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June 1, 1920



White, McKenna, Holmes, Day, Van Devanter, Pitney, McReynolds, Brandeis, Clarke

Author: Pitney

[ 253 U.S. Page 268]

 MR. JUSTICE PITNEY delivered the opinion of the court.

Upon his voluntary petition, filed in February, 1916, J. Herbert Weidhorn was adjudged a bankrupt, and the

[ 253 U.S. Page 269]

     District Court referred the case to a referee under General Order XII (1). Thereafter the trustee in bankruptcy addressed to and filed with the referee a bill in equity against the bankrupt's brother, Leo Weidhorn (the present petitioner) and the Boston Storage Warehouse Company, alleging that certain chattel mortgages, or bills of sale in the nature of mortgages, made by the bankrupt to Leo more than four months before the filing of the petition in bankruptcy, and under which, prior to the filing of the petition, possession of the chattels had passed to the mortgagee and the Storage Warehouse Company, were invalid because made in fraud of creditors, and seeking to set them aside under the Statute of Elizabeth and the Bankruptcy Act, § 70e, and recover the chattels or the proceeds thereof for the bankrupt estate. Defendant Leo Weidhorn promptly objected to the jurisdiction of the referee, and afterwards answered to the merits. The referee overruled the jurisdictional objection, proceeded to hear the merits, and entered a final decree in favor of the trustee. On review the District Court, considering the jurisdictional question only, vacated the decree and dismissed the bill upon the ground that the referee exceeded his powers under the order of reference. 243 Fed. Rep. 756. The trustee petitioned the Circuit Court of Appeals to revise the decree under § 24b; and that court, deeming that the District Court had erred in holding that the referee acted without jurisdiction, reversed its decree dismissing the bill and remanded the cause for further proceedings, including a review of the merits. 253 Fed. Rep. 28. A writ of certiorari brings the case here.

It is assigned for error that the Circuit Court of Appeals ought not to have entertained the petition to revise under § 24b; the contention being that since the decree complained of was made in a plenary suit the exclusive remedy was by appeal under § 24a. Had the District Court sustained the jurisdiction and passed upon the merits the

[ 253 U.S. Page 270]

     point would be well taken, as the court thereby would have determined a "controversy arising in bankruptcy proceedings." Hewit v. Berlin Machine Works, 194 U.S. 296, 300. But since the decision turned upon a mere question of law as to whether the referee had authority to hear and determine the controversy -- in effect a question of procedure -- it properly was reviewable by petition to revise under § 24b. Louisville Trust Co. v. Comingor, 184 U.S. 18');">184 U.S. 18, 26; Schweer v. Brown, 195 U.S. 171, 172; First National Bank v. Chicago Title & Trust Co., 198 U.S. 280, 288, 291; Matter of Loving, 224 U.S. 183, 188; Gibbons v. Goldsmith, 222 Fed. Rep. 826, 828.

Did the referee exceed the authority and jurisdiction conferred upon him by the Bankruptcy Act and the general order of reference?

The following provisions of the act are pertinent: By § 1 (7) "'court' shall mean the court of bankruptcy in which the proceedings are pending, and may include the referee." By § 18g, "If the judge is absent from the district, or the division of the district in which the petition is filed at the time of the filing, the clerk shall forthwith refer the case to the referee." Section 22 provides that after a person has been adjudged a bankrupt the judge may make a reference to the referee either generally or specially with limited authority to act or to consider and report, and "may, at any time, for the convenience of parties or for cause, transfer a case from one referee to another." By § 36, "Referees shall take the same oath of office as that prescribed for judges of United States courts." And by § 38a, "Referees respectively are hereby invested, subject always to a review by the judge, within the limits of their districts as established from time to time, with jurisdiction to . . . (4) perform such part of the duties, except as to questions arising out of the applications of bankrupts for compositions or discharges, as are by this Act conferred on courts of bankruptcy and

[ 253 U.S. Page 271]

     as shall be prescribed by rules or orders of the courts of bankruptcy of their respective districts, ...

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