intend and revise in matter of law, though it must be said that counsel do not even suggest that remedy as the proper one here. At first view it would seem that these labor claims presented questions of law which might well have been disposed of as a step in an ordinary "proceeding in bankruptcy," as distinguished from a "controversy arising in a bankruptcy proceeding" (In re Rouse, Hazard & Co., supra, 91 Fed. 99, 33 C. C. A. 356; In re Worcester County, 102 Fed. 808, 813, 814, 42 C. C. A. 637 [C. C. A. 1]; O'Dell v. Boyden, 150 Fed. 731, 732, SO C. C. A. 397 [C. C. A. 6] 10 Ann. Cas. 239; Orinoco Iron Co. v. Metzel, 230 Fed. 40, 48, 144 C. C. A. 338 [C. C. A. 6]); but in reality the instant case is distinguishable from these decisions, and for the reasons that when the present proceeding in bankruptcy was commenced and the adjudication declared, the bankrupt, the Cataract Company, was not in possession of either the property or the fund derived therefrom, and the ancillary proceeding was found necessary in order to gain possession. We but repeat when we say that the fund thus reduced to possession came into the court below with priorities, indeed, liens, alleged to exist against it in favor of resident claimants, and so gave rise to a controversy within the meaning of section 24a. In re Breyer Printing Co., supra, 216 Fed. 881, 882, 133 C. C. A. 82. The motion to dismiss will be denied.

[4] Upon the merits of the case the appellants' counsel contend that the jurisdiction derived through the ancillary proceeding did not empower the court below to determine the rights of appellees in the fund recovered. The theory of this contention is that Emerson's selection as trustee operated to vacate his positions as receiver and ancillary receiver, and that the state court receiver did not pay over the fund until after Emerson's selection as trustee was made. Counsel, in effect, concede that if the fund had been paid over before such selection, the court below could have controlled and applied the fund at the suit of the resident claimants. Thus the issue is reducible to the circumstance that possession of the fund was not secured until after the trustee was chosen. It is to be remembered that while Emerson was first appointed by the court below as ancillary receiver for the Northern district of Ohio, "with all of the rights and powers to carry into force and effect the orders of the original court of jurisdiction," yet that this portion of the order was subsequently vacated, and Emerson reappointed as ancillary receiver, but invested only "with the right and power to carry into force and effect the orders of this court which may be entered hereafter"; and it was at the same time ordered that the ancillary receiver should report and account to the court below "for all property of said bankrupt coming into his possession" in such Northern district, and that he should "hold the same subject to the order of this court." We have seen that the fund was paid over by the state receiver under an order of the state court, and that this order contained a recital that it was made in pursuance of an order of the court below. It is admitted by appellees that the fund was paid by the state receiver after Emerson had been elected trustee; and in his report as ancillary receiver to the court below, March 26, 1915, Emerson stated that the fund

was paid to the "trustee in bankruptcy." Despite this, we have seen that the order of the state court, directing its receiver to pay over the fund, distinctly provided that it should be paid to "Robert Emerson, receiver and now trustee of the Cataract Rubber Company, bankrupt"; and, although the record fails to disclose the form of the receipt given to the state receiver, it is to be presumed, and it is so stated without denial by appellees' counsel, that the receipt conformed with the order of the state court.

Section 2 of the Bankruptcy Act (subdivision 20), as amended June 25, 1910, vests in the federal District Courts

"ancillary jurisdiction over persons or property within their respective territorial limits in aid of a receiver or trustee appointed in any bankruptcy proceedings pending in any other court of bankruptcy." 36 Stat. pt. 1, 839.

We cannot think that Emerson's selection as trustee operated to vacate his ancillary receivership, and to transfer the fund through him as trustee to the sole control of the court of primary jurisdiction. It is, of course, true, as counsel say, that section 70a of the Bankruptcy Act provides that the trustee shall be "vested by operation of law with the title of the bankrupt as of the date he was adjudged a bankrupt"; still reliance on this provision ignores the facts that the property from which the fund was derived was in possession of the state court receiver at the times of both the bankruptcy and the adjudication, and that admittedly the rights of the ancillary receiver and the trustee in bankruptcy in respect of the property could be determined only through the ancillary proceeding in question. The object of bestowing ancillary jurisdiction would naturally be to invest the tribunal, whose aid is once invoked, with power itself to control the agencies coming within its territorial jurisdiction, and likewise the property found and sought to be recovered therein on behalf of the bankrupt's estate. It would be an anomalous proceeding which would suffer an ancillary receiver or a trustee in bankruptcy at his option to withdraw property recovered through the aid of the ancillary tribunal, and regardless alike of the tribunal itself and resident suitors there appearing and claiming priorities or liens against the property. This would be to make the ancillary tribunal a mere instrument of the official instituting the action, since it would deny to the tribunal power to pass upon the rights of adverse claimants and even of a person found in possession of the property. Such a proceeding would hardly square with due process of law; it would savor rather of violence.

[5] It was held prior to the amendment of 1910 that the District Courts of the United States, sitting in bankruptcy, each possessed "ancillary jurisdiction to make orders and issue process in aid of proceedings pending and being administered in the District Court of another district." Babbit v. Dutcher, 216 U. S. 102, 30 Sup. Ct. 372, 54 L. Ed. 402, 17 Ann. Cas. 969; Elkus, Petitioner, 216 U. S. 115, 117, 30 Sup. Ct. 377, 54 L. Ed. 407. Ancillary jurisdiction, it is true, signifies power to aid primary jurisdiction. But the power in an ancillary tribunal to take possession of property at all is founded on the interest therein of the person or estate in whose right the

proceeding is maintained; and this interest cannot, in the nature of things, be ascertained without passing upon such adverse interests as may be claimed by others in the property. When, therefore, an ancillary tribunal takes possession, whether with or without opposition, such possession draws to that tribunal power, indeed, imposes a duty, to determine all questions of priorities and liens åffecting the property. This applies with especial force to the rights of resident adverse claimants. Fidelity Trust Co. v. Gaskell, 195 Fed. 865, 873, 115 C. C. A. 527 (C. C. A. 8); In re Farrell, 201 Fed. 338, 339, 119 C. C. A. 576 (C. C. A. 6); Loeser v. Dallas, 192 Fed. 909, 911, 114 C. C. A. 349 (C. C. A. 3); In re Lipman (D. C.) 201 Fed. 169, 172; In re Rathfon Bros. (D. C.) 200 Fed. 108, 109. It results that the court below had complete control of Emerson in both of his capacities as respects this fund (Fidelity Trust Co. v. Gaskell, supra, 195 Fed. 874, 115 C. C. A. 527; Reynolds v. Stockton, 140 U. S. 254, 272, 11 Sup. Ct. 773, 35 L. Ed. 464.

[6] The final question is whether the claims of any of the appellees are recoverable under either section 11138 or section 8339 of the Ohio Gen. Code. The learned trial judge, in affirmance of the special master's ruling, based allowance of all the claims upon section 11138. The portion of that section so relied on provides:

"Each person who has performed labor as an operative in the service of the assignor, within twelve months preceding the assignment, shall be entitled to receive out of the trust funds, before the paying of other creditors, the full amount of wages due for such labor, not exceeding three hundred dollars.” 5 Page and Adams Ann. O. G. C.

.

It was held that this provision operated to create a lien upon the fund in dispute, securing each labor claim in a sum not exceeding $300. This was upon the theory that the case is controlled by the ruling of this court in In re Laird, 109 Fed. 550, 48 C. C. A. 538, and the decision of the Supreme Court of Ohio in Machine Co. v. Supply Co., 68 Ohio St. 535, 67 N. E. 1055, 64 L. R. A. 845, 96 Am. St. Rep. 677. The foregoing statutory provision was not involved in the Laird Case. The provision there relied on in sustaining labor claims was the following portion of the present section 8339, Ohio Gen. Code, which at the time of the decision bore the number 3206a, Ohio Revised Statutes (In re Laird, 109 Fed. 554, 48 C. C. A. 542):

"In all cases when property of an employer is placed in the hands of an assignee, receiver or trustee, claims due for labor performed within the period of three months prior to the time such assignee, receiver or trustee is appointed, shall first be paid out of the trust fund, in preference to all other claims against such employer, except claims for taxes and the costs of administering the trust."

Several observations are to be made upon these two statutory provisions. The one of most obvious pertinence is the difference in time within which the services must have been rendered in order to come within the respective limitations there prescribed; the first being "twelve months preceding the assignment," and the other "three months prior to the time such assignee, receiver or trustee is

appointed." The services of each of the nine claimants here were rendered within this twelve months' limitation, but only four of the claimants distinctly appear to have performed any services within the three months' limitation, and such latter services were small in comparison, with the whole. It is next to be observed of these statutes that the one first in part quoted belongs to the chapter regulating the administration and distribution of estates of insolvent debtors (5 Page & Adams Ann. O. G. C. pp. 431, 488), and that the other is part of the chapter which in distinct terms provides for liens, and, among others, for liens of "laborers and employés of any person," etc. (3 Page & Adams O. G. C. pp. 1081, 1103). Further, the first statute relates to "each person who has performed labor as an operative," and the second one to "laborers and employés" whose claims are "for labor performed"; and, while the claim of an "operative" may cover a period of 12 months, the amount of recovery is limited to $300, and although a claim "for labor performed" may cover a period of only 3 months, there is no restriction upon the amount of recovery.

In view of these marked differences between the two statutes, it is reasonably to be inferred that they are independent each of the other, and designed for the accomplishment of distinct objects; and such was the conclusion of this court in In re City Trust Co., 121 Fed. 706, 58 C. C. A. 126. That case presented the question whether the claims of "operatives" were, under either section 3206a (now section 8339) or section 6355 (now section 11138), or both, entitled to priority over certain prior and good-faith chattel mortgage liens. Moreover, a deed of assignment for the benefit of creditors had been made by the assignor previous to the adjudication in bankruptcy; and the court was accordingly called upon to determine whether, under either or both of these statutes, the operatives' claims were entitled to priority over the claims of the chattel mortgagees. This led to the consideration again of the Laird Case and also to its reaffirmance. The result was to deny the application of section 6355 (now section 11138) to estates held by receivers or trustees, and also to deny to laborers, who might fairly be classed as operatives, the benefit of both section 3206a and section 6355; the present Mr. Justice Day saying in the course of the opinion (121 Fed. 708, 58 C. C. A. 128):

"Section 6355 (now section 11138) is a part of the chapter regulating the administration of estates of insolvent debtors, and deals with the distribution of the fund in the hands of the assignee. It does not have to do with estates placed in the hands of receivers or trustees.

And again (121 Fed. 709, 58 C. C. A. 129):

"While we realize the general principle which gives to this kind of legislation a liberal construction, with a view to carrying out its beneficent purposes, we do not think it was the intention of the Legislature to give to laborers of this class the benefit of both sections 3206a and 6355. As we have said, the broad provisions of 3206a might include all classes of laborers; but in section 6355 the Legislature is dealing with a distinct class, fixing the right to preferential claims in cases of assignment."

The effect of this was to deny to an "operative" under present section 11138 the right to claim any benefit under old section 3206a,

in cases where an assignment has been made; and the judgment below was reversed for that reason. The present importance of that ruling will be seen in the fact that in the instant case the court below, in affirming the special master, found that the appellees were operatives within the meaning of section 11138, and also entitled to liens under that section upon the theory of the rule laid down in the Laird Case. This was to overlook the ruling in the City Trust Case that section 11138 applies only to cases of assignment, and not to cases of receivership. However, it was not decided in the City Trust Case that operatives, within the meaning of old section 6355, would not be entitled to prove their claims under old section 3206a, wherever it appears that the estate has been placed in the hands of a receiver instead of an assignee. This points to an important distinction which must be observed when considering both the City Trust Case and the Laird Case; the fact of the assignment which appeared in the former case was held to require disallowance of the claims of operatives under old section 3206a, while the presence of the receivership in the Laird Case was sufficient to justify allowance of the claims there involved under that section. True, no question arose in the latter case as to the character of the claims, that is, whether of operatives or only of ordinary laborers, though apparently they were of the latter class; but the point is clear, and it must be borne in mind, that the effect of these two decisions is to allow claims of operatives under old section 3206a, where the estates are not in the hands of an assignee, but are in the hands of a receiver, yet it is equally important to remember that allowance under old section 3206a must be subject to the limitation in point of time prescribed by that section. It is, however, urged, and it was in effect so held below, that the decision in Machine Co. v. Supply Co., supra, 68 Ohio St. 535, 67 N. E. 1055, 64 L. R. A. 845, 96 Am. St. Rep. 677, decides that labor claimants like the present are entitled "to invoke the provision most favorable to themselves," that is, the provision of either of these Ohio laws. We do not so understand that decision. The sole question involved in the case was one of priority as between the claims of certain laborers and chattel mortgagees. The property of the mortgagor had been placed in the hands of receivers in the common pleas court of Allen county, Ohio, and after the property had been converted into money the rights of the parties were transferred to the fund so derived. The circuit court held that the amounts due on the laborers' claims should first be paid in full, and the remainder applied, in a way pointed out, to the payment of the mortgages. The judgment was reversed and the holders of the chattel mortgages were given priority. Plainly the question involved, and so the judgment, had no relation to a right, like that mentioned in the opinion, of labor claimants to select and recover under the statute "most favorable to themselves." The court was required, and only required to determine which of two classes of claimants-one class claiming for labor performed and the other for loans secured by chattel mortgages-should be subordinated to the other in the distribution of the fund; and nothing more than the determination of that issue is to be found in the syl