Newman v. Fisher

| Md. | Jan 29, 1873

Robinson, J.,

delivered the opinion of the Court.

An attachment was issued on judgment recovered by the appellant against “The Baltimore County Dairy Association,” and laid in the hands of the appellee, as garnishee.

The garnishee pleads, that prior to the issuing of the attachment, the Association had been duly declared and adjudged to be a bankrupt by the District Court of the United States for the State of Maryland, and that the funds in question are held by him as assignee in bankruptcy.

To this plea the appellant replies that the Association had been adjudicated a bankrupt by the District Court, upon a petition filed by an officer of said Association, authorized to do so by a vote of the directors, and not by the vote of a majority of the corporators, at a meeting called for that purpose.

To this replication the garnishee demurred, and this appeal is taken from the judgment of the Court sustaining the demurrer.

The appellant contends that the District Court had no jurisdiction to adjudicate the Association a bankrupt, because the bankrupt Act of 1867 requires the petition to be filed by a person authorized by a vote of a majority of the corporators, at a meeting called for that purpose. Assuming this construction to'be correct, without, however, so deciding, the question is, whether the property in the hands of the assignee in bankruptcy is liable at the instance of creditors to the attachment laws of this State.

The Bankrupt Act of 1867 was passed by Congress in pursuance of Section 8, Article 1, of the Constitution of the United States. By that section full power is conferred upon Congress over the subject of bankruptcy, with the single qualification, that the laws passed in pursuance thereof shall be uniform throughout the United States.

The first section of the Act of 1867, provides that the several District Courts of the U. States shall have original jurisdiction in proceedings in bankruptcy, and this is followed by a general provision extending such jurisdiction to all acts, matters and things to be done under and in virtue of the bankruptcy, until the final, distribution and settlement of the bankrupt estate. The jurisdiction hereby conferred on the Federal Courts is superior and exclusive in all matters arising under the statute, and from the time proceedings in bankruptcy are begun, the District Court has jurisdiction over the bankrupt, his estate and all questions connected therewith. The bankrupt Act having been passed in pursuance of the Constitution of the United States, whenever by express words, or by necessary implication, it affects the jurisdiction of State Courts or the remedies of suitors therein, they must yield to the paramount law. Not only is original jurisdiction in matters of bankruptcy conferred by the Act of 1867 upon the Federal Courts, but it would be inconsistent with the plain purposes of the law, and destructive of the system itself to permit creditors, by resorting to State tribunals, to withdraw against the will of the bankrupt Court, property or cases belonging to the jurisdiction of that Court. Bump’s Law and Practice of Banlcruptey, 262. Moreover, if the contention of the appellant be correct, we should have the State Courts deciding one way and the Federal Courts another, thus inevitably leading to a conflict in jurisdiction, which it was the obvious policy of the law to avoid.

(Decided 29th January, 1873.)

The question, then, as to whether the petition in this case was filed by an officer of the corporation legally authorized by the Act of 1867, is one which belongs to the Bankrupt Court, and whilst the proceedings in bankruptcy are in fieri, its judgment and the grounds upon which it was rendered, are not matters of review in a State Court. The assignee holds the property by virtue of his appointment by the bankrupt Court, and to that Court alone, is he responsible for its custody and disposition.

For these reasons the judgment of the Court below will be affirmed.

Judgment affirmed.