Milton Loyd, and Mid-State Trucking Service, a Corporation v. Stewart & Nuss, Inc., a Corporation

This appeal challenges the jurisdiction of the Bankruptcy Court to determine, in a summary proceeding, the disputed right of appellee as debtor under chapter 11 of the Bankruptcy Act to lay claim to a fund not in its possession.

Appellee, as debtor, has proposed a plan of arrangement for the satisfaction of its debts under chapter 11 ( 11 U.S.C. § 701 . et seq.). On June 20, 1960, the District Court in Bankruptcy entered its order confirming the plan. The order of confirmation provided that the court shall retain jurisdiction “to determine all controversies involving the debtor or its property and to determine any and all disputes or conflicts between the debtor and any party with whom it may do business * * *”

On November 20, 1961, appellants contracted with the debtor to transport aggregate materials for the debtor to a state highway job in Fresno County, California, upon which job the debtor had a subcontract. The prime contractor, as principal, and Fidelity and Deposit Company of Maryland, as surety, entered into a labor and material bond, covering this public work as required by state law.

On August 15, 1962, asserting that the debtor had failed to make payments due,…