Bankruptcy Act

“ The rules in bankruptcy cases proceeded from the express provisions of the statute, and they are not at all controlling upon a court administering, in equity, upon the estates of insolvent debtors. The bankruptcy act requires the creditor to give up his security, in order to be entitled to prove his whole debt; or, if he retains it, he can only prove for the balance of the debt, after deducting the value of the security held. ”

“ Under the National Bankruptcy Act, a person is insolvent “when the aggregate of his property, exclusive of any property that he has conveyed, transferred, concealed or removed, or permitted to be removed with intent to hinder, delay or defraud his creditors, is not, at a fair valuation, sufficient in amount to pay his debts.” ”

“ It is, how far a creditor may lawfully use the process of the State courts to collect his debts, and how far the Bankruptcy Act restricts him in that use.
I. We maintain that a creditor may lawfully do all that he might have done before the Bankrupt Act to collect his debts, provided he has no active or passive assistance from a debtor whom he has reasonable cause to believe insolvent and intending to help him to a preference. ”

“ If a state desires to participate in the assets of a bankrupt, she must submit to appropriate requirements by the controlling power; otherwise, orderly and expeditious proceedings would be impossible and a fundamental purpose of the Bankruptcy Act would be frustrated. ”

“ The jurisdiction of both the bankruptcy forum and the reorganization forum is derived from and is limited by the Bankruptcy Act, enacted in accordance with the congressional power 'to establish * * * uniform Laws on the subject of Bankruptcies throughout the United States.' Constitution, Article 1, § 8. It was within the power of Congress to provide that a bankruptcy court could not permit an attack, even on the usual grounds, to be made upon proceedings initiated in a reorganization court. ”

“ The Bankrupt Act had a very different purpose. It was to secure equality of distribution of that which insolvents have when proceedings in bankruptcy are commenced, and of that which they have collusively with some of their creditors attempted to withdraw from ratable distribution, with intent to prefer some creditors over others. ”

“ The Bankruptcy Act states that even an involuntary adjudication results only from some 'act of bankruptcy,' defined upon the clear assumption that it is within the bankrupt's control. [4] Whether or not this assumption squares with philosophical doctrine, or even with reality, [5] is not for our determination. The Commission, and the courts too, must get on with the application of the federal statutes without waiting to settle the verity of the philosophical assumptions on which they rest. ”

“ An insolvent law is an act occasionally passed for the relief of the body of the debtor. A bankrupt law, as distinguished from an insolvent law, is a general law, by which all the property of the debtor is taken and divided among his creditors, and he discharged from his debts, and made, as it is sometimes said, a new man. But if this be not a bankrupt law, then it may remain in force, if congress should exercise its power. Would then the laws on the subject of bankruptcy be uniform? It is impossible to believe, that the convention meditated such an absurdity. ”

“ The Constitution grants Congress exclusive power to regulate bankruptcy and under this power Congress can limit that jurisdiction which courts, State or Federal, can exercise over the person and property of a debtor who duly invokes the bankruptcy law. If Congress has vested in the bankruptcy courts exclusive jurisdiction over farmer-debtors and their property, and has by its Act withdrawn from all other courts all power under any circumstances to maintain and enforce foreclosure proceedings against them, its Act is the supreme law of the land which all courts-State and Federal-must observe. ”

“ Matter of People (Union Guarantee & Mortgage Co.) , supra, 285 N.Y. at page 343, 34 N.E.2d 345; Matter of Lawyers Title & Guaranty Co., 287 N.Y. 264, 272, 39 N.E.2d 233, we are unable to say that the rule laid down is other than one of state law governing the relative rights of claimants in a state liquidation. Nothing decided in Erir Railroad Co. v. Tompkins, supra, requires a court of bankruptcy to apply such a local rule governing the liquidation of insolvent estates. The bankruptcy act prescribes its own criteria for distribution to creditors. ”

“ Congress has thus treated liens as outside the policy of equal treatment of creditors in bankruptcy. 3 Collier, supra, 57.07. A lienor does not hold simply a first priority; he has 'a right to enforcement independent of bankruptcy,' id., 64.02, at 2061. The Bankruptcy Act deals with the distribution of unencumbered assets among unsecured creditors. Id., 60.01. Lienholders need no Bankruptcy Act. Liens are independent of and essentially unaffected by bankruptcy proceedings. I agree with the court below that liens are unaffected by § 57, sub. ”

“ The bankrupt act of 1898, § 2, invests the courts of bankruptcy 'with such jurisdiction, at law and in equity, as will enable them to exercise original jurisdiction in bankruptcy proceedings, in vacation in chambers, and during their respective terms;' to make adjudications of bankruptcy ”

“ We need not determine whether, without legislation such as the 1934 Act, the fact that a local business in bankruptcy is operated by a bankruptcy trustee makes the business immune from State laws and valid measures for their enforcement. ”

“ Therefore, though the rules and forms in bankruptcy provide for an issue as to solvency in cases of involuntary bankruptcy, where by the statute such issue becomes irrelevant, because the particular act relied on in a given case conclusively imports a right to the adjudication in bankruptcy if the act be established, the allegation of insolvency in the petition becomes superfluous, or, if made, need not be traversed. ”