Jones v. Milbank

By the Court—Gilbert, J. The facts pleaded in the answer are no bar. This appears from the terms of the bankrupt act as well as from the nature and object of the system created by it. The plaintiff was not and could not be a party to the proceeding in the District Court, nor was he in any sort of privity with the bankrupt. But if he could be deemed a privy in estate, his title accrued at the very commencement of the proceedings in bankruptcy (§ 14), which, of course, was long before the proceeding to oppose the discharge was had. There would, therefore, be no estoppel, for the principle of estoppel has no application except where the conveyance is made, after the event out of which the estoppel arises. (Campbell v. Hall, 16 N. Y. R., 575, and cases cited.) The title to property transferred by the bankrupt, in fraud of his creditors, is, in express terms (§ 14), at once vested in the assignee in virtue of the adjudication in bankruptcy and the appointment of his assignee, and the latter is authorized to sue for and recover the same; and whether the creditors, who oppose the bankrupt’s discharge, succeed or fail, the property which may he received or recovered by the assignee remains vested in him, and distribution thereof is to be made among the creditors. (§§ 27, 28.) The proceeding to oppose the discharge seems to be conclusive only in that proceeding. If the determination is in [75] favor of the bankrupt, he gets his discharge. But any creditor may afterward, and within two years, apply to the court to annul it on the same grounds on which it had been opposed, or others, and if the fraud be established, the court is required to set aside and annul the discharge, unless the creditors so applying had knowledge of such fraud before the discharge was granted. (§ 34.) The statute also provides (§ 29) that the discharge itself shall not he valid if the bankrupt has made any fraudulent disposition of his property, or done any of the acts which the statute denounces, thus leaving the discharge open to attack in any court wherever set up as a bar. It is unnecessary to pursue the subject further; the judgment below was clearly right and should he affirmed, with costs, with leave to the defendants to amend on payment of costs. Judgment affirmed.