McEldowney v. Card

• Decision Date: 21 September 1911
• Docket Number: 1,581.
• Citation: 193 F. 475
• Parties: McELDOWNEY v. CARD et al.
• Court: U.S. District Court — Eastern District of Tennessee

193 F. 475

McELDOWNEY v. CARD et al.

No. 1,581.

United States Circuit Court, E.D. Tennessee, Northern Division.

September 21, 1911

[Copyrighted Material Omitted]

Lucky Fowler & Andrews, for plaintiff.

Shields Cates & Mountcastle, for defendants.

SANFORD District Judge.

This is a suit brought by the plaintiff McEldowney, in 1909, as trustee in bankruptcy of the estate of the Clairfield Lumber Company to recover the sum of $9,000, alleged to be due him by two of the defendants as principals and by the other defendants as their sureties, as the balance of the purchase price due for certain logs which came into his hands as part of the bankrupt estate and were sold by him to the two principal defendants. The declaration alleged that the plaintiff was a resident of the State of Kentucky, duly appointed by the District Court of the United States for the Eastern District of Kentucky as trustee of the estate of the said bankrupt, and that all of the defendants resided out of the State of Kentucky and were citizens and residents of the State of Tennessee. Neither the citizenship nor residence of the bankrupt was, however, alleged. The defendants having been duly summoned, appeared and, without demurring for want of jurisdiction or filing any plea to the jurisdiction of the court, filed three pleas to the merits, namely, a general plea of nil debet, a special plea denying various averments of the declaration and alleging various matters of defence, and an affirmative plea alleging that the plaintiff had contracted with the defendants to pay them the reasonable value of the use and occupation of a lumber yard belonging to them, reasonably worth $2,000.00 which sum they offered to set off against the plaintiff's demand, if any he had. In this last plea the defendants also asked for judgment against the plaintiff for the sum of $2,000.00 thus plead as a set-off, having apparently in view the express provisions of sections 2992 and 4160 of the Code of Tennessee (Shan. 4643 and 5973), that if the demand set off by the defendant be found to exceed the amount of the plaintiff's demand or if the plaintiff fails in establishing any demand and the defendant establishes his set-off, judgment shall be rendered against the plaintiff and in favor of the defendant for the amount of such excess or for the full amount of the set-off, as the case may be. Boone v. Bush, 91 Tenn. 29, 17 S.W. 792, and cases cited. Replications were filed to these pleas.

A trial was had to a jury at the present term of court. No evidence was offered as to the residence or citizenship of the bankrupt; and, on the other hand, no objection to the jurisdiction was made at the trial, by request for instructions to the jury, or otherwise. There was a verdict in favor of the plaintiff and against the defendants for the sum of $7,527.88. Before the entry of a judgment upon this verdict the defendants moved for a new trial, and thereafter, without prejudice to their motion for a new trial, moved that the judgment be arrested and the suit dismissed for want of jurisdiction. The sole ground of this motion, as appears from the brief filed in support thereof, is that since it is provided by section 23b of the Bankruptcy Act, as amended by the Act of February 5, 1903, c. 487, Sec. 8, 32 Stat. 798 (U.S. Comp. St. Supp. 1909, p. 1312), that 'Suits by the trustee shall only be brought or prosecuted in the courts where the bankrupt, whose estate is being administered by such trustee, might have brought or presented them if proceedings in bankruptcy had not been instituted, unless by consent of the proposed defendant,' except in certain cases not here material, in the absence of any averment or proof showing that the citizenship of the bankrupt was such that it could have brought suit against the defendants in this court or that the 'proposed' defendants had consented to the bringing of the suit before its institution, the suit is not, under the limitations contained in this section of the Bankruptcy Act, now within the jurisdiction of the court.

1. Without determining whether, under the language of the Act and of the opinion in Spencer v. Silk Co., 191 U.S. 526, 24 Sup.Ct. 174, 48 L.Ed. 287, this section of the Bankruptcy Act applies to a suit brought by the trustee in his own right and upon his own contract in reference to which no right of action had ever vested in the bankrupt, I think it is clear that even if it does so apply, the mere use in this section of the words 'proposed defendant' is not sufficient, under a fair and reasonable construction, to indicate the intention of Congress that the defendant's consent to being sued in the particular court must have been given before the suit is instituted, especially as this section relates by its express terms to either the bringing or the prosecution of the suit, but that in so far as the local jurisdiction depends upon the consent of the defendant it is sufficient if that consent be either previously given to the bringing of the suit or afterwards to its prosecution; and I am furthermore of the opinion that such consent need not expressly appear of record, but may be sufficiently shown by conduct of the defendant necessarily implying such consent. The authorities are uniform that it is not necessary that the consent of the proposed defendant shall be given in writing or upon the record in express terms or in advance of the institution of the suit, but that he will be deemed to have sufficiently consented if he appears and pleads to the merits, without objection to the jurisdiction for want of consent, and will not be allowed thereafter to withdraw his consent or object to the jurisdiction of the court on the ground of want of consent. Loveland on Bankruptcy (3d Ed.) Sec. 20, p. 97; 2 Remington on Bankruptcy, Sec. 1698, p. 1048; In re Connolly (D.C.) 100 F. 620, 626; In re Steuer (D.C.) 104 F. 976, 977; Ryttenberg v. Schefer (D.C.) 131 F. 313, 317. And see, by analogy, Boonville Nat. Bank v. Blakey (C.C.A. 7) 107 F. 891, 893, 47 C.C.A. 43; Phillips v. Turner (C.C.A. 5) 114 F. 726, 728, 52 C.C.A. 358; Chauncey v. Dyke (C.C.A. 8) 119 F. 1, 55 C.C.A. 579;

In re Emrich (D.C.) 101 F. 231; In re Durham (D.C.) 114 F. 750, 751; In re Noel (D.C.) 137 F. 694, 699; In re Hadden Rodee Co. (D.C.) 135 F. 886.

I therefore conclude that the defendants by appearing in the present suit and filing pleas to the merits, including not merely defensive pleas, but a plea of set-off in which they affirmatively invoked the jurisdiction of the court in their own behalf and prayed for judgment against the plaintiff, and by proceeding to a trial on the merits, without objection in any form for want of jurisdiction in the court, must now be deemed to have consented to the prosecution of the suit in this district within the true intent and meaning of section 23b of the Bankruptcy Act. By this course of proceeding they effectively gave their consent to the prosecution of the suit in this court; and having taken the chance of a favorable verdict, they cannot now, after an adverse result, be allowed to question the consent to the prosecution of the suit, thus repeatedly and solemnly expressed.

2. I furthermore am of the opinion that as section 23b of the Bankruptcy Act is not one conferring jurisdiction, but merely contains a limitation upon the local jurisdiction of the particular court in which the suit is brought, it is to be deemed merely a personal privilege given to the defendant, and that hence in a suit brought in a Federal Court where the case presented is within the general jurisdiction of the court, if the defendant appear and plead to the merits without objection for want of local jurisdiction under this section of the Act, he is to be deemed as having thereby waived his ground of objection to such local jurisdiction. Thus under the provision of section 1 of the Act of March 3, 1875, c. 137, 18 Stat. 470, as amended by the Act of August 13, 1888, c. 866, 25 Stat. 433 (U.S. Comp. St. 1901, p. 508), that where the jurisdiction of a circuit court of the United States is founded only on the fact that the action is between citizens of different States, the suit shall be brought only in the district of the residence of either the plaintiff or the defendant, it is well settled that where diversity of citizenship exists, so that the case is cognizable in some circuit court, the right of objecting to the local jurisdiction in the particular district in which the suit is brought for want of proper residence of the parties, is merely a personal privilege of the defendant, which he may waive, and which he will be held to waive by appearing and pleading to the merits. St. Louis Ry. Co. v. McBride, 141 U.S. 127, 131, 11 Sup.Ct. 982, 35 L.Ed. 659; Interior Const. Co. v. Gibney, 160 U.S. 217, 219, 16 Sup.Ct. 272, 40 L.Ed. 401; In re Keasbey & Mattison Co., 160 U.S. 221, 229, 16 Sup.Ct. 273, 40 L.Ed. 402; In re Moore, 209 U.S. 490, 501, 28 Sup.Ct. 585, 52 L.Ed. 904; Western Loan Co. v. Mining Co., 210 U.S. 368, 369, 28 Sup.Ct. 720, 52 L.Ed. 1101. If a defendant thus waives the positive provision of an Act that the suit shall only be brought in a certain district, he must, a fortiori, be held to waive in like manner the provision of an Act which expressly recognizes that he may consent to the local jurisdiction.

The defendants' motion to dismiss and to arrest the judgment must, therefore, on the ground upon which it is based, be overruled.

3. The consideration of the foregoing question has, however, brought to may attention the more serious question, which is not specifically raised by the defendants, as to whether or not although the defendants have consented to the local jurisdiction of this court and have waived any ground of objection thereto under the...