable as of right to the Court of
When § 77B introduced into the Bankruptcy Act the proceeding for
reorganization of a corporation, it was provided that the procedure
to be followed in case reorganization were ordered should, so far
as practicable, follow
Page 297 U. S. 163
that already established by the Bankruptcy Act for liquidation
proceedings. Section 77B(k), [Footnote 1
] directs that the other sections of the
Bankruptcy Act shall apply to proceedings under § 77B unless
inconsistent with it, and that
"the date of the order approving the petition or answer under
this section shall be taken to be the date of adjudication, and
such order shall have the same consequences and effect as an order
The appeal provisions of §§ 24 and 25 [Footnote 2
] of the Bankruptcy Act are thus made
applicable to orders entered in the course of a reorganization
proceeding, and an order approving or disapproving a petition for
reorganization is made the equivalent, at least for purposes of an
appeal under § 25a, of a judgment adjudging or refusing to
Page 297 U. S. 164
adjudge the defendant a bankrupt. By § 24a and § 24b, appeals in
"proceedings" in bankruptcy, as distinguished from appeals in
"controversies arising in bankruptcy," may be taken only on leave
granted in the discretion of the appellate court, except that, in
the cases enumerated in § 25a, including, in clause (1), "a
judgment adjudging or refusing to adjudge the defendant a
bankrupt," an appeal may be taken as of right.
The petitioner appealed not from the order approving the
reorganization, but from that denying her application to dismiss
the reorganization proceedings. It is not contended that this order
is one in a controversy arising in bankruptcy, appealable as of
right under § 24a. See Taylor v. Voss, 271 U.
, 271 U. S. 181
Harrison v. Chamberlin, 271 U. S. 191
Hewit v. Berlin Machine Works, 194 U.
, 194 U. S.
-300. It is urged that it is the equivalent of an
order approving a petition in a reorganization proceeding, which §
77B(k) assimilate to an order of adjudication, appealable as of
right. But an order refusing to set aside an adjudication of
bankruptcy is not within § 25a, clause (1). This Court has held
that an appeal can be taken from such an order only on leave of the
appellate court under § 24b. Valley v. Northern F. & M.
Insurance Co., 254 U. S. 348
present appeal from the order refusing to dismiss the
Page 297 U. S. 165
proceedings does not stand on any different footing, and was
rightly dismissed because taken without leave of the appellate
court. Humphry v. Bankers Mortgage Co.,
79 F.2d 345;
Vitagraph, Inc. v. St. Louis Properties Corp.,
590; St. Louis Can Co. v. General American Life Insurance Co.,
supra; Credit Alliance Corp. v. Atlantic Pacific & Gulf
77 F.2d 595, and see Wilkerson v.
78 F.2d 311.
That part of petitioner's application to the District Court
which asked that the injunction restraining creditors be set aside
does not present a "controversy arising in bankruptcy," as
distinguished from a "proceeding" in bankruptcy. The relief from
the restraining order which petitioner sought was but incidental to
her assault on the order approving the petition, and raised no
issue capable of litigation independently of the proceeding in the
bankruptcy court. It related only to the due administration of the
pending proceeding, and so was a "proceeding" in bankruptcy, in
which the allowance of an appeal is discretionary. See Taylor
v. Voss, supra; Harrison v. Chamberlin, supra.
2. In No. 376, petitioner contends that the order of the
District Court approving the plan of reorganization corresponds to
an order confirming or rejecting a composition with creditors, and
that the latter, as was held in United States ex rel. Adler v.
104 F. 862, is appealable as of right under § 25 as
equivalent to an order "granting or denying a discharge." But we
think it plain that an order confirming a plan of reorganization
under § 77B is not the equivalent of a judgment granting or denying
a discharge, for, unlike confirmation of a composition,
§ 14c, 30 Stat. 550, 11 U.S.C. § 32(c), it does not
operate as a discharge. The release of the debtor in a
reorganization proceeding is contingent upon the performance of its
part of the reorganization plan. Section 77B(h) commands the debtor
and others to execute
Page 297 U. S. 166
the plan of reorganization, when confirmed, under the direction
of the court, authorizes the court to make appropriate orders to
that end, and provides that, "upon the termination of the
proceedings, a final decree shall be entered," which "shall
discharge the debtor from its debts and liabilities." Discharge is
effected not by confirmation of the plan, but by the final
Confirmation of a plan of reorganization is but a step in the
administration of the debtor's estate, and, for reasons already
stated, is an order in a proceeding in bankruptcy, rather than a
controversy arising in bankruptcy proceedings, and appeal lies only
in the discretion of the appellate court. See Campbell v.
75 F.2d 947, 955.
3. In the exercise of the discretion conferred upon it by § 24b,
the court below denied the application for leave to appeal from the
order of the District Court confirming the plan of reorganization.
Petitioner, who alone asked leave to appeal, made no objection to
the plan. Her criticisms of the plan are not of a character to
invite the exercise of the discretion of the court to examine them
for the first time on appeal.
MR. JUSTICE VAN DEVANTER took no part in the consideration or
decision of these cases.
Section 77B, subsection (k):
"All other provisions of this title, except such as are
inconsistent with the provisions of this section, shall apply to
proceedings instituted under this section, whether or not an order
to liquidate the estate has been entered. For the purposes of such
application, provisions relating to 'bankrupts' shall be deemed to
relate also to 'debtors;' 'bankruptcy proceedings,' or 'proceedings
in bankruptcy' shall be deemed to include proceedings under this
section; the date of the order approving the petition or answer
under this section shall be taken to be the date of adjudication,
and such order shall have the same consequences and effect as an
order of adjudication."
"(a) The Supreme Court of the United States, the circuit courts
of appeal of the United States, the United States Court of Appeals
for the District of Columbia, and the supreme courts of the
Territories, in vacation, in chambers and during their respective
terms, are invested with appellate jurisdiction of controversies
arising in bankruptcy proceedings from the courts of bankruptcy
from which they have appellate jurisdiction in other cases."
"(b) The several circuit courts of appeal and the United States
Court of Appeals for the District of Columbia shall have
jurisdiction in equity, either interlocutory or final, to
superintend and revise in matter of law (and in matter of law and
fact the matters specified in § 48 of this title) the proceedings
of the several inferior courts of bankruptcy within their
jurisdiction. Such power shall be exercised by appeal and in the
form and manner of an appeal, except in the cases mentioned in said
§ 48 of this title to be allowed in the discretion of the appellate
"Appeals, as in equity cases, may be taken in bankruptcy
proceedings from the courts of bankruptcy to the circuit courts of
appeal of the United States and the United States Court of Appeals
for the District of Columbia and to the supreme courts of the
Territories in the following cases, to-wit: (1) from a judgment
adjudging or refusing to adjudge the defendant a bankrupt; (2) from
a judgment granting or denying a discharge, and (3) from a judgment
allowing or rejecting a debt or claim of $500 or over."