Ansonia Brass & Copper Co. v. New Lamp Chimney Co.

Majority

p. 427

The Ansonia Brass and Copper Company vs. The New Lamp Chimney Company.

Headnote

Under the provisions of the bankrupt act, where the proceedings in bankruptcy are shown to have been within the jurisdiction of the court, the 21st section prohibits a party who has proved his debt or claim from maintaining any action therefor.

But under the 37th section of the bankrupt act, which requires, on a petition by a corporation, in addition to a petition of the officers, a duly authorized vote of a majority of the corporators, at a legal meeting called for that purpose, if the record of the proceedings shows the want of any such vote of the corporators, whereby it is affirmatively shown that the necessary papers were not presented to the court, so as to make the proceedings legal, it then becomes immaterial whether the bankrupt court was one of general or limited jurisdiction. In either case, on its appearing that the court had no jurisdiction of the case, the inquiry may be made in another action where they are relied on by a party claiming the benefit of them.

And if, in an action against a corporation, the defendant sets up as a defence * that it has, on its own application been declared a bankrupt, and that the plaintiff has proved its claims, in the proceeding, the plaintiff may show in answer to such defence that it appears by the record of the proceedings in bankruptcy that the consent of the corporators, required by section 37 of the bankrupt act, was not given.

Consent will not confer jurisdiction to a court which does not possess it otherwise. Hence proof by creditors, of their claim, in proceedings in bankruptcy, will not give jurisdiction to the bankrupt court, if it does not possess it already; nor will such proof of the claim conclude the creditors in an action brought to recover the debt.

THE action was to recover on nine promissory notes made by the defendants. The defence was, that the defendants had, on their own application, been declared bankrupts, and that the plaintiffs had proved their claims in the proceeding and received a dividend, and were thereby prevented by the bankrupt act from bringing any actions for the claims so proved.

The action was tried before Justice Barrett and a jury. The record of the bankrupt proceedings was introduced and admitted in evidence, from which the above mentioned facts set up as a defence appeared, and the defendants moved to dismiss the complaint, on the ground that the right of action on the notes had been waived by

p. 428

the express provisions of the 31st section of the bankrupt act.

The justice denied the motion, and ordered the jury to find a verdict for the plaintiffs for the balance, the plaintiffs’ counsel having admitted that dividends had been paid on the notes, under the bankrupt proceedings:

The defendants’ counsel excepted to the refusal to dismiss the complaint and to the order directing a verdict for the plaintiffs, and the jury found a verdict for the plaintiffs for $5,659.84. From the judgment entered on the verdict the defendants appealed to the' General Term, and now asked for a reversal of the judgment and an order directing a judgment for the defendants, with costs.

John M. Martin, for the appellants.

S. B. Higenbotam, for the respondents.

It is clear that, under the provisions of the bankrupt act, where the proceedings in bankruptcy are shown to have been within the jurisdiction of the court, the 31st section prohibits a party who has proved his debt or claim from maintaining any action therefor. In the present case it is contended that the defendants were never legally declared bankrupts, and that the court had no jurisdiction in the matter.

The objection to these proceedings is, that the application was not made in a form to give the court jurisdiction. The 37th section of the bankrupt act requires, in addition to the petition of the officers, a duly authorized vote of a majority of the corporators, at a legal meeting, called for that purpose. The application, in the present case, is a mere petition from the officers, without any such consent of the corporators.

p. 429

• Admitting that the rule as to presumption of jurisdiction, in cases where the court is not one of inferior or limited jurisdiction, would apply here, still that presumption is overcome by proof of the record of the proceedings, which shows the want of such act of the corporators, whereby it is affirmatively shown that the necessary papers were not presented to the court, so as to make the proceedings legal.

It then becomes immaterial whether the court is one of general or limited jurisdiction. In either case, on its appearing that the court had no jurisdiction of the case, the inquiry may be made in another action, where they are relied on by a party claiming the benefit of them.

This was very clearly stated in The Chemung Canal Bank v. Judson, ( 8 N. Y. 254 ,) where it was held “that the power of this court to inquire into the jurisdiction of the District Court of the United States is undoubted.” So in Dobson v. Pearce, Allen, J., says: “The jurisdiction of the court in which a judgment has been recovered is always open to inquiry, and if it has exceeded its jurisdiction, or has not acquired jurisdiction of the parties by the due service of process or voluntary appearance, the proceedings are coram non judice, and the judgment void. The want of jurisdiction has always been held to be a good answer to a judgment, when set up for any purpose.”

As the necessary consent of the corporators was not given, there can be no doubt as to the want of jurisdiction of ° the bankrupt Court, -and the plaintiffs had the right to set it up to the bankrupt proceedings on which the defendants relied.

The remaining question is, whether the proof of claim by the plaintiffs in the proceeding in the District Court of the United States, gave such jurisdiction or was conclusive upon them in this action.

It is well settled that consent will not give jurisdiction

p. 430

to a court which does not possess it otherwise. (Dudley v. Mayhew, 3 N. Y. 9 . McMahon v. Rauhr, 47 id. 67 .)

[First Department, General Term, at New York,

January 6, 1873.

Ingraham and Fancher, Justices.]

We think there was no error committed at the circuit, and that the judgment should be affirmed.

Cases cited

Chemung Canal Bank v. Judson 8 N. Y. 254 N.Y. p. 429
Dudley v. Mayhew 3 N. Y. 9 N.Y. p. 430