Palmer v. Larchmont Manor Co.

• Decision Date: 26 November 1940
• Citation: 30 N.E.2d 599,284 N.Y. 288
• Parties: PALMER et al. v. LARCHMONT MANOR CO. et al.
• Court: New York Court of Appeals Court of Appeals

284 N.Y. 288

30 N.E.2d 599

PALMER et al.

v.LARCHMONT MANOR CO. et al.

Court of Appeals of New York.

Nov. 26, 1940.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by Howard S. Palmer and others, trustees of the property of the New York, New Haven & Hartford Railroad Company, debtor, against the Larchmont Manor Company, Peter Lamson Flint and others, to compel the determination of a claim to realty pursuant to article 15 of the Real Property Law, s 500 et seq., wherein defendant Flint and others interposed an affirmative defense and counterclaim. From a judgment of the Appellate Division, Second Judicial Department, 259 App.Div. 823, 20 N.Y.S.2d 165, affirming a judgment in favor of defendants entered upon an order of the Special Term which denied a motion by plaintiffs for an order striking out the affirmative defense and counterclaim and directing a dismissal of the complaint, 14 N.Y.S.2d 417, in which reargument was denied in the Appellate Division, 259 App.Div. 834, 20 N.Y.S.2d 170, the plaintiffs appeal by permission.

Affirmed. Samuel W. Earnshaw and Edward R. Brumley, both of New York City, for appellants.

Seymour L. Colin, of New York City, for respondents.

CONWAY, Judge.

The plaintiffs in this action are trustees in reorganization of the property of the New York, New Haven and Hartford Railroad Company, debtor, in proceedings pending in the United States District Court for the District of Connecticut under section 77 of the National Bankruptcy Act, 11 U.S.C.A. s 205. The action was brought to compel the determination of a claim to real property pursuant to article 15, s 500 et seq., of the Real Property Law, Consol. Laws, ch. 50. The amended complaint was dismissed upon the ground that the courts of this State had no jurisdiction over the subject matter of the litigation in view of the factual situation obtaining. This, we think, was correct.

Upon approval of the petition and upon entry of an order thereon, the bankruptcy court had exclusive jurisdiction of the debtor and its property wheresoever situated. National Bankruptcy Act, s 77, sub. a, 11 U.S.C.A. s 205, sub. a. The trustees took possession of the real property in suit following their appointment. That possession was similar to that of a trustee in an ordinary bankruptcy proceeding upon adjudication. Isaacs v. Hobbs Tie & Timber Co., 282 U.S. 734, 737, 51 S.Ct. 270, 75 L.Ed. 645; National Bankruptcy Act, s 77, sub. c, par. (2), 11 U.S.C.A. s 205, sub. c(2). The trustees were powerless to confer, by bringing suit, jurisdiction upon our courts. Isaacs v. Hobbs, Tie & Timber Co., supra. It is urged that the bankruptcy court could have consented to an adjudication of rights in this real property by our State courts upon proper application prior to the institution of the action. That, of course, is true, but such consent must be pleaded (Cornell v. Dakin, 38 N.Y. 253, 257) and no consent is pleaded here. It is urged, however, that, in fact, there exists such a consent. Bankruptcy proceedings in the Federal courts are not judicially noted in the State courts or, indeed, in any other than the initial court of bankruptcy. See 23 C.J. 115 and cases cited. In addition, when we read the alleged consent it is general and to be of efficacy in litigation such as this, it must be for a particular controversy. Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 483, 60 S.Ct. 628, 84 L.Ed. 876. Indeed, in that case, decided since the order below, the path to be taken by trustees such as plaintiffs and for bankruptcy courts in litigation involving unsettled questions of State property law was delineated....