Northern Pipeline Construction Co. v. Marathon Pipe Line Co.

458 U.S. 50 (1982)


The Bankruptcy Act of 1978 made significant changes in both the substantive and procedural law of bankruptcy. Under the Act, Bankruptcy Court judges were appointed to office for 14-year terms by the President, with the advice and consent of the Senate. They are subject to removal by the 'judicial council of the circuit' on account of 'incompetency, misconduct, neglect of duty or physical or mental disability.' The salaries of the bankruptcy judges are set by statute and are subject to adjustment under the Federal Salary Act. The Act grants the Bankruptcy Courts jurisdiction over all 'civil proceedings arising under title 11 [the Bankruptcy title] or arising in or related to cases under title 11.' This included suits to recover accounts, controversies involving exempt property, actions to avoid transfers and payments as preferences or fraudulent conveyances, and causes of action owned by the debtor at the time of the petition for bankruptcy. The bankruptcy courts can hear claims based on state law as well as those based on federal law. It vested the judges of the bankruptcy courts with all of the 'powers of a court of equity, law, and admiralty,' except that they 'may not enjoin another court or punish a criminal contempt not committed in the presence of the judge of the court or warranting a punishment of imprisonment.' P filed a petition for reorganization in January 1980. In March 1980, P filed in the bankruptcy court a suit against Marathon (D). P sought damages for alleged breaches of contract and warranty, as well as for alleged misrepresentation, coercion, and duress. D moved to dismiss on the ground that the Act unconstitutionally conferred Art. III judicial power upon judges who lacked life tenure and protection against salary diminution. The Bankruptcy Judge denied the motion to dismiss. On appeal, the District Court entered an order granting the motion in that 'the delegation of authority in 28 U. S. C. § 1471 to the Bankruptcy Judges to try cases which are otherwise relegated under the Constitution to Article III judges' was unconstitutional. The United States and P filed notices of appeal.