Claflin v. Houseman Assignee

ERROR to the Supreme Court of the State of New York.

This action was brought in May, 1872, in the New York Supreme Court, county of Kings, by Julius Houseman, as assignee in bankruptcy of Comstock and Young, against Horace B. Claflin, under the thirty-fifth section of the Bankrupt Act, to recover the sum of $1,935.57, with interest, being the amount collected by Claflin on a judgment against the bankrupts, recovered within four months before the commencement of proceedings in bankruptcy. The ground of the action, as stated in the complaint, was that they (the bankrupts) suffered the judgment to be taken by default, with intent to give Claflin a preference over their other creditors, at a time when they were insolvent, and when he knew, or had reasonable cause to believe, that they were insolvent, and that the judgment was obtained in fraud of the bankrupt law. The defendant demurred to the complaint, assigning as cause, first, that the court had no jurisdiction of the subject of the action; secondly, that the complaint did not state facts sufficient to constitute a cause of action. Judgment was rendered for the plaintiff on the thirteenth day of January, 1873, and was subsequently affirmed both by the general term of the Supreme Court and by the Court of Appeals. This judgment is brought here by writ of error, under the second section of the act of Feb. 5, 1867 (14 Stat. 385).

Argued by Mr. William Henry Arnoux for the plaintiff in error.

Where Congress has an exclusive right to legislate, the Federal courts have an exclusive power to adjudicate. United States v. Ames, 1 W. & M. 76; United States v. Bailey, 9 Pet. 261; United States v. Cornell, 2 Mason, 91; Osborn v. U.S. Bank, 9 Wheat. 818.

Where a State cannot legislate, its courts cannot adjudicate. United States v. Lathrop, 17 Johns. 4; Martin v. Hunter's Lessee, 1 Wheat. 304; Rose v. Hinely, 4 Cranch, 241; McLean v. Lafayette Bank, 3 McLean, 191; Stearns v. United States, 2 Paine, 311; Shearman v. Bingham, 7 N. B. R. 490.

The jurisdiction of the courts of the United States is exclusive in all cases arising under the Constitution, laws, or treaties of the United States. Const. U.S., art. 3, sects. 1, 2; 2 Story on Const., sect. 1754; Martin v. Hunter's Lessee, supra; Ex parte Cabrera, 1 Wash. C. C. 232; Griffin v. Domingues, 2 Duer, 576; Mannhardt v. Joderstron, 1 Binn. 138; Commonwealth v. Kostaff, 5 Serg. & R. 545; Davis v. Packard, 7 Pet. 276; Houston v. Moore, 5 Wheat. 1.

The Bankrupt Act of March 2, 1867, by a just construction of its terms, confers exclusive jurisdiction upon the district and circuit courts of the United States. Goodall v. Tuttle, 7 N. B. R. 193; In re Alexander, 3 id. 6; Shearman v. Bingham, 7 id. 490; Ex parte Christy, 3 How. 292; Mitchell v. Great Milling Works Co., 2 Story, 656; Peck v. Jenness, 7 How. 621; McLean v. Lafayette Bank, 3 McLean, 190; Moore v. Jones, 23 Vt. 746.

The right of an assignee to bring suits for the collection of the assets of a bankrupt is a new right conferred upon him by an act of Congress. Cook v. Whipple, 55 N. Y. 150. Therefore the remedy afforded by the statute is exclusive. Dudley v. Mayhew, 3 N. Y. 15; Jordan Plank Road v. Morley, 23 id. 554; Thurber v. Blanck, 50 id. 80; Hollister v. Hollister Bank, 2 Keyes, 248; Almy v. Harris, 5 Johns. 175; Rex v. Robinson, 2 Burr. 799.

The fact that an assignee in bankruptcy is dependent upon the national tribunals, and independent of those of the States, is conclusive against the jurisdiction of the latter, over statutory actions brought by him as an officer appointed under the laws of the United States. The State courts can neither interfere with, or interrupt, the exercise of the authority with which he is clothed, nor aid in enforcing it. McKim v. Voorhies, 7 Cranch, 279; Slocum v. Mayberry, 2 Wheat. 1; McClung v. Silliman, 6 id. 598; United States v. Barney, 3 Hall's L. J. 128; United States v. Peters, 5 Cranch, 115; McNutt v. Bland, 2 How. 17; Hopkins v. Stockton, 2 Watts & S. 163.

The United States and the States are distinct and independent autonomies in their sovereign capacity, and their laws are foreign to each other, except in their surrendered powers. Ohio L. & T. Co. v. DeBolt, 16 How. 428; Buckner v. Finley, 2 Pet. 590; Bank of Augusta v. Earle, 13 id. 520. Therefore the State courts have no jurisdiction over an action brought by a person acting in a representative capacity, who 6 Barb. 429; Parsons v. Lyman, 20 N. Y. 103; Williams v. Storrs, 6 Johns. Ch. 353; Doolittle v. Lewis, 7 id. 45; Vroom v. Van Horn, 10 Paige, 549; Morrell v. Dickey, 1 Johns. Ch. 153; Brown v. Brown, 1 Barb. Ch. 189; Petersen v. Chemical Bank, 32 N. Y. 21; Matter of Estate of Butler, 38 id. 400; Mosselman v. Caen, 34 Barb. 66; Abraham v. Plestero, 3 Wend. 538; Willetts v. Waite, 25 N. Y. 577; Harrison v. Sterry, 5 Cranch, 299; Johnson v. Hunt, 23 Wend. 87; Hoyt v. Thompson, 5 N. Y. 340; Peale v. Phipps, 14 How. 368; Orr v. Amory, 11 Mass. 25; Booth v. Clark, 17 How. 322.

Submitted on printed arguments by Mr. B. F. Lee for the defendant in error.

MR. JUSTICE BRADLEY delivered the opinion of the court.