Case Name: WHEELOCK v. LEE
Court: Brooklyn City Court
Jurisdiction: New York
Decision Date: 1878-01
Citations: 5 Abb. N. Cas. 72
Docket Number: 
Parties: WHEELOCK v. LEE.
Judges: 
Reporter: Abbott's New Cases
Volume: 5
Pages: 72–86

Head Matter:
WHEELOCK v. LEE.
City Court of Brooklyn;
General Term, January, 1878.
Again, Court of Appeals, October, 1878.
Jurisdiction of Action by Assignee in Bankruptcy. — Appearance. — Waiver of Jurisdictional Objection. — Superior City Courts. — Pleading.—Bight of Trial by Jury. — Mode of Securing it. — Waiver.
The State courts are not deprived of jurisdiction of actions by assignees in bankruptcy to collect the assets or recover property belonging to the bankrupt.
A general appearance by a defendant sued in a local court, — as, for instance, the city court of Brooklyn, — does not waive his right to object in his answer, that the court has no jurisdiction of the subject matter of the action, if the case is such that the only element of locality which can exist, and the only means by which the cause can be brought within the territorial limits of jurisdiction of the court as a local court, is the service of the summons within those limits.
Nor does demurring waive the objection, especially if the defendant, pursuant to leave, withdraws the demurrer and answers.
After a demurrer has been withdrawn, and an answer substituted, the demurrer is not available to either party for any purpose.
The principle upon which these rules depend, is that to extend the jurisdiction of the court to cases not arising within its jurisdiction, where the defendants do not reside, and are not served therein, would be to deprive it of its character as a local court.
The joinder of an equitable cause of action with one wholly legal does not deprive defendant of the right of trial by jury.
If such an action is brought to trial at special term, and defendant demands a jury trial the judge must determine whether any of the grounds on which recovery is sought, are such as at the adoption of the constitution were redressed by an action at law, and if so refuse to try the cause without a jury, unless plaintiff elects to rely solely on the equitable cause of action, f
If in a case brought to trial at special term, the complaint is framed solely for equitable relief, the court cannot, on finding that plaintiff is not entitled to equitable relief, give judgment for damages.
Defendant by consenting that a cause containing several causes of action, one of which is purely of a legal nature, be placed on the special term calendar, and noticing it for trial there, does not waive the objection that he is entitled to a trial by jury.
Whether trial by jury can be waived in any other mode than that prescribed by the code, or by entirely failing to object — doubted.
Appeal by the defendant from a judgment of the general term of the city court of Brooklyn.
The action was brought by Adam D. Wheelock, as assignee in bankruptcy of Charles M. Tremaine and William B. Tremaine, against Henry M. Lee, to recover an alleged excess of usurious interest, and also to obtain the delivery and surrender of certain securities alleged to have been deposited by the bankrupts with the defendant, as collateral to usurious loans.
The action was commenced in September, 1873, by service in the city of New York of process upon the defendant, who was a non-resident of Kings county.
A demurrer was interposed on the grounds that several causes of action were improperly united, and that the complaint did not state facts sufficient to constitute a cause of action. This was overruled, and defendant answered, denying, among other things, the making of the usurious loans, and alleging that the court had no jurisdiction of either the person of the defendant or the subject-matter of the action.
The case was tried before a judge without a jury, and judgment rendered for the plaintiff. This judgment was affirmed by the general term of the court, but was reversed in the court of appeals, and a new trial granted (see Wheelock v. Lee, 64 N. Y. 242).
The case was again tried by a judge, a jury having been refused the defendant.
The testimony in the case showed that there were five transactions in all, between Tremaine & Bro. and the defendant, out of which the matter in controversy arose. Pour of these transactions were similar, and were reduced to writing. The exhibits were in form, bills of sale of certain promissory notes therein described from Tremaine & Bro., to defendant for a consideration therein named. Underneath each bill of sale is written the following, signed by the defendant:
“Should the above notes be paid at maturity, or within two days after protest, C. M. T. & Bro. are entitled to claim from me the sum of $-, less costs of collection on above notes when the last one is paid.”
The notes delivered by T. & Bro. were indorsed by them to the defendant. Many of them were not paid at maturity, or within the two days mentioned, and at last the defendant and Tremaine & Bro. had a final settlement, in which no money passed, but defendants returned- to Tremaine & Bro. all but six of the notes unpaid, and also their firm checks for $575, and the latter gave to defendant six other notes, four of which were paid, and applied upon the moneys due the defendant upon the four previous loans.
The court found that all the loans had been repaid, and gave judgment for the plaintiff for the excess of interest for the same amount as in the former judgment, and for all the notes except two.
The defendant again appealed to the general term, and the following is that portion of the opinion handed down by the court in rendering its decision, which relates to the court’s jurisdiction of the action.
Reynolds, J. — The first question to be considered is whether the court has jurisdiction of this action. It is a suit brought by an assignee in bankruptcy to collect debts, and recover property alleged to belong to the bankrupt. The bankrupt act of 1867, section 1, gives the district courts jurisdiction (among other matters) “of the collection of the assets of the bankrupt.” This jurisdiction has been repeatedly held, to be not exclusive, but concurrent with that of the State courts. Such an action is not a matter or proceeding in bankruptcy of which the Federal courts have exclusive jurisdiction (See Claflin v. Houseman, 93 U. S. 130; Cook v. Whipple, 55 N. Y. 150). It is claimed, however, that the State courts have been deprived of jurisdiction in such actions, except in a limited class of cases, by section 2, of chapter 390, Laws of 1874. This is an amendment of section 1 of the bankrupt act, above referred to, and is as follows : “Provided, that the court having charge of the estate of any bankrupt, may direct that any of the legal assets or debts of the bankrupt, as contradistinguished from equitable demands, shall, when such debt does not exceed $500, be collected in the courts of the States, where such bankrupt resides,, having jurisdiction of claims of such nature and ¿mount.” As I read this proviso it neither professes to confer any jurisdiction upon the State courts, nor take away any jurisdiction which they possess. Its obvious purpose and construction is to empower the district courts to rid themselves of a certain class of cases by sending them to a forum which is recognized as already having jurisdiction over such matters. We are referred to the case of Olcott v. Maclean (10 Hun, 277 ) as holding that the State courts are deprived of jurisdiction, except in the cases which the district courts may direct to be brought be fore them. We have very great respect for the authority of the court making that decision ; but if the reasoning is meant to apply to a case like the one before us, we are unable to concur in it. That action was brought upon a case arising under the laws of the United States, the cause of action was created by the bankrupt law, and it may be that of such a cause of action, the courts of the United States have exclusive jurisdiction. But the cause of action in this case existed independent of any act of Congress, the assignee merely standing in the place of the borrower, to prosecute an action which he might have maintained, if he had riot become a bankrupt. The court, in Olcott v. Maclean (p. 281), says “enumerating the cases that might be prosecuted in such courts” (State courts), “ excluded all others not included by the import of the terms made use of.” But section 1 of the bankrupt act, either as originally passed or amended by the act of 1874, is one conferring jurisdiction on the district courts, not on the State courts; it does not say what the State courts may or may not try. As amended, it specifies what the district courts may decline to try, leaving it-optional with them to do so or not. It neither takes away the jurisdiction of the district courts in those cases which they may send to the State courts, nor the jurisdiction of the State courts in such actions as cannot thus be sent to them. In the later cases the selection of the tribunal is left to the suitor, and not to the district courts. The view we have taken concurs with that held by Judge Gilbert, in a case before him, at special term, and is in accordance with the supreme court of Massachusetts, in Goodrich v. Wilson (119 Mass. 429). Gray, Ch. J., says: “The effect of the provision of the act of Congress of 1874 (c. 390, § 2), is not to confer or take away jurisdiction of the State courts, but simply to allow' the Federal courts of original jurisdiction to decline to entertain actions at common law, to which the assignee is a party, in which the debt demanded is less than the amount which determines the jurisdiction in other cases.
The next objection made to our jurisdiction is, that the defendant was a non-resident of the city of Brooklyn at the time of the service of the summons, and that such service was made in the city of New York. This would have been a fatal objection, if taken in time. The defendant appeared and demurred to the complaint on other grounds. The demurrer was overruled ; the defendant was permitted to answer. The objection was first raised by the answer. We think the raising and trying of an issue of law, before objecting to our jurisdiction was a waiver of such objection (see Ogdensburg, &c. R. R. Co. v. Vermont, &c. R. R. Co., 63 N. Y. 176). It appears from an examination of the appellant’s points used before the court of appeals, that this ground of objection to our jurisdiction was there argued, and it is to be presumed that, if that court had considered us without jurisdiction, it would not have sent the case back for re-trial upon the merits.
The remainder of the opinion was devoted to a discussion of the case on the merits, and after reviewing the whole case on the facts, as well as on the law, judgment was given in favor of the plaintiff for $280 for the excess of interest, and $432 costs, upon plaintiff’ s waiving claim to any further relief. The plaintiff so stipulated, and the court permitted defendant to appeal to the court of appeals.
Geo. W. Van Slyck, for appellants,
Cited, as to jurisdiction of city court of Brooklyn: Landers v. Staten Island R. R. Co., 53 N. Y. 450; Hoag v. Lamont, 60 Id. 96. As to effect of the demurrer: Ogdensburgh, &c. R. R. Co. v. Vermont, &c. R. R. Co., 63 N. Y. 176; Brown v. Saratoga R. R. Co., 18 Id. 495; Du Puy v. Strong, 37 Id. 372. As to defendant’s being entitled to a trial by a jury: Palen v. Johnson, 50 Id. 49; Wheelock v. Lee, 64 Id. 246; Bradley v. Aldrich, 40 Id. 511; Davis v. Morris, 36 Id. 572; Hudson v. Caryl, 44 Id. 553; People v. Albany & S. R. R. Co., 57 Id. 161-176. As to non-recovery of usurious excess of interest by assignee until after the loan with legal interest has been repaid: Wheelock v. Lee, 64 N. Y. 246; Whitehead v. Kennedy, 69 Id. 462; East River Nat. Bank v. Gove, 57 Id. 597. As to error of finding of usury: Dowdall v. Lenox, 2 Edw. Ch. 267; Colton v. Dunham, 2 Paige, 267; Smith v. Paton, 31 N. Y. 66; Ingalls v. Lee, 9 Barb. 647, and cases cited; Cram v. Hendricks, 7 Wend. 569 ; Rapelye v. Anderson, 4 Hill, 472; Youngs v. Lee, 18 Barb. 187. As to no cause of action being set forth in the complaint, no loan being alleged, but only an agreement for a loan: Rex v. Upton, Strange, 816; Manning v. Tyler, 21 N. Y. 567.
B. E. Valentine, for respondent,
Cited, as to the court’s jurisdiction of the subject matter of the action: Olcott v. McLean, 10 Hun, 277, and Kidder v. Horribin. As to effect of the general appearance of the defendant, and the demurrer: Ogdensburgh R. R. v. Vermont R. R., 63 N. Y. 176.
To similar effect (IVth department), Wente v. Young, 12 Hun, 220; Burlingame v. Parce, Id. 146. And see Tullis v. Miller, 13 Id. 363.
State courts held to have jurisdiction of action by assignee in bankruptcy, to determine conflicting claims to assets. Brewers, &c. Ins. Co. v. Davenport, 10 Hun, 264.
Otherwise of an action by a creditor against the assignee in bankruptcy, for conversion, in disregarding the lien claimed by plaintiff. Ansonia Brass Co. v. Pratt, 10 Hun, 443.
Whether or not the State courts will apply the provisions of the bankrupt act, declaring preferences, &c. void, except in the assignees’ or creditors’ action, is disputed. Compare Bostwick v. Burnett, 11 Hun, 301; 2 Perry on Trusts, 132, § 587; Id. 145, § 597.
For the distinction between the territorial limits of jurisdiction and the limits dependent upon other facts or qualities, see 13 Abb. Pr. N. S. 325, note.
For the purpose of effecting a waiver of want of jurisdiction, actual appearance, as a party, is necessary. McCormack v. First Nat. Bank, 53 Ind. 466.
Appearing as a witness, for instance, is not a submission to the jurisdiction. Nixon v. Downey, 42 Iowa, 78. Nor is presence in court without knowledge of the proceedings. Merkee v. City of Rochester, 13 Hun, 157. And a formal appearance, given under mistake, the court may allow to be withdrawn. Hunt v. Brennan, 1 Hun, 213.
Appearance waives, not only lack of service, but other irregularities, —such as lack of statute indorsement of summons. Bissell v. N. Y. Central R. R. Co., 67 Barb. 385.
An appearance may be special, or qualified so as not to waive an objection. Brett v. Brown, 13 Abb. Pr. N. 8. 295. Compare Malcolm v. Marshall, 29 Ohio St. 611.
The act of 1873 (L. 1873, p. 363, c. 239), confirmed and extended the jurisdiction of this court and the other superior city courts, so as tobe “concurrent and co-extensive with that of the supreme court ;” subject, however, by virtue of the constitutional provision (1 R. S. 6 Ed. p. 95; Jud. Act of 1869, art. 6, § 12), to the territorial limitation on the exercise of its powers, implied in its character as a local court. Landers’ Case, 14 Abb. Pr. N. S. 346; S. C., 53 N. Y. 450. And see Story v. N. Y. Elevated R. R. Co., 3 Abb. New Cas. 478; Speyer v. Chase, 37 Super. Ct. (J. & S.) 93.
For the precedent jurisdiction of these courts, see Van Pelt v. U. S. Metallic Spring Co., 13 Abb. Pr. N. S. 395, and authorities there cited; Ryan v. Green, 78 N. Y. 295; Eitel v. Bracken, 38 Super. Ct. (J. & S.) 7; Astor v. Mayor, &c. of N. Y., 37 Id. 539.
The present definition of their jurisdiction is in the Code of Civil Procedure, §§ 263-267. As jurisdictional facts need not be alleged in the complaint (section 266), except so far as they are part of the facts constituting the cause of action, a demurrer could often not avail to raise the question of jurisdiction ; and by the last clause of section 266, it is provided that the want of jurisdiction, by reason of the non-existence of any of the jurisdictional facts specified in section 263 is matter of defense ; and is waived by the appearance, unless it is pleaded in defense.
The construction and effect of this clause has not yet been determined.
Before this provision took effect, the rule (as laid down in the city court of Brooklyn), was that an individual defendant waived the objection by answering on the merits alone, and going to trial, for he might be presumed to have been served there ; but a corporation not established nor having its general business there, did not, because it could not be presumed to have been legally served there. Brauneck v. Knickerbocker Life Ins. Co., 1 Abb. New Cas. 893.
To same effect, People v. Albany, &c. R. R. Co., 57 N. Y. 161, rev’g in part 5 Lans. 25.
The demand may be made even after plaintiff has rested after reading the pleadings. People v. Albany, &c. R. R. Co., above cited.
The ground of the right to a jury trial must be truly stated. McKeon v. See, 51 N. Y. 300; affi’g 4 Robt. 449.
1 R. S. 6 Ed. pp. 45, 56, 82.
For recent decisions on what classes of cases are within the constitutional clause, see Litchfield v, Diezendorf, 11 Hun, 358; People ex rel. Killeen v. Baird, Id. 289; Matter of Donohue, 1 Abb. New Cas. 1; Kinne v. Kinne, 3 Sup’m. Ct. (T. & C.) 393; Rexford v. Marquis, 7 Lans. 269.
Even an equity cause the judge may refuse to try without a jury. Parker v. Laney, 58 N. Y. 469; rev’g 1 Supm. Ct. (T. & C.) 590.
Whether a statute authorizing a reference as to particular facts, and in effect, making the report prima fade evidence on the trial before a jury, is obnoxious to the objection of infringing the right of trial by jury, compare Holmes v. Hunt, 122 Mass. 505; S. C., 23 Am. R. 381; Francis v. Baker, R. I. 103; S. C., 23 Am. R. 424.
But the complaint should not be dismissed because the cause was brought on at special term instead of at circuit. Sternberger v. McGovern, 56 N. Y. 12; S. C., 15 Abb. Pr. N. S. 257, rev’g 4 Duly, 456.
For a ruling, perhaps somewhat questionable, that a motion to compel a party to elect between his causes of action should be made before the cause is called on, see Am. Dock, &c. Co. v. Staley, 40 Super. Ct. (J. & S.) 539.
The provisions of the present Code of Civil Procedure are as follows :
§ 1008. [am’d 1877.] In an action triable by a jury, if the parties waive the trial by a jury, of the issue of fact, the action must be tried by the court without a jury ; unless a reference is directed, in a case proscribed by law. But such an action, other than to recover damages for breach of a contract, cannot be tried by the court, without a jury, unless the judge, presiding at the term where it is brought on for trial, assents to such a trial. His refusal so to assent annuls a waiver, made as prescribed in subdivision second, third, or fourth of the next section.
§ 1009. [am’d 1877.] A party may waive his right to the trial of the issue of fact, by a jury, in any of the following modes :
1. By failing to appear at the trial.
2. By filing with the clerk a written waiver, signed by the attorney for the party.
3. By an oral consent in open court, entered in the minutes.
4. By moving the trial of the action, without a jury; or, if the adverse party so moves it, by failing to claim a trial by a jury, before the production of any evidence upon the trial.
See the former code, § 266. See also Green v. Millbank, 3 Alb. New Cas. 138.
Bor the rule that consent to try before a term other than the regular term, waives the irregularity, see White v. Coulter, 59 N. Y. 629; rev’g in part, 1 Hun, 357.
The question there was whether a transfer of goods was void as in fraud of the bankrupt act, because making a preference, &c. But the judgment was reversed, April 4, 1878. See 18 Hun, vii.
State courts have concurrent jurisdiction with the Federal courts in cases arising under the constitution, laws or treaties of the United States, unless excluded by express provision or from the nature of the particular case. A State court has jurisdiction of an action brought by an assignee in bankruptcy upon a draft forming part of the assets of the bankrupt, and the authority of the bankrupt court is not necessary to entitle the assignee to sue. Judgment below affirmed. Kidder v. Horribin, Jan. 15, 1878. Opinion by Andrews, J., Alb. L. J., vol. 17, p. 433.

Opinion:
By the Court. — Rapallo, J.
The defendant set up in his answer that the plaintiff's cause of action, if any, did not arise in the city of Brooklyn, bnt in the city of New York; that at the time of the commencement of this action the defendant did not reside in the city of Brooklyn; that he never resided or had a place of business there; and that the summons was served in the city of New York, and not in the city of Brooklyn ; and that consequently the city court of Brooklyn had no jurisdiction of the person of the defendant or of the action.
These allegations are substantiated by the evidence and findings, and it is conceded that they establish a want of jurisdiction in the city court and a fatal objection to the judgment, unless such objection has been waived or cured.
This question was not passed upon, nor did it arise, when this case was before us on the first appeal. The facts upon which the objection is based were not in the case, the court below having excluded proof of them ; a new trial was ordered on other exceptions.
The defendant, by putting in a general appearance, followed by an answer setting up the want of jurisdiction, did not waive that defense.
This was expressly decided in the case of Landers v. Staten Island R. R. Co., 53 N. Y. 450-460; S. C., 14 Abb. Pr. N. S. 346.
The prevailing opinion in that case sets forth fully the grounds upon which it was held that the city court was without jurisdiction. They are, in substance, that the city court was a local court of limited jurisdiction at the time of the adoption of the judiciary articles of the State constitution in 1869, and that it was continued as such, and it was even beyond the power of the legislature to divest it of its local character ; that its jurisdiction was limited to causes of action arising within its territorial limits, and cases in which the subject of the action was situated, or the party proceeded against resided or was served with process within those limits ; that some one or more of these elements of locality must exist to confer upon the court jurisdiction of the cause. It follows that where none of them exist, a mere appearance does not preclude the defendant from taking the objection. Where no other ground of jurisdiction exists, the service within the county is a jurisdictional fact. Its omission is not cured by an appearance, for the objection is not simply that the court has not jurisdiction of the person of the defendant, but that it has not jurisdiction of the cause (Burckle v. Eckhart, 3 N. Y. 132).
In a case in which the court had jurisdiction of the cause on some of the other grounds, as, — for instance, where the cause of action arose within the city of Brooklyn, — the general rule would apply that a general appearance cures any defect in the service of process to bring the defendant into court, and even the total absence of any service. But where, as in this case, the only element of locality which can exist, and the only means by which the cause can be brought within the jurisdiction of the court as a local court, is the service of the summons within a certain territory, that rule is not applicable; but the point having been expressly adjudged, it is not necessary to pursue it farther.
It is further claimed that the defendant, by interposing a demurrer to the complaint,' precluded himself from setting up the defense of want of jurisdiction after his demurrer was overruled, and the case of Ogdensburg R. R. v. Vermont R. R. 63 N. Y. 176, is cited as sustaining that position.
In that case a demurrer was interposed on the ground that it appeared on the face of the complaint that the court had not jurisdiction over the defendants, they being foreign corporations and non-residents. It was not held that by the fact of demurring the defendants waived this ground of demurrer.
On the contrary, the demurrer was sustained in the supreme court, and the plaintiff appealed to this court. The defendants moved to dismiss the appeal, which had been taken fróih the decision rendered in their favor, on the ground, among others, that they had not been served with process in the action. The case was not one in which the service of process, within any particular locality, was a fact upon which the jurisdiction of the court over the cause depended, nor was it analogous to the present case in any particular. In the present case leave was granted to the defendant to withdraw his demurrer and put in his answer. He availed himself of this leave, and answered, setting up facts showing that the city court had no jurisdiction. The demurrer was then out of the case and formed no part of the record (Brown v. Saratoga R. R. Co., 18 N. Y. 495). It is not available to either party for any purpose, and the fact that it was once interposed does not preclude the defendant from setting up the facts which he might originally have set up by way of answer showing want of jurisdiction.
For the same reason that this objection was not waived by his appearance, it is not cured by the facts that he demurred and withdrew his demurrer.
The same facts existed in the case of Hoag v. Lamont (60 N. Y. 96), but they were not deemed material, and the subsequent defense by answer of want of jurisdiction was sustained.
The principle upon which all these decisions rests is, that to extend the jurisdiction of the city court to cases not arising within its jurisdiction, where the defendants do not reside and are not served therein, would be to deprive it of its character of a local court, and that some one of the specified elements of locality must exist to give it jurisdiction of the cause.
Under the decisions cited the defense of want of jurisdiction was established.
The appellant takes the further point that he was entitled to a trial by a jury.
The first four causes of action specified in the complaint are clearly triable by jury. They are for the recovery of money only, and maintainable at common law (50 N. Y. 49; 64 Id. 246).
The fifth cause of action only is for equitable relief, viz: The surrender of the securities given for the usurious loans. The joinder of an equitable cause of action with others, purely legal, does not deprive the defendant of the right of trial by jury (Bradley v. Aldrich, 40 N. Y. 511).
Where such an action is brought to trial at special term, and the defendant demands a jury trial, the judge must determine whether any of the grounds upon which a recovery is sought, are such as at the adoption of the constitution were redressed by an action at law, and, if so, should direct the cause to be tried by a jury at the circuit, or, at all events, should refuse to try the cause without a jury (Davis v. Morris, 36 N. Y. 569, 572; Hudson v. Caryl, 44 Id. 553).
Where the complaint is framed solely for equitable relief, and the action is tried as an action in equity, the court, on finding that the plaintiff is not entitled to any equitable relief, but that the facts would warrant an action for damages which he has not alleged or claimed, cannot order judgment for such damages (Bradley v. Aldrich, 40 N. Y. 504).
An opportunity must have been afforded to the defendant to claim a jury trial on that ground of action.
The respondent claims that the appellant waived his right to a jury trial by consenting that the case be placed on the calendar for trial at special term, and by noticing the case for trial at that term. We do not think these acts amounted to a waiver. There was not consent that the action be tried without a jury, and at the first opportunity the defendant demanded a jury trial. The case, in one of its aspects, was triable at special term, and had the plaintiff elected to rely solely on this equitable cause of action, he could have proceeded with the trial there.
In the cases cited above, this court gives a strong intimation that a trial by jury can be waived only in the manner described by the code or by entirely failing to object; but it is not necessary to decide that point now. It is sufficient to hold that at all events there must be some unequivocal act or consent showing an intention to abandon the constitutional right; and no such intention is apparent here.
Being of opinion that on both of 'the grounds stated the judgment must be reversed, it is not necessary to consider the other points in the case.
All the judges concurred, except Miller and Earl, JJ., absent.
Judgment reversed, with costs.
See also Gibbs v. Queen. Ins. Co., 63 N. Y. 114.