87 N.Y.S. 78 | N.Y. App. Div. | 1904
Fannie Meng was the owner of and engaged in running a hat and fur store in the city of Rochester, N. T. On the 26th day of December, 1899, four judgments were recovered against her by her three sisters-in-law respectively, aggregating about $2,615.50. One of said sis.ters-in-law is the defendant in this action and her judgment amounted to the sum of $845.67. Executions were immediately issued, upon all of said judgments to the sheriff of Monroe county, and on the 2d day of January, 1900, all of the property of Fannie Meng was sold thereunder for the sum of $2,068. Out of the proceeds of such sale the- defendant’s judgment was paid in full, as were two of the others, and the balance of the proceeds of such sale, being $4.42, was applied upon the other or fourth execution.
On the 6th day of March, 1900,. and within four months of the time when such judgments were recovered, an involuntary petition in bankruptcy was filed against Fannie Meng by certain other of her creditors, alleging that she was insolvent and unable to pay her debts at the time the judgments aforesaid were recovered and asking that she be adjudged a bankrupt. In answer to such petition Fannie Meng denied her insolvency at the time when such judgments were recovered. Neither the defendant nor any of the judgment creditors above referred to were made parties to such proceeding. ■ ,
The issue thus raised by the answer of Fannie Meng was tried in the United States District Court before the court and a jury. The jury found that Fannie Meng was insolvent at the time such judgments were recovered,- and thereupon and on the 17th day of May, 1901, a decree was duly made and entered in said court adjudging that Fannie Meng was insolvent at the time of the recovery of such judg
After making prima faoie proof of the other necessary facts, the plaintiff, for the purpose of establishing the insolvency of Fannie Meng, at the time the-defendant and the other judgment creditors referred to recovered their judgments, introduced in evidence the decree of the United States District Court "Which adjudged that Fannie Meng was insolvent at such time, and -rested. The learned trial court held "and decided that -such decree was no evidence of the insolvency of Fannie Meng as against the defendant in this action. The plaintiff then offered to make common Jaw proof; of such insolvency, but the court held that .having rested .his case he ought not to .be permitted to reopen for that purpose, and-denied his application for leave to make such proof. Thereupon the learned trial court granted the defendants motion for a nonsuit, and directed that the exceptions be heard in this court in the first instance.
Tn case Fannie Meng was insolvent within four months prior to the tiling of the petition in bankruptcy against, hep, and the judgment of the defendant'was recovered against her within that time, it must be conceded that such judgment and all proceedings taken thereunder were void, because- unquestionably the effect of the recovery-of such judgment, the issuing of the execution thereon and the sale of Fannie Meng’s property thereundep was to give a ' preference to the defendant, which is prohibited by the-Bankruptcy Daw. Subdivision .f of section .67 of said statute (30 IT. S. Stat. at-Large, 565) -is as follows:. “ All levies, judgments, ■ attachments
We think it should be held that the decree of the United States District Court put in evidence conclusively establishes, for the purposes of this action, that Fannie .Meng was insolvent at the time the defendant recovered judgment against her, and sold her property by virtue of the execution issued upon such judgment. Any other holding would lead to eijdless confusion in the administration of the law, and would in many cases nullify one of the principal purposes of the Bankruptcy Act. If the question of Fannie Meng’s insolvency can be retried in this case, notwithstanding the decree- of the United States District Court adjudging such insolvency, it may be controverted and litigated in any case brought by a trustee in bankruptcy, to seenre the estate of a bankrupt against a person who may have obtained such estate by process issued out of the State courts, where such person was not made a party to the bankruptcy proceedings. In the case at bar the entire property of Fannie Meng was devoted to the payment of four judgments obtained by her three sisters-in-law, one of whom is the defendant, within four months of the time when other of her creditors filed a petition in bankruptcy, in which it was alleged, in substance, that- she was a bankrupt at the time such judgments were obtained, and basing such allegation upon the fact of the recovery of such judgments, and upon that and other sufficient proof, as we must assume, such insolvency was established, and the decree of a court of competent Jurisdiction was made in accordance with such allegation and proof.
We think the decree of the United States District Court, for the purposes of this action, should be regarded as conclusively establishing that Fannie Meng was insolvent at the time when'the defendant recovered her judgment, and that the validity of such decree cannot be questioned in this action. ' '
In Carter v. Hobbs (1 Am. Bank. Rep. 215) the head note is as follows: “ An adjudication in bankruptcy being an adjudication in
In Levor v. Seiter (34 Misc. Rep. 382) it was held that an adjudication which adjudges bankruptcy is sufficient proof of the fact of insolvency, within the languáge and intent.of the act. '
In Matter of Ulfelder Clothing Co. (3 Am. Bank. Rep. 425) the. head note is as follows: “So, it seems, in proceeding against .the bankrupt, any creditor who had- a right to appear and join-in the petition or to be heard in opposition thereto under section 59,
In Chapman v. Brewer (supra) it was said : “ The District Court which made the adjudication, having had jurisdiction of the subject-matter, and the bankrupt having voluntarily appeared, and the adjudication having been correct in form, it is conclusive of the fact decreed, and cannot-be attacked collaterally in a suit brought by the assignee against a person claiming an adverse interest in property of the bankrupt.” . .
In Matter of Breslauer (10 Am. Bank. Rep. 33) the head note is as follows : “ The filing of a petition in bankruptcy is. a cmeat to all the world, and in effect an attachment and injunction.”
The many cases cited in the opinion in that case we think fully sustain the proposition.
The cases referred to would seem to establish that the decree of the United States District Court, put in evidence in this case by the plaintiff, was sufficient to prove the insolvency of Fannie Meng at the .time when the judgment of the defendant was obtained, and this was really the only issue involved. There is no suggestion in the evidence that the. adjudication in bankruptcy was ■ obtained’ "by collusion with the bankrupt. In fact, as we have' seen, she appeared ’
„ We, therefore, conclude that the plaintiff’s exceptions should be sustained and a new trial granted, with costs to the plaintiff to abide event.
• All concurred ; Spring and Williams, JJ., in result only.
Plaintiff’s exceptions sustained and motion for new trial granted, with costs to the plaintiff to abide event.
See 30 .U. S. Stat. at Large, 561.— [Rep
