## Facts

- Ernest Newton Kalb and his wife were Wisconsin farmers who mortgaged their farm.
- Mortgagees began a state-court foreclosure in March 1933; a foreclosure judgment entered in April 1933.
- The sheriff sold the farm in July 1935 under the foreclosure judgment.
- In September 1935, while Kalb had a petition for composition/extension pending in federal bankruptcy court under § 75 of the Bankruptcy Act, the state county court confirmed the sheriff’s sale.
- No party sought or obtained a separate stay order in either the state court or bankruptcy court.
- In December 1935, the mortgagees obtained a state-court writ of assistance; in March 1936, the sheriff executed the writ and ejected the Kalb family.
- The Kalbs filed a state-court equity action seeking restoration of possession and cancellation of the sheriff’s deed; it was dismissed on demurrer and affirmed on appeal.
- Kalb separately filed a state-court tort action against the mortgagees, the sheriff, and the county judge seeking damages arising from the dispossession; it too was dismissed on demurrer and affirmed.
- The U.S. Supreme Court reviewed both judgments together.

## Issues

1. Whether a pending § 75 farmer-bankruptcy petition deprived a state court of power to proceed in a mortgage foreclosure by confirming a sale and ordering dispossession.
2. If the state court lacked such power, whether the resulting state-court orders were void and subject to collateral attack despite the absence of a direct appeal or objection in the foreclosure case.
3. Whether Congress, under the Bankruptcy Clause, could withdraw state-court authority in this manner.
4. Whether tort liability for actions taken under the void state-court process was a question of federal law or state law.

## Decision

- The Supreme Court reversed the Wisconsin Supreme Court’s affirmances and remanded.
- Filing a § 75 petition operated automatically to stay the state court’s authority in the pending foreclosure to continue proceedings, confirm the sale, and dispossess the farmers.
- The state court’s post-petition orders and processes were in excess of authority, void, and open to collateral attack, regardless of whether jurisdiction was or could have been contested in the foreclosure action.
- Congress acted within its bankruptcy power in creating this statutory restraint on state foreclosure proceedings during a pending § 75 petition.
- Whether the judge, sheriff, and mortgagees were liable in tort for conduct under the void process was to be determined under state law.

## Legal Principles

- The effect of a federal bankruptcy filing on a state court’s power over related proceedings is a federal question.
- A farmer’s filing of a petition under § 75 for composition or extension of time operates ipso facto as a stay of state-court power to proceed with foreclosure, confirm a foreclosure sale, or dispossess the debtor under that foreclosure.
- State-court acts taken contrary to the § 75 stay, without bankruptcy-court authorization, are jurisdictionally void rather than merely erroneous.
- Void state-court orders entered in violation of the § 75 stay may be collaterally attacked; the debtor’s failure to object or pursue direct review does not cure the jurisdictional defect.
- Congress may, under its plenary bankruptcy power, suspend or withdraw state judicial authority to protect the operation of federal bankruptcy relief.
- Tort liability of state officials and private parties for actions taken under void state-court process is governed by state law.

## Conclusion

A pending § 75 farmer-bankruptcy petition automatically halted state foreclosure authority over the debtor’s farm, rendering post-petition confirmation and dispossession orders void and subject to collateral attack, while leaving any resulting tort liability to be resolved under state law.


Kalb v. Feuerstein, 308 U.S. 433 (1940)