Town of Ontario v. First National Bank — 35 N.Y. St. Rep. 536

Majority

p. 536

The Town of Ontario, App’lt, v. The First National Bank of Andes, Impl’d, Resp’t.

(Supreme Court, General Term, Fifth Department,

Filed January 23, 1891.)

Headnote

Judgment—Fbaud—Remedy.

This action was brought to declare certain town bonds void, and that a. judgment of the United States circuit court recovered in an action upon such bonds, and assigned to the defendant, be decreed a nullity, on the ground that the defendant was the owner of said bonds and fraudulently assigned them to the plaintiff in the action in which such judgment was recovered, without consideration, for the purpose of transferring the question of the validity of the bonds from the courts of this state, which had declared them void, to the United States court. Feld, that the action could not be maintained; that the judgment could not be questioned collaterally in this court, but that plaintiff’s remedy, if a fraud was practiced on the United States court, was by application to that court to set the judgment aside.

Appeal from a judgment entered upon the decision of an equity special term in Wayne county, dismissing the complaint.

J. Welling, for app'lt; W. H. Johnson, for resp’t.

In December, 1883, an action was commenced in the United States circuit court for the northern district .of New York, by Dudley P. Ely against the plaintiff in this action. On the 14th day of July, 1885, the plaintiff in that action recovered a judgment against the plaintiff in'this action for $2512.68. The said Ely, at the time of the commencement and trial of that action, was a citizen and resident of the state of Connecticut, and the action was brought to recover the amount apparently due upon certain bonds of the town of Ontario, issued under an act passed April 11,1868, entitled “An Act to authorize certain towns of the counties of Oswego, Cayuga and Wayne to issue bonds to take stock in and for the construction of the Lake Ontario Shore Railroad,” as amended in April, 1869.

The plaintiff in this action alleges among other things the bringing of the action in the United States circuit court; the recovery of the judgment; that it remained unsatisfied and had. not been vacated or reversed; that the defendant, the First National Bank of Andes, was the owner of some of those bonds ; that the court of appeals of this state had adjudged them void, and that the bank to obviate the force of such adjudication fraudulently assigned without consideration, those bonds to Ely, who obtained a judgment upon them as above stated, and then assigned it to the bank, and that the bank was taking proceedings to enforce the judgment.

The complaint alleges in substance that the arrangement between the bank and Ely was colorable and fraudulent, and entered into for the purpose of transferring the question of the validity' of the bonds from the courts of this state, which had adjudged them void, to the circuit court of the United States.

- The prayer of the complaint is that the bonds may be adjudged illegal and void, and that the judgment of the circuit court of the United States may be decreed a nullity.

At the close of the trial of this action, the court dismissed the

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complaint upon the ground that the plaintiff’s remedy, if any, was an application to the circuit court of the United States to vacate and set aside the judgment and proceedings in the circuit court. Judgment was entered upon the decision of the trial court, and the plaintiff appealed to this court.

The allegations in the complaint in this action are to the effect that the judgment of the circuit court of the United States was absolutely void.

The act of March 3, 1875, § 5, 18 United States Statutes, 470, 1st Supp. Bi. S., is as follows : “ That if, in any suit commenced in a circuit court, or removed from a state court to a circuit court of the United States, it shall appear to the satisfaction of said circuit court, at any time after such suit has been brought or removed thereto, that such suit does not really and substantially involve a dispute or controversy properly within the jurisdiction of said circuit court; or that the parties to said suit have been improperly or collusively made or joined, either as plaintiffs or defendants, for the purpose of creating a case cognizable or removable under this act, the said circuit court shall proceed no farther therein, but shall dismiss the suit, or remand it to the court from which it was removed, as j ustice may require; and shall make such order as to costs as shall be just, but the order of such circuit court, dismissing or remanding said cause to the state court, shall be reviewable by the supreme court on writ of error, or appeal, as the case my be.”

The act of congress of September 24, 1789, chapter 20, § 11, confers jurisdiction upon United States circuit courts as follows: . “ The United States circuit courts have been vested by statute with original jurisdiction, concurrent with the courts of the several states, of all suits of a civil nature at common law or in equity, where the matter in dispute exceeds, exclusive of costs, $500, * * * and the suit is between a citizen of the state where the suit is brought and a citizen of another state.”

It is a familiar rule that a decree of a competent tribunal cannot be questioned collaterally. Kinnier v. Kinnier, 45 N. Y., 535 ; Hunt v. Hunt, 72 id., 217.

The plaintiff in the action in the circuit court of the United States lived in Connecticut; that court had jurisdiction of the parties and subject matter; the action proceeded to judgment. If for any reason a fraud was practiced upon that court, or the proceedings were colorable or collusive, and the action was brought to defeat instead of to further the ends of justice, that court had ample power, on proper application, to grant full relief. The remedy is not by an, action in this court to correct the proceedings of the United States circuit court collaterally.

The allegations in the complaint in the present action, to the effect that the judgment of the circuit'-court was absolutely void, are mere legal conclusions, adding nothing to the inferences deducible from the facts alleged. Sprague v. Parsons, 14 Abb. N. C., 320 ; Supervisors of Saratoga v. Seabury, 11, id., 468 ; Price v. Brown et al., 98 N. Y., 388 .

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The conclusions reached by the trial court were correct, and the judgment must be affirmed.

Judgment affirmed, with costs.

Dwight, P. J., concurs; Macomber, J., not sitting.