Case ID: ad_161/html/0453-01.html
Source: Caselaw Access Project
Author: {"author": "Putnam, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

A. Judson Powell and Sadie M. Smith, Respondents, v. Thomas W. Pangborn and John C. Pangborn, Appellants.
    Second. Department,
    February 6, 1914.
    Process—bankruptcy — non-resident officers of bankrupt corporation privileged from service of process from State court while attending meeting of creditors.
    Public policy and comity toward the Federal courts charged with the administration of the Bankruptcy Law require that parties as well as witnesses who come into this State to participate in bankruptcy meetings and hearings before referees should be free from interference by service of process from the State courts.
    Hence, residents of a foreign State who voluntarily come into this State to attend a first meeting of creditors of a bankrupt corporation, of which they are officers, are privileged from service of process from the State courts.
    Appeal by the defendants, Thomas W. Pangborn and another, from an order of the Supreme Court, made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 27th day of December, 1913, denying defendants’ motion to vacate the service of a summons herein upon the defendants, who, as president and vice-president of a bankrupt corporation, had come within the State to testify at the first meeting of creditors before the United States referee in bankruptcy.
    ■ Charles S. Yawger [Edward F. Unger and Herbert B. Shoemaker with him on the brief], for the appellants.
    
      Franklin Taylor [Joseph J. Zeiger with him on the brief], for the respondents.
   Putnam, J.:

A non-resident creditor coming to New York to attend a creditors’ meeting in bankruptcy before a register under United States Revised Statutes, title LXI, is exempt from civil process. (Matthews v. Tufts, 87 N. Y. 568.) Hearings in bankruptcy before referees under the present act of 1898 are judicial so as to protect an attending creditor from being subjected to the service of process. (Morrow v. Dudley & Co., 144 Red. Rep. 441.) The bankrupt himself, attending a hearing before the referee as a party or a witness, is privileged from arrest and from service of State court process. (Goldsmith v. Haskell, 120 App. Div. 403.) In Netograph Mfg. Co. v. Scrugham (197 N. Y. 377) a citizen of Ohio who had been arrested in this State and admitted to bail and had then returned home but afterwards came here to attend the trial of an indictment against him was regarded as in this jurisdiction constructively in the custody of the law ” (p. 382) and, therefore, not privileged from service.

The defendants here were respectively president and vice-president of a local corporation which had been adjudicated bankrupt by the United States District Court for the Southern District of New York with an order of reference to one of the referees in bankruptcy. Both defendants resided in Hagerstown, Md. The moving papers do not disclose the form of this order of reference. But the general orders with the general forms in bankruptcy having been adopted and promulgated by the United States Supreme Court in pursuance of section 30 of the Bankruptcy Act (30 U. S. Stat. at Large, 554) have the force of law (Collier Bankruptcy [9th ed.], 572) and are, therefore, to be judicially noticed. (Caha v. United States, 152 U. S. 211; 1 Chamberlayne Ev. § 652.)

General Form 14 prescribes the wording of the order of reference which directs the bankrupt to attend before the referee at the first meeting. (Collier, Bankruptcy [9th ed.], 1120.) It is not shown that any subpoena to attend had been served upon either of the defendants or upon any of the corporate officials. The officers of such a corporation represent it and may be required to submit to examination at this first meeting. (Collier, Bankruptcy [9th ed.], 453.) While the officials of a bank- ■ rupt corporation are under a duty to attend the creditors’ meeting, so that if the president or vice-president remained absent they might perhaps be put to inconvenience, any compulsion by contempt proceedings seems to require that such an officer should be regularly served with a subpoena and paid his witness fees, including mileage. (Bankruptcy Act [30 U. S. Stat. at Large, 548], § 7.) The affidavit of Hr. Thomas Pang-born shows that he had been examined ns a witness before the referee, and that on this adjourned day of the first meeting, while both defendants were still in the office of the referee in bankruptcy, they were served with the summons in this action.

As these appellants came before the referee although not personally named in the order of reference and without subpoena their attendance must be deemed voluntary. They were in no respect in the custody of the law like a person extradited or one arrested and released on bail. The order of reference notified them to appear, but it was no more compulsory in effect than a notice of taking depositions before a notary public under United States Revised Statutes, section 863. A non-resident litigant induced to come within this State to attend the taking of such a deposition is privileged from service of process. This exemption is not simply personal, but, as declared by Maynard, J., is “the privilege of the court, and is deemed necessary for the maintenance of its authority and dignity and in order to promote the due and efficient administration of justice.” (Parker v. Marco, 136 N. Y. 585, 589.)

Public policy and comity towards the Federal courts charged with the administration of the Bankruptcy Law, require that the parties litigant, as well as witnesses, who come to participate in the bankruptcy meetings and hearings before referees, should be free from interference by service of process from the State courts.

The order appealed from should be reversed, with ten dollars costs and disbursements, and the motion to vacate the service granted, with ten dollars costs.

Junks, P. J., Burr, Thomas and Rich, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.