Bowles v. JJ Schmitt & Co.

Decision Date08 November 1948
Docket NumberNo. 47,Docket 21076.,47
Citation170 F.2d 617
PartiesBOWLES v. J. J. SCHMITT & CO., Inc.
CourtU.S. Court of Appeals — Second Circuit

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, § 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 confesssion of judgment for $12,500 in a named action in the district court, with authorization to the clerk for the entry 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 he 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. 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 original and its presently amended form (effective before the date of final action below), afforded an opportunity for full relief on the merits. As a matter of fact, defendant's original motion to vacate appears to have been at least an initial step that way, although it failed to specify an adequate ground for relief and it was suffered to be dropped for nonappearance, with no attempts at its revival for more than two years. Since the court, notwithstanding the delay, did consider the motion on the merits, we prefer to place our decision on a like basis. On the merits no reason appears why the engagement entered into by the defendant on February 28, 1944, should not be carried out by it. True, defendant in its brief in this court says broadly at the end that it "should be afforded an opportunity to interpose whatever defense it has, such as that the alleged confession was signed as the result of mistake, misrepresentation or even duress." Had it actually had such grounds to press, it could and should have presented them in its motion of June 8, 1945. Quite clearly this is only an afterthought for the purposes of argumentation, since none of the motions and nothing in the record remotely suggests such a defense. In fact the various affidavits by the actors made both at the time of execution of the "Confession" and thereafter on the successive proceedings to vacate the judgment, including those of Schmitt himself, show the absence of any probable basis for such claim. The real objection therefore comes down to one to the form of the proceeding, so that a reversal would mean only that some new action should be initiated to reach a like result to that already achieved below. The claim for refund of the amount previously paid is obviously fantastic.

On the question of jurisdiction defendant asserts vigorously that judgment by confession is improper in any event in the federal courts, and in this case in particular for lack of adequate basis. It further asserts that the confession could have no connection with the civil action which had led to the order for the injunction. But we think these objections do not go to the heart of the issue of jurisdiction. There is no express provision in federal procedure for the entry of judgment on a confession by the clerk of court, such as is provided by N. Y. Civil Practice Act, § 540. Since this is a matter of procedure where the...

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