Fred M. Vinson

“ This decision overturns the analysis which has guided the Court in construing the distribution of jurisdiction between the federal and State courts which Congress devised by the Bankruptcy Act of 1898, and attributes to the Act of 1938 a big change in this distribution, although there is not a glimmer of a hint in its entire legislatve history that Congress was aware that it was doing so. Important shifts in jurisdiction ought to be the product of something more persuasive than what is made to appear as a fit of Congressional absentmindedness. ”

“ Our own investigation has been equally fruitless. There is nothing in Chapter X, in its terms, its antecedents, its history, its advocacy, that gives the remotest hint of a purpose calling for a different policy for reorganization trustees in this respect from other trustees in bankruptcy, or any intimation that the district courts, other than the particular reorganization court, would play a special role as to plenary suits in reorganization proceedings. Nor do the purposes of the Chandler Act bear upon this aspect of jurisdiction. ”

“ The failure to provide appropriate fanfare for the suspension of § 23 in Chapter X cases, and for the consequent expansion of federal jurisdiction, hardly invites our opinion as to the advisability of the action which Congress has taken. Judicial drives to limit the jurisdiction of federal courts should not lead to decision falling short of complete effectuation of statutory scheme. With the limitations of § 23 suspended, § 2 confers jurisdiction upon all reorganization courts to hear plenary suits brought by a Chapter X trustee. ”

“ But it is hardly relevant to the purpose of easier and more comprehensive methods of reorganization to establish a claim through the federal courts rather than the State courts when the basis of recovery is State law, calling for application of State law and procedure. The Court draws support for its conclusion from the fact that other powers are conferred upon the Chapter X trustee which were not possessed by other bankruptcy trustees. But the powers to which attention is called are all explicitly conferred and are not derived by roundabout inference. ”

“ For one thing, there would be destroyed the consent basis for federal jurisdiction of plenary suits brought by a trustee; [26] and, for another, diversity jurisdiction would depend upon the citizenship of the trustee rather than upon that of the debtor. The latter is a formal change of no obvious value, and the former puts a greater limitation upon the jurisdiction of a Chapter X court than has been placed upon an equity receivership, 77B, or ordinary bankruptcy court, a result in obvious contrast to discernible trends in reorganization law. ”

“ That motive is even stronger today (1936) than it was in 1898, and for that reason we do not consider it wise to enlarge the jurisdiction at this time; except as indicated to include receivers and so-called 'debtor proceedings." (Analysis of H.R. 12889, 74th Cong., 2d Sess., Committee Print p. 134.) The indicated exceptions do not touch the jurisdiction here asserted. Yet the Court now concludes that as to Chapter X trustees Congress implied an exception so as to allow the trustee to sue in any federal district court in the country. ”

“ Following an investigation under § 167 [4] of the Act, respondents were authorized to institute suit against petitioners, who are past and present officers and directors of the debtor and others having connection therewith. ”

“ A trustee, 'unless by consent of the proposed defendant,' could bring suit only in courts where the bankrupt could have sued. Subsequent to the Bardes case some lower federal courts held that even with the consent of a defendant, some independent ground for federal jurisdiction must be present. [23] The conflict was resolved in Schumacher v. ”

“ In the 1927 Term, the first Term during which the influence of the Act of 1925 was fully operative, the total number of such petitions was 587. In the 1946 Term, through June 9, 1947, 1,144 such petitions were considered. ”

“ John Gerdes. See Hearings before Subcommittee of the Committee on the Judiciary, U.S. Senate, on H.R. 8046, 75th Cong., 2d Sess. 77 (1938) . Mr. Gerdes did not at this time explain the reasons for the suggested suspension of § 23. He stated as follows:↑ White v. Ewing, 1895, 159 U.S. 36, 15 S.Ct. 1018, 40 L.Ed. 67; see Riehle v. Margolies, 1929, 279 U.S. 218, 223, 49 S.Ct. 310, 312, 73 L.Ed. 669.↑ Finletter, Principles of Corporate Reorganization 185-87 (1937) .↑ 2 Gerdes, Corporate Reorganizations 1465 (1936) . ”