In the Matter of Kirchoff Frozen Foods, Inc. Barnet Dexter, Trustee-Appellant v. Frank H. Gilbert and Beverly L. Gilbert, Husband and Wife

This case presents a single issue: whether the referee had, on these facts, summary jurisdiction over certain funds claimed by appellees Gilbert, which funds the referee ordered appellees to turn over to the trustee. Upon petition of the appellees the District Court reversed the referee’s order, finding lack of summary jurisdiction. It is this ruling which the trustee appeals. The opinion of the District Court appears at 375 F.Supp. 156 (D.Ariz.1972). The facts are fully set forth in that opinion.

The merits of the dispute over the funds present the questions whether the security agreements on which the Gilberts’ claim to the funds is founded were valid; and if so whether the Gilberts were entitled, under the agreements, to “liquidate” the bankrupt corporation by selling inventory and assets and collecting sums due the corporation from its debtors, and applying the sums so collected to the debt of the corporation to the Gilberts.

The referee determined that he had summary jurisdiction to resolve these disputes upon two theories.

1. He ruled that the bankrupt estate (and hence the bankruptcy court) had actual or constructive possession of the funds. Upon this issue the…