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Bros. v. Cook Coal Co.

June 23, 1930


Appeal from the District Court of the United States for the District of New Jersey; Guy L. Fake, District Judge.

Author: Thomson

Before BUFFINGTON and DAVIS, Circuit Judges, and THOMSON, District Judge.

THOMSON, District Judge.

In this case, an involuntary petition in bankruptcy being filed, the defendant demanded, and was granted, a jury trial on the issues of insolvency, and the commission of the acts of bankruptcy charged, which resulted in a verdict for the defendant and judgment thereon in its favor. The petitioning creditors excepted to the rulings of the District Judge, excluding evidence as to fraud and directing a verdict for the defendant. To test the legality of the lower court's rulings, an appeal was taken thirty six days after the entry of judgment. The motion here is to dismiss the appeal because not taken within thirty days after the rendition of judgment, as provided by the amendment of 1926 to section 25a of the Bankruptcy Act (11 USCA § 48(a). It is claimed by the appellant that the appeal so allowed is in the nature of a writ of error at common law, wherein the time for taking an appeal is three months, and that the amendment to section 25a of the Bankruptcy Act has no application.

The authorities have established that a clear-cut distinction exists between a writ of error, which brings up matters of law only, and an appeal, which brings up both law and fact. This distinction has been recognized by the legislation of Congress from the foundation of the government. Dower v. Richards, 151 U.S. 658, 14 S. Ct. 452, 38 L. Ed. 305; Elliott v. Toeppner, 187 U.S. 327, 23 S. Ct. 133, 47 L. Ed. 200; Duncan v. Landis (C.C.A.) 106 F. 839 (3rd Cir.)

Under section 19 of the Bankruptcy Act of 1898 (11 USCA § 42), the person against whom a petition has been filed, is entitled, on demand, to a trial by jury to determine the question of insolvency, and any act of bankruptcy alleged to have been committed. In the absence of such application, within the time prescribed, a jury trial is presumed to have been waived. Except as provided in the act, the right to submit the matters in controversy shall be determined according to the laws of the United States in relation to trials by jury. Section 19 of the original act has not been amended in any way, and is therefore in full force.

The Act of May 27, 1926 (44 Stat. 662), amended certain sections of the original act. Among others, it amended section 24a (11 USCA § 47(a). The amendment consisted of adding certain courts invested with appellate jurisdiction of controversies arising in bankruptcy. Subsection b, which provided that the Circuit Courts of Appeal should have jurisdiction in equity, either interlocutory or final, to superintend and revise in matter of law, the proceedings of the inferior courts of bankruptcy, was amended (11 USCA § 47(b) by adding to the words "in matter of law," the following, "and in matter of law and fact the matters specified in section 25." The original subsection b provided that such power shall be exercised on due notice and petition by the party aggrieved. This was amended by the use of the following words, "such power shall be exercised by appeal and in the form and manner of an appeal, except in the cases mentioned in said section 25 to be allowed in the discretion of the appellate court." This last provision, referring to discretionary powers, relates to appeals to the Supreme Court. The amendment also adds subsection c (11 USCA § 47(c), which provided that, "All appeals under this section shall be taken within thirty days after the judgment, or order, or other matter complained of, has been rendered or entered."

It will be noticed that section 24 has special reference to the jurisdiction of appellate courts, while section 25 relates specially to the appeals. Section 25 of the original act (30 Stat. 553) provides, "That appeals, as in equity cases, may be taken in bankruptcy proceedings from the courts of bankruptcy to the circuit court of appeals of the United States, and to the supreme court of the Territories" in certain designated cases, one of which is "from a judgment adjudging or refusing to adjudge the defendant a bankrupt." The appeal in such case shall be taken within ten days after judgment has been entered.

The only change in amendment of section 25 was the addition to the appellate courts of the Court of Appeals of the District of Columbia, and the time of the appeal being extended from ten to thirty days.

The other amendments in the act of 1926 have no relevancy to the question here.

Title 28 of the United States Code was amended in 1928 by amendments §§ 861a and 861b (28 USCA §§ 861a, 861b), by which writs of error, civil and criminal, were abolished. "All relief which heretofore could be obtained by a writ of error shall hereafter be obtainable by appeal."

But this would appear to be only a change of name. Amendment § 861b provides, "The statutes regulating the right to a writ of error, defining the relief which may be had thereon, and prescribing the mode of exercising that right and of invoking such relief, including the provisions relating to costs, supersedeas, and mandate, shall be applicable to the appeal which the preceding section substitutes for a writ of error."

From the foregoing considerations, the following may be stated by way of conclusion.

1. The right to trial by jury onapplication of the alleged bankrupt is absolute and cannot be withheld at the discretion of the court. In this it differs from the trial of an issue in equity, which the court is not bound to ...

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