Cromwell v. Burr

Van Hoesen, J. Section 5119 of the Revised Statutes of the United States provides that a discharge in bankruptcy may be pleaded by a simple averment that on the day of its date it was granted to the bankrupt, setting forth a full-copy of the discharge in its terms as a full and complete bar to all suits brought on any debts, claims, liabilities or demands which were or might have been proved against the estate of the bankrupt in bankruptcy. Where a discharge is set forth in the answer, that is to say, where a full and complete copy thereof is inserted in the pleading, it is not necessary for the defendant to allege the facts which show that the court of bankruptcy had jurisdiction of the party, or of the subject-matter (Stoll v. Wilson, 14 N. B. R. 571; Estee’s Forms and Precedents, title Bankruptcy). Sackett v. Andross (5 Hill, 327), and other cases which hold that the pleading must set forth the facts that show the bankruptcy court to have had jurisdiction, were decided under a statute which contained no such provision as section 5119, to which reference has been made. But that section applies to discharges only. All other proceedings which are relied on to release a bankrupt from his debts must, when pleaded, he accompanied by averments which show that the court in which they were taken had jurisdiction of the parties and of the subject-matter. Such proceedings are regarded as the judgment of an inferior court of special and limited jurisdiction, or as a discharge in insolvency, and jurisdiction must be shown by the averment of the facts which conferred it (Turner v. Roby, 3 N. Y. 193; Sackett v. Andross, 5 Hill, 327; Stoll v. Wilson, 14 N. B. R. 571). The answer in this case is defective in substance, as it does not set forth the facts which gave the court of bankruptcy jurisdiction of the bankrupt, and of the involuntary proceedings taken by the creditor against him. It was error, therefore, in the justice to deny the plaintiffs’ motion for judgment on the answer. Had the justice decided the answer to be defective, it would then have been [258] proper to allow the defendant to amend his answer by pleading the jurisdictional facts; but as the plaintiffs delayed their motion till the trial had begun, there should not be imposed as condition of such an amendment any more costs than they would have been entitled to if they had moved for judgment upon the answer as frivolous, under section 537, Code Civil Procedure. For the error in denying the motion for judgment ón the answer the judgment must be reversed, with costs to abide the event. As the defendant will doubtless at once apply for leave to amend his answer, it may be well to call attention to the following authorities, which both parties may find useful (Stephens v. Ely, 6 Hill, 607; Exparte Jewett, 11 N. B. R. 443, 444; In re Duncan, 14 N. B. R. 18; In re Funkenstein, Id. 213). The Stephens case establishes that it is not necessary for a bankrupt against whom proceedings in involuntary bankruptcy were taken, to set forth, when pleading a discharge, what the acts of bankruptcy were of which he was accused by his creditors. The other cases hold that where the jurisdictional facts are shown to exist, viz.: that the debtor resides within the United States, and either resides or does business in the district in which bankruptcy proceedings are taken, and that he owes debts provable in bankruptcy to an amount exceeding $300, the court of bankruptcy has jurisdiction, and its decisions cannot be inquired into or impeached collaterally because the requisite number of creditors did not unite in the petition, or because the petition does not contain sufficient allegations of the existence of any of the facts which, under section 5021, United States Revised Statutes, should exist, to warrant a proceeding in involuntary bankruptcy. Nor would it invalidate a composition, resolutions accepting which the court had ordered to be recorded, if the creditor should prove in a collateral action that the requisite number of creditors had not in fact'accepted the composition. The court of bankruptcy, in ordering the resolutions to be recorded, necessarily decided that the requisite num-' ber had accepted, and its decision cannot be questioned collaterally. Nor would the failure to produce the bankrupt’s statement at any'meetmg, or any other omission, or any departure [259] by the bankruptcy court from the regular order of procedure, invalidate the composition when pleaded as a defense to a collateral action. If the court of bankruptcy had jurisdiction of the proceedings when they were begun, its adjudication in favor of recording the resolutions accepting the composition is conclusive as to the regularity of every intermediate proceeding. We do not now intimate any opinion as to the effect of the omission from the petition of any allegation as to the residence of the bankrupt. The Be vised Statutes do not prescribe what the petition shall allege. Whether the petition was sufficient to confer jurisdiction, it not averring that Burr resided within the United States, we leave for future consideration, if or do we now express any opinion as the effect of an offer of money in fulfillment of the terms of the composition, coupled with a demand for a receipt, and a refusal to pay the money unless a receipt were given. We do not determine whether a tender with a condition annexed is such a tender as will debar the creditor from claiming the full amount of his original claim. The judgment should be reversed, and a new trial ordered, with costs to abide the event. Charles P. Daly, Ch. J., and J. F. Daly, J., concurred. Judgment reversed and new trial ordered, with costs to abide event.