Williams v. Austrian, 331 U.S. 642 (1947)

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Williams v. Austrian

No. 850

Argued April 10, 11, 1947
Decided June 16, 1947
331 U.S. 642

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

Trustees in a reorganization proceeding under Chapter X of the Bankruptcy Act, as amended by the Chandler Act of 1938, 52 Stat. 840, who have been authorized by the reorganization court to sue officers and directors of the debtor corporation and affiliated interests alleging misappropriation of corporate assets (discovered in an investigation under § 167) and seeking an accounting and other relief, may bring such suit in another federal district court, even in the absence of diversity of citizenship or other usual grounds of federal jurisdiction. Pp. 646-662.

(a) The phrase "proceedings under this Act," as used in § 2, does not relate solely to summary proceedings, but includes plenary suits as well. Lathrop v. Drake, 91 U.S. 516, followed. Bardes v. Hawarden Bank, 178 U.S. 524, and Schumacher v. Beeler, 293 U.S. 367, distinguished. Pp. 646-662.

(b) Section 23 was adopted as a limitation on the plenary jurisdiction conferred upon all district courts by § 2. Pp. 648-654.

(c) Section 102 of Chapter X, making § 23 inapplicable in proceedings under that Chapter, removes this limitation and gives all federal district courts jurisdiction under § 2 over plenary suits brought by a Chapter X trustee, even though diversity of citizenship or other usual ground for federal jurisdiction is lacking. Pp. 654-659, 661-662.

(d) Such jurisdiction is not confined to the reorganization court, but applies to all other district courts as well. Pp. 659-661.

159 F.2d 67 affirmed.

A District Court in New York dismissed for want of jurisdiction a suit brought by trustees appointed by a District Court in Virginia in a reorganization proceeding under Chapter X of the Bankruptcy Act. 67 F.Supp. 223. The Circuit Court of Appeals reversed. 159 F.2d 67. This Court granted certiorari. 330 U.S. 813. Affirmed, p. 662.