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IN RE INDUSTRIAL ASSOCS.

October 8, 1957

In the Matter of INDUSTRIAL ASSOCIATES, INCORPORATED, Debtor


The opinion of the court was delivered by: LORD

This matter arises on the petition of the Philadelphia National Bank, respondent, for review of an order of the referee in bankruptcy. Petitioner (hereinafter referred to as 'Bank') asks that the referee's order be set aside on the ground that the subject matter was not within the summary jurisdiction of a court of bankruptcy. The Bank further argues that in any event the referee's findings of fact and conclusions of law are erroneous, and the order based thereon must accordingly be reversed.

Resisting the petition, the trustee in bankruptcy denies these contentions in all respects. He argues also that regardless of the foregoing, petitioner has consented to the summary adjudication by the referee by filing his proof of claim after the hearing.

 The opinion and order of the referee sur turnover petition of trustee against Philadelphia National Bank commences with the following:

 'Statement of Case

 'The receiver in bankruptcy filed his petition with the Referee for a rule to show cause why the Philadelphia National Bank should not be directed to turn over to him forthwith the sum of $ 3,997.73, representing the balance on deposit to the credit of the debtor corporation.

 'To this petition the Bank filed an answer, denying almost all the averments of the petition, and setting up as an affirmative defense the lack of summary jurisdiction in the bankruptcy court.

 'At the hearing on the petition each side submitted one witness, the trustee in bankruptcy, G. Potter Darrow, and Daniel H. Ort, an employee of the Bank.

 'Mr. Ort testified that on November 15th, 1956, the account had a balance of $ 4369.13; one check for $ 371.40 came through, leaving a balance of $ 3997.73 on November 16th; no deposits were made nor checks presented for payment by the receiver.'

 Thereafter the opinion sets out the basic principles and authorities applicable to the question of summary jurisdiction. Turning to the testimony, the referee interprets it as showing that the Bank in fact turned over the account in question to the receiver, and subsequently withdrew it from his control and custody. It follows, he adds, that there is no real question involved; that the funds are in the constructive control of the bankruptcy court; and that the claim of the Bank is merely colorable.

 The challenged findings of fact restate that position, and the three conclusions of law accordingly are as follows:

 '1. There is no real question of law involved.

 '2. The Bankruptcy Court has summary jurisdiction of the Receiver and of the Respondent Bank, with power to adjudicate summarily the issues raised by Receiver's petition and Respondent's answer and affirmative defense.

 '3. The Respondent has in its possession or under its control the sum of $ 3,997.13, which it holds in trust for G. Potter Darrow, Receiver, and must turn over or make available forthwith said ...


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