170 F.2d 617 (2nd Cir. 1948), 47, Bowles v. J.J. Schmitt & Co.

Docket Nº:47, 21076.
Citation:170 F.2d 617
Party Name:BOWLES v. J. J. SCHMITT & CO., Inc.
Case Date:November 08, 1948
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 617

170 F.2d 617 (2nd Cir. 1948)



J. J. SCHMITT & CO., Inc.

Nos. 47, 21076.

United States Court of Appeals, Second Circuit.

November 8, 1948

Page 618

Edward Garfield, of New York City (Milton H. Friedman and George Clinton, Jr., both of Buffalo, N.Y., on the brief), for appellant.

Michael J. McMorrow, Asst. U.S. Atty., of Buffalo, N.Y. (George L. Grobe, U.S. Atty., of Buffalo, N.Y., on the brief), for appellee.

Before AUGUSTUS N. HAND, CLARK, and FRANK, Circuit Judges.

CLARK, Circuit Judge.

Defendant has appealed from two orders of the district court refusing to vacate a judgment against it for $10, 000, entered upon its 'Confession of Judgment.' Execution of this document occurred as a step in the arrangements made between officials of the Office of Price Administration and the defendant to settle and adjust the latter's obligations resulting from its violation of maximum price regulations under the Emergency Price Control Act of 1942, Sec. 205, 50 U.S.C.A.Appendix, § 925, affecting its business of slaughtering, dressing, and wholesaling veal and mutton carcasses and cuts, and processed meat products. The arrangements were concluded on February 28, 1944, at the Buffalo District Office of the OPA between the OPA's District Enforcement Attorneys and Julius J. Schmitt, defendant's president. Schmitt agreed to the Attorneys' demand of $20, 000 as penalties for the violations, paid the sum of $7, 500 at once, and agreed to pay the balance of $12, 500 and to give a confession of judgment therefor on condition that it be not recorded and that he be allowed to pay this balance in installments. The Attorneys then drew up the document in question, which, as appears from the quotation in a footnote, 1 is in form an explicit confession of judgment for $12, 500 in a named action in the district court, with authorization to the clerk for the entry

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of judgment without notice. The instrument was not only signed on behalf of the defendant by Schmitt as president, but also contained an affidavit by David A. White, as the OPA 'District Enforcement Attorney and Attorney for the plaintiff in the action, ' that he knew the facts and circumstances, that the defendant was justly and honestly indebted in the sum named, and that the confession was taken without intent to defraud; an affidavit by Schmitt himself, as defendant's president, of substantially similar tenor; and a further oath by Schmitt that he signed the document as president and affixed the corporate seal 'by order of the Board of Directors of said corporation.'

At the same time the Attorneys required of Schmitt that the agree to an injunction in order to make further violations punishable as contempt. Accordingly he and Mr. White signed a stipulation, supported by White's acknowledgment for the Administrator and his own affidavit of corporate authority, wherein he agreed to the entry of a consent decree and judgment granting the injunction relief as demanded by plaintiff. On the same day an action in the name of Chester Bowles, Administrator, Office of Price Administration, against the defendant was instituted upon a complaint charging generally the violation of specifically named maximum price regulations involving these meat products and demanding (1) a permanent injunction, set forth in the detail of the stipulation, against such violations and (2) 'Such other, further or different relief in the premises as may seem just and proper to the Court.' On the next day the court, through Judge Knight, filed a 'final judgment' granting the injunction in the form prayed for, after a recital that the complaint had been filed, that the plaintiff and the defendant had 'agreed upon a basis for the adjustment of the matters alleged in the complaint and the entry of a judgment in this action, ' and that they had entered into a stipulation for judgment, the original of which was being filed with the court.

This effectuated the immediate adjustment of the matters in dispute, which was the obvious objective of the parties. 2 Defendant did pay an additional $2, 500 about March 2, 1945. On June 6, 1945, White, as Enforcement Attorney, moved for judgment on the confession for the balance, showing by affidavit that he had written defendant on April 23, 1945, demanding payment of the $10, 000 still due and stating that judgment would be entered against it without further notice unless payment were made by May 23, 1945. On the same day Judge Knight entered the judgment here in question without notice to the defendant.

On June 8, 1945, defendant moved for an order vacating and setting aside the judgment and requiring the plaintiff to refund all sums paid 'in connection with a purported confession of judgment.' This was supported by the affidavit of Schmitt reciting the facts of execution of the document and payment of the additional $2, 500, stating that he was informed by his attorney that the instrument was not a confession of judgment and did not comply with the New York state statutes, and adding further that his company had been obliged, after its signing, to borrow substantial sums of money in connection with the operation of its business and owed debts substantially larger than at the time of the execution of the paper. Shortly thereafter a creditor of the defendant, appearing by the same attorneys as did defendant, asked for an order permitting intervention for the purpose of making application to vacate the judgment. These motions were not pressed, and they appear to have been dropped from the court's calendar for nonappearance by the following fall.

On December 2, 1947, there was filed another motion on behalf of the same creditor for an order vacating the judgment.

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Notwithstanding the delay the court, through Judge Burke, took notice of the original motions and in a considered decision held that there was jurisdiction to enter the judgment for $10, 000 in the injunction action and denied the motions attacking it. Thereupon defendant made a motion for leave to renew its previous motion, accompanied by a petition, an affidavit of its counsel, and other supporting affidavits to show that the confession was made when no action was pending and was not designed as a part of the to-be-filed injunction action. This motion Judge Burke also denied on April 22, 1948; and thereafter defendant filed its appeal from the two orders refusing to vacate the judgment.

It will be noted that defendant's attack must be, as it is, entirely upon the jurisdiction of the court to enter the judgment as it did. If there was no issue of jurisdiction, the defendant had its full opportunity to attack the merits of the adjudication, by motion under Federal Rules of Civil Procedure, rule 60(b), 28 U.S.C.A., which, in both its...

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