Case ID: ad_164/html/0419-01.html
Source: Caselaw Access Project
Author: {"author": "Per Curiam:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Mary L. Coen, Appellant, v. Peter H. James, Individually and as Trustee in Bankruptcy of and for the Estate of Joseph Mayhew, Bankrupt, Respondent, Impleaded with Commercial Trust Company of New York and Others, Defendants.
    Second Department,
    November 20, 1914.
    Res adjudicata — order of referee in bankruptcy as bar to subsequent action in State court.
    An order of a referee in bankruptcy, denying the right to recover a check indorsed to a trustee in bankruptcy, which has been deposited by a person not a creditor, as a part of the deposit required upon a composition, and payment thereon subsequently stopped after some controversy had arisen, is res adjudicata, and a bar to a subsequent action in the State court by the maker of the check to recover the amount thereof.
    Appeal by the plaintiff, Mary L. Coen, from a judgment of the Supreme Court in favor of the respondent, entered in the office of the clerk of the county of Kings on the 22d day of November, 1913, upon the decision of the court after a trial at the Kings County Special Term.
    
      William H. Good, for the appellant.
    
      Ralph K. Jacobs, for the respondent.
   Per Curiam:

After one Joseph Mayhew had been- adjudicated bankrupt in the United States District Court for the district of New Jersey, and the matter duly referred to Mr. George R. Beach as referee in bankruptcy, the defendant James was appointed trustee in bankruptcy and duly qualified. Terms of composition were then offered and accepted by the creditors. Before, however, a composition can receive judicial confirmation “the consideration to be paid by the bankrupt to his creditors, and the money necessary to pay all debts which have priority and the cost of the proceedings ” must be deposited in a designated place and “subject to the order of the judge.” (Bankr. Act [30 U. S. Stat. at Large, 549], § 12, subd. b; General Orders Bankr. order XXIX.)

It is alleged that the deposit so required was $4,200, of which the bankrupt could raise but $1,200, so that the plaintiff, who was not a creditor, advanced $3,000 by her certified check made payable to the order of her husband and indorsed by him to the order of the defendant James, to be held subject to various conditions, but to be returned if the composition offer should not he confirmed by the court by July 31, 1911. Some controversy afterward arose, and the plaintiff stopped payment of this check. She subsequently presented to- the referee in bankruptcy a verified petition, together with affidavits, claiming .that the terms of her deposit had not been kept, and praying that the trustee be ordered to return it to her. The referee heard the matter on affidavits, and indeed appears to have offered to take oral proof as to the issues thus raised, which the petitioner’s counsel waived, and consented that the proofs be by affidavits. Eventually the referee refused the application by his order denying the relief sought.

The plaintiff then brought the present suit, joining as a defendant the Commercial Trust Company, on which her check had been drawn. The trustee, Mr. James, first obtained from the referee in bankruptcy an order staying the present suit, which restraining order, however, was set aside and vacated by the district judge for the district of New Jersey. The defendant James answered with the plea of res adjudícala, which was sustained by the learned justice at Special Term, from which plaintiff has appealed.

The plaintiff’s check was deposited as the basis for the proposed composition. It was, therefore, a statutory proceeding in the bankruptcy matter pending before the referee in bankruptcy. It would be an extraordinary interference for another tribunal to direct a trustee in bankruptcy as to his duties. At the time of her deposit the plaintiff came into and made herself party to the bankruptcy proceedings.

It follows that plaintiff’s right to get back this check, having been submitted to, and passed upon adversely by, the referee in bankruptcy in a matter within his jurisdiction, is not open to review in this court.

The judgment sustaining defendant’s plea of former adjudication is, therefore, affirmed, with costs.

Jenks, P. J., Thomas, Carr, Stapleton and Putnam, JJ., concurred.

Judgment sustaining defendant’s plea of former adjudication affirmed, with costs.