Morrison v. Woolson

Eastman, J. The questions presented in this case are raised upon the pleadings. The action was debt; plea, bankruptcy; replication that the certificate was insufficient as not being duly and legally granted ; and demurrer to the replication. Upon examining the plea, we find that no court is set forth as having entertained the case and granted the certificate ; and the plea is clearly bad on this account. It does not appear what district court received the petition and granted the discharge ; and this omission is fatal. 1 Chitty’s Pld. 672; Joy v. Simpson, 2 N. H. Rep. 179; Johnson v. Ball, 15 N. H. Rep. 407. This defect, however, was probably a mere clerical error in copying the form ; and the common pleas would no doubt grant an amendment, upon some terms, that would cure it. The important question of the case is this; is a certificate of discharge conclusive as to the intermediate steps taken prior to the final decree ? — 519 — The replication and the argument of the plaintiffs go upon the ground that the defendant having been a member of the firm of Gardner & Woolson, the court should either have declared the firm bankrupt, or Woolson a bankrupt, as a member of the firm, and in his partnership capacity; that such a decree was essential to be passed ; that it was not so, and that they should be permitted to show it, to defeat the discharge. In other words, that they should be permitted to impeach the discharge for irregularity or illegality in the interlocutory proceedings. Now, without stopping to investigate the question as to the correctness of the interlocutory decrees, or whether it ■was necessary for the district court to pass such a decree as that contended for by the plaintiffs, we are of opinion that the intermediate steps cannot be inquired into in this ,way. All that was necessary for the defendant to do in pleading his bankruptcy was to set forth enough to show that the district court had jurisdiction of the case, and decreed his discharge. And this being shown, the intermediate steps cannot be investigated. Service v. Heermance, 1 Johns. 91; Buckman v. Cowell, 1 Coms. 505; Rowan v. Halcomb, 16 Ohio Rep. 463; Johnson v. Ball, 15 N. H. Rep. 407; McNulty v. France, 1 Sandf. Sup. Court Rep. 128. And, correcting the defendant’s plea, of its clerical error, enough was set forth to show that the court had jurisdiction, and could grant the decree of discharge. Having jurisdiction, it could adjudge upon the sufficiency of the interlocutory proceedings, and its decision upon those matters was final. But we regard this question as having been substantially settled when this case was before the court on a former occasion. It was then held, (Morrison v. Woolson, 3 Foster’s Rep. 11,) that as the plea showed the district court to have had jurisdiction, and to have proceeded on the petition to decree the discharge, all the intermediate steps would be presumed to have been regularly taken. The course of argument pursued by the plaintiffs’ coun — 520 — sel is founded mainly upon decisions made under the English bankrupt act, which differs from ours, and upon decisions of State courts, based upon insolvent acts, which do nbt make the discharge and certificate final and conclusive; and hence the unsoundness of his conclusions. By the English bankrupt act, where a defendant had obtained a certificate before the suit against him was brought, he was allowed to plead his bankruptcy generally, concluding to the country, and to give in evidence the special matter which entitled him to his discharge; and on the trial he was bound to prove all the proceedings required by the statutes, the certificate being made prima facie, but not conclusive evidence. Where he obtained his certificate after the suit was commenced, the provision which permitted him to plead generally did not apply; and in that case he was obliged to set out all the steps that warranted his discharge. The certificate of the chancellor was not in the nature of a ■ decree or judgment on the validity and sufficiency of those proceedings. It did not constitute his discharge, and could not be pleaded as such. 2 Chitty’s Pld. 426, 427; 1 Cook’s Bankrupt Law, 82, 502, 506; Miles v. Williams, 1 P. Williams, 258, 259; S. C. 10 Mod. 160, 247. And so with the decisions upon the insolvent laws of several of the States, the certificate is not made by the terms of the acts conclusive evidence of the discharge. But by the fourth section of the bankrupt act of the United States, the court was empowered to allow and decree to the bankrupt, who had complied with the law, a discharge from his debts, and give him a certificate thereof; and it was provided that such discharge and certificate, when duly granted, should, in all courts of justice, be deemed a full discharge of all debts, contracts, and other engagements, which were provable under the act, and should be and might be pleaded as a full and complete bar to all suits brought in any court of judicature whatever; and that the same should be conclusive evidence, of itself, in favor of such bankrupt, — 521 — unless the same should be impeached for some fraud or artful concealment by him, of his property or rights of property, contrary to the provisions of the act, on reasonable notice, specifying, in writing, such fraud or concealment. The district court was thus entrusted with jurisdiction to pass the decree for the bankrupt’s discharge. That was the tribunal appointed by the act to decide and adjudge on the question of his right to the certificate. It was not an inferior tribunal, whose proceedings could be impeached in the manner contended in the argument, but a court of record, and upon the question of granting the certificate, a court of final and conclusive resort. All persons interested were made parties, on notice prescribed by the law, to the proceedings in that court, and might there resist the debtor’s application for his discharge. The decree of that court was expressly declared by the statute to be a final discharge. That decree, and'not the proceedings on the petition, was to-be pleaded in bar of the bankrupt’s debts, and the certificate-was made conclusive evidence, not only of the fact that the-decree was passed, but also of the validity and legal effect of the decree, unless impeached for a cause named in the act, viz, fraud or artful concealment, by the bankrupt, of his property or rights of property, and upon notice in writing,, specifying such fraud or concealment. It was the decree which constituted the discharge, and was to be pleaded as such. If the defendant should plead and prove all the matters and things that, under the act, would be necessary to entitle him to his discharge, it would be no defence, because the law entrusted to the district court the jurisdiction to decide and conclude that question. And this jurisdiction, when it once attaches, must be held to extend, not only to the general merits of the bankrupt’s case, but to the sufficiency and regularity of the proceedings ; otherwise the certificate could not be in the language of the act, conclusive evidence of the bankrupt’s discharge. If the decree could be impeached because, before another — 522 — tribunal, and in another cause, the intermediate proceedings between the petition and final decree did not appear to be, in all respects, such as that other tribunal might be inclined to consider as sufficient, it would be in direct contradiction to the express words of the act, which declares that the decree shall not be impeached, except for fraud or concealment, specified in writing. The plaintiffs attach much significance to the words “ duly granted.” But it is evident' they cannot have the force contended for. If so, they open to inquiry all the proceedings in the district court; override the positive provisions of the fourth section of the act, and nullify its clearest language. It is unnecessary to inquire as to what the phrase was intended to refer, or as to what particular signification should be given to it, being clear, as we are, that it cannot, by any legitimate construction of the section, be held to defeat the plain words of the act, that the certificate shall be conclusive evidence, of itself, in favor of the bankrupt, unless impeached for fraud or artful concealment of property. The district court judged upon the sufficiency of the interlocutory proceedings on the defendant’s application, and had jurisdiction to conclude those questions, and the decree of discharge cannot be held void in this court, because those proceedings might not be such as we should think the proper practice. The suggestions made upon this question are but little more than an abstract of the views expressed by the learned judge who delivered the opinion of the court when the case was formerly before us. Those views appear to us to cover almost the entire ground, and we have adopted them as. expressing clearly and distinctly the opinion of the court at the present time. Upon the main question, then, of the case, our opinion is, as stated, with the defendant; that the certificate is conclusive ; but on account of the error in the plea, in omitting to — 523 — state any court in which the discharge was obtained, the ■demurrer must be overruled, with leave to the defendant to move the court of common pleas to amend his plea. When that shall he amended, there should be, Judgment for the defendant.