Abendroth v. Van DolsenAbendroth v. Van Dolsen
delivered the opinion of the court.
This writ of error brings before the court for review a judgment of the Court of Common Pleas for the- city and county of New York, affirming, on appeal, a judgment of the City Court of New York. The former is, under the New York Code of Civil Procedure, the highest court of the State to which a decision of the latter court may, as a matter of right, be carried by appeal for revеrsal or affirmance. The Federal question involved relates to the construction of the Bankrupt Act of March 2, 1867.
On the 18th of June, 1877, the defendants in error filed in the Marine Court of the city of New York, now known as the City Court of New York, a complaint against William P. Abendroth, John Griffith and George W. Wundram, in which they alleged “that at the times hereinafter mentioned the defendants werе copartners in business, carrying on such business in the city of New York under the firm name and style of Griffith & Wundram; that on or about the 7th day of August, 1872, at the city of New'York, the said defendants, in and under their said firm name of Griffith & Wundram, made their certain promissory note in writing, bearing date on that day, whereby they promised, three months after the date thereof, to pay to the order of Van Dolsеn & Arnott, these plaintiffs, the sum of nine hundred dollars, and thereupon delivered said note to these plaintiffs; that plaintiffs are the holders and owners of said note, and the said note is wholly unpaid; wherefore plaintiffs demand judgment against the defendants for the sum of nine hundred dollars, with interest from the 10th day of November, 1872, and for the costs of this action.”
The defendant Abendroth аlone appeared and filed his answer, which, after denying the partnership as alleged in the complaint, set up as a further defence that it was a limited partnership under the name of Griffith & Wundram, of which Griffith and Wundram were the general partners and he a special partner only, and as such' special partner entitled, under the statutes of New York, tо exemption from liability for engagements of the firm as a general partner.
The case was tried before a jury, which, under the direction of the court,, found in favor of the plaintiffs for the аmount claimed, with interest, and judgment was entered accordingly. Upon appeal the judgment was affirmed. To reverse that affirmance this writ of error was sued out.
From the evidence in this case it appears that, on the 23d of December, 1870, Abendroth, Griffith and Wundram formed a limited partnership under the statutes of New York, under the firm name of Griffith & Wundram, in which Griffith and. Wundram were designаted the general partners and-Abendroth the special partner. All the requirements of the statute, as to the signing and publication .of the articles, filing of the certificate and affidavit and publishing the same, were strictly qomplied with, except that the capital contributed by the special partner was not paid in cash, as stated in the affidavit;, but by a pоst-dated check payable eight days after its execution, and cashed in ten days from its date, the day after the firm went into business. Such misstatement in the affidavit was held by the Court of Appeals of that State to render the special partner liable as a general partner for the engagements of the firm, under the following provision of the statute authorizing the formation.of limited partnerships:
“And if any false statement be made in such certificate or affidavit all the persons interested in such partnership shall be liable for all the engagements thereof as general partners.”
On the 30th of November, 1872, Wundram presented his petition in bankruptcy to the District Court of the United States for the Southern District of New York, setting forth
It is proper to note here that in this adjudication there is no reference to Abendroth as a partner, either general or special; and no designation of the firm as a limited partnership. The usual warrant of seizure of the-estate of the bankrupt, the assignment of assets to the register in bankruptcy, the notice to creditors, and the first meeting of the creditors, all followed in the regular order of such proceedings, Abendroth was chosen by the creditors as assignee in bаnkruptcy, and accepted the office, with the approval of the judge. Upon the face of the return it appears that Yan Dolsen and Arnott did not take any part in the selection of the assignee. At the second meeting of the creditors Joseph McDonald & Co., creditors of the bankrupts, presented a petition to the register in bankruptcy, setting forth.that two days before the filing of the petition in bankruptcy certain of the creditors had agreed to sell their claims to Abendroth at twenty-five cents on the dollar, had afterwards proved their debts' in bankruptcy, and had then assigned the same to Abendroth. They asked that Abehdroth should no't receive any dividend upon said assigned -claims, and that the proof of them should be expunged, and the claims disallowed.
The counsel for plaintiff in error does not contend that this court should disregard the construction which the courts of New York have given to the statutes of that State authorizing the formation of limited partnerships; nor does he deny- that Abendroth incurred, at the formation of the partnership, a statutory liability for the debts of the firm, by the misstatement in the affidavit respecting the time and manner of putting in his capital as a special partner. But he contends that the plaintiffs are estopped from setting up this liability by the proceedings in bankruptcy, above recited, which he claims had the effect of an adjudication binding upon them that no such liability .existed. This ^contention involves two propositions: first, that as Wundram’s petition against Griffith alleged that the two, Griffith and Wundram, composed the firm, it clearly
We havе seen that through the entire 'proceedings in bankruptcy, from the inception to the adjudication, inclusive, nothing appears affirmatively or negatively with regard to Abendroth’s membership of the firm, no reference to him of any kind in the adjudication, and nothing in regard to him, except as a creditor in the schedule annexed to the petition. We concur in fhе opinion of the court below that the connection ' of - Abendroth with the partnership was not a matter in issue, nor a point in controversy upon the determination of which the adjudication was rendered.
An adjudication in bankruptcy partakes in part of the nature of a judgment in rem, and in part of the nature of a judgment in -personam. With regard to the estate of the bankrupt debtor, which has been by the court’s wаrrant of seizure, or by the surrender of the debtor, brought within the possession and jurisdiction of the court, its orders, decrees, and judgments as to the right and title to the property, or as to the disposition of it among the parties interested, are binding upon all persons and in every court. As a determination of the legal status of the bankrupt, or of the relations of the сreditors to both, its judgment is conclusive in all courts where it is pleaded. But as a determination of the legal status of a person not a bankrupt, and who was not a party to the proceeding, and whose status as a bankrupt has never been a question before the court, it unquestionably is not binding upon any person not a party to such proceeding. In the сases cited by the counsel for plaintiff in error, the adjudication either determined the legal status of the bankrupt debtor or related to the bankrupt estate brought within the jurisdiction of the court. In this case the petition neither asserted nor denied that Abendroth was a member of the bankrupt firm. No process was served upon him to show- whether he was or was nоt such member; nor did he himself voluntarily appear and petition to be declared the one or the other.
In our opinion an adjudication of the bankruptcy of a firm,
The second ground involved in the contention of the plaintiff in error is, that there was, in the subsequent proceedings before the register, an express adjudication that .Abendroth was a special partner and not a general partner; and that this adjudication wаs binding upon all the creditors, including the plaintiffs below in this action. We think this contention unten- • able, The question, before the register in that proceeding was, whether the proof of the claims referred to should be expunged, and the dividends upon them disallowed to Abendroth. In his report to the court he expresses his opinion to be that neither the fact that Abendrоth was the assignee in bankruptcy, nor the fact that he was a special partner in the firm, precluded him from drawing his share of dividends' in the claims referred to. This was certainly not an adjudication by the court that he was a special partner. The district judge in the order made by him did not pass on any question discussed in the report of the register, except his conclusion that the claims assigned to Abendroth, as aforesaid, ought not to be expunged or diminished, and that he was entitled to the dividends on them; and he so ordered. The order, relating as it did exclusively to a question as to the distribution of the assets of the firm, contained no feature of an adjudication with respect to Abendroth’s copartnership. Indeed, it is manifest from'аn examination of the register’s report that he did not consider that the question as to whether Abendroth was or was not a special partner had any material bearing on the question as to how the money in the hands of the assignee should be distributed among the creditors. In either case he considered that the claim should not be expunged or diminished. But even if, for the sake of argument, we concede that this last order of the judge was in effect an adjudication that Abendroth was a special partner, there is nothing in the judg
“Notwithstanding the erroneous statement in the affidavit as to the payment of the capital, the partnership was, in form, a limited partnership, and subject to all the rules applicable to such partnerships. If it had' undertaken to make an assignment with preferences, such assignment could not have been sustained on the ground 'of the violation of the statute. That violation could be taken advantage of only by creditors, and its consequence simply was to give them recourse against the special partner personally, as if- he had been a general partner.”
Another ground relied on for reversal is, that the pendency of the proceedings in bankruptcy is a good plea in abatement of this action. Section 5106 of the Revised Statutes, cited in support of this proposition, formerly § 21 of the act of March 2, 1867, c. 176, 14 Stat. 526, provides that “no creditor whose debt is provable shall be allowed to prosecute to final judgment any suit at law or in equity therefor against the bankrupt, until the question of the debtor’s discharge shall have been determined; and any such suit'or proceedings shall, upon the application of the bankrupt, be stayed to await the deter
It is only necessary to say that Abendroth was in no sense the bankrupt in those proceedings, nor was he endeavoring to obtain his discharge as a bankrupt debtor in any proceedings in bankruptcy pending at the time this action was commenced. lie is not entitled, therefore, to any stay of proceedings which the statute, by its own express terms, provides exclusively for the protection of the bankrupt.
The only remaining point relied on by plaintiff in error as a ground for reversal of the judgment below is, that the defendants were sued in the action as general partners, and thó judgment in favor of the plaintiffs determined that they were general partners ; and that the adjudication in bankruptcy of Griffith and Wundram was a judgment against the two partners, which is a bar to any action subsequently brought by the creditor against the two' defendants as suсh general partners. Against this view there is, we think, an insuperable objection. By § 5118 of the Revised Statutes, formerly § 33 of the act of March 2, 1867, c. 176, 14 Stat. 533, the rule of the common law, as declared by this court '-in
Mason
v.
Eldred,
If the discharge of the two bankrupt partners, which is the final judgment in the' proceedings, сannot estop the creditor from afterwards setting up the liability of the third partner for the joint debt, clearly the other and previous adjudication in the course of the proceedings cannot be held to have that effect. Though the action in the court below was brought against the three defendants, the jury was directed by the court to render its verdict аgainst Abendroth alone, and the judgment was entered up against him alone, thus fully recognizing the
The judgment of the court below is Affirmed.