A discharge in bankruptcy is no bar to an action on a judgment
recovered against the bankrupt after his discharge in a suit,
commenced before the bankruptcy, pending when the discharge was
granted and founded upon a debt provable against him in
bankruptcy.
This case comes here by a writ of error to the supreme court of
New York, having been decided in the Court of Appeals,
Page 117 U. S. 560
and the record remitted to the supreme court that judgment might
be finally entered there. The action was brought in that court on a
judgment in favor of the Revere Copper Company, plaintiff, against
Anthony W. Dimock, rendered in the Superior Court of the
Commonwealth of Massachusetts for the County of Suffolk on the
first day of April, 1875.
The defendant, Dimock, pleaded, in bar of this action a
discharge in bankruptcy by the District Court of the United States
for the District of Massachusetts rendered on the 26th day of
March, 1875, five days before judgment in the state court. The case
being submitted to the New York supreme court in special term,
without a jury, that court found the following facts, and
conclusions of law thereon:
"
As Findings of Fact"
"First. That the plaintiff is, and at the times hereinafter
mentioned was, a corporation duly organized and existing under and
by virtue of the laws of the Commonwealth of Massachusetts."
"Second. That on or about the 13th day of January, 1874, the
Revere Copper Company of Boston, Massachusetts, the plaintiff
herein, commenced an action in the Superior Court of the
Commonwealth of Massachusetts within and for the County of Suffolk,
a court of general jurisdiction, against Anthony W. Dimock, the
defendant herein, by the issue of a writ of attachment against the
goods, estate, and body of the said defendant, and which said writ
was duly served on said defendant, and the summons to appear in
said action was duly served upon him personally, and that the said
defendant thereafter duly appeared in said action by attorney; that
the cause of action was an endorsement of said Dimock of two
promissory notes made in the City of New York to the order of
plaintiff by the Atlantic Mail Steamship Company and dated December
19, 1872."
"Third. That on or about June 23, 1874, the said defendant,
Anthony W. Dimock, filed a petition in bankruptcy and was duly
adjudicated a bankrupt in the District Court of the United States
for the District of Massachusetts, and that such proceedings
Page 117 U. S. 561
were thereafter had that on or about March 26, 1875, the said
Dimock was discharged from all debts and claims provable against
his estate, and which existed on the 23d day of June, 1874."
"Fourth. That such proceedings were had in the aforesaid action
in the superior court of the Commonwealth of Massachusetts that on
or about April 1, 1875, the plaintiff duly recovered judgment in
said action against the defendant for the sum of three thousand
five hundred and ninetyfive 15/100 dollars, ($3,595.15), and that
said judgment was upon that day duly entered."
"Fifth. That no part of said judgment has been paid, and the
whole thereof is now due and payable to the plaintiff."
"
As Conclusions of Law"
"I. That the said proceedings in bankruptcy are no bar to the
present action, and constitute no defense herein."
"II. That the plaintiff should have judgment against the
defendant for the sum of three thousand five hundred and ninetyfive
15/100 dollars ($3,595.15), with interest from April 1, 1875,
amounting to one thousand one hundred and fortytwo 96/100 dollars
($1,142.96), making in all four thousand seven hundred and
thirtyeight 11/100 dollars ($4,738.11), together with the costs of
this action, to be taxed, and an allowance, in addition to costs,
amounting to the sum of seventyfive dollars."
The judgment rendered on these findings was reversed by the
supreme court in general term, and that judgment was in turn
reversed by the Court of Appeals, which restored the judgment of
the special term. 90 N.Y. 33.
Page 117 U. S. 564
MR. JUSTICE MILLER, after stating the case as above reported,
delivered the opinion of the Court.
The only question considered at all these trials was whether the
discharge of the defendant in the bankruptcy proceeding is, under
the facts found by the court, a bar to the present action, and, as
the decision by the New York court against the plaintiff in error,
as to the effect of that order of discharge, is to refuse to him a
right claimed under the laws of the United States, this Court has
jurisdiction to review the decision.
The superior court of Massachusetts had jurisdiction of the suit
of the copper company against Dimock both as regards the subject
matter and the parties. This jurisdiction was rendered complete by
service of process and by the appearance of the defendant. All this
was before the beginning of the bankruptcy proceeding. Nothing was
done to oust this jurisdiction, and the case accordingly proceeded
in due order to the rendition of the judgment which is the
foundation of this action. It is not argued that this judgment was
void or that the court was ousted of its jurisdiction by anything
done in the bankruptcy court. No such argument could be sustained
if it were made. In the case of
Eyster v. Gaff,
91 U. S. 521, which
was very similar to this on the point now before the Court, it was
said:
"The court in that case had acquired jurisdiction of the parties
and of the subject matter of the suit. It was competent to
administer full justice, and was proceeding, according to the law
which governed such a suit, to do so. It could not take judicial
notice of the proceedings in bankruptcy in another court, however
seriously they might affect the rights of parties to the suit
already pending. It was the duty of that court to proceed to a
decree between the parties before it until, by some proper
pleadings in the case, it was informed of the changed relations of
any of the parties to the subject matter of the suit. Having such
jurisdiction, and performing its duty as the case stood in that
court, we are at a loss to see how its decree can be treated as
void."
The Court then goes on to show that if the assignee had brought
his right, acquired
pendente lite, to the notice of the
court, it would have been protected.
Hill v. Harding,
107 U. S. 631.
Page 117 U. S. 565
So here, if Dimock had brought his discharge to the attention of
the superior court at any time before judgment, it would have been
received as a bar to the action and, under proper circumstances,
even after judgment, it might be made the foundation for setting it
aside and admitting the defense.
Ray v. Wight, 119 Mass.
426;
Page v. Cole, 123 Mass 93;
Golden v.
Blaskopf, 126 Mass. 523. Nothing of the kind was attempted.
The question before the Massachusetts court for decision at the
moment it rendered its judgment was whether Dimock was then
indebted to the copper company. Of Dimock and of this question it
had complete jurisdiction, and it was bound to decide it on the
evidence before it. Its decision was therefore conclusive, as much
so as any judgment where the jurisdiction is complete. It concluded
Mr. Dimock from ever denying that he was so indebted on that day,
wherever that judgment was produced as evidence of the debt. If he
had the means at that time to prove that the debt had been paid,
released, or otherwise satisfied and did not show it to the court,
he cannot be permitted to do it in this suit, and the fact that the
evidence that he did not then owe the debt was the discharge in
bankruptcy, made five days before, does not differ from a payment
and receipt in full or a release for a valuable consideration.
Cromwell v. Sac County, 94 U. S. 357;
also Claflin v. Houseman, 93 U.
S. 134. A still stronger case of the validity of
judgments of a state court in their relation to bankruptcy
proceedings had
pendente lite is that of
Davis v.
Friedlander, 104 U. S. 570.
In the case of
Thatcher v. Rockwell, 105 U.
S. 467, THE CHIEF JUSTICE, after alluding to these and
other cases, says:
"They establish the doctrine that under the late bankrupt law,
the validity of a pending suit or of the judgment or decree thereon
was not affected by the intervening bankruptcy of one of the
parties, that the assignee might or might not be made a party, and
whether he was or not be was equally bound with any other party
acquiring an interest
pendente lite."
It is said, however, that though the defendant had his discharge
before the judgment in the state court was rendered, and might have
successfully pleaded it is bar of that action, and
Page 117 U. S. 566
did not do so, the judgment now sued on is the same debt, and
was one of the debts from which, by the terms of the bankrupt law,
he was discharged under the order of the bankruptcy court, and to
any attempt to enforce that judgment the discharge may still be
shown as a valid defense. That is to say that the failure of the
defendant to plead it when it was properly pleadable, when, if he
ever intended to rely on it as a defense, he was bound to set it
up, works him no prejudice because, though he has a dozen judgments
rendered against him for this debt after he has received his
discharge, he may at any time set it up as a defense when these
judgments are sought to be enforced. Upon the same principle, if he
had appeared in the state court and pleaded his discharge in bar
and it had been overruled as a sufficient bar, he could
nevertheless, in this action on that judgment, renew the defense.
But in such case, his remedy would not lie in renewing the struggle
in a new suit on such judgment, but in bringing the first judgment
for review before this Court, where his right under the discharge
would have been enforced then, as he seeks to do it now, after
submitting to that judgment without resistance and without
complaint.
We are of opinion that, having in his hands a good defense at
the time judgment was rendered against him -- namely the order of
discharge -- and having failed to present it to a court which had
jurisdiction of his case and of all the defenses which he might
have made, including this, the judgment is a valid judgment, and
that the defense cannot be set up here in an action on that
judgment. The case of
Steward v. Green, 11 Paige 535,
seems directly in point. So also are
Hollister v. Abbott,
31 N.H. 442, and
Bradford v. Rice, 102 Mass. 472.
It is clear that until the judgment of the Massachusetts court
is set aside or annulled by some direct proceeding in that court,
its effect cannot be defeated as a cause of action, when sued in
another state, by pleading the discharge as a bar which might have
been pleaded in the original action.
The judgment of the New York court is
Affirmed.
