United States Court of Appeals Second Circuit.: No. 376. Docket 33652

418 F.
2d 9
UNITED KINGDOM MUTUAL STEAMSHIP ASSURANCE

ASSOCIATION,
v.
Arthur L. LIMAN, Trustee in Bankruptcy.
In the Matter of Seatrade Corporation, Kulukundis Maritime
Industries, Inc., Tramp Shipping & Oil Transportation Co., A.
H. Bull Steamship Co., A. H. Bull & Co. (Inc.) American
Tramp Shipping Development Corporation, Messenian
Shipping Corporation, Star Line Agency, Inc., Bankrupts.
No. 376.
Docket 33652.
United States Court of Appeals Second Circuit.

Submitted September 8, 1969.
Decided October 28, 1969.
Marshall P. Keating (Kirlin, Campbell & Keating), New York City, for
appellant.
Ambrose Doskow (Rosenman, Colin, Kaye, Petschek, Freund & Emil),
New York City, for appellee.
Before LUMBARD, Chief Judge, and SMITH and FEINBERG, Circuit
Judges.
J. JOSEPH SMITH, Circuit Judge.
This is a motion to dismiss the appeal by an insurer from an order by the United
States District Court for the Southern District of New York, David N.
Edelstein, Judge, denying review of an order of the referee in bankruptcy
upholding summary jurisdiction in the bankruptcy court over the claim of the
trustee to be indemnified by the insurer for moneys paid on personal injury
claims. The insurer in this case, United Kingdom Mutual Steamship Assurance
Association ("United Kingdom"), is a creditor of the bankrupt and has filed a
claim against the estate; thereupon the referee determined that he had summary
jurisdiction over this claim for indemnity by the trustee. There was no order in
regard to the merits of the claim, merely that there was summary jurisdiction.
We hold that the order was interlocutory, that it was made in a controversy
arising in proceedings in bankruptcy and was therefore not appealable at this
stage, and grant the motion to dismiss the appeal.
2
The applicable portion of the Bankruptcy Act, 24(a), 11 U.S.C. 47(a)

provides:
"The United States courts of appeals * * * are invested with appellate

jurisdiction from the several courts of bankruptcy in their respective
jurisdictions in proceedings in bankruptcy, either interlocutory or final, and in
controversies arising in proceedings in bankruptcy, to review, affirm, revise, or
reverse, both in matters of law and in matters of fact * * *."
The distinction between "controversies" and "proceedings" from which it must

be determined whether an interlocutory order may be the subject of appeal, has
often been characterized as being hairline thin and the classification depends
upon an analysis of each case. In re Imperial "400" National, Inc., 391 F.2d 163
(3d Cir. 1968) (order reopening ruling by referee on reclamation claims out of
time, appealable); Columbia Foundry Co. v. Lochner, 179 F.2d 630, 14
A.L.R.2d 1349 (4th Cir. 1950) (claim for goods sold and delivered,
counterclaim for damages for defect in goods, appealable); In re Greenstreet,
Inc., 209 F.2d 660 (7th Cir. 1954) (claim and counterclaim on performance of
contract, appealable). "Proceedings" are generally described as those matters of
an administrative character, including questions between the bankrupt and his
creditors which are presented in the ordinary course of the administration of the
bankrupt's estate. Taylor v. Voss, 271 U.S. 176, 46 S.Ct. 461, 70 L.Ed. 889
(1926); Hillcrest Lumber Co., Inc. v. Terminal Factors, Inc., 281 F.2d 323 (2d
Cir. 1960); In re National Finance & Mortgage Corp., 96 F.2d 74 (9th Cir.
1938). "Controversies" are usually described as arising in the course of the
bankruptcy proceeding and not being mere steps in the ordinary administration
of the bankrupt, but which present distinct and separable issues between the
trustee and adverse claimants concerning the right and title to the bankrupt's
estate. Taylor v. Voss, supra; Hillcrest Lumber Co., Inc. v. Terminal Factors,
Inc., supra.
A dispute between the debtor and an adverse claimant over property which is
within the summary jurisdiction of the bankruptcy court has been held a
controversy. Hillcrest Lumber Co., Inc. v. Terminal Factors, Inc., supra.
Similarly, it has been held that interlocutory orders in reclamation proceedings
are not appealable since such a proceeding is a controversy, In re Brendan

Reilly Associates, Inc., 372 F.2d 235 (2d Cir. 1967) and that proceedings
concerning disputes as to the title of property in a dispute between the trustee
and an adverse claimant over the right to possession of property is a
controversy. In re Brendan Reilly Associates, Inc., 378 F.2d 30 (2d Cir. 1967);
Harrison v. Chamberlin, 271 U.S. 191, 46 S.Ct. 467, 70 L.Ed. 897 (1926). In
other words, the normal turnover or reclamation order concerns title to specific
property and thus inherently raises a "controversy arising in proceedings in
bankruptcy." In re Imperial "400" National, Inc., supra.
6
As Judge Lumbard pointed out in his dissent in Pettit v. Olean Industries, Inc.,
266 F.2d 833 (2d Cir. 1959) the standard and workable criterion which governs
whether a proceeding contains a controversy has been whether the claimant
raises a dispute with regard to the propriety of including property in the estate
for distribution, rather than a question with regard to the administration of the
estate once it is amassed. Judge Lumbard added that he would hold that no
interlocutory order assuming summary jurisdiction to decide an asserted claim
of right on the merits is appealable because every such order is entered in at
least partial disposition of a controversy arising in a proceeding in bankruptcy
and is unappealable. In another case dealing with an adverse claimant, the
Ninth Circuit stated that a finding by the district court of the existence of
summary jurisdiction in a bankruptcy matter, the merits of which have not been
heard, is a determination in a controversy and not in a proceeding. In re Christ's
Church of the Golden Rule, 172 F.2d 523 (9th Cir. 1949). This case is not like
that of In re Greenstreet, Inc., supra. There the government sought recovery of
certain property and asserted a claim against the bankrupt estate also; the
trustee objected to allowance of each of these claims and sought to defeat them
by counterclaims demanding substantial sums by way of set-off. The court
stated that the disposition of the issues arising upon the government's general
claim and the trustee's counterclaim thereto had to do with the allowance and
disallowance of claims, which is part of the proceedings in bankruptcy.
Therefore, it stated that the order holding that the district court had jurisdiction
was entered in a proceeding and an appeal was properly taken from an
interlocutory order.
The cases closest to the borderline are those in which a contest seeking to
augment the estate is linked to determination of claims against the estate, as in
the instant case. If the determination of the claims is to be given greater weight,
appealability is upheld as in a proceeding. If the establishment of the estate's
right to augmentation is primarily looked to, appealability is denied as in a
controversy. It is difficult, if not impossible, to reconcile in principle all the
cases. In our case, the claims of the creditor and of the trustee do not appear to
be necessarily interrelated. The insurer claims unpaid premiums. The trustee is

raising a separate question in regard to a claim against United Kingdom for
indemnification for funds paid out by the bankrupt estate to a person injured,
for which the trustee claims that the bankrupt is to be indemnified by United
Kingdom. Although summary jurisdiction is based upon the fact that United
Kingdom is a creditor of the estate, that should not automatically classify this
indemnification question between the trustee and the creditor as one in a
proceeding. Here we feel that judicial economy is best served by emphasizing
the contest over augmentation of the estate, holding it to be a "controversy"
even though it comes in by way of counterclaim to the assertion of the insurer's
premium claims. We, therefore, grant the motion and postpone consideration of
appeals on the assertion of summary jurisdiction until that controversy is fully
decided.
8
Appeal dismissed.

United States Court of Appeals Second Circuit.: No. 376. Docket 33652

Uploaded by

Copyright:

Available Formats

United States Court of Appeals Second Circuit.: No. 376. Docket 33652

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

United States Court of Appeals Second Circuit.: No. 376. Docket 33652

Uploaded by

Copyright:

Available Formats

418 F.

UNITED KINGDOM MUTUAL STEAMSHIP ASSURANCE

United States Court of Appeals Second Circuit.

The applicable portion of the Bankruptcy Act, 24(a), 11 U.S.C. 47(a)

"The United States courts of appeals * * * are invested with appellate

The distinction between "controversies" and "proceedings" from which it must

are not appealable since such a proceeding is a controversy, In re Brendan

be necessarily interrelated. The insurer claims unpaid premiums. The trustee is

You might also like