In re Farrell , 201 F. 338 ( 1912 )

SESSIONS, District Judge

(after stating the facts as above). [1) Congress, by express enactment, has vested in the several courts of bankruptcy, “within their respective territorial limits,” full and complete power and authority to try and determine bankruptcy controversíes, and specifically to “cause the estates of bankrupts to be collected, reduced to money and distributed, and determine controversies in relation thereto.” The jurisdiction thus defined and conferred is exclusive within the territorial limits of each court and confined to those limits. While a summary proceeding to collect property belonging to the estate of a bankrupt, which is in the possession of a stranger who resides outside of the territorial limits of the court of the original adjudication, is ancillary in character, nevertheless it presents a completely distinct and separable controversy, and therefore, one which must be determined by the court within whose jurisdiction the property .is located and the respondent resides. Any otlaer rule would result in unnecessary confusion of authority and would do violence to the plain provisions of the Bankruptcy Act (Act July 1, 1898, c. 541, 30 Stat. 544 [U. S. Comp. St. 1901, p. 3418]). This view is sustained, either directly or inferentially, by numerous authorities. Babbitt v. Dutcher, 216 U. S. 102, 30 Sup. Ct. 372, 54 L. Ed. 402; Lathrop v. Drake, 91 U. S. 516, 23 L. Ed. 414;, Staunton v. Wooden, 179 Fed. 61, 102 C. C. A. 355; In re Waukesha Water Co. (D. C.) 116 Fed. 1009; Loveland on Bankruptcy, § 34.

[2] It is equally clear that'the controversy between these parties is •of such a character that it can be determined only by a plenary suit in a court of competent jurisdiction. While the respondent does not claim to be the owner of the money in question, yet it holds the fund as a legal custodian for lien claimants who are asserting rights in and to it adverse to those of the trustee in bankruptcy, and who, in accordance with the law, invoked the aid of the proper state court to perfect and enforce their liens more than 18 months prior to the filing of the petition in bankruptcy. The regularity of the proceedings to foreclose the liens is not questioned, nor can it be denied that the state court acquired complete jurisdiction and control over all the parties and property long prior to the commencement of the bankruptcy proceedings against Fleintz. The ruling of this court in Re Rohrer, 177 Fed. 381, 100 C. C. A. 613, and the authorities there cited are decisive of this question. See, also, Jaquith v. Rowley, 188 U. S. 620, 23 Sup. Ct. 369, 47 L. Ed. 620; In re Rathman, 183 Fed. 913, 106 C. C. A. 253; In re Foster (D. C.) 181 Fed. 703; Loveland on Bankruptcy, § 540.

The order of the District Court is affirmed, with costs.