Cobbossee National Bank v. Rich

16 A. 506, 81 Me. 164, 1889 Me. LEXIS 2
CourtSupreme Judicial Court of Maine
DecidedJanuary 1, 1889
StatusPublished
Cited by7 cases

This text of 16 A. 506 (Cobbossee National Bank v. Rich) is published on Counsel Stack Legal Research, covering Supreme Judicial Court of Maine primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cobbossee National Bank v. Rich, 16 A. 506, 81 Me. 164, 1889 Me. LEXIS 2 (Me. 1889).

Opinion

Peters, C. J.

The defendant went into voluntary insolvency, obtaining his discharge under a composition with creditors. The plaintiffs were parties to the composition, accepting the dividend on their debt. They afterwards sued for, and claim to recover, the balance of their debt, by virtue of § 62 of the insolvency statute. That section provides that a creditor may maintain such an action as the present, when the signature of any creditor to the composition has been obtained by fraud, or when the debtor has knowingly made any false statement of a material character in the affidavit or schedules required of him by such section.

The plaintiffs claim a right to sustain this action for the fraud of the defendant. It must be for such frauds as are described in the section, and can be for no other. It is not constructive fraud [170]*170that is aimed at by the section, bnt wilful fraud or falsehood. We cannot, in any ordinary case, encumber an opinion with an extended discussion of matters strictly of fact. It is enough on this branch of the case to announce that while there may be some inaccuracies and discrepancies in the matters presented, we do not discover fraud.

The counsel for plaintiffs next contends that there are defects in the proceedings, on which the composition was grounded, which will allow the action to be maintained under § 62. We do not concur in the proposition. The statute neither expresses nor implies such a tiring. Unless the defects prove fraud, they are not noticeable under that section. It plainly declares just what will sustain an action, and mistakes and defects are not in the enumeration.

But the learned counsel, going further in the proposition, contends that, if the suit be not maintainable under § 62, it may be maintained for the reason that the defects in the proceedings ' are so radical as to deprive the insolvency court of jurisdiction in the casé and render its action void. There is no doubt that if the court had not jurisdiction of the case, its decree would be void. If it had not jurisdiction to grant a discharge, the discharge is void. But it would be otherwise, if the defective proceedings were merely irregular. Void proceedings would destroy jurisdiction in a court of inferior powers, but merely irregular proceedings would not.

The difference is not always readily perceivable. Generally speaking, it is the difference between substance and form, between void and voidable, or between void action and imperfect action. Error or nullity goes to the foundations, and discovers that the proceedings have nothing to stand upon, while irregularity denotes that the court was acting within its jurisdiction, but failed to consummate its work in all respects according to the required forms. The one applies to matters which are contrary to law, the other to matters which are contrary to the practice authorized by the law. One relates more to the act, and the other more to the manner of it. It may be stated as a general rule, that in doubtful cases the courts incline to treat defects in legal proceedings as irregularities [171]*171rather than as nullities. Macnamara on Nullities, p 3; Wait on Fraudulent Conveyances, § 442, and cases cited.

Section 49, ch. 70, It. S., was designed to prevent the judgments of insolvency courts being subverted for any irregularity in their proceedings. It provides that the certificate given to the insolvent, “shall be conclusive evidence,” in his favor, “of the fact and regularity of such discharge.” The plaintiffs’ counsel contends that this provision applies only to a certificate obtained in regular insolvency proceedings, and not to one under a composition. We think it applies to all certificates, and can see no reason why it should not. Protection against the mistakes of the court or its officers, is as desirable in the one case as in the other. The section has both a general and special application. Its provisions apply generally as far as appropriate and consistent with other sections. The only provision in the chapter in relation to the manner of pleading a discharge is contained in this section, and certainly that simple and useful provision applies to all cases. And so, too, other sections, relating to the effect of a discharge, have relation to discharges generally; as § 48, which provides that a discharge shall not release a partner, joint contractor, indorser or surety, and § 47, which excludes from the operations of a discharge liabilities for embezzlement or defalcations.

There is much reason for assuming that the same rule would have been implied, had it not been expressed in the insolvency statute, in relation to the inconsequence of judicial or clerical mistakes which are not vital on the question of the jurisdiction of the court. The probate court is invested with more dignity and powers than it formerly possessed. Our general statutes denominate it a court of record, and § 5 of the insolvency chapter declares that proceedings in courts of insolvency shall be deemed matters of record. As courts of record they may amend and correct their records according to the truth, as other courts may. Marsh v. McKenzie, 99 Mass. 64.

We are next to consider whether there are the alleged defects, and, if so, what consequences shall attach to them, in view of the discussion which we have already indulged in. Section 62 of chapter 70, K. S., directs that, to effect a compositiotr the debtor is to [172]*172produce at a meeting of the creditors an affidavit signed by'him, to be sworn to before the judge or register, to contain among other things this statement, “My assets and liabilities are correctly^ stated in the schedule hereunto annexed and signed by me.” ■The judge is to grant a discharge of all the debts and liabilities named in the schedule annexed to said affidavit,” — and the discharge is not to be valid if any material statement contained in the affidavit or schedule is false, &c. The section has before been more fully quoted.

A schedule of assets and a list of creditors, each signed by the insolvent, were produced at a meeting of creditors, an affidavit in due form was sworn to before the judge, and a discharge was decreed to the insolvent, but from the inadvertence of either judge, register or party, the schedules and affidavit were filed away without being fastened together. The judge testifies as a witness, that the debtor swore to the schedules or lists, that he (the judge) held them-at the time in his hands, calling the debtor’s attention to them as the oath was administered, and that he informed the debtor’s attorney at the same time that the papers should be annexed to the affidavit. The form of the affidavit calls for annexation. The recorded degree of the judge recognizes annexation. The work would have been perfectly done had the schedules and'affidavit been fastened together.

It is contended that the debtor knowingly swore to a falsehood when he asserted in his affidavit that the papers were annexed. It would seem strange that he should commit such a crime, without any possible motive to do so, and stranger still that he should have been allowed to do so in the presumed presence of many creditors, when the error was avoidable by so little trouble. That point certainly fails.

The next position taken is, that the want of annexation of the papers deprived the judge of jurisdiction to adjudge the composition good, that annexing the papers was a matter conditional to his right to act, and that his decree is absolutely void. We do not concede such fatal consequences to the alleged defect.

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Bluebook (online)
16 A. 506, 81 Me. 164, 1889 Me. LEXIS 2, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cobbossee-national-bank-v-rich-me-1889.