117 U.S. 559 - Dimock v. Revere Copper Co of Boston Massachusetts

The only question considered at all these trials was whether the discharge of the defendant in the bankruptcy proceeding is, under the facts found by the court, a bar to the present action; and, as the decision by the New York court against the plaintiff in error, as to the effect of that order of discharge, is to refuse to him a right claimed under the laws of the United States, this court has jurisdiction to review the decision.

The superior court of Massachusetts had jurisdiction of the suit of the copper company against Dimock, both as regards the subject-matter and the parties. This jurisdiction was rendered complete by service of process, and by the appearance of the defendant. All this was before the beginning of the bankruptcy proceeding. Nothing was done to oust this jurisdiction, and the case accordingly proceeded, in due order, to the rendition of the judgment which is the foundation of this action. It is not argued that this judgment was void, or that the court was ousted of its jurisdiction by anything done in the bankruptcy court. No such argument could be sustained if it were made. In the case of Eyster v. Gaff, 91 U. S. 521, which was very similar to this on the point now before the court, it was said: 'The court in that case had acquired jurisdiction of the parties and of the subject-matter of the suit. It was competent to administer full justice, and was proceeding, according to the law which governed such a suit, to do so. It could not take judicial notice of the proceedings in bankruptcy in another court, however seriously they might affect the rights of parties to the suit already pending. It was the duty of that court to proceed to a decree between the parties before it, until, by some proper pleadings in the case, it was informed of the changed relations of any of the parties to the subject-matter of the suit. Having such jurisdiction, and performing its duty as the case stood in that court, we are at a loss to see how its decree can be treated as void.' The court then goes on to show that if the assignee had brought his right, acquired pendente lite, to the notice of the court, it would have been protected. Hill v. Harding, 107 U. S. 631; S. C. 2 Sup. Ct. Rep. 404.

So here, if Dimock had brought his discharge to the attention of the superior court at any time before judgment, it would have been received as a bar to the action, and, under proper circumstances, even after judgment, it might be made the foundation for setting it aside and admitting the defense. Ray v. Wight, 119 Mass. 426; page v. Cole, 123 Mass 93; Golden v. Blaskopf, 126 Mass. 523. Nothing of the kind was attempted. The question before the Massachusetts court for decision, at the moment it rendered its judgment, was whether Dimock was then indebted to the copper company. Of Dimock and of this question it had complete jurisdiction, and it was bound to decide it on the evidence before it. Its decision was therefore conclusive, as much so as any judgment where the jurisdiction is complete. It concluded Mr. Dimock from ever denying that he was so indebted on that day, whereever that judgment was produced as evidence of the debt. If he had the means at that time to prove that the debt had been paid, released, or otherwise satisfied, and did not show it to the court, he cannot be permitted to do it in this suit; and the fact that the evidence that he did not then owe the debt was the discharge in bankruptcy, made five days before, does not differ from a payment and receipt in full or a release for a valuable consideration. Cromwell v. Sac Co., 94 U. S. 357; also Claflin v. Houseman, 93 U. S. 134. A still stronger case of the validity of judgments of a state court, in their relation to bankruptcy proceedings had pendente lite, is that of Davis v. Friedlander, 104 U. S. 570.

In the case of Thatcher v. Rockwell, 105 U. S. 467, the chief justice, after alluding to these and other cases, says: 'They establish the doctrine that, under the late bankrupt law, the validity of a pending suit, or of the judgment or decree thereon, was not affected by the intervening bankruptcy of one of the parties, that the assignee might or might not be made a party, and whether he was or not be was equally bound with any other party acquiring an interest pendente lite.'

It is said, however, that, though the defendant had his discharge before the judgment in the state court was rendered, and might have successfully pleaded it is bar of that action, and did not do so, the judgment now sued on is the same debt, and was one of the debts from which, by the terms of the bankrupt law, he was discharged under the order of the bankruptcy court, and to any attempt to enforce that judgment the discharge may still be shown as a valid defense. That is to say, that the failure of the defendant to plead it when it was properly pleadable, when, if he ever intended to rely on it as a defense, he was bound to set it up, works him no prejudice, because, though he has a dozen judgments rendered against him for this debt after he has received his discharge, he may at any time set it up as a defense when these judgments are sought to be enforced. Upon the same principle, if he had appeared in the state court, and pleaded his discharge in bar, and it had been overruled as a sufficient bar, he could, nevertheless, in this action on that judgment, renew the defense. But in such case his remedy would not lie in renewing the struggle in a new suit on such judgment, but in bringing the first judgment for review before this court, where his right under the discharge would have been enforced then, as he seeks to do it now, after submitting to that judgment without resistance and without complaint.

We are of opinion that, having in his hands a good defense at the time judgment was rendered against him, namely, the order of discharge, and having failed to present it to a court which had jurisdiction of his case, and of all the defenses which he might have made, including this, the judgment is a valid judgment, and that the defense cannot be set up here in an action on that judgment. The case of Steward v. Green, 11 Paige, 535, seems directly in point. So, also, are Hollister v. Abbott, 31 N. H. 442, and Bradford v. Rice, 102 Mass. 472. It is clear that until the judgment of the Massachusetts court is set aside or annulled by some direct proceeding in that court, its effect cannot be defeated as a cause of action, when sued in another state, by pleading the discharge as a bar which might have been pleaded in the original action.

The judgment of the New York court is affirmed.