diction. It cannot enjoin the prosecution of a suit in another district by a person not served within its own jurisdiction. It cannot order persons outside the district and not there served with any process, unless they are attorneys-at-law, to pay money or to surrender property or papers in their possession. In a proceeding in bankruptcy against a firm within the district it may serve by publication a subpoena ad respondendum upon a partner who does not reside within the district. It may sell land situated without the district. It may determine conflicting claims to land, or personal property 10 of which the trustee has possession situated beyond the district, and where the mortgagee can be served within the district, it may summarily determine the validity of a mortgage upon land 'elsewhere in the. possession of the trustee and restrain a sale thereof; although the customary procedure in such a case is to permit the institution of a suit of foreclosure in which the validity of the mortgage can be determined.11 Nor it seems has it jurisdiction to control the action of persons out of the district who do not seek relief from the court in the course of its administration of the estate or who have not become parties to the proceeding by voluntary appearance, unless § 611. 1 Re Wood & Henderson, 210 U. S. 246, 258; Re Waukesha Water Co., 116 Fed. 1009; Re Williams, 123 Fed. 321; Havens & Geddes Co. v. Pierek, 120 Fed. 244. 2 Acme Harvester Co. v. Beekman Lumber Co., 222 U. S. 300, 311, 56 L. ed. 208, 215; Robeling's Sons Co. v. Federal Storage Co., 185 App. Div. (N. Y.) 430, 434. 8 Re Wood & Henderson, 210 U. S. 246. See supra, § 608a. 4 Re Haley, C. C. A., 158 Fed. 74; Re Boston-Cerrillos Mines Corp., 206 Fed. 794. It has been held that it has the power to determine whether foreign stockholders of a bankrupt corporation are subject to assessment for the benefit of creditors. Re Monarch Corporation, 196 Fed. 252. 5 Re Waukesha Water Co., 116 Fed. 1009; Re Geller, 216 Fed. 558. 6 Ibid. 7 Re J. & M. Schwartz, 204 Fed. 326. It seems that in such a proceeding an adjudication of bankruptcy may be made against him individually as well as against the firm. Ibid. 8 Robertson v. Howard, 229 U. S. 254; T. E. Wells & Co. v. Sharp, 208. Fed. 393. Contra, Re Britannia Min. Co., 197 Fed. 459. 9 Galbraith V. Robson-Hilliard Grocery Co., C. C. A., 216 Fed. 842. 10 Orinoco Iron Co. v. Metzel, C. C. A., 230 Fed. 40. 11 Re U. S. Chrysotile Asbestos Co., 253 Fed. 294. they are partners of a bankrupt firm.12 It cannot in a plenary suit serve process outside the jurisdiction; 18 except in cases where a court of equity might have authorized substituted service,14 or service by advertisement, or otherwise,15 or perhaps except when an order authorizing such a suit has been made. upon due service of notice upon the parties without the jurisdiction.16 "In case personal service" of a subpoena to answer a petition for involuntary bankruptcy "cannot be made, then notice shall be given by publication in the same manner and for the same time as provided by law for notice by publication in suits to enforce a legal or equitable lien in the courts of the United States,17 except that, unless the judge shall otherwise direct, the order shall be published not more than once a week for two consecutive weeks, and the return day shall be ten days after the last publication unless the judge shall for cause fix a longer time." 18 It has been held that, under these statutes, a person may be adjudicated to be an involuntary bankrupt, in a proper case, although he is beyond the territorial limits of the court.19 A proceeding to determine the validity of a payment in contemplation of bankruptcy, made by a bankrupt to an attorney for legal services to be rendered in the future, may be instituted, when the latter is a non-resident, by the service of an order to show cause, citation or notice of the hearing upon him without the district; 20 although it is doubtful whether the order can be enforced without ancillary proceedings,21 and although the trustee may not maintain a plenary suit for that purpose against a non-resident attorney upon service of process made outside the district.2 22 § 612. Ancillary jurisdiction in bankruptcy. By the Act of June 25, 1910, the bankruptcy courts may "exercise ancillary 12 Harris Co., 173 Fed. 735; J. & M. Schwartz, 204 Fed. 326, 329; Re Smith Const. Co., 224 Fed. 228. 13 Re Wood & Henderson, 210 U. S. 246, 258, 52 L. ed. 1046, 1051; Re Smith Const. Co., 224 Fed. 228. 14 Supra, § 165. 15 Supra, § 166. 16 Re Wood & Henderson, 210 U. S. 246, 258, 52 L. ed. 1046, 1051. 17 Supra, § 166. 18 30 St. at L. 544, § 18a. 19 Hills v. F. D. McKinniss Co., 188 Fed. 1012. 20 Re Wood & Henderson, 210 U. S. 246, 52 L. ed. 1046. 21 Staunton v. Wooden, C. C. A., 179 Fed. 61. 22 Re Wood & Henderson, 210 U. S. 246, 52 L. ed. 1046. jurisdiction of persons or property within their respective territorial limits in aid of a receiver or trustee appointed in any bankruptcy proceeding pending in any court of bankruptcy."1 Ancillary jurisdiction may be exercised: by directing the filing of a schedule by an officer of the bankrupt, in accordance with an order of the court of primary jurisdiction; 2 by compelling the examination of a witness concerning the property of the bankrupt and the delivery to the trustee of property or books of the bankrupt; by restraining a creditor of a bankrupt from suing an estate outside the jurisdiction of the court of the adjudication; by appointing ancillary receivers; by selling 6 § 612. 136 St. at L. 838, ch. 412. Previously to this enactment, the extent of the ancillary jurisdiction was doubtful. In Babbitt v. Dutcher, 216 U. S. 102, 54 L. ed. 402; Elkus, Petitioner, 216 U. S. 115, 54 L. ed. 407, and Re Peiser, 115 Fed. 199, such jurisdiction was sustained. Contra, As to the right of a receiver thus to apply, see Lovell v. Newman, 227 U. S. 412, 57 L. ed. As to the right of foreign receivers to sue generally, see § 93, supra. Re Williams, 120 Fed. 38; s. c., 123 Fed. 321; RossMeeham Foundry Co. v. Southern Car & Foundry Co., 124 Fed. 403; Re Tybo Min. & Reduction Co., 132 Fed. 697; Re Granite City Bank, C. C. A., 137 Fed. 818; Re Von Hartz, C. C. A., 142 Fed. 726; Hull v. Burr, C. C. A., 153 Fed. 945. See "Ancillary Receivers in Bankruptcy," by L. M. Friedman, Harv. Law Rev., XVIII, 519. 2 Re Brockton Ideal Shoe Co., C. C. A., 200 Fed. 745. 8 Elkus, petitioner, 216 U. S. 115. 4 Lazarus v. Prentice, 234 U. S. 263, 267, affirming Musica v. Prentice, C. C. A., 211 Fed. 326, affirming Re A. Musica & Son, 205 Fed. 413; Re Sage, 224 Fed. 589; Progressive Building & Loan Co. v. Hall, 220 Fed. 45, summary proceedings; Hartman v. Ackoury, 210 Fed. 188, ancillary bill; Re J. & M. Schwartz, 204 Fed. 326. But see Scott v. Georges Creek Coal & Iron Co., 202 Fed. 251. 5 Babbitt v. Dutcher, 216 U. S. 102, 54 L. ed. 402, corporate records and stock books. 6 Acme Harvester Co. v. Beekman Lumber Co., 222 U. S. 300, 311, 56 L. ed. 208, 215. 7 Fidelity Tr. Co. v. Gaskell, C. C. A., 195 Fed. 865. Infra, § 634. In Re Peiser, 115 Fed. 199, it was held that ancillary jurisdiction might be exercised by compelling the payment of funds of the bankrupt to a receiver appointed in the original jurisdiction, in obedience to an order of the original court of bankruptcy, notice of which had been served upon the holder of such funds in the ancillary jurisdiction. It has been said: that an ancillary receiver's duty is limited to the collection of assets and the custody of the same until the appointment of a trustee; and that in the absence of an application by the receivers in the court of original jurisdiction, he will not be directed to sell the property. Re Brockton Ideal Shoe Co., 194 Fed. 233. The 8 property within the judicial district; by adjudicating the claims to the title to, or to legal equitable liens upon, such property; and then, and after payment of such claimants, to transmit any balance to the court of primary jurisdiction; 10 by granting an order for the examination of a resident witness at the request of a trustee in bankruptcy.11 It has been held that ancillary jurisdiction may be exercised at the request of a creditor,12 but that temporary receivers, appointed before adjudication, cannot institute ancillary proceedings in another district to secure a confirmation of their appointment and to be put in possession of property of the corporation there situated.13 court appointing the ancillary receiver has the right to settle his accounts and to pay his fees and expenses out of the fund before its transmission. Fidelity T. Co. v. Gaskell, C. C. A., 195 Fed. 865, 874; but should afford the creditors or the trustee an opportunity to object to the same. Loeser v. Dallas, C. C. A., 192 Fed. 909. An application to set aside the appointment of the ancillary receiver, upon the ground that the alleged bankrupt was not insolvent and had committed no act of bankruptcy, was denied for the reason that the question should first be submitted to the original court of bankruptcy. Re Hayes, 192 Fed. 1018. For ancillary receivers appointed by courts of equity, see § 304, supra. 8 Re Britannia Min. Co., 197 Fed. 459. 9 Fidelity Trust Co. v. Gaskell, C. C. A., 195 Fed. 865, 54 L. ed. 407; Re Lipman, 201 Fed. 169; De Friece v. Bryant, 232 Fed. 233; Emerson v. Castor, 236 Fed. 29; Re Einstein, 245 Fed. 189. But it has been held: that when an ancillary suit is brought to recover assets, intervenors cannot obtain an adjudication that they are entitled to a priority of payment because of trust funds unlawfully obtained by the bankrupt; Knauth, Nachod & Kuhne v. Latham & Co., 242 U. S. 426; affirming S. C., 219 Fed. 721, and Jaffe v. Pyle, 242 Fed. 67; nor that they are entitled to shares of stock in the bankrupt corporation of which they have been fraudulently deprived; West v. Empire Life Ins. Co., 242 Fed. 605; Re Farrell, 201 Fed. 338; that the ancillary court has no power to al low an intervention by creditors who wish to bring its decision before a court of review, Babbit v. Read, C. C. A., 240 Fed. 694, and that where the ancillary court has taken possession of the property subject to a mortgage the court of primary jurisdiction alone has the right to decide whether the mortgage shall be permitted to foreclose in another court, Re Patterson Lumber Co., 247 Fed. 578. 10 Fidelity Trust Co. v. Gaskell, C. C. A., 195 Fed. 865, 54 L. ed. 407; Lazarus v. Prentice, 234 U. S. 263. 11 Elkus, Petitioner, 216 U. S. 115. 12 Re Brockton Ideal Shoe Co., C. C. A., 200 Fed. 745. 13 Re Tygarts River Coal Co., 203 Fed. 178. § 612a. Effect of bankruptcy upon State insolvency proceedings. The Federal Constitution gives Congress power to establish "uniform laws on the subject of bankruptcies throughout the United States." This and the inhibition against the enactment by the States of laws which impair the obligations of contracts forbids a State from enacting an insolvent law which discharges citizens of other States from debts owed by citizens of the enacting State or from thus discharging debts created before the passage of such a statute.2 But it does not forbid the enactment by a State of an insolvent law which operates upon its own citizens and discharges indebtedness created subsequent thereto. All such legislation, however, is subject to supersession by a statute of the United States regulating bankruptcy.* The Bankruptcy Law now in force makes it an act of bankruptcy to make a general assignment for the benefit of creditors or, being insolvent, to apply for a receiver or trustee of one's own property, or when because of insolvency a receiver or trustee has been put in charge of the bankrupt's property under the laws of a State, or of a Territory or of the United States. The same law invalidates all conveyances or transfers made by a debtor while insolvent within four months prior to the filing of a petition against him. This invalidates all insolvent assignments made within the period of four months even though made by citizens of the United States exempted from the provisions of the Bankruptcy Law. It was said that the assignee in insolvency is charged with notice of the filing of the petition in bankruptcy. A sale by an assignee in insolvency after the filing of the petition is void although made before the adjudication. A decree of the State court approving his accounts when made after the filing of the petition is void.10 When the amount § 612a. 1 Article I, Section 8. 2 Sturges V. Crowninshield, Wheaton 122, 4 L. ed. 529. 4 3 Odgen v. Saunders, 12 Wheaton 213, 6 L. ed. 606; Baldwin v. Hale, 1 Wallace, 223, 231, 17 L. ed. 531; U. S. v. Fox, 95 U. S. 670, 24 L. ed. 538. 4 Odgen v. Saunders, 12 Wheaton 213, 6 L. ed. 606. 530 St. at L. 544, § 3. 6 Ibid, § 67. 7 Closser v. Strawn, 227 Fed. 139 (a farmer); Contra, State Nat. Bank of Denison v. Syndicate Co. of Eureka Springs, 178 Fed. 359 (a corporation). 8 Re Neuburger, 233 Fed. 701. 9 Bryan v. Bernheimer, 181 U. S.. 188, 45 L. ed. 814, 21 Sup. Ct. 557; Re Neuburger, 233 Fed. 701. 10 Re Neuburger, 233 Fed. 701. |