Lucius v. Cawthon-Coleman Company/Opinion of the Court

By the express terms of subdivision 11 of § 2 of the bankruptcy act of 1898 [30 Stat. at L. 546, chap. 541, U.S.C.omp. Stat. 1901, p. 3421], jurisdiction is conferred upon courts of bankruptcy to determine all claims of bankrupts to their exemptions. When, therefore, as in the case at bar, property of the bankrupt has come into the possession of the trustee in bankruptcy, and the bankrupt has asserted in the bankruptcy court a claim to be entitled to a part or the whole of such property, as exempt property, the bankruptcy court necessarily is vested with jurisdiction to determine, upon the facts before it, the validity of the claimed exemption. An erroneous decision against an asserted right of exemption, and a consequently erroneous holding that the property forms assets of the estate in bankruptcy, to be administered under the direction of the bankruptcy court, while subject to correction in the mode appropriate for the correction of errors (Lockwood v. Exchange Bank, 190 U.S. 294, 47 L. ed. 1061, 23 Sup. Ct. Rep. 751), does not create a question of jurisdiction proper to be passed upon by this court by a direct appeal under the provisions of the act of March 3, 1891.

''First Nat. Bank v. Klug'', 186 U.S. 203, 204, 46 L. ed. 1127, 1128, 23 Sup. Ct. Rep. 899, and cases cited. It necessarily results from the foregoing that, as the bankruptcy court determined that the proceeds of the insurance policies in the hands of the trustee were assets of the estate in bankruptcy, and not exempt property of the bankrupt, the jurisdiction existed to proceed to adjudicate the validity of an alleged equitable lien upon such property. Hutchinson v. Otis, 190 U.S. 552, 555, 47 L. ed. 1179, 1181, 23 Sup. Ct. Rep. 778.

As, therefore, upon the record before us, the jurisdiction of the court was not in issue within the meaning of the act of March 3, 1891, the direct appeal to this court was not properly brought, and the order must be appeal dismissed.