Buckingham v. Schuylkill Plush & Silk Co.

Blanchard, J. This is an application by a trustee in bankruptcy of the defendant for leave to intervene and to vacate an attachment issued out of this court, and for the release from the said attachment and the levy thereunder of the property affected thereby. This action was commenced March 22, 1901, and an attachment issued on that day and levied on property of the defendant. Subsequently, and on May 20, 1901, judgment was obtained by the plaintiff against the defendant, and execution issued to the sheriff, who has not yet made return thereof. That thereafter an action was commenced by Hamilton de Veer against [308] this defendant, in -which a- warrant of attachment was issued to the sheriff of the county of New York, who, pursuant thereto, made a levy upon property of the defendant in the county of New York. Judgment was obtained in said action on June 17, 1901, and an execution issued to the sheriff of New York county directing him to satisfy the judgment out of the attached property. On May 10, 1901, a motion was made in this court on behalf of said Hamilton de Veer to vacate a prior attachment theretofore issued out of this court against this defendant, which motion was denied, and an order entered thereon May 22, 1901. An appeal was taken by said de Veer, but the order was affirmed by the Appellate Division at the June, 1901, term. On December 24, 1901, the sheriff was notified that said warrant of attachment and execution were withdrawn. On July 17, 1901, this defendant was adjudicated a bankrupt in the District Court of the United States for the eastern district of Pennsylvania upon the petition of Hamilton de Veer and two other creditors. The defendant interposed no answer to the petition. There being more than twelve creditors, three creditors were necessary to join in the petition. The plaintiffs, opposing this application, attack the adjudication in bankruptcy, and hence the title of the trustee, claiming that the court was without jurisdiction in that three creditors ■whose debts were provable in bankruptcy were necessary to adjudicate defendant a bankrupt,, and that as Hamilton de Veer was maintaining a levy upon his attachment in this court at the time he joined with two others in the petition to have defendant adjudicated a bankrupt, his debt was not provable in bankruptcy, and hence the court was without jurisdiction to make the adjudication. The plaintiffs may properly question the judgment of the District Court of Pennsylvania. Matter of Kimball, 155 N. Y. 62; Hammond v. National L. Assn., 31 Misc. Rep. 182; affd., 58 App. Div. 453. The adjudication is not binding upon creditors who do not appear. Matter of Elmira Steel Co., 109 Fed. Repr. 456. By section 59b of the Bankruptcy Act, where, as here, there are more than twelve creditors, three creditors are required to join in the petition in order to give the court jurisdiction. The, sufficiency of .the number of creditors joining in the petition is a jurisdictional fact which may be questioned. Matter of Schenkein, 113 Fed. Repr. 421; Matter of Burlington Malting [309] Co., 109 id. 777. It has been decided that a creditor of an alleged bankrupt, who obtains an attachment, has, in substance and effect, a lien on the property until the attachment is vacated or becomes null and void by the adjudication, and to such extent, ' and up to that period, must be deemed to have a preference, and therefore not a provable debt, and, the attachment not being surrendered, he has no standing to maintain a petition in involuntary bankruptcy. Matter of Schenkein, supra; Matter of Burlington Malting Co., supra. Hamilton de Yeer having maintained his attachment in New York at the same time that he was a petitioning creditor in bankruptcy in the District Court of Pennsylvania, and he being one of the three creditors necessary to confer jurisdiction upon that court, it follows by virtue of the foregoing decisions that the court was without jurisdiction to make the adjudication, and hence that the trustee’s title must fail. The motion should be denied, with ten dollars costs. Motion denied, with $10 costs.