Thompson v. Magnolia Petroleum Co., 309 U.S. 478 (1940)

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Syllabus

In a railroad reorganization proceeding under § 77 of the Bankruptcy Act in the federal court for Missouri, rights in oil underlying the right of way of the railroad in Illinois were claimed by the trustee and by others adversely. The trustee had possession of the right of way lands under claim of fee simple ownership.

Held:

1. The bankruptcy court had summary jurisdiction to adjudicate the question of title. P. 481.

2. The bankruptcy court did not abuse its discretion in ordering that the underlying oil be extracted and marketed, to prevent irreparable loss to the estate by its being drained off through wells on adjacent lands, and that the net proceeds thereof be impounded pending determination as to the rightful owner. P. 482.

3. Under the circumstances, the ownership of the fee to the right of way lands should be determined by the state courts of Illinois, and the bankruptcy court should order the trustee to proceed accordingly. P. 483.

106 F.2d 217 reversed.

Certiorari, 308 U.S. 630, to review a decree which reversed an order of the District Court and directed dismissal of a petition to that court by a trustee in a proceeding under § 77 of the Bankruptcy Act.