b. The judge may, at any time, for the convenience of parties or for cause, transfer a case from one referee to another.

When the judge refers a case to the referee the order shall set a day on which the bankrupt is to appear before the referee. After that he is to be subject to the orders of the referee.1 Form 14 prescribes the terms of the order of reference.

SEC. 23.

JURISDICTION OF

§ 486. Act of 1898. SEC. 23. UNITED STATES AND STATE COURTS.-a. The United States circuit courts shall have jurisdiction of all controversies at law and in equity, as distinguished from proceedings in bankruptcy, between trustees as such and adverse claimants concerning the property acquired or claimed by the trustees, in the same manner and to the same extent only as though bankruptcy proceedings had not been instituted and such controversies had been between the bankrupts and such adverse claimants.

b. Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt, whose estate is being administered by such trustee, might have brought or prosecuted them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant.

c. The United States circuit courts shall have concurrent jurisdiction with the courts of bankruptcy, within their respective territorial limits, of the offenses enumerated in this act.

The circuit courts were given jurisdiction over controversies between assignees and adverse claimants by the acts of 1841 and 1867.2 This jurisdiction did not extend to any proceeding

1 Rule XII. (1).

2 Act of 1841, § 8, 5 Stats 446; Act of 1867, § 2, 14 Stats. 518, R. S. § 4979.

in bankruptcy such as the question of granting a discharge 1 or any other matter,2 and this is the rule now according to the express terms of this section. Suits by a trustee must be brought by an action in the proper court and can not be determined in a summary way as a part of bankruptcy proceedings.3

The circuit court will not have so extensive a jurisdiction as it had under the Act of 1867.4 Section 23 may be construed in two different ways. Either it means to deprive the circuit court of the jurisdiction only which it would otherwise have over suits by the trustee as an officer appointed under a federal law,5 or it takes away all the jurisdiction of the circuit court over questions arising under the bankrupt law. Without this provision the circuit court would have jurisdiction over such questions if the amount in controversy were two thousand dollars exclusive of interest and costs, on the ground that the controversy arose under the laws of the United States.6 § 23 be construed in the way first suggested its scope will be very limited, since every suit by a trustee for two thousand dollars or over will involve some question under the bankrupt law and an allegation of that fact in the declaration will give the court jurisdiction. It seems a more reasonable interpretation of this section, therefore, that it deprives the circuit court of all jurisdiction which is dependent on a question of the meaning of the bankrupt law being involved.

lf

This construction is reinforced by two considerations, one

1 Commercial Bank v. Buckner, 20 115 U. S. 348. See Re Fowler, 1 N. B. How. 108. N. 215; Re Buntrock Clothing Co., 92 Fed. Rep. 886, 1 N. B. N. 291; Re Abraham, 1 N. B. N. 281.

2 See Morgan v. Thornhill, 11 Wall. 65; Hall v. Allen, 12 Wall. 452; Mead v. Thompson, 15 Wall. 635; Coit v. Robinson, 19 Wall. 274. These cases are in point because they hold that there was a power in the circuit court to revise bankruptcy proceedings under § 2 of the Act of 1867, but no power to revise suits by an assignee against an adverse claimant. See also cases cited in § 486.

8 Smith v. Mason, 14 Wall. 419; Stickney v. Wilt, 23 Wall. 150; Marshall v. Knox, 16 Wall. 551; Milner v. Meek, 95 U. S. 252; Sargent v. Helton,

4 § 2, 14 Stats. 518; R. S. § 4979. 5 Feibelman v. Packard, 109 U. S. 421; Bock v. Perkins, 139 U. S. 628; Sonnentheil v. Moerlein Brewing Co., 172 U. S. 401. See Re Sievers, 91 Fed. Rep. 366, 1 N. B. N. 68. 6 Act of Aug. 13, 1888, § 1, 25 Stats.

433.

7 Tennessee v. Union & Planter's Bk. 152 U. S. 454; Borgmeyer v. Idler, 159 U. S. 408; Oregon Short Line v. Skottowe, 162 U. S. 490.

arising from the words of the section and the other from the general scope of the act. In the first place, if "bankruptcy proceedings had not been instituted" there would be no question arising under the bankrupt law and the circuit court would have no such question to pass on. The second point is that the tendency of the whole act is to confine the powers of the courts of bankruptcy within more narrow limits than former acts. Under the Act of 1867 the state courts had jurisdiction over suits by assignees though there was no provision in the act giving them this power. The present law is more limited in many ways than the Act of 1867, and provides in paragraph b of § 23 for an extensive jurisdiction by state courts. It is clear for these reasons that Congress intended to limit the scope of the power of the circuit courts and extend that of the state courts.

The circuit courts will have jurisdiction of controversies between the trustee and an adverse claimant of all cases arising under the Constitution, laws, or treaties of the United States, except questions under the bankrupt law, or when the United States is a petitioner, or where there is a controversy between citizens of different states, or citizens of a state and foreign states, citizens, or subjects, or where citizens of the same state claim land under grants of different states. In all of these cases except that where the United States is a petitioner the amount involved must be two thousand dollars exclusive of interest and costs in order to give the court jurisdiction. The circuit courts have also jurisdiction of suits for the infringements of patents and copyrights irrespective of the amount involved.5 Also of trade-marks used in foreign commerce or trade with the Indian tribes, if they have been registered, and of suits arising under certain laws where jurisdiction is expressly given to the circuit courts.7

In those cases where the jurisdiction of the circuit court depends on there being two thousand dollars involved, it must appear from the plaintiff's bill or declaration that it is legally possible for him to recover that amount. If it is clear that the plaintiff has no legal right to recover two thousand dollars exclusive of interest and costs, the court will not have jurisdiction, but where the damages are indefinite the jurisdiction will attach.1

Paragraph b has been held to apply only to suits in circuit courts. But the title of § 23 shows that the jurisdiction of district courts and state courts was also covered by the section, and paragraph a has treated of the jurisdiction of circuit courts. It seems, therefore, more likely that paragraph b relates to suits in the district courts. Section 2 (7) gives the district court power to determine controversies relating to the estates of bankrupts, "except as herein otherwise provided." Paragraph b of § 23 is the only other provision which relates to the jurisdiction of district courts. If we consider these two parts of the act together we shall see that by the provision of the present paragraph the trustee will have to bring certain suits in the state court, unless the defendant consents to be sued in the district court. If bankruptcy proceedings had not been begun, these suits would have had to be brought in the state court, because the district court derives all its authority from the bankrupt law, which does not attach till a proceeding under the law is commenced.

If we do not construe this paragraph as a restriction on the jurisdiction of the district court given by § 2 (7), that court will have power over all controversies between trustees and other parties, and the state courts will be deprived of juris

1 Curtis, Jurisdiction U. S. Courts, 2d ed. p. 120 et seq.; Scott v. Donald, 165 U. S. 58; Building & Loan Assoc. v. Price, 169 U. S. 45; Wetmore v. Rymer, 169 U. S. 115; Vance v. Vandercook, 170 U. S. 468.

2 Re Sievers, 91 Fed. Rep. 366, 1 N. B. N. 68. The case involved merely the decision that a receiver might be appointed to take charge of the assets

after a voluntary assignment; so the opinion on the construction of § 23 b is a dictum. The decision was affirmed in Davis v. Bohle, 92 Fed. Rep. 325, 1 N. B. N. 216, without discussion of this question.

3 Sherman v. Bingham, 7 N. B. R. 490, Fed. Cas. No. 12,762; Lathrop v. Drake, 91 U. S. 516.

diction, except in a case where the trustee chooses to resort to these courts. This result is contrary to the intent of Congress. Paragraph a of this section relates to the jurisdiction of circuit courts as distinguished from state courts, and paragraph b regulates the right of trustees to sue in all courts.

It is to be noticed that all bankruptcy proceedings, as distinguished from controversies, are to be brought in the district court, and neither the circuit courts nor the state courts will have any power over such proceedings.

It has been held in several cases that the district court is without jurisdiction over suits by a trustee, as that jurisdiction is forbidden by paragraph b. But as such a construction of the bankrupt act will seriously interfere with its operation, it should not be adopted unless it is the inevitable result of a correct interpretation of that act. The district court is given full power in § 2 of the act to control the estate of a bankrupt. The provision of § 23 b should not be construed as taking away all this power.2 Accordingly, it has been held that paragraph b relates only to suits which the bankrupt himself might have brought, if there had been no bankruptcy 3 This construction gives the district court jurisdiction over all cases of voluntary assignments where the bankrupt would be estopped to sue, and all preferences which are valid between the parties themselves, though voidable by the trustee. It also allows the trustee to sue in the district court to prevent any intermeddling with the bankrupt's assets after the petition is filed.6

4

5

A learned judge has called this interpretation of paragraph b "strained judicial construction,"7 and if we consider this para

1 Re Scott, 1 N. B. N. 138, s. c. nom. Mitchell . McClure, 91 Fed. Rep. 621; Burnett v. Morris Co., 91 Fed. Rep. 365; See Re Carter, 1 N. B. N. 162.

2 Carter v. Hobbs, 92 Fed. Rep. 594, 1 N. B. N. 191.

8 Re Gutwillig, 90 Fed. Rep. 481; Re Brooks, 91 Fed. Rep. 508; Carter v. Hobbs, 92 Fed. Rep. 594, 1 N. B. N. 191; Re Abraham, 1 N. B. N. 281,

contra.