Stubbins, James B.

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LAW JOURNAL-JULY, 1942DEBTORS' ESTATESRECEIVERSHIP-JURISDICTION UNDER SECTION 57 OF THEJUDICIAL CODE-COUNTERCLAIM-ABRIDGEMENTOF BOOTH V. CLARKInsurance Commissioner for the State of Iowa, as an Iowa re-ceiver, asked the Federal District Court to take jurisdiction underdiversity of citizenship' and Section 57 of the Judicial Code 2 tosettle claims to a res. Section 57 provides for service by publicationon non-residents to enforce a legal or equitable lien on or claim to,personal property within the District where the suit is brought. Thesuit was begun pursuant to authority and direction of the Iowastate court.The Iowa insurance company which had become insolvent agreedthat a Michigan insurance company should reinsure the policy-holders of the Iowa company. Now the Michigan company is in" re-ceivership. Securities had been deposited in Iowa according to lawand contract, but the Michigan receiver was collecting the maturingprincipal and income on the securities and wishes to have completecontrol of them.The Michigan receiver appeared specially and objected to thejurisdiction and was overruled. He then filed an answer and coun-terclaim. Thereupon, the Iowa receiver amended and asked theMichigan receiver to account for collections ana to be enjoinedfrom interfering with the Iowa administration. Held: the FederalDistrict Court in Iowa had jurisdiction to resolve the controversyunder Section 57 of the Judicial Code. Fischer, Commissioner of In-surance for Iowa, v. American United Life Insurance Co., et al.,314 U. S. 549, 86 L. ed. 328, 62 Sup. Ct. 380 (1942).On th strength of Lion Bonding Co. v. Karata 3 the AppellateCourt held that the trial court had no jurisdiction-to determine theinterest of the Michigan receiver in the securities.4 The SupremeCourt evaded this difficulty by distinguishing between interferencewith administering a res and determining rights in one. The presentcontroversy did not "necessarily involve a disturbance of the pos-'JUDICIAL CODE 24; 28 U. S. C. 41; 28 U. S. C. A. 41.228 U. S. C. 118, 28 U. S. C. A. 148.3262 U. S. 77, 67 L. ed. 832, 43 S. Ct. 518 (1922).4 American United Life Ins. Co. et al. v. Fischer, 117 F. (2d) 811 (1941).336NOTES AND COMMENTS 337session or control of the Michigan . . . (court) over the propertyin (its) possession." 5 Further, as the Iowa state receiver soughtthe jurisdiction of the federal court, the prohibition of Penna. v.IVillian'; -was not in point.As the principal case 7 recognizes the right of a foreign equityreceiver to appear and answer regardless of whether or not he is astatutory successor I or quasi assignee,9 it further strengthens a limi-tation to Booth v. Clark 10 which forbade an equity receiver to sue ina foreign federal court. In view of the fact that action under Section57 of the Judicial Code is to quiet title and that unless such a receivermay appear and assert his claims he is in effect excluded, the limi-tation is highly desirable.While it upheld the trial court's jurisdictional power to de-termine all rights to principal and interest in the securities held bythe Iowa receiver, the decision falls far short 1 of deciding to whatextent an adjudication of rights in securities under Section 57 mayaffect the administration of collections on such securities then inpossession of a foreign court. 2JB. S.1314 U. S. at 554.0294 U. S. 176, 79 L. ed. 841, 55 S. Ct. 380 (1934), which forbade assumption offederal jurisdiction in receiverships when there is special state machinery for administer-ing the assets of particular businesses. See also: Gordon v. Ominsky, 294 U. S. 186,79 L. ed. 848, 55 S. Ct. 391 (1934); Penna. General Casualty Co. v. Penna., 294 U. S.11,9, 79 L. ed. 850, Z5 S. Ct. 3.6 (1934); (1931) 1 0. S. L. J. 322.314 U. S. at 553, citing Clark v. Williard, 294 U. S. 211, 86 L. ed. 330, 62 S. Ct. 382(1935).1Refle v. Rundle, 103 U. S. 222, 26 L. ed. 337 (1881); American National Bank v.National Benefit & Casualty Co., 70 Fed. 420 (1895).'Conserve v. Hamilton, 224 U. S. 243, 56 L. ed. 749, 32 S. Ct. 415, (1911); Bern-hoimer v. Converse, 20 U. S. 516. 51 L. ed. 1163, 27 S. Ct. 775 (1907); (1931) 1 0. S. L. J.QA!; First, Extraterritorial Powers of Receivers, (1932) 27 ILL. L. REv. 482; Laughlin,The Extraterritorial Powers of Receivers, (1932) 45 HAR. L. Rav. 704; Rose, Extraterritorial Actions by Reccvers, (133) 17 Mrsi. L. REv. 237.x 17 How. Rep. (U. S.) 322, 15 L. ed. 164 (1854).",Whether the scope of the decree entered by the District Court was proper we donot decide. We only hold that the District Court had jurisdiction to resolve the contro-versy under see. 57 of the judicial Code. The Circuit Court of Appeals should havedecided what rights, under Iowa law, Iowa and its receiver had to the securities andcollections thereon, and whether the decree entered by the District Court was kept withinthe appropriate limits." 314 U. S. 555.12Annotation, 96 A. L. R. pp. 485.40.

Receivership -- Jurisdiction Under Section 57 of the Judicial Code -- Counterclaim -- Abridgement of Booth v. Clark

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Receivership -- Jurisdiction Under Section 57 of the Judicial Code -- Counterclaim -- Abridgement of Booth v. Clark

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