Court Opinion

ID: 7366398
Source: CourtListenerOpinion
Date Created: 2022-07-27 23:52:03.742474+00
Date Added: 2024-06-11T16:20:46.607293
License: Public Domain

*557ON APPLICATION POR REHEARING.
MAYFIELD, J.
We think the following authorities conclusively show the correctness of our holding that the allowance of plaintiffs’ claim in the bankrupt court, and from Avhich no appeal was taken, is an answer to the defendant’s plea of ultra vires. Mr. Collier, in his Avork on Bankruptcy, p. 616, under the head of “Effect of proof and alloAvance,” says: “Under the former law, a creditor who proved his claim could not proceed thereon in another court. This is not the laAV noAV. He can proceed, though he Avill usually be halted by a stay. He becomes, however, a party to the bankruptcy proceeding, with all that that condition implies. If his claim, voluntarily filed, is disallowed it is a bar to a suit against the bankrupt on the same cause of action in another jurisdiction.” We have examined the authorities cited by Collier, and find that they support the conclusion.
In the case of Sanford v. Sanford, 58 N. Y. 68, 17 Am. Rep. 206, it is said: “When the bankrupt is seeking to prevent the establishment- of a claim against himself, the assignee in the interest of the creditors may Avell be allowed to intervene in order to exclude claims which, if established, might be entitled to dividends; but in the latter case the bankrupt also certainly has an interest sufficient to entitle him to maintain an appeal. He may never obtain a discharge, and in that event erroneous judgment Avill be a charge upon him.” Justice CaldAvell, in Hudson’s Case, 122 Fed. 233, 58 C. C. A. 597, says: “The plaintiff having voluntarily gone into the bankrupt court, and submitted itself to the jurisdiction of that court, and filed its claim against the bank-' rupt estate founded on the judgment here in suit, and that court having disallowed- the claim' and entered *558judgment accordingly, and that judgment, remaining in full force and virtue, constitutes a complete bar to this action. It is not material upon what ground that court rested its judgment. It unquestionably had jurisdiction of the parties and the subject-matter, and, if either party conceived its judgment was for any reason erroneous, the remedy was by appeal, and not by •a suit on the same cause of action in another jurisdiction against the bankrupt.” It therefore appears that, the judgment or decree allowing or disallowing a claim is binding upon both the creditor and the bankrupt, as •either may appeal; but, if they do not appeal, it is conclusive.
Of course, if the bankrupt is ultimately discharged, neither the allowance in the bankrupt court, nor the judgment in the state court'would be binding on him personally; but, if he should not be discharged, it would be binding upon him personally and upon his estate.