Augustine, Assignee, v. McFarland et al.

on any of the matters enunciated in said section were absolutely null and void.

That Congress having the constitutional power to establish uniform laws on the subject of bankruptcy, has seen proper to select the Federal courts as the tribunals in which such laws should be administered, and has expressly conferred that power on those courts, and by no implication can the State courts take any of that jurisdiction.

See ex parte Christy, 3 How., 292; Brigham v. Claflin, 7 N. B. R., 412.

The several courts of this State have such powers as are defined by law, and no lawyer would contend that the District Courts of this State have jurisdiction to settle estates of deceased persons because the law has nowhere said that they should not exercise that power. There has been a tribunal brought into existence, and that particular jurisdiction has been in terms conferred upon it, and that of itself is an implied exclusion of that power from other courts.

With this statement as to what my own views of the law would have been, aside from any decisions, I come back to the question as to what has been decided by the courts.

It seems that the general current of authorities, and even those that hold the jurisdiction exclusive in the Bankruptcy Court, agree that the State courts may exercise the power when leave of the Bankruptcy Court is first obtained.

Then there are other decisions which hold that the Bankruptcy Court may approve and ratify proceedings commenced in the State court without leave, if the estate will not be materially injured thereby, or if the assignee has been guilty of laches in objecting to such proceedings. It would seem to stand to reason, if the power can be conferred on the State courts by leave had prior to any proceedings, that it can by the same authority be approved and made good after the proceedings have been commenced.

The following cases hold that the jurisdiction of the United States District Court in matters appertaining to bankruptcy is not exclusive of the State courts.

Augustine, Assignee, v. McFarland et al.

In re Bowie, 1 N. B. R., 628; Norton's assignee v. Boyd, 3 How., 426. In this case the Circuit Judge used this language:

"I agree fully in the opinion that upon the ground of expediency the jurisdiction of the District Court of the United States over all the property of the bankrupt, mortgaged or otherwise, should be exclusive, but I do not understand the Bankrupt Law to render it so." The court then holds that parties may foreclose a mortgage against a bankrupt in the State courts, and that the Federal courts will not interfere except to prevent wrong or injustice to the estate.

The Supreme Court affirmed this decision, but declined to express any opinion as to the exclusive jurisdiction of the Federal court.

In Mays v. Fritton, 11 N. B. R., 229; 20 Wall., 414, a foreclosure of a mortgage was had against the bankrupt in the State court. The assignee was made a party defendant, and entered his appearance and made a contest for the surplus proceeds of the sale, and did not object to the jurisdiction of the court. On appeal to the Supreme Court, it was held that he could not then be heard to object to the jurisdiction, as he had acquiesced in the proceedings in the State court.

A still later case is published in 12 N. B. R., 96, Scott et al., assignees, v. Kelley. It was a case decided by the Supreme Court, and the opinion is delivered by Waite, C. J. It is very brief, and the substance of it is contained in these words:

"The assignees in bankruptcy voluntarily submitted themselves and their rights to the jurisdiction of the State court. Being summoned, they appeared without objection and presented their claim for adjudication by that court. No effort was made to remove the litigation to the courts of the United States.

"It is now too late to object to the power of the State court to act in the premises and render judgment." And cites the case of Mays v. Fritton, before referred to.

Platt v. Parker.

These decisions of the highest court in the land have recognized the power of the State courts to proceed under certain circumstances in these cases, and although it is to be regretted that the views of that court and the reasons for its decision have not been given, it is nevertheless binding upon this court.

As to the other question, it is necessary to say but little. The assignee voluntarily appeared in the case and submitted to the jurisdiction of the State court, and asked for, and took a judgment in his own favor as an individual, and had his lien adjudicated on the real estate.

He permitted the property to be repeatedly appraised and offered for sale without objection, and was present at the sale and advised about the proceedings therein. The various proceedings have extended over a period of more than two years, and never, until now, has the assignee made any objection thereto. The incumbrances on the real estate are more than it will bring at public sale, and there can be no surplus for the general creditors. There is no reason to believe that the assignee can sell it for more than it has already been sold for, and I cannot see that the estate is now going to be injured by permitting the State court to proceed to a final conclusion of the matter. The temporary injunction will therefore be denied.

SUPREME COURT-NEW YORK.

The claim of a creditor is barred by a discharge, although his name was not placed on the schedule nor any notice given to him of the proceedings.

PLATT v. PARKER.

APPEAL by plaintiff from a judgment in favor of defendants dismissing the complaint entered upon the report of a referee.

The action was brought by George W. Platt against William A. Parker and another, upon two promissory notes

Platt v. Parker.

indorsed by defendants. Sufficient facts appear in the opin

ion.

Edward S. Clinch, for appellant.

William A. Jenner, for respondents.

Present-Barnard, P. J., Tappen and Gilbert, JJ.

TAPPEN, J.-The plaintiff sued the defendants as indorsers upon two promissory notes, each for the sum of two thousand five hundred dollars; the defendants pleaded a discharge in bankruptcy granted them on the 20th of December, 1872, under the general Bankrupt Act of 1867, and the amendments thereof.

The trial was before a referee, who found this defense established, and gave judgment in favor of the defendants; the plaintiff appeals therefrom, and claims that such bankrupt discharge does not bar his action, for the reason that the defendants, in their schedules, did not include the claim or the name of the plaintiff in their list of liabilities, and hence, that the plaintiff, as a creditor, is not affected by such discharge. It is admitted as a fact that the bankruptcy schedules, required by the act, did not include the plaintiff's name or indebtedness in question. The marshal or messenger did not serve upon the plaintiff any notice of the proceeding; the notice required by publication was duly given.

The plaintiff offered no proof to show any fraudulent · omission on the part of the bankrupts; the defendants were offered as witnesses to testify that such omission was not intentional, but on the plaintiff's objection the referee excluded the testimony. The defendants also put questions for the purpose of showing that the plaintiff had actual knowledge of the bankrupt proceedings during their pendency, and these were excluded on plaintiff's objection.

In the 34th Section of the Act of 1867 it is provided, that any creditor of the bankrupt, whose debt was proved or provable, who shall see fit to contest the validity of such discharge, on the ground that it was fraudulently obtained, may, at any time within two years, apply to the court which granted it, to set it aside.

Platt v. Parker.

The same section provides that a discharge, duly granted under this act, shall (with certain exceptions relating to debts created by fraud, and certain other debts) release the bankrupt from all debts, claims, liabilities, and demands, which were or might have been proven against his estate, and the certificate of discharge is made conclusive evidence of the fact and regularity of such discharge.

A clause in the Bankrupt Act of 1841, declaring the discharge conclusive, unless impeached for fraud or willful concealment, is not contained in the Act of 1867, and its omission from this latter act is now invoked in the interpretation thereof.

In construing the Act of 1841 the Chancellor, in Hubbell v. Cramp, 11 Paige, 310, held, that the omission, by mistake of the debtor, of the name or claim of a creditor, could not invalidate the discharge as to such creditor.

Neither the Act of 1841 nor the Act of 1867 requires absolute certainty, either as to the list of creditors or the inventory of the bankrupt's assets. The effect of the Act of 1867, in respect to the question under review, was passed upon in Payne v. Able, 4 N. B. R., 220; 7 Bush (Ky.), 344. The bankrupt, in that case, had failed to specify the plaintiffs, or their claim, in his bankrupt schedules, and their claims, although provable, had not been proven in the Bankrupt Court; and the conclusion is reached, quoting Shaw, C. J., in Burnside v. Brigham, 49 Mass., 75, that the mere omission of the creditor's name will not avoid the discharge, but the plaintiff must go farther and show the omission to be fraudulent or willful; the same rule is held in cases decided in other States. (Brown v. Rebb, 1 Rich., 374; Beake v. Birdsall, 1 N. J., 12; Gassett v. Morse, 21 Vt., 627.) And in Stevens v. M. S. Bank, 101 Mass., 109, the warrant and application for the bankrupt's discharge being published in the newspaper, as required by the act, the creditor not personally served, or whose name is omitted or not known, was held to be bound, at his peril, to take notice. In the Kentucky case the court was of opinion that the discharge could not be re