Jordan v. Downey

Bartol, C. J., delivered the opinion of the Court. We fully concur in the ruling of the City Court upon the demurrer, and in the reasoning upon which the learned Judge rested his decision. In support of these,views, we may refer to the decision of the Court of Appeals of New York, in Cook vs. Waters, 9 N. B. R., 155 , as expressing the true ground upon which the rights of an assignee in Bankruptcy may be asserted by proceeding in a State Court. It was there held that such assignee ‘‘may sue in a State Court for the enforcement of any right vested in him by the bankrupt Act, as for the recovery of property transferred in fraud of that Act within six months prior to the commencement of bankrupt proceedings.

That the State Court in passing upon claims of assignees in bankruptcy, is not proceeding under the bankrupt Act; but simply recognizes that Act as the source of the assignee’s title, in the same manner as it would, if he derived his title from a deed or contract.” That decision was contrary to the ruling of the Supreme Court of Wisconsin in Bingham vs. Claflin, 7 N. B. R., 412, and that of the Supreme Court of Michigan in Vorhees vs. Frisbie, 8 N. B. R., 152 . But it is supported by Ward vs. Jenkins, 10 Met., 583 , a case under the former bankrupt Act; and by Stevens vs. Mech. S. Bank, 101 Mass., 109 ; Forbes vs. Howe, 102 Mass., 428 ; Hastings vs. Folder, 2 Carter, 216; Boone vs. Hall, 7 Bush., 66, and Mays vs. Man. N. B., 64 Pa., 74 .

Both upon reason and authority, we think the decision of the Court below, was correct, and ought to be affirmed. After the demurrer was overruled, the appellee was permitted to answer the petition, and to file an amended answer, and the cause was submitted upon petition and answer, without any proof being offered. It is argued by the appellant’s attorney, that the appellee having by the demurrer, admitted the facts alleged ⁴¹¹ in the petition, was thereby estopped, and that final judgment ought to have been entered for the petitioner; but the learned counsel is in error. The object of the demurrer was merely to raise the question of jurisdiction, and being overruled, the appellee was entitled to file an answer, and be heard upon the merits.

The petition alleges that one Isaac Larnberd was adjudicated a bankrupt on the 29th day of July, 1873, and the appellant was duly appointed assignee. That on the 27th day of February, 1873, the appellee obtained a judgment against Larnberd, by confession. That fieri facias had been issued thereon, the personal property of Larnberd had been seized and sold by the sheriff, and the sum of $797.83 realized from the sales; which was then in Court. The petition charges that the judgment was a fraud upon the bankrupt Act, because it was confessed at a time when the defendant (Larnberd) was unable in the ordinary course of business to pay his debts, and was hopelessly bankrupt; and that the appellee knew these facts ; and further that the confession of judgment was made in contemplation of bankruptcy, and the petitioner claims the fund in Court, realized under the execution, as properly payable to him as assignee.

The appellee in his answer states that the judgment was obtained on an indebtedness for that sum, due and owing to him from Larnberd ; that the same was rendered more than four months before the proceedings in bankruptcy were commenced. “He denies all charges of fraud in obtaining the judgment, denies that Larnberd was at the time the judgment was rendered or the levy made, either insolvent or bankrupt, within the