New Lamp Chimney Co. v. Ansonia Brass and Copper Co.

State, which authorizes three persons to form such a corporation, and requires that the trustees shall be stockholders of the company. (Sess. Laws (1848), Chap. 40, p. 54.)

Nothing being alleged to the contrary, it must be assumed that the corporation was duly organized; and it appears that a meeting of the trustees was duly called, and notified to inquire into the condition of the affairs of the corporation, and that the meeting was regularly held; and it having been ascertained to the satisfaction of the meeting that the corporation was insolvent, it was voted and resolved, by a majority of the trustees present, that the president of the company be required to file a petition in the District Court that the corporation may be adjudged bankrupt. Such a petition was accordingly filed, and if the president of the company was duly authorized to sign and file it, the plaintiffs do not deny that the bankrupt proceedings were regular.

Two objections are taken to the jurisdiction of the Bankrupt Court, which in point of fact involve the same considerations. They are, that the majority of the stockholders did not sign the petition filed in the District Court, and that the president of the corporation was not authorized to sign itwhich is a mere inference from the fact that the meeting, when the vote and resolution were adopted, was a regular meeting of the trustees; but inasmuch as the statute of the State requires that the trustees shall be stockholders, and no objection is made to the organization of the company, it may well be presumed that the trustees were stockholders, as required by law.

As before remarked, three persons may form such a corporation, and the record shows that a majority of the trustees present adopted the vote and resolution, which necessarily implies that a minority did not concur; and if not, then certainly there must have been three or more present, and the record does not show that the whole capital stock of the company is not owned by three persons.

Viewed in the light of these suggestions, it follows that the want of jurisdiction in the Bankrupt Court is not clearly

New Lamp Chimney Co. v. Ansonia Brass and Copper Co.

shown, and that the case is plainly one where every presumption should be that the action of the court was rightful.

Due notice, it is conceded, was given to all concerned, and that the defendants appeared in the Bankrupt Court, and that they never made any objection to the jurisdiction of the court; and in view of those circumstances, the rule is that every presumption is in favor of the legal character of the proceedings. (Voorhees v. Bank, 10 Pet., 449, 473.)

Concede that, still it is said that courts created by statute cannot have jurisdiction beyond what the statute confers, which is true; but no such question arises in the case before the court, as all concede that the District Court had jurisdiction of the subject-matter, and that the defendants appeared and claimed and exercised every right which the Bankrupt Act confers. They are, therefore, estopped to deny the jurisdiction of the court, nor are the plaintiffs in any better condition, unless it appears that the bankrupt proceedings are actually void. Void proceedings of course bind no one, not estopped to set up the objection, and in order to establish the theory that the proceedings in this case are void, the plaintiffs deny that the president of the corporation was authorized to make and file the petition in the District Court. (McCormick v. Pickering, 4 N. Y., 276, 279.)

Such a petition might properly be made by the president of the company, and be by him presented to the District Court, if he was thereto duly authorized at a legal meeting called for the purpose by a vote of a majority of the corporators; and whether he was so authorized or not was a question of fact to be determined by the District Court to which the petition was presented; and the rule in such cases is that if there be a total defect of evidence to prove the essential fact, and the court find it without proof, the action of the court is void; but when the proof exhibited has a legal tendency to show a case of jurisdiction, then, although the proof may be slight and inconclusive, the action of the court will be valid until it is set aside by a direct proceeding for that

New Lamp Chimney Co. v. Ansonia Brass and Copper Co.

purpose. Nor is the distinction unsubstantial, as in the one case the court acts without authority, and the action of the court is void; but in the other the court only errs in judgment upon a question properly before the court for adjudication, and of course the order or decree of the court is only voidable. (Staples v. Fairchild, 3 N. Y., 41, 46; Miller v. Brinkerhoff, 4 Denio, 118; Voorhees v. Bank, 10 Pet., 449, 473; Kinnear v. Kinnear, 45 N. Y., 535.)

Jurisdiction is certainly conferred upon the District Court in such a case, if the petition presented sets forth the required facts expressly or by necessary implication, and the court upon proof of service thereof finds the facts set forth in the petition to be true; and it is equally certain that the District Court has jurisdiction of "all acts, matters, and things" to be done under and in virtue of the bankruptcy until the final distribution and settlement of the estate of the bankrupt, and the close of the bankrupt proceedings. (14 Stat. at L., 518.)

Power, it is true, is vested in the Circuit Courts in certain cases to revise the doings of the District Courts, and in certain other cases an appeal is allowed from the District Court to the Circuit Court, but it is a sufficient answer to every suggestion of that sort that no attempt was made in the case to seek a revision of the decree in any other tribunal. Nothing of the kind is suggested, nor can it be, as the record shows a regular decree unreversed and in full force.

Grant that, and still the proposition is submitted that the decree was rendered without jurisdiction, for the reason assigned, and that that question is open to the defendants, even though the decree was introduced as collateral evidence in a suit at law or in equity in another jurisdiction. But the court here is entirely of a different opinion, as the District Courts are created by an Act of Congress, which confers and defines their jurisdiction, from which it follows that their decrees, rendered in pursuance of the power conferred, are entitled in every other court to the same force and effect as the judgment or decrees of any domestic tribunal, so long as they

New Lamp Chimney Co. v. Ansonia Brass and Copper Co.

remain unreversed and are not annulled. (Shawhan v. Wherritt, 7 How., 627, 643; Huff v. Hutchinson, 14 How., 586, 588; Parker v. Danforth, 16 Mass., 299; Pecks v. Barnum, 24 Vt., 76; 2 Smith's Lead. Cas. (7th ed.), 814.)

Judgments or decrees rendered in the District Courts may be impeached for the purpose of showing that the particular judgment or decree was procured for the purpose of avoiding the effect and due operation of the Bankrupt Act, and competent evidence is admissible for that intent and purpose; but the judgment or decree of the District Court, in a case like the present, is no more liable to collateral impeachment, except to show that it was designed to prevent the equal distribution of the debtor's estate, than it is to such impeachment in the court where it was rendered. (Palmer v. Preston, 45 Vt., 154, 159; Miller v. United States, 11 Wall., 268, 300.)

Authority to establish uniform laws upon the subject of bankruptcy is conferred upon Congress, and Congress having made such provision in pursuance of the Constitution, the jurisdiction conferred becomes exclusive throughout the United States. By the Act of Congress, the jurisdiction to adjudge such insolvent corporations as are described in the 37th Section of the act, to be bankrupts, is vested in the District Courts; and it follows that such a decree is entitled to the same verity, and is no more liable to be impeached collaterally than the decree of any other court possessing general jurisdiction; which of itself shows that the case before the court is controlled by the general rule that where it appears that the court had jurisdiction of the subject-matter, and that process was duly served or an appearance duly entered, the judgment or decree is conclusive, and is not open to any inquiry upon the merits. (2 Smith's Lead. Cas. (7th ed.), 622; Freeman on J. (2d ed.), Section 606; Hampton v. McConnel, 3 Wheat., 234; Gelston v. Hoyt, 3 Wheat., 246, 312; Slocum y. Mayberry, 2 Wheat., 1, 10; Nations v. Johnson, 24 How., 195, 203; D'Arcy v. Ketcham, 11 Id., 165; Webster v. Ried, Ib., 437, 460.)

Such a decree adjudging a corporation bankrupt is in the

New Lamp Chimney Co. v. Ansonia Brass and Copper Co.

nature of a decree in rem, as respects the status of the corporation, and if the court rendering it has jurisdiction, it can only be assailed by a direct proceeding in a competent court, unless it appears that the decree is void in form, or that due notice of the petition was never given. (Way v. How, 4 N. B. R., 677; 108 Mass., 502; Ex parte Wieland, L. R., 5 Ch. Ap., 486; Ocean Bank v. Olcott, 46 N. Y., 12, 15; Revell v. Blake, L. R., 7 C. P., 305, 308.)

Second. Suppose that is so, then it is insisted by the defendants that the case before the court is controlled by the 21st Section of the Bankrupt Act, which, among other things, provides that no creditor proving his debt or claim shall be allowed to maintain any suit at law or in equity therefor against the bankrupt, but shall be deemed to have waived all right of action and suit against the bankrupt, etc. (14 Stats. at L., 526.)

Debtors, other than corporations and joint-stock companies, are certainly within that provision, and if corporations are also within it, then it follows that the judgment must be reversed, as the plaintiffs are not entitled to recover. Instead of that, the plaintiffs deny that corporations or jointstock companies are within that provision, and insist that the case before the court is controlled by the 37th Section of the Bankrupt Act, which provides that no allowance or discharge shall be granted to any corporation or joint-stock company, or to any person or officer or member thereof-which is the view of the case taken by the Court of Appeals of the State, whose judgment is brought into review by the present writ of error. (14 Stats. at L., 535; Brass and Copper Co. v. Lamp Chimney Co., 53 N. Y., 123.)

Difficulties, perhaps insurmountable, would attend the theory of the plaintiffs if the 21st Section of the Bankrupt Act stood alone; but it does not stand alone, and being a part of a general system of statutory regulation, it must be read and applied in connection with every other section appertaining to the same feature of the general system, so that each and every section of the act may, if possible, have their