T.E. Hill Co. v. Contractors' Supply & Equip. Co.

• Decision Date: 06 April 1911
• Citation: 94 N.E. 544,249 Ill. 304
• Court: Illinois Supreme Court
• Parties: T. E. HILL CO. v. CONTRACTORS' SUPPLY & EQUIPMENT CO.

249 Ill. 304

94 N.E. 544

T. E. HILL CO.

v.CONTRACTORS' SUPPLY & EQUIPMENT CO.

Supreme Court of Illinois.

Feb. 25, 1911.

Rehearing Denied April 6, 1911.

Error to Appellate Court, First District, on Error to Circuit Court, Cook County; John A. Gray, Judge.

Action by the T. E. Hill Company against the Contractors' Supply & Equipment Company. From a judgment of the Appellate Court reversing a judgment for plaintiff, he brings error. Affirmed.

Buell & Abbey and Fred W. Bentley, for plaintiff in error.

Harrison Musgrave, John H. S. Lee, and Dudley Taylor, for defendant in error.

CARTER, J.

This is an action instituted in the circuit court of Cook county by the plaintiff in error for the use of its assignee, against the defendant in error, for the alleged wrongful seizure of the property of plaintiff in error through a receiver appointed by the United States District Court for the Northern District of Illinois, upon the application of defendant in error, in bankruptcy proceedings instituted by it. On the trial in the circuit court before a jury a verdict was rendered in favor of plaintiff in error, and judgment was entered thereon. The case was taken to the Appellate Court for the First District by writ of error, and that court reversed the circuit court with a finding of facts that defendant in error did not act ‘maliciously and without probable cause’ in prosecuting the bankruptcy proceedings. The cause has been brought here by petition for certiorari.

After the bankruptcy proceedings had been instituted in the District Court, pending a hearing whether the plaintiff in error was or was not a corporation ‘principally engaged in manufacturing, trading, printing, publishing, mining or mercantile pursuits,’ as required by Bankruptcy Act July 1, 1898, c. 541, § 4b, 30 Stat. 547 (U. S. Comp. St. 1901, p. 3423), a receiver was appointed in accordance with the provision of section 3e and a bond given. The plaintiff in error was a corporation engaged in building concrete arches, bridges, and other structures. The District Court decided that it did not come within the specified classes of corporations subject to be declared bankrupt under the 3ct and dismissed the petition. This ruling was affirmed by the United States Circuit Court of Appeals in Re Hill Co., 148 Fed. 832, 78 C. C. A. 522. A writ of certiorari was denied by the United States Supreme Court in that case.

The principal contention of plaintiff in error is that, the District Court having dismissed the petition and having held that the T. E. Hill Company was not amenable to the bankruptcy act, such action was an ‘adjudication of that court that it did not have, and never had had, jurisdiction over the plaintiff in error or its property.’ Defendant in error contends that in deciding this question this court ought to take into consideration the fact that at about the same time the decision was handed down by the United States Circuit Court of Appeals in the Seventh District in Re Hill Co., supra, holding that it was not a corporation that could be adjudged a bankrupt, the same kind of corporation was held subject to the bankruptcy act by the Circuit Court of Appeals in the Eighth Circuit in Re First Nat. Bank of Belle Fourche, 152 Fed. 64, 81 C. C. A. 260, and that later, in Friday v. Hall & Kaul Co., 216 U. S. 449, 30 Sup. Ct. 261, 26 L. R. A. (N. S.) 475, the Supreme Court made a like ruling. We are disposed to hold that these later decisions cannot be considered in deciding whether or not the District Court had jurisdiction in the T. E. Hill Company bankruptcy proceedings. If the District Court was without authority to decide whether or not it had jurisdiction of the subject-matter involved in said proceedings, then there is force in the contention of plaintiff in error on this point. Some authority must decide whether or not a corporation or person is subject to the provisions of the bankruptcy act. The petition filed in the United States District Court to declare the plaintiff in error a bankrupt is conceded to have been in conformity with the statute and rules of the United States Circuit Court in such matters, as was also the petition for the appointment of a receiver. There is nothing to show in any of these papers that the T. E. Hill Company was not included within that class of corporations which could be declared a bankrupt under the bankruptcy act. We deem, however, the turning point of the controversy here to be whether the bankruptcy act gave jurisdiction to the United States District Courts to decide the question as to whether a particular person or corporation could be declared a bankrupt under the act.

Whatever construction might be placed upon this act if it were one of first impression need not be considered, as it has been settled conclusively by the United States courts. In Denver First Nat. Bank v. Klug, 186 U. S. 202, 204, 22 Sup. Ct. 899, 900, 46 L. Ed. 1127, when considering this very point, the court said: ‘The conclusion was, it is true, that Klug could not be adjudged a bankrupt, but the court had jurisdiction to so determine, and its jurisdiction over the subject-matter was not and could not be questioned.’ In Louisville Trust Co. v. Comingor, 184 U. S. 18, 25, 22 Sup. Ct. 293, 296, 46 L. Ed. 413, in discussing the jurisdiction of the district court in bankruptcy proceedings, it was said: ‘Jurisdiction as to the subject-matter may be limited in various ways, as to civil and criminal cases; cases at common law or in equity or in admiralty; probate cases or cases under special statutes; to particular classes of persons; to proceedings in particular modes; and so on. In many cases jurisdiction may depend on the ascertainment of facts involving the merits, and in that sense the court exercises jurisdiction in disposing of the preliminary inquiry although the result may be that it finds that it cannot go farther.’ In Re First Nat. Bank of Belle Fourche, supra, the court, in considering whether or not it had jurisdiction to decide on the merits or only as to the jurisdction, said (page 69 of 152 Fed.,page 265 of 81 C. C. A.): ‘The court had the same jurisdiction to decide the issues between the parties whether the Widell Company was or was not principally engaged in a manufacturing pursuit. The only difference the determination of that issue made was that if it was so engaged the court should have given judgment for the petitioners, and...